feb 6/EU gives Greece a 10 day ultimatum to sign or else they are booted out of the Eu monetary zone/

 Your quote of the day:  Yanis talking about the EU personnel:

stated late in the day after the EU issued a 10 day ultimatum (see below)

(carpet-bombing = complete obliteration as a carpet completely covers the floor/total annihilation)

All hands on deck:  Yanis V and Alexis Tsipras calling Mr Putin and Xi  Jinping on the hot line!!  

 

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold: $12633.90 down $28.10   (comex closing time)
Silver: $16.72 down 46 cents  (comex closing time)

In the access market 5:15 pm

 

 

Gold $1233.25
silver $16.69

 

 

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

 

The big story today is the ultimatum issued on Greece (covered below) and the phony jobs report.  If Greece does its GREXIT then derivatives will blow up the entire globe.  Yanis V is a PhD in Finance and you bet the farm he is well versed how how these financial structures work and when lit it can send a daisy chain of defaults. As for the phony jobs report, we will cover the nonsense in the USA section of my report at the bottom.

 

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

The gold comex today had a good delivery day, registering 57 notices served for 5,700 oz.  Silver comex registered 67 notices for 335,000 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 fell by 3,292 contracts as yesterday’s silver price was down by 20 cents. The total silver OI continues to  remain relatively high with today’s reading at 165,296 contracts.

We had 0 notices filed  for nil oz

In gold surprisingly we  had a tiny rise in OI even though gold was down by $1.80 yesterday.  The total comex gold OI rests tonight at 414,502 for a gain of 10 contracts.  Today we had a small 57 notices served upon for 5700 oz.

 

 

 

Today, we had no changes in 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 rose marginally today by 10 contracts from  414,492 up to 414,502 with gold down by $1.80 yesterday (at the comex close).  We are now in the big delivery month of the active February contract  and here the OI fell by 368 contracts  from 1210 down to 842. We had 342 contracts served yesterday.  Thus we lost  26  contracts or 2600 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 11 contracts up to 1381.  The next big active delivery month is April and here the OI fell by 84 contracts down to 287,457. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est)  was poor at 117,164. The confirmed volume yesterday ( which includes the volume during regular business hours  + access market sales the previous day) was also poor at 120,542 contracts. Today we had 57 notices filed for 5700 oz .

And now for the wild silver comex results.  Silver OI fell by 3,292 contracts from 168,588 down to 165,296 as silver was down by 20 cents yesterday. The bankers were able to shake some silver leaves from the silver tree. Let us wait until Monday to see how successful they were today. We are now in the non active contract month of February and here the OI rose by 8 contracts up to 92.   We had 0 notices filed yesterday so we gained 8  contracts or 40,000  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 3878 contracts down to 92,973. The estimated volume today was awful at 26,753 contracts  (just comex sales during regular business hours). The confirmed volume yesterday was excellent (regular plus access market)  at 49,394 contracts. We had 67 notices filed for 335,000 oz today.

February initial standings

 

Feb 6.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz 96.45 oz(3  kilobars)  Manfra
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 803.75oz ( 25 kilobars  Manfra)
No of oz served (contracts) today 57 contracts (5700 oz)
No of oz to be served (notices)  775 contracts (77500 oz)
Total monthly oz gold served (contracts) so far this month  545 contracts(54,500 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 0 dealer transactions

we had 0 dealer withdrawals:

total dealer withdrawal: nil oz

 

 

we had 0 dealer deposit:

 

 

total dealer deposit: nil oz

 

 

we had 1 customer withdrawals

 

 

ii) Out of Manfra: 96.45 oz (3 kilobars)

total customer withdrawal: 96.45  oz

 

 

we had 1 customer deposit:

i) Into Manfra: 803.75  (25 kilobars)

total customer deposits;  803.75 oz

We had 0 adjustments

 

 

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 57 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 45 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 (545) x 100 oz  or 54,500 oz , to which we add the difference between the OI for the front month of February (842 contracts)  minus the number of notices served today x 100 oz (57 contracts) x 100 oz = 132,000 oz, the amount of gold oz standing for the February contract month.( 4.14 tonnes)

Thus the initial standings:

545 (notices filed for the month x( 100 oz) or 54,500 oz + { 842 (OI for the front month of Feb)- 57 (number of notices served upon today) x 100 oz per contract} = 132,000 oz total number of ounces standing for the February contract month. (4.14 tonnes)

 

we lost 26 contracts or 2600 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.

 

 

end

 

 

 

And now for silver

 February silver: initial standings

feb 6 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 667,075.327  oz (Delaware, Scotia )
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory 597,794.200 oz (Scotia)
No of oz served (contracts) 25 contracts  (125,000 oz)
No of oz to be served (notices) 84 contracts (420,000 oz)
Total monthly oz silver served (contracts) 376 contracts (1,880,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal  of silver from the Customer inventory this month  869,343.0 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 1 customer deposits:

 

i) Into Scotia:  597,794.200

total customer deposit 597,794.200 oz

 

We had 2 customer withdrawals:

i) Out of Delaware:  5,127.39 oz

ii) Out of Scotia:  661,947.93

 

total customer withdrawal: 667,075.327 oz

we had 1 adjustments

 

i) Out of Delaware:  99,162.412 oz was adjusted out of the customer and this landed into the dealer account at Delaware:

 

Total dealer inventory: 67.890 million oz

Total of all silver inventory (dealer and customer) 177 million oz

.

The total number of notices filed today is represented by 67 contracts for 335,000 oz. To calculate the number of silver ounces that will stand for delivery in February, we take the total number of notices filed for the month (376) x 5,000 oz    = 1,880,000 oz  to which we add the difference between the OI for the front month of February (92)- the number of notices served upon today (67) x 5,000 oz per contract = 2,005,000 oz,  the number of silver oz standing for the February contract month

Initial standings for silver for the February contract month:

376 contracts x 5000 oz= 1,880,000 oz + (92) OI for the front month – (67) number of notices served upon x 5000 oz per contract =  2,005,000 oz, the number of silver ounces standing.

we gained 8  contracts or 40,000 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

 

end

 

 

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

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

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

i) demand from paper gold shareholders

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

vs no sellers of GLD paper.

And now the Gold inventory at the GLD:

 

 

feb 6/ no change in gold inventory tonight/inventory 773.31 tonnes

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 6/2015 /no change in   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.

 

 

end

 

 

And now for silver (SLV):

 

 

Feb 6  no change in silver inventory/SLV’s silver inventory at 320.327 million oz.

 

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 6/2015 we had no change in silver inventory/

SLV inventory registers: 320.327 million oz

 

 

end

 

 

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

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

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

1. Central Fund of Canada: traded at Negative  5.7% percent to NAV in usa funds and Negative 6.1 % to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.1%

Percentage of fund in silver:38.5%

cash .4%

 

( feb6/2015)

 

2. Sprott silver fund (PSLV): Premium to NAV rises to + 3.76%!!!!! NAV (Feb 6/2015)

3. Sprott gold fund (PHYS): premium to NAV rises to +.37% to NAV(feb 6 /2015)

Note: Sprott silver trust back  into positive territory at +3.76%.

Sprott physical gold trust is back into positive territory at +.37%

Central fund of Canada’s is still in jail.

 

 

end

 

And now for the COT report

 

First the gold COT:

 

This takes in the collapse of OI as we enter into the front month of February:

 

 

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
229,006 43,991 28,674 117,174 320,447 374,854 393,112
Change from Prior Reporting Period
-9,401 -5,491 -10,141 -152 -3,039 -19,694 -18,671
Traders
166 61 70 49 55 244 162
 
Small Speculators  
Long Short Open Interest  
44,670 26,412 419,524  
939 -84 -18,755  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, February 03, 2015

 

Our large specs:

 

Those large specs who have been long in gold somehow as February came about decided to liquidate a massive 9401 contracts

 

Those large specs who have been short in gold, covered 5491 contracts from their short side.

 

Our commercials:

Those commercials who have been long in gold, pitched a tiny 152 contracts from their long side

 

Those commercials who have been short in gold covered 3039 contracts from their short side and this is when gold was rising.

 

Our small specs:

Those small specs who have been long in gold added 939 contracts to their long side

 

Small specs;

Those small specs who have been short in gold covered 84 contracts from their short side.

 

 

and now for silver;

 

Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
64,166 13,593 18,947 65,063 121,262
-1,556 1,218 3,390 5,099 -295
Traders
76 40 45 38 48
Small Speculators Open Interest Total
Long Short 168,486 Long Short
20,310 14,684 148,176 153,802
-887 1,733 6,046 6,933 4,313
non reportable positions Positions as of: 134 118
Tuesday, February 03, 2015   © Silver

 

Our large speculators:

Those large specs that have been long in silver pitched 1556 contracts from their long side

 

Those large specs that have been short in silver added another 1218 contracts to their short side

 

Our commercials:

Those commercials that have been long in silver added 5099 contracts to their long side

Those commercials that have been short in silver covered 295 contracts from their short side.

 

Our small specs:

Those small specs that have been long in silver pitched 877 contracts from their long side

Those small specs that have been short in silver added 1733 contracts to their short side.

