Feb5/GLD rises by another 5.38 tonnes to 773.31/SLV remains constant/Denmark lowers interest rate again for the 4th time in 3 weeks/Greece remains adamant about a Greek haircut/Poor USA data today

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold: $1262.00 down $1.80   (comex closing time)
Silver: $17.18 down 20 cents  (comex closing time)

In the access market 5:15 pm



Gold $1269.25
silver $17.38



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

Today, we witness the Greeks remaining adamant that they will not take in any more debt.  They state that they are already bankrupt and any new loans will be nothing but a fraudulent conveyance.  We have many stories today on this front.  Also Denmark lowered its key interest rate for the 4th time in 3 weeks.  We have these and many more important stories to bring to your attention today.


Following is a brief outline on gold and silver comex figures for today:

The gold comex today had a good delivery day, registering 342 notices served for 34200 oz. We have now seen weak consecutive delivery notice days . Silver comex registered 0 notices for nil oz .

Three months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 254.00 tonnes for a loss of 49 tonnes over that period.

In silver, the open interest surprisingly rose by 102 contracts despite Wednesday’s silver price was up by only 7 cents. The total silver OI continues to  remain relatively high with today’s reading at 168,588 contracts.

We had 0 notices filed  for nil oz

In gold surprisingly we  had a good sized drop in OI as gold was up by $4.10 yesterday.  The total comex gold OI rests tonight at 414,492 for a loss of 5,032 contracts.  Today we had a large 342 notices served upon for 34200 oz.




Today, we had a gigantic increase of 5.38 tonnes  of gold inventory at the GLD/Inventory at 773.31 tonnes



In silver, /SLV  no change in  of silver inventory to the SLV/Inventory 320.327



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: the crooks are no longer reporting.



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 surprisingly fell today by a rather large 5032 contracts from  419,524 down to 414,492 with gold up by $4.10 yesterday (at the comex close).  We are now in the big delivery month of the active February contract  and here the OI fell by 77 contracts  from  1287 down to 1210. We had only 69 contracts served yesterday.  Thus we lost  8  contracts or 800 oz will not stand for delivery for the February contract and no doubt were bought out with fiat.  The next contract month of March saw it’s OI rise by 171 contracts up to 1370.  The next big active delivery month is April and here the OI fall by 4,007 contracts down to 287,541. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est)  was poor at 112,769. The confirmed volume yesterday ( which includes the volume during regular business hours  + access market sales the previous day) was also poor at 149,403, contracts. However the HFT boys followed the bankers momentum with a huge amount of trading yesterday.Today we had 342 notices filed for 34,200 oz .

And now for the wild silver comex results. Silver OI surprisingly rose by 102 contracts from 168,486 up to 168,588 despite the fact that silver was only up by 7 cents yesterday. The bankers could not shake any silver leaves from the silver tree, in total contrast to gold.  We are now in the non active contract month of February and here the OI rose by 42 contracts up to 84.   We had 0 notices filed yesterday so we gained 42  contracts or 210,000  additional oz will stand for delivery in this February contract month.   The next big active contract month is March and here the OI fell by 392 contracts down to 96,851. The estimated volume today was awful at 25,629 contracts  (just comex sales during regular business hours). The confirmed volume yesterday was excellent (regular plus access market)  at 50,380 contracts. We had 0 notices filed for nil oz today.

February initial standings


Feb 5.2015



Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz 5,345.495 oz ( includes 2 kilobars) JPM, Manfra
Deposits to the Dealer Inventory in oz 1,155.01 oz (Brinks)
Deposits to the Customer Inventory, in oz 61,149.17 oz(CNT,Scotiaincludes 1900 kilobars
No of oz served (contracts) today 342 contracts (34,200 oz)
No of oz to be served (notices)  868 contracts ,(86,800 oz)
Total monthly oz gold served (contracts) so far this month  488 contracts(48,800 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month

Total accumulative withdrawal of gold from the Customer inventory this month

 5470.6 oz

Today, we had 1 dealer transactions

we had 0 dealer withdrawals:

total dealer withdrawal: nil oz



we had 1 dealer deposits:


i) Into Brinks:  1155.01 oz

total dealer deposit: 1155.01 oz



we had 2 customer withdrawals


i) Out of JPMorgan: 5,281.19 oz

ii) Out of Manfra: 64.30 oz (two kilobars)

total customer withdrawal: nil  oz



we had 2 customer deposit:

i) Into Scotia:  61,085.000  (1900  kilobars)

total customer deposits;  61,149.17 oz

We had 1 adjustment


i) Out of Scotia:  35,062.441 oz was adjusted out of the customer and this landed into the dealer account of Scotia:

Today, 0 notices was issued from JPMorgan dealer account and 0  notices were issued from their client or customer account. The total of all issuance by all participants equates to 342 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 262 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 (488) x 100 oz  or 48,800 oz , to which we add the difference between the OI for the front month of February (1210 contracts)  minus the number of notices served today x 100 oz (342 contracts) x 100 oz = 135,600 oz, the amount of gold oz standing for the February contract month. 4.217 tonnes)

Thus the initial standings:

488 (notices filed for the month x( 100 oz) or 48,800 oz + { 210 (OI for the front month of Feb)- 342 (number of notices served upon today) x 100 oz per contract} = 135,600 oz total number of ounces standing for the February contract month. (4.217 tonnes)


we lost 8 contracts or 800 oz will not stand in this February contract month.

Total dealer inventory: 805,240.309 oz or 25.04 tonnes

Total gold inventory (dealer and customer) = 8.166 million oz. (254.00) tonnes)

Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 49 tonnes have been net transferred out. However I believe that the gold that enters the gold comex is not real.  I cannot see continual additions of strictly kilobars.







And now for silver

 February silver: initial standings

feb 5 2015:



Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 6,141.66  oz (Delaware JPM )
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory nil
No of oz served (contracts) 0 contracts  (nil oz)
No of oz to be served (notices) 84 contracts (420,000 oz)
Total monthly oz silver served (contracts) 309 contracts (1,545,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal  of silver from the Customer inventory this month  202,267.7 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 2 customer withdrawals:

i) Out of Delaware:  1,012.66 oz

ii) Out of JPM: 5,129.000 oz ????


total customer withdrawal: 6,141.66 oz

we had 0 adjustments


Total dealer inventory: 67.791 million oz

Total of all silver inventory (dealer and customer) 178.015 million oz


The total number of notices filed today is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in January, we take the total number of notices filed for the month (309) x 5,000 oz    = 1,545,000 oz  to which we add the difference between the OI for the front month of February (84)- the number of notices served upon today (0) x 5,000 oz per contract = 1,965,000 oz,  the number of silver oz standing for the February contract month

Initial standings for silver for the February contract month:

309 contracts x 5000 oz= 1,545,000 oz + (84) OI for the front month – (0) number of notices served upon x 5000 oz per contract =  1,965,000 oz, the number of silver ounces standing.

we gained 42  contracts or 210,000 oz of additional silver that  will standing for this February contract month

It seems that some major entity is after some silver supplies. It looks like they all gave up trying to get physical from the gold comex.

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

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


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:

feb 5. we had another addition of 5.38 tonnes of gold to the GLD/Inventory tonight at 773.31 tonnes

Feb 4/2015; we had another addition of 2.99 tonnes added to the GLD inventory/Inventory tonight 767.93

Feb 3.2015: today a withdrawal  of 1.79 tonnes of  gold inventory removed from the GLD/Inventory at  764.94

feb 2/ a huge addition of 8.36 tonnes of “paper” gold inventory/Inventory tonight at 766.73 tonnes

jan 30. we had no change in gold inventory/Inventory at 758/37 tonnes

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 952.44 tonnes

Jan 27.we had a monstrous “paper” addition of 9.26 tonnes of gold into the GLD tonight/Inventory at 952.44 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

Feb 5/2015 / we had an addition of 5.38 tonnes  of   gold inventory at the GLD/

inventory: 773.31 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 : 771.31 tonnes.




And now for silver (SLV):


Feb 5.we had no change in silver inventory/320.327 million oz/


Feb 4/we had a small withdrawal of 136,000 oz of silver from the SLV vaults/Inventory/320.327 million oz

feb 3.2015: we had a good addition of 1.149 million oz of silver inventory/inventory 320.463 million oz

Feb 2 no change in silver inventory at the SLV/inventory at 319.314

million oz.

jan 30  no change in silver inventory at the SLV/inventory at 319.314

million oz

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

feb 5/2015 we had no change in silver inventory/

SLV inventory registers: 320.327 million oz






And now for our premiums to NAV for the funds I follow:

Note: Sprott silver fund now for the first time into the negative to NAV

Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)

1. Central Fund of Canada: traded at Negative  3.6% percent to NAV in usa funds and Negative 3.5 % to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.7%

Percentage of fund in silver:37.8%

cash .5%


( feb 5/2015)




2. Sprott silver fund (PSLV): Premium to NAV rises to + 4.50%!!!!! NAV (Feb 5/2015)

3. Sprott gold fund (PHYS): premium to NAV rises to .+.50% to NAV(feb 5 /2015)

Note: Sprott silver trust back  into positive territory at +4.50%.

Sprott physical gold trust is back in positive territory at +.50%

Central fund of Canada’s is still in jail.






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




Early gold trading from Europe early Thursday  morning:

(courtesy Mark O’Byrne)



ECB ‘Blackmails’ Greece – Bail-Ins, Bank Runs and “Grexit” Likely

  • ECB ‘blackmails’ Greece – “Grexit”, bank runs, capital controls and bail-ins likely
  • Shock announcement yesterday led to volatility in markets; turmoil in Greece
  • Stocks, commodities including oil and Greek investments fall
  • Euro gold surged from EUR 1,104 to EUR 1,126 per ounce or 2 per cent
  • Greek government bonds will not be accepted as collateral in accessing cheap ECB liquidity from February 11
  • Greek banks are believed to be heavily exposed to Greek government bonds
  • Banks in difficulty will have recourse to Emergency Liquidity Assistance (ELA) from Greek central bank but ECB has authority to block ELA
  • Greece now shut out of markets
  • ECB putting interests of banks over those of people … again

The shock ECB announcement that it is to remove vital funding to Greek banks and financial system led to volatility in markets yesterday and demand for safe haven assets – including German bunds and gold.

Euro gold surged from EUR 1,104 to EUR 1,126 per ounce or 2% in minutes after the announcement.

People Versus The Banks

The ECB manoeuvre which came 15 minutes before the end of trading in New York caused the ETF which tracks to Greek stock market to plunge 6%, led by losses in Attica Bank and Piraeus Bank SA. Greek 10-year bond yields rose to 10.8%.

Financial carnage for Greek assets continued today. Greek borrowing costs leapt and bank shares were hammered this morning after. The Athens Stock Exchange FTSE Banks Index plunged 23 percent at the open before recovering somewhat. Three-year government borrowing costs leapt more than three percentage points to nearly 20 percent, leaving Greece utterly shut out of the markets.

The ECB decision to cancel its acceptance of Greek bonds in return for funding shifts the burden onto Athens’ central bank to prop up its banks and marks a further setback for the government’s attempt to negotiate a new debt deal.

The Greek government has rightly protested the move and called the ECB’s abrupt pulling of the plug on its funding for the Greece’s already very vulnerable banking sector blackmail and an act of coercion.

Just hours following a meeting between Greek finance minister Yanis Varoufakis and ECB Chairman Mario Draghi yesterday – which Varoufakis had described as “very fruitful,” – the ECB made a pre-emptive strike on the new government of the Hellenic Republic.

Following the meeting Mr. Varoufakis described the bank bailout program as it currently functions as “fuelling a debt deflationary crisis in our nation, thus causing a major humanitarian crisis.”