 

end

 

 

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

 

 

 

Early gold trading from Europe early Friday  morning:

(courtesy Mark O’Byrne)

 

“Forgive Us Our Debts” – Debt Forgiveness Only Way To Prevent Economic Meltdown

 

 

– Europe and western world is in a debt-fuelled deflation which is spiralling out of control

– Global debt has risen a massive $57 trillion or more than 25% in 7 years since the crisis of 2008

– Managed debt forgiveness is essential now to avoid chaos of defaults, mass unemployment depression and economic collapse

goldcore_1_06-02-2015
And forgive us our debts, as we also have forgiven our debtors” – Matthew

The bully tactics employed by the ECB against the newly elected government in Greece demonstrates once again how the ECB and the entire European project puts the interests of banks and political elites over those of the average citizen.

Certainly, it is necessary to take a tough stance regarding fiscal responsibility and discipline. Very few people suggest otherwise.

However, the ECB maintains a different set of standards when it comes to supporting the banking system as demonstrated by its imminent initiation of quantitative easing (QE).

QE has failed in Japan and only had a degree of success in the UK and the U.S. Even Alan Greenspan admitted that it has been a “terrific success” for the rich but had failed to meet its stated objectives.

In time, deflation will likely lead to even greater QE and “emergency” QE debt monetisation. This will likely lead to high inflation and stagflation.  Given the dollar’s current status as global reserve currency – this would quickly become a global phenomenon.

Where was the discipline in the run up to the 2008 prelude-crisis when major northern European banks were pumping vast amounts of liquidity and irresponsibly lending into obviously overheated property sectors of economies like Ireland, Greece, Spain, Portugal and Italy?

What consequences were suffered by Goldman Sachs when it was revealed in 2008 that the bank had aided the profligate Greek government to cook the books, legally of course, so as to facilitate it in borrowing €1 billion from the ECB which it could not afford?

Goldman went on to buy insurance on Greek debt demonstrating its complete lack of faith in its own actions and its ability to profit from poor advice proffered to clients and the public.

Not only was there no sanction against Goldman, rather one of its own, Mario Draghi, replaced Jean Claude Trichet as Chairman of the ECB.

Two years later Mario Monti, who also had very close ties to Goldman, was appointed without election to replace Silvio Berlusconi as Prime Minister of Italy following his forced resignation.

While the people of the peripheral PIIGS nations were told that the book stops with them and they were responsible for the losses of private institutions in their countries, banks who facilitated the binge were rewarded with even greater influence as the unelected technocrats further consolidated power.

Why the book should stop with the country of the profligate borrower and not that of the profligate lender or European agencies who are supposed to manage the currency is an important point.

It is a point which is breeding a festering resentment towards the European project.

The new government in Greece has made it clear that it intends to get Greece back on its feet through cuts in spending. However, it insists that those cuts cannot be made at the expense of the most vulnerable in Greece. It therefore rejects the dictats of the Troika.

Finance minister Varoufakis has consistently displayed a will to reach a fair and practical settlement and a willingness to cooperate with Europe. The reforms he proposes cannot be made overnight.

Greece is in a depression. Many European countries are in recession. Europe as a whole, including Germany, is experiencing deflation. Should deflation take hold, Europe will likely experience full blown depression.

Clearly, as Greece’s government points out, it can not be business as usual.

The euro looks increasingly like a failed currency. It has been in crisis and caused hardship for the people it is supposed to serve for the greater part of the time it has been in existence.

The Greek government is trying to open discussion as to how the European project can be reformed to benefit all its citizens. The response by the ECB on Monday night is telling. The status quo of debt-riddled nations is not up for negotiation even as the EU hurtles towards the cliff edge.

At the heart of the entire crisis is the problem of debt. Europe is mired in debt. The western world is mired in debt. Even China is mired in debt.

The Guardian reports that “Global debt has grown by $57 trillion in seven years following the financial crisis” – a rise of more than 25%. China now has a greater debt to GDP ratio than even the U.S.

Average Europeans are choking on debt. The reason Europe is now in deflation is because not many people or businesses can afford to take on new debt.

This means that – given paper and electronic currency has no intrinsic value and comes into existence as a debt – without new borrowing, the money to repay interest on existing loans simply does not exist. This causes the weakest of existing loans to go into default which removes even more money from the system.

The process feeds on itself resulting in a depression. The problem is then compounded by excess industrial capacity forcing business to lower prices, cut costs and make workers unemployed.

Time is running out for Europe, Europeans and the world. We can wait for the system to crash into the brick wall or we can take the responsible approach and discuss contingency plans.

If these measures are left to unelected and demonstrably incompetent bureaucrats behind closed doors, when the time comes we can expect  bail-ins of deposits, capital controls, high taxes with cuts to public services and repression as the burden is shifted once again onto the citizenry.

GoldCore_Gold_2013_Review_2014_Outlook_25

We should applaud the new Greek government for their courage in pushing for reform in Europe. This is not an advocacy for left-wing politics. In another time and place we might find ourselves opposed to Syriza and we do not agree with all their policies.

However, in this time and place, centrist governments dominate the political landscape and take orders from Brussels to intervene protecting the interests of financial institutions and banks at the expense of their suffering electorates.

We need more parties like Syriza in power in Europe. We urgently need debate as to how to manage the unavoidable catastrophe which fast approaches. We believe a managed program of debt forgiveness is essential to avert the economic chaos that would ensue from mass defaults and depression.

“Prepare for the worst but hope for the best …”

Protecting Deposits in the Coming Bail-in Era Click here

 

DAILY MARKET UPDATE
Today’s AM fix was USD 1,264, EUR 1,103.64 and GBP 824.74 per ounce.
Yesterday’s AM fix was USD 1,263.75, EUR 1,106.71 and GBP 828.80 per ounce.

Yesterday, gold and silver were mixed. Gold gained 0.36 per cent or $4.90 yesterday, closing at $1,270.20, while silver fell 0.35 percent or $0.06, closing at $17.30.

goldcore_2_06-02-2015

In Asian trading, Singapore gold moved sideways and this trend continued in European trade. Gold is marginally higher ahead of US nonfarm payroll numbers and unlikely to make big moves until the NFP number is released at 1330 GMT.

Gold remains on track to end the week down just over 1%. The range this morning has been pretty narrow, less than $7/oz, ahead of this afternoon’s non-farm payrolls data.

Silver is also flat,while, platinum and  palladium are marginally higher.

Sentiment towards gold continues to improve and this is seen in the ETF gold demand numbers. Holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose to 24.86 million ounces on yesterday, the highest since September.

goldcore_3_06-02-2015

Gold in Dollars – 5 Years (GoldCore)

Gold should be supported by the continuing Greek debt saga and deepening tensions between the U.S. and NATO and Russia.

Greece’s new Finance Minister clashed openly with his powerful German counterpart after blunt talks in Berlin. German Finance Minister Wolfgang Schaeuble said he had told Greece’s Yanis Varoufakis it was not realistic to make electoral promises that burdened other countries, and they had “agreed to disagree.”

Greece’s borrowing costs have leapt and bank shares plunged following the ECB’s decision to stop funding the country’s lenders. Greek banks were already struggling with big outflows of deposits and stealth bank runs are believed to be continuing.
goldcore_4_06-02-2015

Gold in Euros – 5 Years (GoldCore)

Nato is to bolster the alliance’s military presence in Eastern Europe in response to increased fighting in eastern Ukraine between government forces and pro-Russia rebels. Six bases are being set up and a 5,000-strong “spearhead” force established.

The U.S. is now talking about arming Ukraine which will further inflame the situation and likely lead to an escalation in the conflict.

German Chancellor Angela Merkel says she and French President Francois Hollande will “use all our power” on their visit to Moscow to try and stop the bloodshed in eastern Ukraine.

Speaking Friday before flying to Russia for talks with President Vladimir Putin, Merkel said she could not say whether she and Hollande, who were in Kiev for talks Thursday with the Ukrainian government, would be able to achieve a new cease fire.

goldcore_5_06-02-2015
Gold in British Pounds – 5 Years (GoldCore)

Geopolitical risk remains high with relations between Russia and the U.S. and NATO continuing to deteriorate.

NATO sabre rattling was seen yesterday when the former head of Nato warned that  Vladimir Putin has dangerous ambitions beyond Ukraine and aims to test Western resolve in the Baltic states. Anders Fogh Rasmussen, the former secretary-general of the Atlantic alliance, said the Kremlin’s true goal is to shatter NATO solidarity and reassert Russian dominance over Eastern Europe.

The very uncertain geopolitical backdrop is supportive of gold. Another incident such as the tragic shooting down of the civilian airline could be a catalyst to a wider conflict.

 

 

end

 

*** Late last night unbeknownst to me, the CME raised margin requirements on oil and silver. Something is really bothering the CME on silver.

 

end

 

 

 

We brought this to your attention yesterday. Now William Pesek is warning us that China is also preparing for a currency war:

 

(courtesy William Pesek)

 

 

 

William Pesek: Is China preparing for currency war

Section:

By William Pesek
Bloomberg News
Friday, February 6, 2015

China has entered the global monetary-easing fray, along with more than a dozen other economies, after its central bank surprised investors by cutting reserve requirements 50 basis points to spur lending and combat deflation. But Beijing may be raring for an even bigger and more perilous fight — in the currency markets.

Reducing the amount of cash that banks are required to set aside (to 19.5 percent), as China has just done, is largely symbolic — a don’t-panic-we’re-on-top-of-things reassurance to international markets and local property developers. Still, the move is also an inflection point. China is in all likelihood about to loosen monetary policy considerably to support economic growth. If global conditions worsen, China’s one-year lending rate, now at 5.6 percent, could head toward zero.

At the same time, something else is afoot in Beijing could have even greater global impact. The central bank is cooking up measures to widen the band in which its currency trades. People’s Bank of China officials say it’s about limiting volatility as capital zooms in and out of the economy. Let’s call it what it really is: the first step toward yuan depreciation and currency war. …

… For the remainder of the report:

http://www.bloombergview.com/articles/2015-02-06/is-china-preparing-for-.

 

end

 

 

 

Rand Paul is ready to take on the Fed as he wants a full audit.

The Federal Reserve fires back

 

(courtesy the Hill/Kevin Cirilli)

 

 

Federal Reserve fires back at Rand Paul

Section:

By Kevin Cirilli
The Hill, Washington
Thursday, February 5, 2015

The Federal Reserve is lashing out at Sen. Rand Paul’s plan to give Congress more oversight over the central bank, a proposal that could gain traction in the new Republican-led Congress.

The Kentucky Republican reintroduced his “Audit the Fed” legislation last month with 30 co-sponsors, including other potential 2016 Republican presidential hopefuls, Sens. Ted Cruz of Texas and Marco Rubio of Florida.

The proposal — once championed by his father, former Rep. Ron Paul, R-Texas — would subject the central bank to an audit by the Government Accountability Office. Regional bank presidents from around the country are decrying the plan, which they argue could damage the economy. …

… For the remainder of the report:

http://thehill.com/policy/finance/231822-fed-fires-back

 

end

 

 

 

The New York Sun  lashes back at the Federal Reserve on Rand Paul’s

initiate to audit the Fed

 

(courtesy New York Sun/GATA)

 

New York Sun: The Fed’s right mind?

Section:

From the New York Sun
Friday, February 6, 2015

It looks like the Federal Reserve is starting to worry about Senator Rand Paul’s plan to audit the central bank. The way the Hill newspaper, which covers Congress, puts it this week is that the Fed is “lashing out” at Mr. Paul’s plan, which, it said, could gain traction now that the Republicans are in control of the Senate as well as the House. It quotes the president of the Dallas Fed, Richard Fisher, as demanding, in an interview, “Who in their right mind would ask the Congress of the United States — who can’t cobble together a fiscal policy — to assume control of monetary policy?”

Who in their right mind? How about George Washington, James Madison, Alexander Hamilton, and the rest of the rest of the authors of the Constitution. …

If the Congress is so inept at budgeting, why has the Federal Reserve been buying up the paper it’s kiting? The Fed has taken onto its books more than $2 trillion in federal debt. …

… For the complete commentary:

http://www.nysun.com/editorials/the-feds-right-mind/89032/

 

end

 

 

 

In the last week of January we had 54 tonnes of gold withdrawn (equals demand) in China.  Total for the month, a staggering 255 tonnes:

 

(courtesy Koos Jansen)

 

 

 

Posted on 6 Feb 2015 by

Total SGE Withdrawals 255t In January, Up 4 % y/y

In the last trading week of January another huge quantity of gold left the vaults of the Shanghai Gold Exchange (SGE). According to the latest SGE data nearly 54 tonnes were withdrawn in week 4 (January 26 – 30), down 24 % w/w. Year to date a staggering 255 tonnes has been withdrawn, up 4 % from the strongest January ever in 2014.

Screen Shot 2015-02-06 at 11.44.19 AM
Blue (本周交割量) is weekly gold withdrawn from the vaults in Kg, green (累计交割量) is the total YTD.

Corrected by the volume traded on the Shanghai International Gold Exchange (SGEI), withdrawals in week 4 were at least 42 tonnes (read this post for a comprehensive explanation of the relationship between SGEI trading volume and withdrawals). Year to date withdrawals corrected by SGEI volume were at least 230 tonnes.

Shanghai Gold Exchange SGE withdrawals delivery 2015 week 4, dips

Shanghai Gold Exchange SGE withdrawals delivery only 2014 - 2015 week 4, dips

A quick calculation suggests China has imported somewhere in between 175 and 200 tonnes of gold in January. Happy New Year!

In a recent blog post Thomson Reuters noted banks that enjoy a PBOC gold trade license are obliged to import a minimum amount of gold each year. Supposedly this is why Chinese gold import (and SGE withdrawals?) ramped up in the fourth quarter of 2014.

Licensed importers need to import a minimum amount of gold bullion per year to demonstrate to government authorities that they have put their import license to good use. Therefore, after a series of relatively weak import numbers in the second and third quarters, importers had some catching-up to do by the fourth quarter.

So China imports gold, which is being sold through the SGE and withdrawn from the vaults, though this is not related to any demand? If there would be no demand for the imported gold in China, (i) there would be significant discounts on the SGE relative to London, (ii) Importing/consignment banks would suffer enormous losses. Doesn’t make sense to me.

On January 26 the SGE announced to allow its international members and customers to trade the deferred silver contract Ag(T+D), a domestic precious metals contract, starting February 2. Though, foreign traders will only be able to open long or short positions, receive/pay the deferred compensation fee and close long or short positions. Delivery let alone withdrawals will not be allowed. Herein we can clearly see the closed characteristics of the Chinese precious metals market; not only gold is prohibited from being exported, through VAT rules the State Council effectively blocks silver from being exported as well (in general trade). The possibility for foreigners to open Ag(T+D) positions are pure paper trades. From the SGE:

All members,

For the purpose of diversifying trading products for international members and customers, the Shanghai Gold Exchange (“The Exchange”) is going to open the trading access of Ag(T+D) contracts to international members and customers. From February 2nd, 2015, all international members and customers are allowed to participate in the Ag(T+D) trading, including opening long or short positions and closing out long or short positions; and yet delivery tendering, delivery equalizer tendering, or load-in and load-out of physical silver bullions are not allowed.

The trading margins and transaction fees for international members are consistent with domestic members and customers. The position limits of Ag (T+D) for international members and customers are also in line with domestic members and customers. International members and customers may apply to SGEI for adjustment of position limits as per their business needs.

Likely not many foreign traders have jumped in as of yet, total weekly silver volume in week 5 (January 2 – 6) was 9,704 tonnes, down 11 % w/w.

Shanghai Gold Exchange SGE weekly silver volume

Hard to say what happens down the line, the internationalization of the SGE since September 2014 hasn’t been successful up until now. This would presumably change if China liberalizes its precious metals export policy, but does it want to? Not in the near future if you’re asking me.

Let’s see what happens next in the global realm of precious metals when Chinese banks will participate in the new London gold fix scheduled in March.

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

 

 

end

 

 

 

This was brought to your attention yesterday but it is worth repeating/

(courtesy London’s Financial times)

 

 

 

Another central bank pledges ‘whatever it takes’

Section:

Danish Central Bank Fiercely Defends Currency Peg

By Richard Milne
Financial Times, London
Friday, February 6, 2015

Denmark’s central bank governor pledged to face down speculators testing its currency peg to the euro, saying he would do “whatever it takes” to defend it.

Lars Rohde told the Financial Times that Nationalbank could “go on forever” defending the peg, after lowering interest rates four times in three weeks to a global record low of minus 0.75 per cent. It has also swelled its balance sheet to a record size by printing krone in an attempt to weaken the Danish currency.

“The main message is that we are ready to do whatever it takes to defend the peg. We have unlimited access to Danish krone and we have no restrictions on our balance sheet,” he said, in his first public comments since the recent quadruple rate cuts. …

… For the remainder of the report:

http://www.ft.com/intl/cms/s/0/d3c385f6-adc6-11e4-919e-00144feab7de.html

 

end

 

Your weekly column from Alasdair Macleod:

 

(courtesy Alasdair Macleod/GATA)

 

 

Alasdair Macleod: Sovereign bonds won’t stay up forever

Section:

By Alasdair Macleod
Research Director, GoldMoney
Friday, February 6, 2015

Today’s obvious mispricing of sovereign bonds is a bonanza for spending politicians and allows over-leveraged banks to build up their capital. This mispricing has gone so far that negative interest rates have become common: In Denmark, where the central bank persists in holding the krona peg to a weakening euro, it is reported that even some mortgage rates have gone negative, and high quality corporate bonds such as a recent Nestle euro bond issue are also flirting with negative yields. …

Macroeconomists will probably claim that so long as central banks can continue to manage the quantity of money sloshing about in financial markets, they can keep bond prices up. But this is valid only so long as markets believe this to be true. Put another way, central banks have to continue fooling all of the people all of the time, which as we all know is impossible.

… For the full commentary:

http://www.goldmoney.com/research/analysis/sovereign-bonds?gmrefcode=gat…

 

end

 

Eric Sprott delves into the area where I can visualize huge damage, that is in the huge derivatives market.