He said the meeting “gives me great encouragement for the future.”

However, late in the evening at 21:36 (European central time) yesterday, the ECB suddenly announced that from next Wednesday February 11 it would no longer accept Greek government bonds as collateral used by struggling Greek banks to borrow from the ECB.

A statement from the ECB read, “The Governing Council decision is based on the fact that it is currently not possible to assume a successful conclusion of the programme review and is in line with existing Eurosystem rules.”

The Financial Times said the meeting was arranged so that Greece could get a bridging loan while Greece began to implement reforms.

In a fascinating interview with Germany’s Zeit newspaper published yesterday morning, Varoufakis put forward his reasons for insisting that the bailout system had to be reformed. He stated unequivocally:

I’m finance minister of a bankrupt country.

He explained that currently he had access to €7 billion from “ongoing European aid programs” of which he was not going to avail.

All I have to do is sign a document quickly. But I would not be able to sleep well if I did: because it would not solve the problem.

He went on to say,

That’s why we need a bridging loan. The European Central Bank should support our banks so that we can keep ourselves above water by issuing short-term government bonds.

Varoufakis seems to be of the opinion that with more time he will be able to implement economic reforms that will protect the weakest members of society and help the Greek economy get out of its current deflationary abyss.

When we talk about reforms, we should talk about cartels, about rich Greeks who hardly pay any taxes. Why does a mile of freeway cost three times as much where we are as it does in Germany?

Because we’re dealing with a system of cronyism and corruption. That’s what we have to tackle.

When asked about the possibility of taking Russia up on it’s offer of emergency funding he said,

I can give a clear answer to that: That is not up for debate. We will never ask for financial assistance in Moscow.

So Mr. Varoufakis had discussions with Mario Draghi to arrange a bridging loan which he described as being “very fruitful,” only for the ECB to ignore the Greek government’s reasonable requests and create renewed turmoil in the Greek financial system and likely an intensification of runs on Greek banks.

The timing of the move seems designed to cause discomfort to the new Greek government by causing instability and fear in the financial sector. A likely consequence is bank runs, which would put the new government under even greater pressure and could force them back into the arms of the Troika.

The first blow has been struck between the ECB and Syriza. The ECB probably hopes the move will cause the Greek government will acquiesce to the demands of the Troika.

It is a high risk move which may cause bank runs in Greece, “Grexit” and a return to the drachma and ultimately to contagion in the European banking sector.

Should the crisis escalate it is almost certain that bail-ins of deposits and the confiscation of bank deposits – will be enforced.

Irish Finance Minister Michael Noonan clearly warned, “Bail-ins are now the rule.”

Physical gold, held outside the banking system, is an absolutely essential hedge for Greeks, Europeans and indeed investors and savers globally at this time.

Get Breaking News and Updates On Markets Here

Today’s AM fix was USD 1,263.75, EUR 1,106.71 and GBP 828.80 per ounce.
Yesterday’s AM fix was USD 1,269.25, EUR 1,108.08 and GBP 835.31 per ounce.

Yesterday, gold gained 0.33% or $4.10 yesterday, closing at $1,265.30. Silver rose 0.46% or $0.08, closing at $17.36.

Gold in Euros – 5 Years (GoldCore)
Gold 5 Year Chart

The ECB decision to strike Greek bonds off its list of accepted collateral rattled European markets today, sending shares into reverse and investors back into safe-haven German bonds. gold benefited initially prior to also seeing price falls.

The euro tumbled after the ECB announcement and this saw gold rise 2 percent – from EUR 1,104 to EUR 1,126 per ounce in minutes. While gold rose after the ECB announcement, in Asian trading, gold in Singapore gradually moved lower and this trend continued in European trade.

As pressure on Greece’s new anti-austerity and pro-justice government ratchets up and ‘Grexit’ appears more likely, risk aversion is returning and the pan-European FTSEurofirst index dropped 0.5 percent.

Greek bank shares collapsed another 15 percent, leading a 6.5 percent decline by the Athens stock market. Yields on 3- and 5-year Greek debt climbed a very 220 and 190 basis point respectively.

Meanwhile, demand from India and China remains very robust.

Gold imports by India, the world’s second-biggest buyer, jumped in the first 10 months of this financial year as the government eased curbs on overseas purchases.

Shipments jumped to about 940 metric tons from April through January, two government officials with direct knowledge of the matter, told Bloomberg.

“Imports may be around 1,000 tons this fiscal and remain stable next year unless we see any fresh government regulations coming in,” Madhavi Mehta, an analyst at Kotak Commodity Services, told Bloomberg.

Gold in Dollars – 5 Years (GoldCore)
Gold 5 Year Chart

NATO defense ministers will meet Thursday in Brussels to discuss nuclear issues, the conflict in Ukraine and the threat of conflict with Russia.

Geopolitical risk remains high with relations between Russia and the U.S. and NATO continuing to deteriorate. The U.S. is now talking about arming Ukraine which will further inflame the situation and likely lead to an escalation in the conflict.

The very uncertain geopolitical backdrop is supportive of gold.

Get Breaking News and Updates On Markets Here








Early last evening, we received a report from the Russian newspaper Sputnik that Belgium has purported plans to repatriate 200 tonnes of gold form England:



© Sputnik/ Oleg Lastochkin


22:45 04.02.2015(updated 23:11 04.02.2015)

Belgium is planning to retrieve 200 metric tons of gold, deposited to United Kingdom storage in the 1930s, out of fear of Nazi theft.



MOSCOW, February 4 (Sputnik) — Belgium is planning to retrieve
200 metric tons of gold, deposited to United Kingdom storage in
 the 1930s, Belgian public broadcasting organization RTBF said

The date of the retrieval operation is kept secret for security reasons, according to RTBF. A ship with 50 soldiers and a helicopter will escort the ingots to Belgium.

The gold, estimated at $7 billion, is stored at a depth of over 65 feet in a repository with 3-feet thick walls. The password-protected storage can be opened only with an almost 3-inch key, of which there are no copies.
The ingots were deposited to the UK, a country with the most
secure storage in the world, out of fear of Nazi theft. The UK also
stores French and the United States gold.
Belgium pays over $280,000 in rent for the storage every year.





Then denied by the central bank.  However it does show nervousness on the part of central banks in keeping gold in foreign jurisdictions.

Koos highlights the huge discrepancy of 31 tonnes which cannot be accounted for anywhere.

(courtesy Koos Jansen)

Posted on 5 Feb 2015 by

Belgium Denies To Repatriate Gold From The UK

Belgian newspaper Het Nieuwsblad was reporting on Wednesday Belgium will repatriate 200 tonnes of gold from the Bank Of England (BOE) in London. De Tijd is now stating the opposite, quoting the governor of the Belgian Central Bank (NBB) Luc Coene:

The repatriation from the UK is not true…. There are other and more effective ways to verify if the gold in London is really ours. We have an audit committee that inspect the Belgian gold in the UK regularly…. Repatriating would be more expansive with transport, storage and security costs.

One thing is for sure, the Belgians are very nervous about their gold (227 tonnes) held abroad. In December 2014 theLuc Coene admitted he was investigating to repatriate all Belgian gold reserves, on TV-network VTM Nieuws:

Luc Coene: If one feels that in surrounding countries these decisions are taken, one knows that this question will be asked to us as well. So we’re pro-active investigating all the elements, so when the question will be asked, we can answer it.

The practical problem is the transport of the gold, with all the risk that come with it. Second, if we repatriate we need to setup a large security system in Belgium. Though currently this is done by certain central banks that are specialized in this.

Did the investigation point out the transport and storage costs would be too high? Currently the storage fee NBB pays to its custodians (BOE, BIS, Bank of Canada) is €250,000 a year. Is Belgium not repatriating because of the costs or because it got obstructed by other authorities?

Last week I reported about the mystery regarding the fine gold tonnage claimed to have been repatriated by the Netherlands and Germany in 2014 from New York (208 tonnes), and the drop in total foreign gold deposits disclosed by the Federal Reserve Bank Of New York (FRBNY) in 2014 (177 tonnes). The mystery – that adds to a long list of oddities – couldn’t be clarified to me by the central bank of the Netherlands, Germany or US. Additionally, I called and emailed to the central bank of the Ukraine to ask whether they had deposited any gold in New York in 2014 that could help explain the mysterious 31 tonnes gap. Until now, all four central bank were reluctant to say anything that could restore their common credibility, but perhaps one will in the future – still waiting on email reply from the central bank of the Ukraine, but I doubt it will help.

There is enough evidence European countries, among others, are nervous about the security of their official gold reserves stored abroad – who wouldn’t be if unprecedented amounts of physical gold were moving to Asia while Western consultancy firms are clearly underreporting this trend. Accidentally there are more and more stories popping up that might be a backwash from the tension between the big custodians (FRBNY, BOE) and the gold owners.

This story about Belgium repatriating 200 tonnes from the UK, which was officially denied after a few hours by the NBB, makes the story of the Netherlands that bought 10 tonnes last December, which was also officially denied after a few hours, more suspicious. I hate to speculate, though our central banks and the impossibility of the numbers they put out force me to speculate – apparently there is no other option.  

The fact the 31 tonnes gap is not being elucidated by the central banks in concert might signal these central banks have something to hide. If the custodians have something to hide, we can ask ourselves; did Belgium apply for withdrawing 200 tonnes of gold from the UK, but shortly after got a telephone call this request was not part of the range of possibilities?

Koos Jansen
E-mail Koos Jansen on: koos.jansen@bullionstar.com





More on the German Repatriation


(courtesy Bloomberg)


Germany’s gold repatriation campaign celebrated in long profile by Bloomberg News


9a ET Thursday, February 5, 2015

Dear Friend of GATA and Gold:

Bloomberg News today publishes a long profile about the heroic work of the leader of Germany’s gold repatriation campaign, Peter Boehringer of the German Precious Metals Society, and as the profile raises the campaign’s powerful questions about the disposition of the gold reserves of the German Bundesbank and other central banks, it touches ever so briefly on the previously prohibited subject of gold market manipulation. GATA long has been pressing that subject on Bloomberg reporters and will do so again. The Bloomberg report is headlined “Where Is Mein Gold? Almost Half of Germany’s Gold Is Stored in Vaults Under the Streets of Manhattan. Or Is It?” and it’s posted at Bloomberg here:


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





Bloomberg reports that once India scraps the tax on gold, one should expect gold imports to surge:


(courtesy Bloomberg/GATA)

Gold imports by India are said to surge this year as curbs are scrapped


By Vrishti Beniwal and Swansy Afonso
Bloomberg News
Wednesday, February 4, 2015

Gold imports by India, the world’s second-biggest user, jumped in the first 10 months of this financial year as the government eased curbs on overseas purchases.

Shipments jumped to about 940 metric tons from April through January, said two government officials with direct knowledge of the matter, asking not to be identified as the provisional data isn’t public. Finance Ministry spokesman D.S. Malik didn’t answer two calls to his mobile phone. Purchases fell 35 percent to 662 tons in 2013-2014, according to the Commerce Ministry.

Imports increased after the government in May allowed more agencies to bring in gold and scrapped a rule requiring shippers to re-export 20 percent of their shipments. India curbed imports in 2013 after the current-account deficit reached a record, pushing rupee to an all-time low. The south Asian nation accounted for 25 percent of global demand in 2013, according to the World Gold Council.

“Imports may be around 1,000 tons this fiscal and remain stable next year unless we see any fresh government regulations coming in,” Madhavi Mehta, an analyst at Kotak Commodity Services, said by phone from Mumbai. …

… For the remainder of the report:






The strong USA dollar is having its effect on budgets:


(courtesy London’s Financial Times/GATA)

Congress indignant: Why aren’t our pots calling those kettles black?