 

Eric explains…

 

(courtesy Eric Sprott/Kingworldnews/Eric King)

 

 

 

Spectacular volatility in currencies means spectacular derivatives losses, Sprott says

Section:

2:10p ET Friday, February 6, 2015

Dear Friend of GATA and Gold:

Fund manager Eric Sprott tells King World News today that the spectacular volatility in currency markets must be causing spectacular losses in derivative instruments that will be defaulted upon. Another financial house collapse may be imminent, Sprott says. His interview is posted at the KWN blog here:

http://kingworldnews.com/billionaire-eric-sprott-just-made-one-dire-pred…

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

 

end

 

And now for the important paper stories for today:

 

 

Early Friday morning trading from Europe/Asia

1. Stocks mixed on major Asian bourses  / the  yen rises  to 117.31

1b Chinese yuan vs USA dollar/ yuan strengthens  to 6.2427
2 Nikkei up 143.88  points or 0.82%

3. Europe stocks all in red   // USA dollar index up to 93.66/

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 52.06 Brent: 58.34 /all eyes are focusing on oil prices. This should cause major defaults as derivatives blow up.

3g/ Gold up /yen up;

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

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

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

3j Oil rises this morning for  WTI  and Brent

3k Chinese reserve rate cut stimulates gold purchases

3l  Greek 10 year bond yield: 9.71% (up 5 basis points)

3m Gold at $1263.50. dollars/ Silver: $17.31

3n USA vs Russian rouble:  ( Russian rouble  down 3/5 in roubles per dollar in value)  67.00!!!!!!

3 0  oil  into the 52 dollar handle for WTI and 58 handle for Brent

3p  ECB removes Greek sovereign collateral in their investment strategy (on Feb 11). This leaves only ELA funding for the next two weeks. Maximum allowed 60 billion euros for this funding.

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  Big FOMC meeting today/results below

3s Merkel and Hollande in Moscow trying to obtain a ceasefire in Eastern Ukraine/talks with Putin

4. USA 10 yr treasury bond at 1.81% early this morning. Thirty year rate well below 3%  (2.41%!!!!)/yield curve flattens/foreshadowing recession
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid

 

 

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

 

Futures Unchanged Ahead Of Payrolls

 

It has been a quiet overnight session, following yesterday’s epic short-squeeze driven – the biggest since 2011 – breakout in the S&P500 back to green for the year, with European trading particularly subdued as the final session of the week awaits US nonfarm payroll data, expected at 230K, Goldman cutting its estimate from 250K to 210K three days ago, and with January NFPs having a particular tendency to disappoint Wall Street estimates on 9 of the past 10. Furthermore, none of those prior 10 occasions had a massive oil-patch CapEx crunch and  mass termination event: something which even the BLS will have to notice eventually. But more than the NFP number of the meaningless unemployment rate (as some 93 million Americans languish outside of the labor force), everyone will be watching the average hourly earnings, which last month tumbled -0.2% and are expected to rebound 0.3% in January.

European shares are slightly lower with the travel & leisure and personal & household sectors underperforming and bank, financial services outperforming. The main source of volatility in Europe continues to be Greece whose Alpha and NBG banks Goldman downgraded from Buy to Neutral, saying it is “make or break” time and that ECB help is crucial, an ECB which yesterday was said to allow Greek banks up to $68b in emergency funding (an ELA which was boosted to accomodate the fund needs now that Greek banks have no eligible GGB collateral). German December industrial production below estimates. RBA lowers Australian GDP forecast which sent local stock higher.

Equities and fixed income have traded without direction this morning, with most major European indices opening slightly lower, while consumer staples is the worst performing sector. German Bunds are 1 bps tighter, as are Japanese 10 Years, with both the 10 Years Bund and JGB trading literally on top of each other as Europe has now officially mutated into a deflationary, money-pritning Japan (which going back over a decade, is now on QE12… no really).

Elsewhere, all is relatively quiet with regards to Greece, with the Athens Stock Exchange lower by just under 1% despite the Bank of Greece governor Stournaras commenting that Wednesday’s decision by the ECB to revoke its waiver on the use of Greek bonds as collateral can be overturned if the country reaches another bailout deal with the EU.

Interestingly, the FT has reported that the ECB decision to revoke the waiver on Wednesday was fairly evenly split between members between removing early or waiting until the end of the month when the current programme expires. The move was pushed through however as some of the members who wanted to wait were not eligible to vote this time round. Next week the focus moves to a potential emergency Eurogroup meeting on Wednesday where Greece would no doubt be front and centre.

The energy complex has experienced a bout of strength today following on from yesterday’s gains, with WTI March crude futures now up 20% on last week’s low. This has left many confused because yesterday Saudi Arabia cut pricing for March oil sales to Asia, a sign according to Bloomberg that the desert kingdom is continuing to fight for market share. “This is further evidence that they are hellbent on protecting their market share in China,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $2.4 billion, said by phone Thursday. “They are trying to stay competitive in what is the biggest area of growth.” Middle Eastern producers are increasingly competing with cargoes from Latin America, Africa and Russia for buyers in Asia. Meanwhile Citadel’s algos continue to misread the real signals and try to stop hunt each and every day’s “crude bottom” as oil now trades in a 10% daily range, just like you typical pennystock.

In US specific news, Fed’s Plosser (Non-Voter, Hawk) said at the Fed’s Jan meeting there was no agreement about whether to drop the ‘patient’ phrase from their statement and how to replace it. While elsewhere Twitter reported a beat in expectations aftermarket (Q4 Adj. EPS USD 0.12 vs. Exp. USD 0.06. Q4 revenue USD 479mln vs. Exp. USD 453.6mln), while today sees Aon, Moody’s Marsh & McLennan and Dominion all report at 1200GMT/0600CST.

Over in Asia, equities traded mixed despite a strong Wall Street close spurred by a surge higher in oil prices during yesterday’s session which saw the S&P 500 finished up 1%. Hang Seng (-0.35%) and Shanghai Comp (-1.93%) trade in the red, the latter on course for its longest weekly losing streak since May, despite this week’s PBoC RRR rate cut. The decision was downplayed as a sign of further monetary easing, with officials saying its aim was to address liquidity conditions ahead of the lunar New Year. Nikkei 225 (+0.8%) rose while the ASX 200 (+0.3%) set a record 12th day of gains.

While FX markets have seen choppy price action, with GBP seeing a mild downtick as a result of a larger trade deficit than expected (-10154mln vs. Exp. -9100mln, Prev. -8848mln, Rev. -9283mln) and AUD holding onto their overnight gains on the back of a less dovish than expected RBA statement on monetary policy.

Market Wrap

  • S&P 500 futures up 0.1% to 2056.8
  • Stoxx 600 down 0.2% to 371.6
  • US 10Yr yield down 1bps to 1.81%
  • German 10Yr yield down 1bps to 0.36%
  • MSCI Asia Pacific up 0.3% to 142.1
  • Gold spot up 0.2% to $1267.8/oz

Bulletin Headline Summary from Bloomberg and RanSquawk

  • The European session has been quiet, as is usual ahead of Nonfarm payroll data. In addition, today also sees Canadian unemployment rate, as well as Fed’s Lockhart at 1745GMT/1145CST
  • The energy complex has experienced a bout of strength today following on from yesterday’s gains, with WTI March crude futures now up 20% on last week’s low.
  • Treasuries mixed, with long-end rallying before employment report forecast to show U.S. economy added 230k jobs in January while unemployment rate remains steady at 5.6%.
  • Prime Minister Tsipras is preparing to set out the most detailed account yet of his plans to revive the Greek economy after a diplomatic push ended with a rebuff from Germany and a warning shot from the ECB
  • ECB will allow the Greek central bank to provide as much as EU59.5b ($68b) in emergency funding for the country’s lenders, a euro-area central-bank official familiar with the decision said
  • Spain’s bonds are set to underperform their Italian peers for the fifth time in six weeks amid concern the rise of a Spanish anti-austerity party will lead to the sort of turmoil that followed Syriza’s victory in Greece
  • Saudi Arabian Oil Co. lowered its official selling price for Arab Light crude by 90 cents to $2.30 a barrel less than Middle East benchmarks, the lowest in at least the 14 years since Bloomberg began gathering data
  • After cutting Denmark’s deposit rate for a fourth time this year, matching Switzerland’s key rate of -0.75%, central bank governor Lars Rohde said he’s ready to do more to prevent the “unthinkable” outcome that the country might lose its euro peg
  • Australia’s central bank lowered its 2015 growth and inflation forecasts and predicted unemployment will rise, underscoring this week’s decision to cut interest rates
  • Merkel and Hollande will press Vladimir Putin for a cease-fire in Ukraine on Friday as U.S. and Russian officials expressed skepticism that a quick resolution to stem the spiraling violence is possible
  • Sovereign yields mixed, Greece 10Y rises ~24bps to 9.93%. Asian stocks mixed; European stocks mostly lower, U.S. equity-index futures rise. Brent, WTI, gold rise; copper falls

 

DB’s Jim Reid concludes the overnight recap

 

 

It was a continuation of the themes we’ve seen for most of the week yesterday, with Greece dominating the headlines and another 5% handle move in oil markets. We’ll take a look at the moves in oil and what was a better day for US risk assets later, but firstly running through the Greece news over the last 24 hours. Markets unsurprisingly opened weaker yesterday as Greek equities initially tumbled 10%, banks fell 30% and 5y yields widened nearly 250bps following the news that the ECB had removed the waiver on Greek debt as collateral. Sentiment improved however over the course of the day as markets were lifted by the news by that the ECB had upsized the ELA facility to €59.5bn, an increase of €9.5bn. Greek equities recovered throughout the session as a result, paring back around 7% of initial losses to finish -3.37% at the close. Greek banks recovered too somewhat although still finished down 10% whilst 5y yields recovered and finished 32bps wider at close.