Strong Dollar Revives Old Currency Angst

By Shawn Donnan
Financial Times, London
Wednesday, February 4, 2015

WASHINGTON — When Jack Lew, the US Treasury secretary, sits down on Thursday to brief the august members of the Senate finance committee on the president’s 2016 budget and plans for tax reform he will be bracing himself for a barrage of questions on at least one other subject.

A strong dollar now hitting corporate profits and US exports and an accumulating number of moves by central banks around the world to weaken their own currencies has revived an old angst on Capitol Hill and yielded new battle lines for Congress and its currency warriors.

Where once the target was China these days the push is for the administration to include tough provisions against currency manipulation in its trade agreements and particularly the Trans-Pacific Partnership, the mega trade deal with Japan and 10 other economies that is at the heart of the US international economic agenda and is nearing conclusion. …

… For the remainder of the report:











For your interest..


(courtesy zero hedge)



Spot The Gold One Out

It is no secret that even as the price of Russia’s primary export, oil, has been sliding in what is now a confirmed attempt by the West and Saudis to crush its grip over Syria, and in the process make Gazprom irrelevant as a critical supplier of gas to Europe, Russia has not wavered in its determination to slowly (at first) but surely diversify its dollar assets into the one currency western central banks hate the most: gold.


Just how much gold does Russia hold relative to all other key gold-holding central banks? The chart below, based on data courtesy of Santiago Capital which shows the total percentage of the monetary base backed by gold reserve and gives the answer in quite a rather fashion.

And while Russia’s relative gold holdings, relative to its fiat exposure, are truly impressive, the real question we, and anyone esle should have about the chart above, is where does the red question mark representing China’s gold as a % of its monetary base, currently lie. Yes, we know what China’s gold was in early 2009 when the PBOC gave its last official update to the IMF, but to assume this has not changed in 6 years is ludicrous, especially since as Zero Hedge first showed back in 2011, citing a Wikileaked report of what China’s Foreign Exchanges Administration reported on the topic of China’s rising gold holdings. From the source:

“China increases its gold reserves in order to kill two birds with one stone”


“The China Radio International sponsored newspaper World News Journal (Shijie Xinwenbao)(04/28): “According to China’s National Foreign Exchanges Administration China ‘s gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the U.S. and European countries. The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold’s function as an international reserve currency. They don’t want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar’s role as the international reserve currency. China’s increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB.”

So don’t be surprised if and when China provides its next long overdue gold holdings report, if the Chinese dot is located above Russia’s.

Bridgwater’s Ray Dalio seems to have purchased  4.7 million  oz of gold in his All Weather Fund
(courtesy  Travis McPherson/CEO.ca)

Ray Dalio is the founder of Bridgewater Associates, the world’s largest hedge fund firm and is one of the most iconic money managers on Wall Street.

The Harvard graduate created the All Weather fund in 1996 and revolutionized traditional optimal strategic asset allocation models. Instead of balancing portfolios based on total weightings only, he included risk, inflation and growth (now referred to as ‘risk parity’) in order to match weightings with risk exposure given certain inflation and growth scenarios.

The new spin on portfolio theory helped the All Weather fund return some of the most consistent numbers in the hedge fund business and allowed Bridgewater to grow assets under management to over US$160 billion (his personal net worth grew as well, now over US$15 billion). The All Weather fund holds roughly 50% of Bridgewater’s total AUM.

Mr. Dalio is a big believer in gold as a hedge against inflation and believes every portfolio needs a gold allocation.

The All Weather fund calls for a 30% weighting in stocks, 15% intermediate term Treasuries, 40% long-term Treasuries, 7.5% gold and 7.5% commodities. This means, the All Weather fund is holding up to US$6 billion in gold or roughly 4.7 million ounces (at $1,270/oz gold price).

“I think there’s a way of looking at things in which people overly complicate things perhaps in a desire to be overly precise and can easily lose sight of the important basic ingrediants that are making those things up.” – Ray Dalio

Over the last 5 years, the fund has averaged 11.8% annually.

Visit http://www.bwater.com/ to learn more.



And now Bill Holter
(courtesy Bill Holter/Miles Franklin)
Mainstream put them to sleep, it’s your job to WAKE THEM UP


  Every once in a while I am still amazed at some of the truly non thinking and non logical “mush” that comes out of the mainstream.  While years ago my wife could find me screaming at the television on a regular basis, I have since mellowed and this is a much more rare occasion …until this morning.  Maybe being bombarded for years by illogical mainstream pabulum has numbed my senses?  One thing is for sure, the public has swallowed it whole!
  CNBC had one of their “money honey’s” on and was talking about the scorecard for January.  Did she talk about gold? Silver?  No, being factually incorrect she was talking about how well the European bourses did!  She was incorrect no matter how she tries to rationalize it, in nominal terms or in real terms, let me explain.  First, when looked at from “local currency terms, the Russian bourse did far better than anything else …even though it was actually down in terms of gold and silver.  The European bourses were at very best down 2-3% in terms of dollars or gold, some down much further.  Because gold was up 8% and silver up 11% versus the dollar, and the dollar up against everything else, they were “up” double digits versus most everything on the planet!  Of course, you know better than this, everything else was “down” or if you want, you can call it “devalued”.  Gold and silver are the unmovable, immutable “yardsticks” that cannot debased, stretched or finagled with because an ounce is always an ounce.  Gold and silver do not change, they don’t stretch, they don’t shrink they just “are” and everything else is “valued” against them …even the dollar.  Their perceived values can however be “played with” by diluting paper supply but I digress…
  Next, CNBC had another guest on who manages some $100+ billion (cringe) of “other peoples money”.  He was proudly spouting how much better value U.S. equities were over international equities and actually said with a straight face “there are still some very good values” in the bond markets even though 10 year Treasuries were yielding 1.75%!  Really?  Seriously?!  He went on to suggest that particularly in the municipal sector, “good values” could be found.  Then of course we got the standard “disclaimer” that everyone should be “well diversified”.
  Did the CNBC announcers ask him where the value is in tying up money for 10 years at 1.75%?  You of course understand the problem, where is the upside?  Will interest rates still be at these ridiculous levels in 10 years?  Lower?  Higher?  10 years is a very long time, it used to be more than two average business cycles.  Now, the amount of “events” occurring in one year probably dwarf what used to be notable in 10 or even 20 years.  The problem is this, “notable” events in today’s world, happen so often that its become the new normal and eyebrows no longer are raised for anything unless its “politically incorrect” …THEN there’s a problem!
   Switching gears just a bit but still connected to these mainstream thoughts, all of this is about “fraud”.  The U.S. way of life has gone from hard work and savings to cutting corners and borrowing.  The fraud goes from top to bottom and starts with our money itself.  Lie after lie about our economic and financial conditions have piled one on top of the other since 2008 and long before.  You name the report, inflation (and thus real GDP), unemployment, housing, consumption or production …they are about the only thing we “manufacture” any more in the U.S..  Markets are rigged, manipulated and forced in contorted directions to confirm the lies fed to the public… and continually reaffirmed by the clueless “mainstream mushers”.
  Are these mouthpieces lying?  I really don’t think they intentionally are.  I truly believe that THEY believe what they are saying.  They hear other people say the same things over and over again with the reaction being applause …and who doesn’t like applause?  They hear “official” reports which don’t make sense to a mildly intelligent monkey yet they never question anything.  Never mind the fact that their grocery bills jumped 15% or more last year, never mind their own eyes when they open a tax, tuition or insurance bill.  No what “it” is, it is good!  Crashing oil was good for the economy over the last weeks …this week rising oil shows how strong it is!  It’s all good!
  I am here to tell you No!, it is not.  We are being lied to, manipulated and used.  Fraud encompasses nearly all aspects of our daily life.  Even those who understand this concept are not fully aware of how deep this goes because we have all been numbed down to the point where what used to be “crazy” is now a normal as picking up the morning paper.  Make no mistake, the fraud will be uncovered as it always is once credit begins to contract in earnest.
  Right now, you are being given a God given opportunity to avoid being aboard the coming disaster.  History has already shown you what happens after markets become as volatile as they are currently, you still have the chance to not just change your deck chair but to exit the vessel.  Do we know exactly what the event or events will be that ignite the fuse?  No, but it will be truly obvious only after the fact.  What we do know is the world is now more indebted, many times over than ever before in history.  We know that sovereign governments will fail this time around because even they “joined the party” (to keep the party and the fraud) going.
  Never before this era has the world been entirely off of the gold standard.  Another first it the fact that interest rates have never ever been as low as they are.  Fake money and too much debt in realty equals massive “risk”.  In today’s capital markets, there is almost ZERO compensation for this risk.  In fact, valuations suggest the current situation is THE most “risk free” period of time in financial history!
  The “fraud” as I call it being perpetrated on you, on the entire world can be broken down to these two main themes.  More “real” risk for our economies, financial systems, ways of life and lives themselves has never been greater.  The trick, to keep this going is to “show” the reverse, to portray “less risk” than ever before.  As I stated yesterday, your job, your mission, your immediate actions should be very defined at this point.  Get out of the way!  Don’t play the game!  Do Not Own Assets which can, and certainly will DEFAULT!  Gold and silver are the very core assets and the only “money” which cannot nor ever will default.  WAKE UP!  Act for yourself.  Grab your non believing, your in denial, your non understanding friends and relatives …and SHAKE THEM!  WAKE THEM UP!  Tell them to use the common sense that was God given yet “fraudulently” stolen from them slowly over time.  No one ever can tell you exactly “when” fraud will be uncovered, they can however tell you with absolute certainty that it will be.  Regards,  Bill Holter

And now for the important paper stories for today:

Early Thursday morning trading from Europe/Asia

1. Stocks mixed on major Asian bourses  / the  yen lowers  to 117.34

1b Chinese yuan vs USA dollar/ yuan weakens  to 6.2524
2 Nikkei down 174.12  points or 0.98%

3. Europe stocks all in red   // USA dollar index up to 93.91/

3b Japan 10 year yield back down to .35%/ (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 117.34/everybody watching the huge support levels of 117.20 and that level acting as a catapult for the markets.

3c Nikkei now  above 17,000/

3e The USA/Yen rate still well below the 120 barrier this morning/
3fOil: WTI 49.10 Brent: 55.25 /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 Brent

3k Chinese reserve rate cut stimulates gold purchases

3l  Greek 10 year bond yield: 9.66%

3m Gold at $1263.00. dollars/ Silver: $17.17

3n USA vs Russian rouble:  ( Russian rouble  down 1 1/4 in roubles per dollar in value)  66.32!!!!!!

3 0  oil  into the 51 dollar handle for WTI and 56 handle for Brent

3p  ECB removes Greek sovereign collateral in their investment strategy. This leaves only ELA funding for the next two weeks.

3Q  SNB (Swiss National Bank) intervening again driving down the SF/window dressing/Swiss rumours of intervention to keep the  soft peg at 1.05 Swiss Francs/euro.

3r  Radio shack will file for bankruptcy proceedings today.

3s Now European corporates sell bonds with a negative yield: Nestle’s bond yield: negative .002%/

4. USA 10 yr treasury bond at 1.78% early this morning. Thirty year rate well below 3%  (2.37%!!!!)/yield curve flattens/foreshadowing recession
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid



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



SNB Said To Be Buying EUR Crosses In Aftermath Of ECB’s Greek Fiasco; Europe Boosts Its Own Growth Forecast

If yesterday’s newsflow was bizarre, then today’s market reaction has been outright surreal, and the day hasn’t even really started.

First, weeks after the ECB’s folded on Europe’s deflationary specter and what is now seen by most as an all out triple-dip recession in the Eurozone, where only the endless adjustment of the definition of GDP has prevented this from flowing through to the bottom line, and hours after the ECB implicitly did everything in its power to create a banking panic in Greece, risking an all out Grexit and much worse down the line, the European Union decided that it was time perfect time to, drumroll, raise European growth forecasts!

According to the WSJ, “the European Union’s official economists said the sharp drop in global oil prices and a weaker euro should boost growth in the eurozone this year, raising their forecasts for the currency area’s largest economies.”

The economists at the European Commission, the EU’s executive arm, said the eurozone should grow 1.3% this year and 1.9% in 2016. In November, they expected growth of 1.1% this year and 1.7% next. The commission raised its growth estimates for most of Europe’s largest economies, including Germany, France and Spain.

“Europe’s economic outlook is a little brighter today than when we presented our last forecasts,” said Pierre Moscovici, the European economics commissioner. “The fall in oil prices and the cheaper euro are providing a welcome shot in the arm for the EU economy.”

And then, as always in the case of Europe (whose central bank conducted a stress-test with a worst case that excluded deflation as a possible outcome when two months later the same ECB launched bond buying precisely to prevent deflation), it immediately shot itself in the foot, explaining just why these forecasts are already null and void:

The cutoff date for the forecasts is Jan. 23. The left-wing Syriza party was swept to victory in the Greek elections two days lateron a platform of getting Greece’s official creditors to loosen austerity mandates on the country and restructure its debt. So far, Germany and others eurozone nations have refused. The commission did lower its forecasts of Greek growth, saying the decision to call early elections had hurt confidence.

Worse, the forecasts “don’t account for the threat that the crisis could return in full force now that the eurozone is again headed for a showdown with Greece, which is asking the bloc’s other members to rewrite the bailout plan they signed with Athens.” The result: “The commission cut its estimates for the Greek economy.Growth is expected at 2.5% this year, down from a November estimate of 2.9%. “The growth momentum was fairly firm in the second half of 2014, although the early election has affected confidence and investment,” the commission said.”

2.5% growth in Greece in 2015: remember that. Or rather, forget it.

In other words, just your usual run-of-the-mill propaganda by an artificial monetary and political block which has all but run out of “political capital.”

However, the same block has not run out of printer ink. The reason being that just before Europe came in to start trading in the aftermath of yesterday’s ECB shocker which has since seen Greek bank stocks and bonds tumble yet again, a day which absent some hail-mary from the central banks, would have been a total bloodbath, someone started buying EUR crosses particularly the EURCHF and EURUSD, and buying, and buying, and buying more…

… until finally that someone was rumored to have been revealed as the Swiss National Bank, the same bank which – as we wrote yesterday – had doubly lost the markets’ confidence after not only did it end its hard CHF ceiling, but three weeks later, saw its “soft ceiling” in the form of the EURCHF 1.05-1.10 corridor breached as well.

In other words, one central banks shoots itself in the foot by trying to make a very explicit political statement to a rebelious Greece, and another central bank is supposed to bail it out, a central bank that has become a hedge fund with a nominal losing FX position that is fast approaching the entire GDP of Switzerland.

Call it unintended consequences of “style drift.”

So what else is going on? A quick recap courtesy of RanSquawk and Bloomberg

The Headlines:

  • Greek negotiations remain the dominant theme with European equities in the red and Athens Stock Exchange opening 8.9% lower
  • EU commission forecasts: Euro area 2015 GDP 1.3% (Prev. 1.1%), 2015 CPI 0.1% (Prev. 0.8%), 2015 unemployment 11.2%
  • Looking ahead, at 1130GMT/0530CST the Greek and German finance ministers are scheduled to brief the press, with the BoE rate decision, ECB’s Praet and Knot all scheduled later today. Out of the US there is Challenger job cuts, weekly jobs numbers and the December trade balance data
  • Treasury yields slightly higher in overnight trading; yields have been rising amid firm U.S. economic data and rebounds from record lows reached last week by U.K., German and Japanese 10Y yields.
  • Greece lost a critical funding artery as the ECB restricted loans to its financial system, raising pressure on the government to yield to German-led austerity demands to stay in the euro zone
  • “The decision of the newly elected Greek government to stop cooperating with the Troika shows how unpopular sharing sovereignty rights with foreign creditors is, even in cases in which national expenditures are largely dependent on external financial help,” ECB’s Jens Weidmann said
  • The European Commission raised its euro-area growth forecasts and cut its inflation outlook as cheaper energy proves both a blessing and a curse
  • CME Group Inc. will close most of its futures pits in Chicago and New York by July 2, with open outcry trading dwindling to just 1% of CME volume
  • The Fed is stepping up efforts to fend off congressional audits of its policies, with one official warning they would constitute a threat to its independence; Sen. Rand Paul (R-KY) last month re-introduced an audit bill
  • RadioShack Corp. is closing in on an agreement with creditors and other parties that would put the retailer in bankruptcy as soon as today, people with knowledge of the discussions said
  • Weatherford Intl plans to cut 5,000 positions by the end of the first quarter, joining its larger competitor Schlumberger Ltd. in responding to lower oil prices
  • Sovereign yields mixed, Greece 10Y rises ~62bps to 10.30% Portugal, Spain and Italy also higher. Asian stocks mixed; European stocks mostly lower, U.S. equity-index futures rise. Brent, WTI rise; copper and gold fall


Asian equities trade mixed with outperformance seen across Chinese stocks, after the PBoC cut its RRR rate for the first time in over 2yrs. Shanghai Comp (-1.18%) and Hang Seng (+0.35%) were earlier led by financials, however have now pared its gains. ASX 200 (+0.58%) traded in the green, gaining for an 11th consecutive day, equalling the all-time record set in 2003. Nikkei 225 (-0.98%) fell amid dampened risk-appetite fuelled by the ECB stance to restrict financing to Greece.\


Yesterday’s aftermarket announcement from the ECB stating that they are removing its current waiver for the minimum credit-requirement for Greek collateral took focus this morning, with Greek asset classes feeling the consequences. Greek banks opened lower with the banking index down 22.8%, while the Athens Stock Exchange fell 8.9% and the GR/GE 10y spread widened by over 100 bps at the open of the Greek stock exchange.

All major European indices opened lower on the news, however have been paring some of the losses through the morning, while Bunds come off their best levels as the market factors in the significance of the move, which is less than first predicted, with the March contract now back to flat ahead of the N.A. open. Looking in greater detail, Greek banks will only have to convert ~EUR 30bln of financing into ELA financing which is not as severe as some had feared. However, one big concern that remains is that yesterday’s decision by the ECB could lead to deposit flights and a possible run on Greek banks. Focus regarding Greece will now move to the meeting between the Greek and German finance ministers scheduled for 1130GMT/0530CST.

US earnings this afternoon see Phillip Morris and Teva report pre market, with Twitter scheduled to report after market, while yesterday saw Allergan report Q4 Adj. EPS USD 2.17 vs. Exp USD 1.83.


FX markets have seen EUR strengthen gradually to pare back the fast money move lower following the ECB announcement last night regarding Greek collateral. The EUR strength was supported by EU commission forecasts, estimating Euro area 2015 GDP at 1.3% (Prev. 1.1%) but with 2015 CPI at 0.1% (Prev. 0.8%). EUR strength was further supported by stops tripped in EUR/CHF, with RANsquawk sources reporting renewed talk that the SNB are active in the CHF. Elsewhere, GBP/USD trades near session highs with weakness in the greenback and on the back of better than expected UK Halifax house prices data (M/M 2.0% vs. Exp. 0.0%, Prev. 0.9%, Y/Y 8.5% vs. Exp. 7.7%, Prev. 7.8%), while commodity linked currencies are moderately stronger across the board. (CAD, AUD, MXN) following the trend higher in crude futures throughout the European morning.

Fed’s Rosengren (Non-voter, Dove) has also spoken during the European morning, stating that with inflation this low, patience is still required, however these comments saw no reaction in the USD as they are in line with Rosengren’s stance.

Looking ahead, the BoE rate decision (1200GMT/0600CST) is expected to be a non-event after last month’s decision saw the vote move back to 9-0 from 7-2 as a consequence of low inflation.


WTI crude futures trade higher into the North American session, back above USD 49.00, paring back some of the significant losses after falling approximately 10% from yesterday’s high to the overnight low. US traders will now look ahead to challenger job cuts and the weekly jobs data in the run up to this Friday’s nonfarm payrolls release. In addition we also await December Trade Balance data in US alongside the weekly EIA NatGas storage change, which is expected to show a drawdown of 119 (Prev. draw 94).

DB’s Jim Reid concludes the event summary

Greece and Oil continue to twist and turn like my kneecap. We’ll move to the 6% drop in Brent (nearly 9% in WTI) a little later but first Greece. After a major early week rally, the ECB last night announced the suspension of GGB eligibility in Eurosystem refi operations from February 11th. They previously allowed Greek government debt to be used as collateral under a waiver as although its sub-IG, the country has been in a program. This basically means the majority of Greek bank funding shifts to the (emergency) ELA which the ECB reviews every two weeks. This was going to happen at the end of the month but the fact that the ECB have done this now is a surprise and means that they no longer see Greece as being part of an approved program. It probably also reflects an overall EU move to raise the stakes as negotiations start to become more serious. That the ELA is reviewed at this level of regularity makes one wonder whether the ECB is saying to Greece that if you don’t adhere to the EU demands then your banking system could be left out on a limb very quickly.

It makes an interesting backdrop to today’s meeting with finance minister Varoufakis and his German counterpart Schaeuble. Before the headlines the ASE yesterday closed +0.89% for its third consecutive day of gains, led by a further rally for banks (+8.44%). Greek yields were more subdued relative to recent moves. 3y yields closed 2bps tighter and 10y yields finished 13bps wider. Post the news, a Greek equity ETF dropped 10% in late NY trading so I think we can safely say it won’t be a great opening for Greek assets this morning. There was little in the way of news pre the ECB announcement. Chatter from European officials was along the lines of what we had previously seen this week. The European Council President Tusk was noted as saying that ‘negotiations will be difficult, will require cooperation and dialogue as well as determined efforts by Greece’ whilst Merkel was quoted as saying that ‘I don’t think that the positions of the member states within the euro area with regard to Greece differ, at least in terms of substance’. Elsewhere Greece held a 6 month T-Bill auction yesterday where we saw demand fall to a six year low as the €812.5m raised (per Bloomberg) came in at an average yield of 2.75% and the bid-to-cover ratio fell to 1.3x – the lowest since July 2006.

In terms of market reaction yesterday, in the minutes prior to the ECB/Greece story hitting the headlines, the S&P 500 was trading +0.24% on the day, 10y Treasuries generally flat at 1.81%, CDX IG at 66.5 and the Euro a touch lower at $1.145. In the short time between the headlines being released and markets closing, the S&P dropped some 0.6% to close the day at -0.42%, 10y Treasuries rallied 6bps into 1.75%, CDX IG widened 3bps and the Euro weakened nearly 1% to $1.135. Market reaction this morning is more mixed with the Hang Seng (+0.54%), Shanghai Composite (+0.97%) and ASX (+0.58%) all firmer however the Nikkei (-0.74%) and Kospi (-0.60%) are both weaker. Obviously China’s RRR cut is having some influence and we’ll discuss this later.