Our resident expert George Saravelos noted yesterday that current Greek bank funding stands at between €70-€80bn, €30bn of which relies on EFSF-based collateral. This leaves the remaining – up to €50bn – at the level of the ELA. So on a back of the envelope calculation this implies a €10bn cushion in the now larger facility. The ELA is currently under review every two weeks so questions now will likely centre on how long the ECB is willing to let the facility run and how large they allow it to grow to. Pressure on funding requirements for Greek banks was mounting following large deposit outflows in the last month. The situation is clearly very fluid and dominated by headlines but George expects that a likely outcome would be an offer for negotiations on a new third programme, but accompanied by a pre-commitment to respect various conditions.

Aside from the ECB ELA announcement, Greek finance minister Varoufakis yesterday met with German finance minister Schaeuble with the meeting appearing to yield little in the way of progress. According to Reuters, Varoufakis was reported as saying after the meeting that ‘we didn’t even agree to disagree’. Meanwhile Prime Minister Tsipras was reported on Bloomberg as saying that the ‘new government will negotiate hard for the first time in years and will put a final end to the Troika and its policies’ in a talk to his fellow Syriza lawmakers.

Interestingly, the FT has reported that the ECB decision to revoke the waiver on Wednesday was fairly evenly split between members between removing early or waiting until the end of the month when the current programme expires. The move was pushed through however as some of the members who wanted to wait were not eligible to vote this time round. Next week the focus moves to a potential emergency Eurogroup meeting on Wednesday where Greece would no doubt be front and centre.

Turning our attention over to US markets yesterday, the S&P 500 closed +1.03% and the Dow finished +1.20% firmer at the close of play. US markets are in fact now back in positive territory YTD. The S&P 500 is now +0.18% for 2015 after a +3.4% rally in February so far. Credit markets also firmed yesterday with CDX IG ending 2.2bps tighter. With the better tone Treasuries weakened, the yield on the 10y benchmark closing 6.9bps tighter at 1.820. Aside from the better sentiment out of the ELA news, oil markets gave a boost to risk assets yesterday. A +4.45% rally for Brent and +4.19% gain for WTI means oil markets have traded in a $5 range this week, albeit with considerable swings between gains and losses. In fact the CBOE Crude Oil Volatility Index closed at the highest level in six years yesterday as markets digest various production level indicators. Unsurprisingly, energy stocks (+1.45%) closed stronger although in reality it was a stronger day for all sectors. The healthcare (+1.64%) component in particular benefiting from the news that Pfizer has agreed to buy drug-maker Hospira for $17bn – the latter closed 35% firmer following the announcement.

With much of the focus this week having been on Greece, data has largely taken a backseat. Today’s payrolls print however should put some of the focus back on the US. DB’s Joe Lavorgna notes that today’s employment report will likely be the last major piece of labour data Yellen has before her semi-annual monetary policy testimony to Congress which takes place later this month. Meanwhile, Hilsenrath notes in the WSJ that given Fed officials will have been able to digest two more employment reports prior to the next policy meeting in March, he believes that ‘if officials think a June interest rate increase is a possibility, they will need to remove an assurance that the central bank will be ‘patient’ before raising rates’.

So it’ll be interesting to see what a strong reading today would mean for those more dovish members of the Fed. In terms of today, market expectations are currently for a +230k print. Rounding up yesterday’s macro data, jobless claims rose 11k to 278k however the print was below consensus and lowered the four-week average to 293k. Elsewhere non-farm productivity weakened in Q4 (-1.8% from +2.3%) and unit labour costs jumped to 2.7%, ahead of 1.2% expected. Finally there were some dovish comments out of the Boston Fed’s Rosengren yesterday who was quoted on Reuters as saying that ‘given how low total and core inflation have fallen in most developed countries, a policy of patience in the US continues to be appropriate’.

Wrapping up market moves yesterday, after trading softer for most of the day European equity markets received a late boost from energy stocks to close mostly unchanged. Indeed, the Stoxx 600 (+0.11%), DAX (-0.05%) and CAC (+0.15%) finished relatively flat although the IBEX (-0.40%) and FTSE MIB (-0.59%) were weaker. The move in the Euro was significant, the single currency actually wiped out Wednesday’s losses to trade +1.16% versus the Dollar at $1.1478. The better sentiment was perhaps also as a result of upgraded eurozone growth forecasts out of the European Commission. The EC upgraded both its 2015 and 2016 forecasts for growth to 1.3% and 1.9% respectively, a 20bps increase from previous estimates for each year. 10y Bund yields finished unchanged at 0.366%.

Elsewhere the Bank of England left rates unchanged yesterday at 0.5% as expected however there was more easing surprise (although perhaps becoming less of a surprise) out of Denmark with the Nationalbanken cutting its deposit rate by a further 25bps to -0.75% – in a move which signaled continued defense for the Krone. The move marked the fourth rate cut in less than three weeks and puts them in line with Switzerland with the joint lowest rate globally.

Before we take a look at the today’s calendar, despite the better finish in the US last night equity markets in Asia this morning are generally mixed with the Nikkei (+0.80%) and ASX (+0.16%) both firming, but the Hang Seng (-0.12%) and Kospi (-0.10%) weaker.

Looking at the day ahead, the focus this morning will likely be on Germany where we have the industrial production print for the region. As well as this, we’ve got trade data due for both France and the UK along with industrial output for Spain. Over in the US this afternoon and away from the aforementioned payrolls highlight, we’ve also got other employment indicators due including the unemployment rate, average hourly earnings and participation rate. Consumer credit for the US rounds off the day’s releases. Finally, the Fed’s Lockhart is due to speak today.

 

end

 

The following is something that the EU and the USA do not want to see.

*late in the day, I can assure you that the Greek Prime Minister made a phone call to Mr Putin and Xi  (leader of China)

 

(courtesy zero hedge)

 

 

 

Shunned Greece Agrees To Boost Economic Cooperation With Russia

 

It’s been an odd few days for Greece’s new PM Alexis Tsipras. From being lambasted by Jeroen Dijsselbloem, shunned by Angela Merkel’s henchmen, holding hands with Jean-Claude Juncker, and losing a key funding channel from Mario Draghi; Tsipras’ anti-austerity platform has been ‘supported’ by Barack Obama and he has been invited for a visit to Russia by Vladimir Putin, and reminded that Russia is willing (and able) to provide financial aid if asked by finance minister Anton Siluanov.So headlines this evening from ekathimerini should not be entirely surprising that Putin and Tsipras have agreed to boost cooperation in the economy and energy, tourism, culture and transport sectors; and discussed the possible creation of a pipeline to carry natural gas from Russia to Europe via Turkey and Greece.

 

As ekathimerini reports,

Prime Minister Alexis Tsipras and Russian President Vladimir Putin on Thursday agreed to boost bilateral ties in a telephone conversation during which the latter invited the new Greek premier to an event in Moscow in May to mark the victory over Nazism.

 

The two men agreed to boost cooperation in the economy and energy, tourism, culture and transport sectors. They also agreed on the need to “secure peace and stability in Ukraine,” according to a statement from Tsipras’s office. Putin expressed satisfaction at Greece’s stance at a recent summit in Brussels where Greek Foreign Minister Nikos Kotzias conveyed concerns over the prospect of additional sanctions against Russia over Ukraine.

 

Sources rebuffed rumors about financial support for Greece from Russia, noting that the government was looking toward its European partners for support. The two men also discussed the possible creation of a pipeline to carry natural gas from Russia to Europe via Turkey and Greece.

 

Meanwhile Defense Minister Panos Kammenos responded to comments by his German peer Ursula von der Leyen, according to which Greece was jeopardizing its position in NATO with its stance vis-a-vis Russia. Kammenos called her comments “unacceptable and extortionate,” noting “Greece was always on the side of the Allies when they pushed back German occupation troops.”

*  *  *

Friends…

end

 

Prior to the jobs report the Euro starts to slide.  It intensified after the jobs report

 

(courtesy zero hedge)

 

EUR Slides As Greece Refuses To Yield To European Pressure

 

Despite ECB funding restrictions and German demands, it appears Greece will not yield to the pressures from its ‘peers’ to toe-the-line and accept servitude. None other than Greek FinMin Varoufakis made that very clear this morning…

  • WILL NOT AGREE TO ANY DEAL RELATING TO PREVIOUS BAILOUT PROGRAMME AT NEXT WEEK’S EUROGROUP – GOVERNMENT OFFICIAL

While ECB’s bank supervisor Nouy has proclaimed Greek banks “safe”, it appears the market is not so sure as Greek Bank bonds fade along with weakness in EURUSD. It seems last night’s pro-government protests have emboldended Syriza further to keep their promises, much to the chagrin of Merkel et al..