Back to oil markets yesterday, both Brent (-6.48%) and WTI (-8.67%) finished lower yesterday to trade at $54.16/bbl and $48.45/bbl respectively – more or less reversing Tuesday’s gains. Yesterday’s change in sentiment appears to be the result of the latest EIA report which showed crude stockpiles climbing 6.33m barrels last week to the highest level on record and well ahead of expectations of 3.25m, dampening hopes somewhat of production levels in the US falling. Energy stocks (-1.61%) dragged equities lower over the day, although in reality it was a volatile day for risk assets with sentiment bouncing on Greece, oil and macro data. Staying on the oil theme, the FT reported yesterday that Standard & Poor’s has now downgraded 19 high yield oil and gas companies since October including 8 in January. The report points out that it is the largest set of ratings downgrades since the financial crisis in 2009. Although unchanged yesterday, US HY energy spreads are 28bps wider so far this year although had actually widened as much as 72bps as of mid-January.

Yesterday’s data was supportive on the whole. Ahead of payrolls this Friday, the ADP employment print came in touch below consensus at +213k (vs. +223k expected) but still marked eight consecutive months of +200k prints. Elsewhere the final January reading for the services PMI was largely as expected (54.2 vs. 54.1 expected) and the ISM non-manufacturing print improved to 56.7 from an upwardly revised 56.5 reading in December.

The other main news yesterday centered on China with the announcement from the PBOC that it has cut the RRR by 50bps for all banks and cut the RRR by an extra 50bps for some municipal and rural commercial banks. DB’s Zhiwei Zhang notes that although the cut is in line with his expectations, it happened earlier than he thought. The move should likely release liquidity of RMB640bn into the banking sector and Zhiwei believes that although the impact on the real economy is positive, it is not enough to stabilize the economy as although it helps to raise loan supply, demand may remain weak. Zhiwei expects more easing to come, possibly as soon as Q2 with a similar 50bp cut.

In Europe and away from Greece yesterday, the Stoxx 600 closed +0.49% with stronger sessions for the DAX (+0.19%) and CAC (+0.39%) whilst peripheral markets underperformed as the IBEX (-0.19%) and FTSE MIB (-0.33%) closed softer. Credit markets were broadly unchanged and 10y Bunds finished 2bps higher. Peripheral yields firmed however as 10y yields in Italy (-3.8bps), Spain (-4.4bps) and Portugal (-10bps) closed tighter. Yesterday’s PMI prints were on the whole supportive. The final composite reading for the Euro-area printed at 52.6, ahead of expectations of 52.2. Regionally, better than expected readings for Germany (53.5 vs. 52.6 expected), Italy (51.2 vs. 50.1 expected) and Spain (56.9 vs. 54.6 expected) helped offset a weaker reading for France (49.3 vs. 49.5 expected). Elsewhere, retail sales for the Euro-area improved significantly to 2.8% yoy in December, well ahead of expectations of 2.0% and up from 1.6% previously.

Before we look at today’s calendar, as we noted yesterday with negative yields now increasingly pervasive, it was perhaps unsurprising to see the first negative yield debt primary issuance from a Eurozone member. Amazingly, Finland yesterday issued 5-year debt at an average yield of -0.017 at an auction yesterday with a bid-to-cover ratio of 1.7x. What a crazy world we have. In terms of the day ahead and away from the obvious ‘Greece-watch’, this morning in Europe we’ve got factory orders due out of Germany followed closely by UK house price data. Later in the day we’ve got the BoE decision with rates expected to stay on hold at 0.5%. Across the pond this afternoon in the US, we kick off the releases with nonfarm productivity and unit labour costs as well as jobless claims data. Trade balance data rounds off the day’s releases.







Ukraine raises key interest rate to 19.5% and will also allow for a free float of the UHA currency: (25.1 UAH/dollar from 16 UAH/dollar).  Reserves are now down to 7.55 billion USA which cover only two weeks of imports.

We thus have two basket cases with respect to insolvency:

Greece and the Ukraine!

(courtesy zero hedge)



Ukraine Currency Plunges Over 30% After Central Bank Gives Up On Indicative Rate



It had been a while since a member of the US state department had visited ground zero of its second most disastrous intervention in the past year (the first being the embarrassment that is ISIS) namely Kiev, Ukraine, the same place where precisely a year ago US assistant SecState Victoria Nuland was recorded in a hacked conversation saying to “Fuck the EU”, and revealed as the mastermind behind the violent Ukraine coup. Which is perhaps why today US Secretary of State John Kerry arrived in Kiev on Thursday “in a signal of firm US support for the country amid growing international alarm at a surge in fighting.”

In addition to whispering words of support to the local government, whose army has been on the defensive in past weeks in east Ukraine having lost several key outpusts, Kerry also unveiled $16 million in fresh US humanitarian aid.

And yet one can’t help but wonder if the true purpose of Kerry’s visit was something totally different, because just as the US Secretary of State was landing in Kiev, the Ukraine central bank finally conceded defeat and announced it will not only raise its key discount rate by 5.5 percentage points to 19.5% effective Friday, but effectively return to a float of the local, Hryvnia, currency. The central bank scrapped the hryvnia’s indicative rate and canceled daily currency auctions. Ukraine will retain some administrative measures, including mandatory sales of foreign revenue for exporters and restrictions on individual currency purchases, according to Governor Valeriya Gontareva.

The reason for the surprise move, which partially ends Ukraine effective capital controls resulting from the economic crisis which had included restricting individuals’ FX purchases and maintaining a requirement for exporters to convert their overseas revenue into hryvnia, is the collapse in central banks reserves. As Bloomberg reports, “the monetary authority also spent almost $1 billion of its foreign reserves to support the currency before October’s parliamentary election. As the government repays foreign debt and finances natural gas imports from Russia, reserves have sunk more than 76 percent since 2012 to $7.55 billion.” And with reserves so low they can only cover at most a few weeks of imports, the central bank had no choice but to follow in the steps of the SNB and permit the forces of market supply and demand take their toll.

Toll, which as the chart below shows, has sent the Hryvnia plunging by about 35% following the announcement, and in the process pushing local prices of imported (and soon all other goods), higher by the same amount.

Not helping were comments by the local central bank head who said the “currency market is still dominated by a panic mood,” according to Governor Valeriya Gontareva who spoke to reporters in Kiev on Thursday, adding that Ukraine’s economy was torn by “multiple hryvnia rates.”

Well, now it will be torn by another bout of hyperinflation, which may well turn into all out economic collapse as the nation runs out of money unless the IMF bails it out: Ukraine hopes to conclude talks with the IMF within days over expanding its $17 billion bailout, Jaresko said Feb. 3. said.

Then again, the IMF may find it has its hands full with bailing out that other insolvent basket case, Greece, one which just so happens is actually a member of the European “Union.”

As for any further US help, and the reason why the central bank had to abdicate its duty, well Ukraine’s gold is long gone, so the western powers may have no further need to keep the financial stability in the country that is now a war-torn shell courtesy of its being the latest proxy pawn in the US global geopolitical chess game.





The big meeting between Schauble (German Fin Min) and Yanis V (Fin Min/Greece) went no where!!



(courtesy zero hedge)


Schauble And Varoufakis Meeting Ends: “We Agreed To Disagree” (schauble/ “or we did not even agree to disagree!!” (Yanis V)

Less than 24 hours after the ECB showed it would only play hardball from now on, there were some hopes that either the Greek position would soften or that Germany would indicate it may agree to at least a modest compromise to avoid the worst possible outcome.

Alas, as the following photo from the ongoing press conference between the finance ministers of Greece and Germany shows…

… it was not meant to be.


The punchline:


And the other side:


Yanis’ punchline:


Said otherwise, if the ECB had hoped that by escalating the political fight by yanking the proverbial financial rug from under Greece it would lead to a quick submission of Greece, it has so far failed.

All of this happens after ECB member Peter Praet had some choice comments of his own as well:


It wasn’t a surprise: as we noted on January 31, Vitor Constancio was kind enough to warn Greece this was coming several days ago. But the bigger question is why wasn’t this an “easy decision” – after all isn’t the ECB just following its rules? Because if it wasn’t “easy” it implies there was much discretion in the choice, discretion which makes it very clear this latest escalation is nothing but a move by a central bank which is anything but, and is now clearly a political power broker to an increasingly troubled continent, which as some are starting to whisper, is starting to lose control.

Watch the press conference here:

 Early this morning in Greece:  Their stock market in a free fall!!
(courtesy Greekreporter.com)
 Greek Stock Market in Free Fall After Punitive ECB Announcement

by Anastasios PapapostolouFeb 5, 2015

 94  11 Google +0  0  0  122

stock exchange

The Athens Stock Exchange opened in free fall today, with -10% losses, following an announcement by the European Central Bank saying it lifted its waiver on credit requirements for assets posted as collateral by Greek financial institutions. At 10.41am local time the index was at 775,84 points and -8,51% losses.

After the ECB announcement, Greek finance minister Yanis Varoufakis issued a statement saying, “This decision does not reflect any negative developments in the country’s financial sector and comes after two days of substantial stabilization.”

Here’s Varoufaki’s full statement:

The Governing Council of the ECB decided to refer to emergency liquidity assistance (ELA) of Eurosystem counterparties seeking to secure liquidity through deposit Greek securities as collateral.

This decision does not reflect any negative developments in the country’s financial sector and comes after two days of substantial stabilization. According to the European Central Bank (ECB), the Greek banking system remains adequately capitalized and fully protected through access to the ELA.

The European Central Bank (ECB) decision puts pressure on the Eurogroup to proceed rapidly to conclude a new mutually beneficial agreement between Greece and its partners.

The government daily widens its circle of consultation with partners and institutions to which they belong, remains unwavering in its goal of social salvation program approved by the vote of the Greek people, and consults with a view to drawing up European policy that will finally end the hitherto self-sustaining social crisis of the Greek economy.

The ECB’s statement effectively means that Greek banks can’t post Greek sovereign bonds as collateral to be used in the ECB’s monetary policy operations.



– See more at: http://greece.greekreporter.com/2015/02/05/greek-stock-market-in-free-fall-after-punitive-ecb-announcement/#sthash.jqll5Ke0.dpuf

Greeks come out in the thousands supporting the Syriza government:
(courtesy zero hedge)

Thousands Of Anti-ECB Protesters Gather In Athens In “First Greek Pro-Government Rally” – Live Feed

In what is being described as “the first Greek pro-government rally”, thousands of people have gathered outside Greek Parliament in the infamous Syntagma Square to protest against a decision by the European Central Bank to restrict the eligibility of Greek bonds used as collateral from Feb. 11, rather than at the end of February. “ECB Chief Draghi chose to play Merkel’s game again and to blackmail the Greek people and the new Greek government,” is one of the charges being aired on the pro-SYRIZA quarters of cyberspace.


Live Feed:


*  *  *

As 1000s gather…

And finally, we thought this summed it up very nicely…

It would seem Draghi’s blackmail scheme is failing and forcing Tsipras’ hands as any withdrawal from his demands now will result in mass social unrest… maybe this is not a protest after all, but one long line to the nearest Greek Bank ATMs?

Putin, the masterful chess player is now ready to pounce as he invites Tsipras to visit Russia.  He is willing to fund Greece.  Greece would be a stategic partner to Russia in that they have some of the greatest warm ports in the world and it could also serve as a great gateway for the gas/oil pipelines into Europe having arrived from Turkey:
(courtesy zero hedge)

Putin Invites Tsipras To Visit Russia

While Greek finance minister Yanis Varoufakis’ comments that “we will never ask for financial assistance in Moscow,” which notably does not deny acceptance of aid if offered, and Greek Minister of Energy Panagiotis Lafazanis adding that Athens opposes the embargo imposed on Moscow, “we have no disagreement with Russia and the Russian people,” it is perhaps not surprising that, as Vedemosti reports, Russian President Vladimir Putin spoke by phone with the new Prime Minister of Greece Alexis Tsipras, congratulated him on taking office, and invited him to Russia.