 

While the reaction is modest for now , Greek stocks and bonds are leaking in the confirmation and EURUSD fading.

end
Later this afternoon, S and P downgraded Greece stating a worse case scenario of bank runs and capital controls
(courtesy zero hedge)

S&P Downgrades Greece, Suggests Worst Case Scenario With Bank Runs And “Capital Controls”: Full Report

And the hits keep coming. On the heels of a demand for repayment of ECB’s profits from GGB bond gains and to extend the T-Bill limit to give the nation time to negotiate with EU leaders (i.e. a Bridge Loan) which Jeroen Dijsselbloem already dismissed earlier in the day, S&P just piled on…

  • GREECE RATINGS CUT TO B- FROM B BY S&P; MAY BE CUT FURTHER

This downgrade comes just 5 months after upgrading Greece because “risks to fiscal consolidation in Greece have abated.” EURUSD is not moving much (having already cratered after US payrolls) but Greek stock ETFs are sliding once again.

What is scariest, is that a day after we first noted the increasing whsipers of capital controls and bank runs, S&P itself mentions this!

In our view, a prolongation of talks with official creditors could also lead to further pressure on financial stability in the form ofdeposit withdrawals and, in a worst-case scenario, the imposition of capital controls and a loss of access to lender-of-last-resort financing, potentially resulting in Greece’s exclusion from the Economic and Monetary Union.

This means that now not only the ECB but the rating agencies are doing everything in their power to institute a Greek bank run in order to either make the government withdraw its demands, or, if that doesn’t work, lead to a new government.

This follow the news from earlier in the day:

  • `WE DON’T DO’ BRIDGE LOANS, DIJSSELBLOEM SAYS ABOUT GREECE

and now this:

  • GREEK GOVT SEES IT NECESSARY TO INCREASE T-BILL LIMIT: OFFICIAL
  • GREEK GOVT GOAL IS FOR BRIDGE PROGRAM WITH CREDITORS: OFFICIAL

As Bloomberg reports,

Greece doesn’t want more funds from its bailout program, apart from return of EU1.9b of ECB profits on GGBs, govt official says in e-mailed statement. Official also says:

 

Greek govt goal is a bridge program, to give time for negotiations with creditors

 

As govt doesn’t want more bailout loans,considers it necessary to be granted ability to issue T-bills beyond current EU15b limit

 

After bridge program granted, Greek govt will formulate fiscal strategy for next 4-5 yrs and national reform plan

 

Official asked not to be named in line with policy

and then this…

  • GREECE RATINGS CUT TO B- FROM B BY S&P; MAY BE CUT FURTHER

And the reaction…

 

*  *  *

This is what S&P said just 5 months ago…

Standard & Poor’s Ratings Services upgraded its debt rating for Greece, citing progress in the nation’s fiscal reform efforts and its potential return to economic growth.

 

The firm now puts its long-term sovereign credit rating for Greece at B – five notches into junk territory – up from B-minus. The outlook for the rating is stable, S&P added Friday.

 

“The upgrade reflects our view that risks to fiscal consolidation in Greece have abated,” the firm said.

 

S&P said it believes Greece will begin to emerge from seven straight years of economic shrinkage next year, calling the country’s recovery “gradual but weak.”The firm also said it thinks the country has enough funds to cover future bank recapitalizations.

And now, time for S&P, which after the DOJ settlement has become nothing more than a political errand boy, to completely reverse everything it said because the Greek economy, which has been improving in the past 6 months if one is to believe the data, actually wasn’t improving at all.

OVERVIEW

  • Liquidity constraints have narrowed the timeframe during which Greece’s new government can reach an agreement with its official creditors on a financing programme, in our view.
  • We believe the potential uncertainties surrounding the timing and success of such an agreement risk exacerbating deposit outflows, depressing investment, and weakening tax compliance.
  • As a result, we have lowered our long-term rating on Greece to ‘B-‘ from ‘B’.
  • The long- and short-term ratings remain on CreditWatch negative.

Full report: see zero hedge)

 

 

end
Stocks fall as fears of the GREXIT intensifies
(courtesy zero hedge)

Stocks Give Up “Good News” Gains As Grexit & Crude Fears Trump Jobs Cheers

 

As the jobs’ “good news” sinks in and the realization that this is “bad news” for free-money-a-holics hits, US equity markets have stumbled off the exuberant knee-jerk highs and given up the jobs bounce (for now)… as they are reminded that GREXIT is a real risk and oil’s price collapse has yet to play out in the real economy…

 

The initial bounce faded quickly but the US open ripped stocks higher to Europe’s close… and then…

 

Oil is still higher post-payrolls with gold and silver lagging…

end
THEN BANG!!!!!, just before the markets closed, the EU gives Greece 10 days to apply for an extension or else they are booted out of the EU monetary zone.  And just for good measure, Moody’s hints at lowering its rating on Greece.
Greece now must go to Russia/China for financial support
(courtesy zero hedge)

Eurogroup Gives Greece 10 Day Ultimatum: Apply For Bailout Or Grexit

Update: And now this: Moody’s places Greece’s Caa1 government bond rating on review for downgrade

The key driver for the review for downgrade is the high level of uncertainty over the outcome of the negotiations between Greece and its official creditors over the terms of Greece’s support programmer. The outcome could potentially have negative implications for Greece’s ability to meet its funding and liquidity needs and for the probability of default on marketable securities. Moody’s government bond rating applies to marketable securities only.

 

Moody’s would consider downgrading Greece’s Caa1 government bond ratings were it to conclude, as a result of the review, that (1) an agreement with official creditors is not likely to be reached in time to enable the government to repay its creditors who hold debt on commercial terms; and (2) that the likelihood of a significant deceleration or even reversal in the implementation of the adjustment programmer would further hinder Greece’s growth prospects.

Surely Greece must be delighted to be part of the European “Union” at this point.

* * *

Europe has an unpleasant habit of dropping tape bombs at the most inopportune of times, like at 3pm or later a Friday. And while on Wednesday it was the ECB yanking repoable Greek collateral for local banks, today it was first S&P, which downgraded Greece 5 months after upgrading it, and moments ago it was none other than the Cyprus bail-in man himself, the Eurogroup’s Dijsselbloem, aka Diesel “Blueprint” BOOM,  who just have Greece a 10 day ultimatum to fall into place or risk a terminal bank run and capital controls (both hinted at earlier by the post-DOJ settlement political “rating agency’)

  • GREECE MUST APPLY FOR BAILOUT EXTENSION ON FEB 16 AT THE LATEST TO KEEP EURO ZONE FINANCIAL BACKING -EUROGROUP CHAIRMAN DIJSSELBLOEM

This means that Greece now has 10 days, or until the Monday after next to decide whether it will stay in the Eurozone or Grexit. More from Reuters:

[Yanis Varoufakis] made clear that the new government, which came to power on a wave of anti-austerity anger in elections last month, now wanted to forego remaining bailout money that had austerity strings attached:

 

Greece is not asking for the remaining tranches of the current bailout programme – except the 1.9 billion euros that the ECB and the EU member states’ central banks must return.”

 

Euro zone finance ministers will discuss how to proceed with financial support for Athens at a special session next Wednesday ahead of the first summit of EU leaders with the new Greek prime minister, Alexis Tsipras, the following day.

 

However, the chairman of the finance ministers said the following meeting of theEurogroup on Feb. 16 would be Greece’s last chance to apply for a bailout extension because some euro zone countries would need to consult their parliaments.

 

“Time will become very short if they (Greece) don’t ask for an extension (by then),” said Jeroen Dijsselbloem.

 

The current bailout for Greece expires on Feb 28. Without it the country will not get financing or debt relief from its lenders and has little hope of financing itself in the markets.

* * *

Participants said no progress was made at a preparatory meeting of senior finance officials in Brussels on Thursday because Greece and its euro zone partners were so far apart.

 

“It was Greece against all others, basically one versus 18,” one official said.

Almost sounds like a reverse veto out of the European “Union”.

At the end of the day what D-Boom has effectively said is this:

Which is precisely the thing Greece, whose negotiating position already has been crushed with the threat of a wholesale bank run, did not want to hear especially now that the government really has no choice: either it complies with European demands,  and can sign its resignation right after having flopped epically, or it pushes on to find out just how badly Europe is bluffing.

Suddenly next week’s emergency Eurogroup meeting on Wednesday is looking quite fascinating. We hope the caterers have bulletproof jackets.

And with that we give you… EUROPE!

end

The drums of war are beating loudly.

 

(courtesy RT/Robert H)

30,000 troops, 6 rapid units: NATO increases military power in Eastern Europe

Published time: February 05, 2015 14:49
Edited time: February 05, 2015 21:40

Members of Poland's special commando unit Lubliniec disembark from a Mi-17 helicopter during the "Noble Sword-14" NATO international tactical exercise at the land forces training centre in Oleszno, near Drawsko Pomorskie, northwest Poland (Reuters / Kacper Pempel)

Members of Poland’s special commando unit Lubliniec disembark from a Mi-17 helicopter during the “Noble Sword-14” NATO international tactical exercise at the land forces training centre in Oleszno, near Drawsko Pomorskie, northwest Poland (Reuters / Kacper Pempel)

 

The NATO Response Force in Europe might increase to 30,000 troops, more than double the current 13,000, said the alliance’s secretary general after a defense ministers’ meeting in Brussels. Most of the troops are set to be stationed near Russia’s borders.