As ANA reports,

The situation in Ukraine and other international issues, among them, “the South Stream and Turkish Stream pipeline projects, dominated a telephone call between Russian President Vladimir Putin and Greek Prime Minister Alexis Tsipras earlier on Thursday, the Kremlin announced.


Putin invited Tsipras to visit Moscow on May 9 when celebrations will take place, commemorating the peoples’ victory over fascism. On his part, the Greek prime minister underlined the importance he attributes to the fight against Nazism, expressing his intention to accept the invitation.


The Russian leader’s top foreign policy adviser Yuri Ushakov said that Putin congratulated Tsipras on his victory in last month’s general elections and on the assumption of his duties as the new prime minister of Greece.


The discussion was very warm and constructive, he said, noting that President Putin invited Tsipras to Russia. He also said that the will for a more active development of bilateral relations was reaffirmed.


The Russian ministers of foreign affairs and defence have already invited their Greek counterparts to visit Moscow.

*  *  *

Meanwhile, as ekathimerini reports, Obama is worried about the pivot…

The United States has urged Greece to work closely with its European partnersand the International Monetary Fund, a senior American official said late on Wednesday.


“We do believe that in the case of Greece it isvery important for the Greek government to work cooperatively with its European colleagues, as well as with the IMF. And we have advised it to do so, and we are hopeful that these conversations are now moving to a place with some cooperation and mutual understanding.” noted the official during a conference call regarding US Vice President Joe Biden’s visit to Belgium and Germany which begins on Thursday.


The comments followed President Obama’s recent remarks with regard to austerity in Greece, in which he argued that countries could not go on being “squeezed.”

*  *  *

And Russia reiterates its willingness to aid Greece financially…





The Greek government refuses to back down.  Tsipras states that his government will do as the party promised:
(courtesy zero hedge)

Greece Refuses To Back Down: “Government Will Do As Promised” Tsipras Says

With an increasingly vitriolic tone, the new Greek government has come out swinging today with leader Alexis Tsipras making it clear that he will implement the election pledges the people of Greece voted for:


It took one week, Tsipras chides, to get European leaders to talk about the real problems and Greece will negotiate hard to “put an end to Troika.”

Tsipras adds:


And then the ECB chimes in…


*  *  *

And Tsipras counters…


“We will make the impossible, possible to turn things around in Greece”

*  *  *


Chicken continues…



The Greek bank runs are creating chatter of Greek capital controls:
This will be worth watching for:
(courtesy zero hedge)

Whispers Of Greek Capital Controls Begin

That didn’t take long: just hours after Greece entered the ECB countdown mode, with now just 23 days until midnight on February 28, when the ECB is set to yank the final pillar of liquidity support, the ELA – as it has warned before – it is time to start contemplating Plan B, or rather plan Z. A plan, which as described by Nordea’s analyst Jan von Gerich, would be quite unpleasant for that nearly extinct class of Greeks, bank depositors, because the “plan”, or rather blueprint, is a well-known one: capital controls.

As Nordea points out, ECB’s decision to restrict Greek bank access to direct liquidity lines risks increasing uncertainty among depositors.  As a result depositors may decide to withdraw more money from Greek banks. Most of these outflows would likely be replaced by ELA funding, increasing risks for Eurosystem.

However, if ECB becomes more uncomfortable with situation or Greek banks risk running out of collateral, Greece may need to impose Cyprus-style withdrawal    limitations and capital controls.

Gerich notes that while there’s been some progress in talks, Greece needs to back down further for deal to be reached, although as he also observed, the news flow needs to become worse for Greece to drive broader markets to more notable extent.

Why is this important? Because as we have said from day one, what is going on now between Greece and Europe is a game of leverage, leverage which can now be quantified: For the ECB, it is measured by how long the lines are in front of Greek ATMs; for Greece, it is inversely proportional to the level of the Stoxx 50 (and to an extent the S&P500).

And just in case some think that capital controls is a fringe plan, one that will never see broad acceptance, here are the key highlights from Bloomberg’s “One Way Greece Can Keep Its Banks Alive.”

An outflow of deposits from Greek banks will put pressure on the government to limit how much money people can withdraw or transfer outside the country as European Union nations lose patience with providing a lifeline.


Imposing capital controls, as Cyprus did two years ago when its banks faced a crisis, would buy time for Prime Minister Alexis Tsipras’s government to negotiate debt relief, according to economists including Daniel Gros, director of the Centre for European Policy Studies in Brussels.


“Capital controls may be the only option to stop the bleeding in the banking system,” Gros said in an interview.



Greek banks probably lost about 21 billion euros ($24 billion) of deposits in the past two months, or 11 percent of the total as of the end of November, according to the ECB and estimates last week by JPMorgan Chase & Co.


Depositors are withdrawing money now because they’re worried a refusal by the government to extend the bailout when it expires at the end of the month could lead to an exit from the euro area. That would mean waking up one morning and finding their savings converted to drachma, which would face a steep devaluation. Putting the money in another European bank or keeping it as cash at home would protect them from losses.


… Customers withdrew 6 billion euros in December, central bank data show. They pulled out an additional 11 billion euros in the first three weeks of January, and the total for the month may have reached 15 billion euros, JPMorgan analysts estimated. That would be more than was withdrawn in May 2011, the month with the biggest drop in the earlier crisis.


But bank run aside, what happens if/when D-Day comes and Greece still has no funding options?


If the central bank refuses to extend this type of lending, Greek banks would run out of cash quickly, as they already rely on ECB funding for about 70 billion euros they can’t replace because they have been shut out of capital markets since November.


That would force Greek banks to cut lending to companies, consumers and the government. They’d be unable to roll over treasury bills and might recall loans. Greece would have to abandon the euro and print its own currency to fund its banks.


“Given how extreme this option is, the ECB might instead impose a Cyprus-like solution of withdrawal and capital-transfers controls,” said Nicholas Economides, an economics professor at New York University.



While only national governments have the power to impose capital controls, and doing so is in violation of the European Union treaty, the ECB gave tacit approval when Cyprus did just that in 2013. The central bank had threatened to cut off all liquidity to Cypriot lenders if the government didn’t reach a deal with its European partners.

What Europe Plan B, or rather Plan Z, would look like:

“If the deposit flight is continuing while things drag on, the euro zone wouldn’t want to increase its exposure to Greece through rising ECB financing,” said Ruparel. “Then they’d push for capital controls as a way of limiting further exposure in case things don’t work out and Greece ends up exiting. It’s an option nobody wants, but it will become likelier the longer the type of brinkmanship we’ve seen recently continues.”


Even though they’ve been loosened, capital controls remain in place in Cyprus. While they have been successful at stemming deposit outflows and stabilizing the banking system, the country is stuck in a three-year-long recession.


In the case of Greece, controls probably would only work for a few months as Tsipras’s government negotiates a new debt deal with its European creditors, according to Benn Steil, director of international economics at the Council on Foreign Relations in New York. Without an agreement, restrictions on withdrawals wouldn’t be enough to keep Greece in the euro zone.


“The Grexit could happen slowly, not in a big bang as we always imagine,” Steil said. “It could come after capital controls and other ways of scrambling to continue.”

The sad conclusion, if only for innocent Greek bystanders in this epic middle-class plunder designed to make trillionaires out of billionaires:

The experience of Cyprus suggests that you cannot completely rule out capital controls any more as a policy option,” said Jens Bastian, a former member of the European Commission’s Greek task force who’s now an independent analyst based in Athens. “The situation isn’t so dire yet, but it could get there.”


Capital controls would be painful and unpopular with the Greek public, putting even more pressure on Tsipras to reach an agreement sooner rather than later, according to Gros of the Centre for European Policy Studies.


“The popularity of the government will plummet, and the economy would be hurt too,” Gros said.

Of course, the ECB knows very well that should a bank run commence then the days of the Tsipras government – capital controls or not – are numbered. Which is preicsely why yesterday it tried to precipitate one. And since, as we noted earlier, the only marker of Greek leverage is the response of the global capital markets, today’s pre-determined market ramp, which started with the SNB’s intervention in the EUR and has since transformed into a wholesale central bank binge fest across all assets (except gold of course), the corresponding reaction in risk is precisely meant to smash any trace of leverage the new Greek finmin may have hoped he had.






For your interest..


(courtesy zero hedge)



Where The Greeks Are Hiding Their Cash


While today surprised some with its lack of images of Greeks standing in line furiously pulling cash from bank ATMs, as Bloomberg reports, Greeks are anxiously stashing cash in the most unusual places


As Bloomberg reports, in the days after Tsipras’s election, the nation’s banks found themselves busy again…

The teller at National Bank of Greece SA leaned forward to tell one customer something he’s noticed over the past few days.


“Had you come in last week, without warning, I wouldn’t have been able to give you so much cash,” he said in a low voice to the client withdrawing 20,000 euros. “We didn’t have the money.”

And stashing it wherever they can  – that’s not under the eye of the government…

He said customers coming in to withdraw funds ahead of the election were for the most part older Greeks worried about their savings, removing cash and stashing it in safe deposit boxes.


Another favorite for an older generation of Greeks is to buy gold sovereigns from the central bank.


On Greek said that he’d withdrawn 25,000 euros from the bank, taken it home, worked loose a tile in the bathroom and stashed the money there.


Another took the cash to his village and buried it in the garden.


Yet another fashioned a small safe box in the air-conditioning unit on his balcony.


“I can’t fault these people,” said Karavelas, 37. “They were obviously people who had worked hard for their money, with families and jobs, not oligarchs.”

And deposit runs continue…

The deposit outflows in the walk up to the elections would rival banks’ losses in 2012 when back-to-back elections in May and June fanned fears Greece would leave the euro.


“The story of the Greek deposits is not one of a bank run but a bank marathon,”said Andreas Koutras, a partner at In Touch Capital Markets Ltd. in London. “The smart money is long gone and there are few accounts with more than 100,000. The true barometer of fear is the amount of hard cash that is withdrawn, not how much is transferred outside Greece. This has gone up the past two months.”

And finally, if you are wondering why Greek Bank runs have not been greater so far…

Karavelas, the taxi driver, said he commiserates with his clients even though he has little to worry about. “I don’t have deposits,” said the father of two who still has his savings in the bank. “I have about 1,000, 2,000 euros in the bank and that’s for my children.”

*  *  *





And now for the 4th time in less than 3 weeks, the Danes have cut interest rates again. They are now at -.75%


(courtesy zero hedge)





It Will Now Cost You 0.75% To Save Money In Denmark: Danish Central Bank Cuts Rates For FOURTH Time In Three Weeks


It has become a weekly thing now. In its desperation to preserve the EURDKK peg, the Danish central banks has cut rates into negative, then cut them again, then again last week, and moments ago, just cut its deposit rate to negative one more time, pushing NIRP from -0.5% to -0.75%, its fourth “surprise” rate cut in the past 3 weeks!

From the press release:

Effective from 6 February 2015, Danmarks Nationalbank’s interest rate on certificates of deposit is reduced by 0.25 percentage points to -0.75 per cent. The lending rate, the discount rate and the current account rate remain unchanged at 0.05 per cent, 0.0 per cent and 0.0 per cent, respectively.


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


Following the decision by the Swiss National Bank to discontinue the minimum exchange rate and the decision by the European Central Bank to launch an expanded asset purchase programme, there has been a considerable inflow of foreign currency.


The traditional monetary policy instruments of the fixed exchange rate policy are interventions in the foreign exchange market and influencing the interest rate spread relative to the euro area. Danmarks Nationalbank’s interventions in the foreign exchange market amounted to kr. 106.3 billion in January and the rate on certificates of deposit has been lowered several times. Additionally, the Ministry of Finance has decided to suspend the issuance of domestic and foreign bonds until further notice, based upon the recommendation of Danmarks Nationalbank. These measures have been taken with the intention to inhibit the inflow of foreign exchange.


“The fixed exchange rate policy is an indispensable element of economic policy in Denmark – and has been so since 1982. Danmarks Nationalbank has the necessary instruments to defend the fixed exchange rate policy for as long as it takes”, says Lars Rohde.


Lars Rohde continues: “There is no upper limit to the size of the foreign exchange reserve. The sole purpose of the monetary policy instruments is maintaining a stable krone exchange rate against the euro. The revenue of Danmarks Nationalbank is positively affected by the increase of the foreign exchange reserves.”

And all this even after Denmark launched bizarro QE when instead of adding to Treasury demand, Denmark decided to boost prices of long-dated bonds by cutting all supply indefinitely. Looks like that strategy failed less than a week after its launch.

The good news is that all those who still haven’t gotten the epic deal of getting paid to take out a Danish mortgage, are one step closer. And the other news is that with every passing rate cut, Denmark essentially admits it is one step closer to pulling an SNB, facing reality and admitting it can no longer peg to the EUR.

The kneejerk reaction in the EURDKK is higher…

… but we doubt it will last more than a few minutes.

Update (30 seconds later)

It wasn’t “a few minutes” – it was “seconds.”

With the Baltic Dry Index at 564, we are now witnessing casualties in the shipping lanes with Danish shipping company Copenship filing for bankruptcy and the large Danish shipping company Norden coming up with huge losses this quarter and in the year.  We also have many  many more struggling:
(courtesy zero hedge)

Bulk Shipping Bankruptices Begin As Baltic Dry Collapse Continues

With one of the world’s leading dry bulk shipping companies, Copenhagen-based D/S Norden, having made huge losses for the last 2 years and expected to report dramatic losses in 2014 also, it is hardly surprising that the smaller bulk shipping firms are struggling as The Baltic Dry Index collapses ever closer to record all-time lows. As Reuters reports, privately-owned shipping company Copenship has filed for bankruptcy in Copenhagen after losses in the dry bulk market, with the CEO exclaiming, “we have reached a point where there is not more to do.” We suspect, given the crash in shipping fees, that this is the first of many…

On Thursday the index stood at 564, close to the historic low level of 554 set in July 1986.

As Reuters reports,

Privately-owned shipping company Copenship has filed for bankruptcy in Copenhagen after losses in the dry bulk market, its Chief Executive Michael Fenger told Reuters.

Copenship had been operating over 50 chartered small-sized dry-bulk vessels carrying goods such as grain, iron ore and timber.

“We have done what we could to raise the funds to save the company, but we have reached a point where there is not more to do,” Michael Fenger wrote in a text message to Reuters on Wednesday.

The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities, fell to its lowest level in nearly three decades on Tuesday, hurt by weaker rates across all four vessel segments.

“First of all, we have found ourselves in an extremely bad dry cargo market. Secondly, there are several counterparties that have caused us losses, and then thirdly there are different insurance cases that could hit us,” Fenger wrote.

Insolvency administrator Per Astrup Madsen from Copenhagen law firm Lett said the vessels will be handed back to owners.

“Copenship expected to turn around the business in 2014 but the dry bulk freight rates continued the falling trend,” Astrup Madsen said.

One of the world’s leading dry bulk shipping companies, Copenhagen-based D/S Norden, posted a net loss of $326 million for 2012 and 2013 combined, and said in December itexpects a full-year 2014 EBITDA loss of between $290 million and $230 million.

*  *  *

Shipping analyst Peter Sand at shipping organisation Bimco said 2015 looks set to be dull on the demand side, whereas the supply side is likely to provide the same amount of new capacity as in 2014. “Such a development will not improve the fundamental market balance,” he wrote in a note.





Venezuela runs out of condoms.  Getting quite dire inside the country as staples are just not around



(courtesy zero hedge)




Venezuela Runs Out Of Condoms: A Pack Now Costs $755 (If You Can Find It)

Over the years we have had our fair share at the epic social(ist) experiment that is Venezuela. Below is a random selection of stories over the past years or two, which truly capture the essence of Venezuela’s socialist revolution:

Unfortunately, the country whose president two weeks ago said that “Venezuela Must Deepen Socialism To Improve Economy“, which is the political equivalent of “we must do even more QE to fix record wealth inequality”, may have just hit rock bottom when Venezuelans, who already must line up for hours to buy the simplest of daily necessities (which they can obtain without being arrested in the process if they are lucky) now have to pay $755 for a pack of condoms.

“The country is so messed up that now we have to wait in line even to have sex,” lamented Jonatan Montilla, a 31-year-old advertising company art director. “This is a new low.”

And, as Bloomberg explains, while certainly farfetched at this point, one increasingly possible conclusion to the Latin American socialist utopia is a very tragic, and very terminal HIV epidemic, which puts what’s left of the nation back at square one.

Venezuela had the third-fastest rate of HIV infections per capita in South America, after Paraguay and Brazil in 2013, United Nations data shows. The country also has the highest rate of teenage pregnancies on the continent after Guyana, at 83 per 1,000, according to 2012 data from the World Bank. This compares to just 4 per 1,000 in Germany and 31 in the U.S.

“Without condoms we can’t do anything,”Jhonatan Rodriguez, general director at the not-for-profit health group StopVIH, said by phone Jan. 28 from Venezuela’s Margarita Island. “This shortage threatens all the prevention programs we have been working on across the country.”

The condom shortage, caused by a scarcity of dollars among importers, has prices on a website used to find scarce goods soaring and risks aggravating one of South America’s highest HIV infection and teenage pregnancy rates.

Condoms and other contraceptives disappeared from many Venezuelan pharmacies and clinics starting in late December, as the government tightened dollar disbursements amid sliding oil revenue, according to the Venezuelan Pharmaceutical Federation. No condoms were available in 10 eastern and central Caracas pharmacies visited in late January, compared with as many as 20 different kinds available at some locations in November, including Reckitt Benckiser Group plc’s Durex and Church & Dwight Co.’s Trojan brands.

The punchline, and the jarring outcome of ridiculous socialist policies is nothing short of capitalism on steroids:

On the auction website MercadoLibre, used by Venezuelans to obtain scarce goods, a 36-pack of Trojans sells for 4,760 bolivars ($755 at the official exchange rate), close to the country’s minimum monthly wage of 5,600 bolivars. At the unofficial black-market rate used by people with access to dollars, the cost is about $25, compared to $21 in the U.S.

The reason for the surge in prices: a halt in global trade, which means Durex imports to Venezuela have collapsed “because of the political situation the country is going through.” It appears that central banks can print everything, and trickle up wealth… everything but the actual lifeblood of a globilzed world: trade.

And the biggest irony is that none other than Maduro promised in 2013 to build a network of condom factories to protect Venezuela’s youth from the effects of “capitalist pornography.”

“When the ears grow hot and nothing can wait, and everything must happen now or the world will end — that’s when you end up with a tremendous belly at 14 or 15 years of age,” he said in a televised address in June 2013. “This can’t be.”

To get contraceptives in the capital, residents can still go to one of three family-planning centers run by IPPF subsidiary PlaFam, where in late January condoms were sold freely for 3 bolivars a piece.

“This is all there is,” said pharmacist Carlos Hernandez as he handed out the last two condoms available in the dispensary of the University Hospital of Caracas on Jan. 29. “Who knows when we will get more.”

Coming soon to every banana republic near you.




Your more important currency crosses early Thursday morning:

Eur/USA 1.1427 up  .0110

USA/JAPAN YEN 117.34  + .034

GBP/USA 1.5245 up .0068

USA/CAN 1.2525 down .0054

This morning in Europe, the euro is well up, trading   now well above the 1.14 level at 1.1427 as Europe reacts to deflation,   announcements of massive stimulation and today crumbling bourses.   In Japan Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31.  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 3 basis points and settling well below the 118 barrier to 117.34 yen to the dollar. The pound was up this morning as it now trades just above the 1.52 level at 1.5245.(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 stopped its descent and today it is up a fraction  and is trading  at 1.2525 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 174.12 points or 0.98%

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

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

Gold very early morning trading: $1263.00


Early Thursday morning USA 10 year bond yield: 1.78% !!!  up 3  in basis points from Wednesday night/

USA dollar index early Thursday morning: 93.91  down 8 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: 2.45% down 4 in basis points from Wednesday


Closing Japanese 10 year bond yield: .36% !!! down 2 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: 1.45% !!!!!!
Your Thursday closing Italian 10 year bond yield: 1.54% down 1 in basis points from Wednesday:

trading 9 basis points higher than Spain.




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

Euro/USA: 1.1481  up .0165

USA/Japan: 117.53 up .225

Great Britain/USA: 1.5334 up .0156

USA/Canada: 1.2430 down .0149



The euro rose quite a bit this afternoon and it up by .0165  points finishing the day well above  the 1.14 level to 1.1481. The yen was up in the afternoon, and it was up by closing  to the tune of 23 basis points and closing well below  the 118 cross at 117.53 and still causing much grief again to our yen carry traders who need a much lower yen (to surpass 120). The British pound gained considerable  ground during the afternoon session and was up on  the day closing at 1.5334. The Canadian dollar skyrocketed again due to the rise in oil.  It closed at 1.2430 to the uSA 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.

Your closing 10 yr USA bond yield: 1.80 up 1 basis points from yesterday

Your closing USA dollar index: 93.50 down 49  cents on the day.

(and faltering these past few days)


European and Dow Jones stock index closes:

England FTSE  up 5.91 points or 0.19%

Paris CAC up 7.00 or 0.15%

German Dax down 5.91 or 0.05%

Spain’s Ibex down  42.300 or 0.40%

Italian FTSE-MIB down 122.68 or 0.59%



The Dow:up 211.86 or 1.20%

Nasdaq; up 48.40 or 1.03%



OIL: WTI 50.77 !!!!!!!

Brent: 56.73!!!!



Closing USA/Russian rouble cross: 66.21  up 1 1/4  roubles per dollar on the day. (oil rising)


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


Your New York trading for today:


Biggest Short Squeeze Since 2011 Sends Stocks Surging, USDollar Purging


With “Most Shorted” stocks squeezed by their most since 2011 (up over 6% in the last 4 days), back at 2-month highs…


We thought this an appropriate analogy…

Who could have seen this coming??!! When Gartman flipped bearish on Monday, we said…

Translation: The Biggest Short Squeeze Of 2015 May Be Imminent

At the end of the day… Stocks like European uncertainty, higher oil prices, weaker macro data, and disappointing earnings – BTFD!!!


Futures markets show the real action started when Europe opened and the SNB started buying EURs… so thank the Swiss for saving the day.. notice The Nasdaq only just managed to get back the Draghi cliff gains…


3 of the 4 days this week have been dramatic short squeezes… with yesterday’s moves smaller and saved by Draghi


Oh The Magic of The 100-Day Moving Average…


From Draghi’s cliff yesterday, Materials and Healthcare (Biotechs) are #winning, Hombeuilders are not #winning, Energy is up small…


The Dow is the outperformer on the week…


Which at the moment will be the best week since Dec 2011!! Of course we have payrolls tomorrow so that will change things we suspect


and it appears from VIX that more than a few were hedging ahead of it…


and credit did not like it either into the close..


Perfect timing ahead of the Payrolls print, US equities have been managed back into the green for the year…Notice what happened after the last payrolls data!