NATO’s rapid deployment forces will consist of a 5,000-strong brigade, sea and air-based elements and special task troops, said NATO’s Secretary General Jens Stoltenber after meeting with the alliance’s 28 defense ministers in Brussels on Thursday.

Before the meeting he noted that he expected the ministers to “agree on several important elements of a package that increases our collective defense.”

The UK has already announced plans to deploy 1,000 troops and four multirole Typhoon fighter jets to join the Response Force in Eastern Europe.

The spearhead of that force will be 5,000 servicemen, distributed among six compact command centers in Eastern Europe, with about only 50 officers in each.

“It is a response to what we have seen from Russia over a period of time and it is in full accordance with our international obligations,” NATO Secretary-General Jens Stoltenberg told reporters.

 

These six Rapid Deployment Force units to be stationed in Bulgaria, Estonia, Latvia, Lithuania, Poland and Romania are expected to be capable of rapidly reinforcing the region” in response to any threat from Russia,” Reuters reports.

“In Ukraine, violence is getting worse and the crisis is deepening. Russia continues to disregard international rules and to support the separatists,” Secretary-General Jens Stoltenberg told reporters before the meeting.

When necessary, this force could be deployed in two days. The remaining 25,000 will be operational within a week.

 

Last September, Ukraine, Poland, and Lithuania agreed to form a joint military force (LitPolUkrBrig) to take part in the first joint military drill in 2015.

 

The Ukrainian parliament ratified the document on Wednesday.

The brigade of approximately 4,500 servicemen (3,500 – Polish, 545 – Ukrainian and up to 350 Lithuanians) is slated to become the UN and EU peacekeeping force, or alternatively form a basis of a NATO battle group in the region bordering Russia.

The purpose of creating that kind of an international brigade raises concerns, Russian Foreign Ministry’s spokesman Aleksandr Lukashevich said at a media briefing on Thursday.

Ukraine’s internal conflict has already been internationalized to a great extent and adding the element of joint armed forces to it is absolutely counterproductive and would endanger the situation in the region, Lukashevich said.

 

The alliance significantly boosted its presence in Eastern Europe last year, citing a growing threat from Russia in the wake of the Ukrainian crisis.

 

Today, despite the fact that NATO suspended all military cooperation with Russia in 2014, the alliance is keeping open channels with Russian authorities “for political contacts,” Stars and Stripes reported.

On Saturday, Secretary-General Jens Stoltenberg is expected to meet Russian Foreign Minister Sergey Lavrov at the annual Munich security conference.

 

 

end

 

The Turkish lira is the next problem area:

 

(courtesy zero hedge)

Turkish Lira Crashes To New Record Lows, Erdogan Slams “New York Times Owners”

 

Following his outburst at the “independence” of the Turkish Central Bank earlier this week (which crashed the Lira), President Erdogan has opened his mouth again this morning…

  • *ERDOGAN: TURKEY NEEDS NEW CONSTITUTION AND PRESIDENTIAL SYSTEM, and
  • *ERDOGAN SAYS PEOPLE SHOULD RESEARCH NEW YORK TIMES OWNERS

So the blame for his nation’s weakness is an independent central bank and the NY Times… The Lira just passed 2.47 to the USDollar – a record low.

 

 

It appears SocGen was right… The honeymoon is over

Turkey was supposed to be the big trade of the year. After all, it did look particularly good at some point, with the sharp decline in inflation and the collapse in oil prices. Somehow, Turkey had become the new darling of global emerging markets (GEM).

 

Fast forward a month or two and this is now all over.

 

So what happened? Essentially, a big policy error on the part of the central bank in the context of serious political pressures. The emergency meeting saga caused tremendous damage to the credibility of the policy framework and to investor confidence.

 

I am in the US visiting investors right now, and nobody is bullish on Turkey any more.

 

Last time I was there, everybody was. If I had been in the governor’s shoes, I would have stayed quiet and continued easing normally at each scheduled meetings. Nothing wrong with that, and in fact, Mr. Market was going to love it. I would also have looked up the definition of “emergency” in the dictionary.

 

The TRY selling off by 2% each day, causing serious stress in the local financial market? An emergency.

Inflation declining a bit faster than usual, helped by fortunate external factors? Not an emergency.

 

Overall, this was a highly disappointing experience and now the CBRT has moved to my list of “fading” central banks from that of the “following” ones. What I mean by that is I want to position for policy backtracking in Turkey at this point, given the heightened risk of policy volatility. Our 1s5s curve steepener has been struggling quite a bit, as it was a bullish trade on market-friendly policy easing. We just elected to close it at flat PnL.

 

Meanwhile, I believe that positioning is still heavy on the Turkish bullish side, even if sentiment has sharply deteriorated, which represents a major technical risk.

 

end

 

 

*  *  *

 

end

 

 

 

Rig counts continue to fall.  However as we indicated to you, production will stay high

 

(courtesy zero hedge)

 

 

 

 

US Rig Count Collapse Accelerates, Production Stays High

 

The worldwide rig count ended January at 3,309, down 261 from December but it is the US and Canada that is dominating that collapse. Following last week’s all-time record absolute drop of 94 rigs (over 7%, most since APR09), the oil rig count dropped for the 9th week in a row (down another 83 to 1140 rigs – down 27% in last 9 weeks) as it tracks the 4-mo lagged oil price perfectly.The Permian basin saw the biggest cut in rig count.This is the lowest oil rig count since Dec 2011 (down 19.5% YoY) and lowest total rig count in the US since March 2010 – down 25% in the last 9 weeks). Hopes of production cuts are simply wrong as the last 4 times that rig counts have dropped, no production cuts have occurred.

  • *U.S. TOTAL RIG COUNT -87 TO 1,456, BAKER HUGHES SAYS
  • *U.S. OIL RIG COUNT -83 TO 1,140, BAKER HUGHES SAYS

Breakdown:

  • *ENERGY RIGS IN PERMIAN BASIN DROP 37 TO 417: BAKER HUGHES
  • *ENERGY RIGS IN WILLISTON BASIN FALL 11 TO 137: BAKER HUGHES
  • *ENERGY RIGS IN TEXAS’S EAGLE FORD DOWN 10 TO 168: BAKER HUGHES
  • *ENERGY RIGS IN MARCELLUS FORMATION DROP 4 TO 71: BAKER HUGHES

West Virgina has seen its rig count collapse almost 50% from the peak.. and Pennsylvania is actually higher!

 

 

Rig count continues to crater…

 

Heading into the rig count data, WTI Crude was pushing higher (on Greek downgrade news? lol) and is slumping post…

 

And do not expect production to slow any time soon..

 

Charts: Bloomberg

 

 

end

 

 

 

Your more important currency crosses early Friday morning:

 

 

Eur/USA 1.1452 down  .0018

USA/JAPAN YEN 117.31  – .230

GBP/USA 1.5346 up .0028

USA/CAN 1.2443 up .0008

This morning in Europe, the euro is slightly down, trading now well above the 1.14 level at 1.1452 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. The yen continues to trade in yoyo fashion as this morning it settled  up again in Japan by 23 basis points and settling well below the 118 barrier to 117.31 yen to the dollar. The pound was up this morning as it now trades well above the 1.53 level at 1.5346.(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 down a fraction  and is trading  at 1.2443 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: Friday morning : up 143.88 points or 0.82%

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

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

Gold very early morning trading: $1264.00

silver:$17.25

 

Early Friday morning USA 10 year bond yield: 1.81% !!!  down 1  in basis points from Thursday night/

USA dollar index early Friday morning: 93.66  up 9 cents from Thursday’s close.

 

 

This ends the early morning numbers.

 

 

 

And now for your closing numbers for Thursday:

 

 

 

Closing Portuguese 10 year bond yield: 2.41% down 4 in basis points from Thursday

 

Closing Japanese 10 year bond yield: .34% !!! down 2 in basis points from Thursday

 

Your closing Spanish 10 year government bond,  Friday up 4 in basis points in yield from Thursday night.

Spanish 10 year bond yield: 1.49% !!!!!!
Your Friday closing Italian 10 year bond yield: 1.58% up 4 in basis points from Thursday:

 

 

trading 11 basis points higher than Spain.

 

IMPORTANT CURRENCY CLOSES FOR TODAY

 

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

Euro/USA: 1.1318  down .0151

USA/Japan: 118.97 up 1.438

Great Britain/USA: 1.5237 down .0082

USA/Canada: 1.2525 up .0089

 

 

The euro collapsed  this afternoon and it was down  by a whopping .0151  points finishing the day well below  the 1.14 level to 1.1318. The yen was down in the afternoon, and it was down by closing  to the tune of 144 basis points and closing well above  the 118 cross at 118.97 and still causing much grief again to our yen carry traders who need a much lower yen (to surpass 120). The British pound lost considerable  ground during the afternoon session and was down on  the day closing at 1.5237. The Canadian dollar plummeted  again today.  It closed at 1.2525 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: 1.95 up 13 basis points from yesterday

Your closing USA dollar index: 94.68 up $1.11  on the day.