Treasuries reversed the post-Draghi gains also – ending up 4-7bps on the day and 15-20bps on the week… this is the biggest 4-day percentage gain in 30Y yields since Sept 2012


As an FYI – 10Y Bund yields are now back above 10Y JGB yields (however briefly)

Gold and Silver slipped lower despite USD weakness, as copper and crude bounced…


Copper and Gold are unchanged from the Draghi ledge, silver lower, crude notably higher…


Crude surged to take out stops at $52 and faded –


not helped by Saudi Aramco slashing prices to Europe and US…


The US Dollar dropped notably today with only Swissy and JPY weaker against the Dollar on the week…


As The SNB intervened and saved the world back to 1.1500 in EURUSD…


It wasn’t just bonds that were sold. The USDollar has had its worse 4 day drop since Sept 2013


as the battle between The BoJ and The SNB continues…



Charts: Bloomberg

Bonus Charts: Because… fun-durr-mentals







The following quite be quite catastrophic if we have a complete shutdown of the West Coast Port which accounts for 12.5% of the USA GDP.



(courtesy zero hedge)





“Catastrophic Shutdown Of America’s Supply Chain Looms” As West Coast Port Worker Talks Break Down

For those who have been following the recent ISM reports, one of the recurring concerns of respondents in both the manufacturing and service sector has been the congestion at West Coast Ports – which handled 43.5% of containerized cargo in the U.S and where transiting cargo accounted for 12.5% of US GDP – as a result of reduced work output by the local unions who have been more focused in recent weeks on ongoing wage hike negotiations.

And according to the latest update from the 29 west coast ports that serve as the entry point of the bulk of Asia/Pac trade into and out of the US, things are about to get far worse for America’s manufacturing base, because as RILA reported earlier, talks between the Pacific Maritime Association (PMA) representing port management, and the International Longshore and Warehouse Union (ILWU) officially broke down on Wednesday, and without an agreement, experts have suggested that nearly 30 west coast ports could be shut down within a week.

As RILA reports, “a work slowdown during contract negotiations over the past seven months has already created logistic nightmares for American exporters, manufacturers and retailers dependent on an efficient supply chain. A complete shutdown would be catastrophic, with hundreds of thousands of jobs at risk if America’s supply chain grinds to a halt.”


“A west coast port shutdown would be an economic disaster,” said Kelly Kolb, vice president of government affairs for the Retail Industry Leaders Association. “A shutdown would not only impact the hundreds of thousands of jobs working directly in America’s transportation supply chain, but the reality is the entire economy would be impacted as exports sit on docks and imports sit in the harbor waiting for manufacturers to build products and retailers to stock shelves.


“The slowdown is already making life difficult, but a shutdown could derail the economy completely,” said Kolb. “For retailers specifically, a shutdown will have dire consequences for those dependent on spring inventory demand.”


The last prolonged port shutdown of the West Coast ports was the 10-day lockout in 2002 which was estimated to cost the U.S. economy close to $1 billion a day.


“A port shutdown of even a short duration could derail economic growth and cause long-lasting damage and job losses across the country,” said Kolb. “There needs to be a greater sense of urgency at the White House, before it’s too late.”

One can see why the US retail association is concerned. So will there be a strike? Here is Bloomberg’s take:

Union-led work slowdowns could halt the 29 U.S. West Coast ports in five to 10 days, the head of the shippers’ association said, urging the union to accept a new offer that includes 3 percent raises. James McKenna, the president of the Pacific Maritime Association, said backups and delays at many of the ports are harming farmers, manufacturers and consumers as the flow of goods approaches a “coast-wide meltdown.” He called on the International Longshore and Warehouse Union to accept management’s second formal contract proposal since negotiations began last May.


“We’re not considering a lockout,”McKenna said on a conference call with reporters, his first public comments since the talks began. “What I’m really saying is that this system will bring it to a stop. Once that happens, we really don’t have a choice.”

Which is like the ECB saying “we don’t really want Greece out, but we will halt their liquidity. Once that happens, Greece doesn’t really have a choice.”

Here are the port workers’ demands:

The association of shipping lines, terminal operators and stevedores made public details of its contract offer, including 3 percent annual raises over five years, retaining employer-paid health care, and raising pensions by 11 percent. The average dockworker now makes $147,000 a year in salary, plus $35,000 a year in employer-paid health care and an annual pension of $80,000, according to an association press release.

And while there hasn’t been a formal lock out yet, the reality is that the workers have made their displeasure felt loud and clear:

McKenna blamed the union for work slowdowns that have contributed to congestion at the largest West Coast ports, including Los Angeles, Long Beach, Oakland, Seattle and Tacoma. Twenty-two ships were queued up Wednesday at the harbor shared by the Los Angeles and Long Beach ports, up from as few as four in mid-December, according to the Marine Exchange of Southern California, in one measure of the backups confronting shippers.


Since early November, the longshore union has been dispatching fewer crane operators in Los Angeles and Long Beach and slowing cargo movement in Oakland, Seattle and Tacoma, according to a Feb. 3 maritime association presentation. McKenna said productivity at many ports is down by as much as half, suggesting that cargo movement “will collapse under its own weight.”

Some of the impacts of the already experienced slowdown has included keeping U.S.-raised Christmas trees from reaching consumers in Asia, depriving McDonald’s customers in Japan of french fries, and stranded shipments of Mardi Gras beads bound for New Orleans.

Should talks fall apart, it probably will not be the end of the world: a nearly identical situation developed one decade ago leading to a 10 day lock down and which ended up costing the US economy $10 billion per day:

In the conference call, McKenna said the two sides remain at odds over wages, pensions, the duration of the contract and arbitration for workplace disputes. He said the sides are “far apart” on some issues and nearing agreement on others.


The parties negotiated many of the same issues in 2002 before the maritime association locked out workers for 10 days amid slowdowns. That stoppage, which ended when then-President George W. Bush invoked the Taft-Hartley Act, cost the U.S. economy $1 billion a day, the maritime association said.


A 20-day lockout now would cost more than $2 billion a day, the association said in a report last year, including losses to railroads, ocean carriers and the broader economy.

Which incidentally, in an economy that is desperate for any “one-time, non-recurring” item to explain what is now global secular stagnation and economic slowdown, an excuse such as a port strike, or a harsh winter, or a strong dollar, or plunging crude, may be precisely the scapegoat that the central-planning doctor ordered.




A strong dollar has hurt exports and this has caused a huge trade deficit for December of 46.6 billion USA dollars. Start to expect huge revisions in 4th quarter GDP


(courtesy zero hedge)


US Trade Deficit Soars In December As Strong Dollar Hurts Exports, Downward Q4 GDP Revisions Imminent


And so after that epic 5.0% Q3 GDP print, driven largely by Obamacare, the payback begins, and the annualized Q4 GDP print, which came in at nearly half the previous quarter run rate, or 2.6%, is about to tumble by another ~0.5% following the just released trade data for December which saw a 17.1% surge in the US trade deficit from $39 billion (revised to $39.8 billion) to a whopping $46.6 billion in December, the widest deficit since 2012, as US exports declined 0.8% to 4194.9Bn from $196.4 Bn, while imports rose notably from $236.2Bn to $241.4Bn in the month before. All of this brought to you courtesy of the soaring USD. This was also the biggest miss to expectations of $38.0 billion since July of 2008. If this does not force policymakers to reassess the impact of the soaring dollar on US trade, nothing will.

Finally, if and when the US shale boom ends, and the US is forced to once again import the bulk of its oil needs from abroad, watch as the US deficit surges in the coming months and years, which incidentally is precisely what the Fed needs: after all in order for the Fed to monetize US debt, the US needs to issue debt to fund its deficit, which now has no choice but to go far wider from recent levels in order to restock the available stock of US Treasurys.

The trade deficit broken down by key trading partners:

  • China: deficit of $28.30 billion, down from $29.94 billion as the USD peg is also impairing Chinese exports.
  • EU: deficit of $15.1 billion, a surge from $11.8 billion thanks to the plunging EUR
  • Japan: deficit of $5.7 billion, in line with November’s $5.52 billion

For those curious about the petroleum trade, US petroleum imports rose to 313.3m barrels in December, at a value of $23.2 billion. Crude oil imports increased to $18.2b from $15.7b last month, representing 78.4% of total petroleum imports. December non-crude petroleum imports widened to $5b from $4.3b m/m; 21.6% of total petroleum imports.

And something curious: US crude oil imports averaged 7.980m b/d in Dec. compared to 6.296m b/d in Nov., a substantial jump and one which would have been the result of a drop in domestic production, if indeed domestic production were dropping instead of rising. So the increase is confusing on the surface.

The breakdown of imports:

  • Oil imports from OPEC rose to 38.2% of the total
  • Oil imported from Canada and Mexico was 51.9% of total in Dec. vs 52.0% in Nov.

Bottom line: expect the sellside crew to unleash a barrage of downward Q4 GDP revisions any second.




This does not look good for tomorrow’s job report:


(courtesy BLS/zero hedge)


Layoffs Surge 17.6% YoY, Shale State Joblessness Soars, Initial Jobless Claims Rise


It all makes perfect sense. Challenger announced this morning that layoffs in January soard 17.6% year-over-year with planned job cuts at the highest level in almost 2 years… Jobless claims in Shale states continues to trend higher as oil prices collapse… but initial jobless claims beat expectations – hovering near cycle lows – though did rise modestly WoW.


Jobless Claims in Shale States continues to trend higher… (this data is lagged a week)


Job Cuts announced soars over 17% YoY…


The number of planned layoffs by U.S. employers rose to a nearly two-year high in January as the energy industry slashed jobs in the face of falling oil prices, according to a report by Challenger, Gray & Christmas. Employers planned to let go 53,041 jobs in January, up 63 percent from the 32,640 layoffs announced the previous month. Total job reductions last month were the highest since February 2013.


And Jobless claims rose modestly but is hovering near multi-year cycle lows…


Charts: Bloomberg





Layoffs hit a 2 year high in January


(courtesy Challenger/Christmas)


Layoffs hit nearly 2-year high in Jan: Challenger

Tom DiChristopher CNBC.com

The number of planned layoffs by U.S. employers rose to a nearly two-year high in January as the energy industry slashed jobs in the face of falling oil prices, according to a report by Challenger, Gray & Christmas.

Employers planned to let go 53,041 jobs in January, up 63 percent from the 32,640 layoffs announced the previous month. Total job reductions last month were the highest since February 2013.

Challenger said 21,322 cuts—about 40 percent—were directly related to oil prices. The number of layoffs in the energy industry in January was 42 percent greater than all job cuts in the sector last year, when oil and gas employers let go just 14,262 workers.

The cost of crude has plummeted up to 60 percent since peaking last June, prompting oil companies to scale back budgets and cancel planned projects.

The fallout from the low commodity price market spilled over into the industrial goods manufacturing sector, which supplies drillers and announced 4,859 job cuts in January.

“We may see oil-related job cuts extend well beyond those industries directly involved with exploration and extraction. The economies throughout the northern United States that have been thriving as a result of the oil boom could experience a steep decline in employment across all sectors, including retail, construction, food service and entertainment,” John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement.




as predicted..


(courtesy zero hedge)



RadioShack Files For Bankruptcy



As credit markets have been indicating for 15 months, 94-year-old consumer-electronics chain RadioShack has finally pulled the ripcord…


Additionally, Bloomberg reports that a post-bankruptcy deal is being worked on with Sprint.



It’s been a wild ride for stocks…


It’s over…


Bloomberg additionally reports,

RadioShack completing deal with Sprint that would let company name live on as store-within-a-store in as many as 1,750 locations, a person familiar with the deal tells Bloomberg’s Jodi Xu Klein.


RadioShack to sell 1,500 to 2,400 stores to Sprint and Standard General LP, rest would be closed as part of bankruptcy filing, which may be imminent

*  *  *

We  will see you on Friday.

bye for now


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