(and faltering these past few days)

 

European and Dow Jones stock index closes:

England FTSE  down 12.49 points or 0.18%

Paris CAC down 12.27 or 0.26%

German Dax down 59.02 or 0.54%

Spain’s Ibex up  37.60 or 0.36%

Italian FTSE-MIB down 58.31 or 0.28%

 

 

The Dow: down 60.59 or 0.34%

Nasdaq; down 20.70 or 0.43%

 

 

OIL: WTI 52.12 !!!!!!!

Brent: 58.25!!!!

 

 

Closing USA/Russian rouble cross: 66.95  down 3/5  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:

 

Greek Tape Bomb Crushes Payrolls Euphoria, Takes S&P Back To Red For 2015

 

Everything was awesome until the middle of the afternoon…

 

And then the world was reminded about GREXIT fears and that the global oil collapse is far from over… and things changed on the day…

 

Still, stockholders can’t complain – the Dow’s best week since 2011.. thanks to very last minute manipulation up 20 points

 

UPDATE: After the cash close… VIX was smashed even lower and S&P Futures pushed higher…

 

But Biotechs worst week since October…

 

As it led all major indices on the week -= but note the ugly close today

 

Utes were monkey-hammered today as rates soared…

 

On the day things were extremely volatile… as stocks roundtripped gain from Jobs, ramped into the European close,  then tumbled on Greek downgrades, Rig Counts, and Greek ultimatums…

 

Internals shifted earlier in the day when we saw “Most shorted” decouple…

 

and VIX decouple…

 

Stocks end the week with a dump and then adesperate ranmp which got The Dow perfectly unchanged YTD!!! Are you fucking kidding me?!! S&P 500 is red for 2015 still…

 

Behold the magic of efficient markets – a perfect levitation to Green YTD!!!

 

Treasury Yields exploded on the week (no really they did)

 

30Y yields topped 2.5%, rising 13% on the week for the worst week since Jan 2009…

 

 

The USD ramped all the way back to unchanged on the week today after the jobs print…

 

Commodities ened teh week very mixed. Gold & Silver dumped, Crude and Copper jumped…

 

Notably Crude and copper are unch from payrolls as gold and silver bore the brunt of the USD surge

 

At the end of the day, Silver, Gold, and Bonds lead in 2015, the S&P is still negative…

 

Charts: Bloomberg

Bonus Chart: “Because… fundamentals”

end

 

January payrolls rise by 257,000 jobs. Strangely the oil sector only sees a drop of 3,000 jobs.

 

(courtesy zero hedge)

 

 

 

January Payrolls Smash Expectations Rising By 257,000 As Hourly Earnings Surge Most Since November 2008

 

So much for expectations that January, missing on 9 out of 10 previous occasions, will miss again, as the BLS just reported that in January a whopping 257K jobs were added, far above the 228K expected, and up from December’s 252K which was revised as part of the annual BLS data revision to 329K, a whopping 147K revision! More impressive: the household survey reported that a whopping 759K jobs were created in January.

The unemployment rate rose from 5.6% to 5.7%, above the 5.6% expected.

But most notable, the average hourly earnings surged from last month’s -0.2% by a whopping 0.5%, the highest monthly jump in average hourly earnings since November 2008. On an annual basis, the increase was a less impressive 2.2%:

It remains to be seen just how this is happening with mass layoffs in the oil patch, but what is now practically assured is that the Fed will have no choice but to hike as soon as June.

More from the report:

Total nonfarm payroll employment rose by 257,000 in January. Job gains occurred in retail trade, construction, health care, financial activities, and manufacturing. After incorporating revisions for November and December (which include the impact of the annual benchmark process), monthly job gains averaged 336,000 over the past 3 months. (See table B-1 and summary table B. See the note at the end of this news release and table A for information about the annual benchmark process.)

  • Employment in retail trade rose by 46,000 in January. Three industries accounted for half of the jobs added–sporting goods, hobby, book, and music stores (+9,000); motor vehicle and parts dealers (+8,000); and nonstore retailers (+6,000).
  • Construction continued to add jobs in January (+39,000). Employment increased in both residential and nonresidential building (+13,000 and +7,000, respectively). Employment continued to trend up in specialty trade contactors (+13,000). Over the prior 12 months, construction had added an average of 28,000 jobs per month.
  • In January, health care employment increased by 38,000. Job gains occurred in offices of physicians (+13,000), hospitals (+10,000), and nursing and residential care facilities (+7,000). Health care added an average of 26,000 jobs per month  in 2014.
  • Employment in financial activities rose by 26,000 in January, with insurance  carriers and related activities (+14,000) and securities, commodity contracts, and investments (+5,000) contributing to the gain. Financial activities has added 159,000 jobs over the past 12 months.
  • Manufacturing employment increased by 22,000 over the month, including job gains in motor vehicles and parts (+7,000) and wood products (+4,000). Over the past 12 months, manufacturing has added 228,000 jobs.
  • Professional and technical services added 33,000 jobs in January, including increases in computer systems design (+8,000) and architectural and engineering services (+8,000).
  • In January, employment in food services and drinking places continued to trend up (+35,000). In 2014, the industry added an average of 33,000 jobs per month.
  • Employment in other major industries, including mining and logging, wholesale trade, transportation and warehousing, information, and government, showed little change over the month.

 

end

 

Huge revisions

 

(courtesy zero hedge)

 

BLS Unleashes Whopping Revisions To 2014 Jobs Data, Now Reports 423K Job Gains In November

 

As reported first thing this morning, in addition to the jobs and wages numbers, perhaps just as importantly, the BLS would revise its entire 2014 jobs data series, which it did today as it noted:

Establishment survey data have been revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors. Also, household  survey data for January 2015 reflect updated population estimates. See the notes at the end ot this news release for more information about these changes.

It wasn’t kidding: remember that January of 2014 jobs print of 144K which was supposedly “horrible” and was blamed entirely on the snow, and was in fact used by the Fed in its decision-making process. Well, guess what: it was BS, and – following the BLS’s revisions – actually turned out to be a whopping 247K.

It gets better: remember that whopping 353K jobs number in November? Well, following the data revision, it was boosted by 20% to a whopping 423K – the second biggest monthly jobs increase in the 21st century!

Here are the details, courtesy of the BLS itself, explaining how it revised, estimated and otherwise massaged the data for the past year:

Effective with data for January 2015, updated population estimates have been used in the household survey. Population estimates for the household survey are developed by the U.S. Census Bureau. Each year, the Census Bureau updates the estimates to reflect new information and assumptions about the growth of the population since the previous decennial census. The change in population reflected in the new estimates results from adjustments for net international migration, updated vital statistics and other information, and some methodological changes in the estimation process.

In accordance with usual practice, BLS will not revise the official household survey estimates for December 2014 and earlier months. To show the impact of the population adjustments, however, differences in selected December 2014 labor force series based on the old and new population estimates are shown in table B.

The adjustments increased the estimated size of the civilian noninstitutional population in December by 528,000, the civilian labor force by 348,000, employment by 324,000, and unemployment by 24,000. The number of persons not in the labor force was increased by 179,000. The total unemployment rate, employment-population ratio, and labor force participation rate were unaffected.


And breaking it more fully down, what was supposed to be a total gain of 2,952K jobs in 2014 has now been revised to 3,197K.

As it turns out, and as had been expected, the BLS has decided to ignore all those reports of thousands workers laid off in the energy space and mask it all with seasonal adjustment.

And the best news of the day: that average weekly wage you thought you were collecting during all months of 2014? That too was just revised higher across the board.

end
How on earth did this happen?
(courtesy zero hedge)

 

Did The BLS Forget To Count Thousands Of Energy Job Losses?

One of the convenient things about the sharp plunge in crude and its subsequent and acute impact on energy company staffing levels, is that due to its concentrated nature one can keep track of precisely how many layoffs corporations in the energy sector announced in January. And as Bloomberg helpfully tracks, there were at least (and surely many more that were not unaccounted for) 18,000 terminations by US companies in the high-paying energy sector (and thousands more by foreign companies who have laid of US workers which are not shown in this total).

According to third-party tracker Challenger, Gray & Christmas, the number is roughly the same with 21,322 job cuts in January in the energy space attributed to the tumble in oil prices. Texas alone accounted for 19,833 of these layoffs.

“We may see oil-related job cuts extend well beyond those industries involved with exploration and extraction,” said John A. Challenger, CEO of the outplacement firm. He warned the retail, construction and entertainment sectors in regions that have benefited from the oil boom could face challenges.

The BLS report? Well, according to the January payrolls report, the number of Oil and Gas Extraction workers declined to 199.5K in January from 201.4K in December, a virtually non-exstant drop of 1,900 workers (and even the not seasonally adjusted, raw data shows a tiny drop of just 3.1K workers).

Visually, the outlier is as follows:

So our question is: did the BLS choose to ignore these thousands of jobs losses, or did it simply forget?

 

end

 

Now the difference between manufacturing jobs in the jobs and the amount of waiters in the USA is at a record low:

 

(courtesy zero hedge)

 

Difference Between US Manufacturing Workers And Waiters Drops To A Record Low

 

While one of the much trumpeted highlights of today’s jobs report was the 0.5% jump in average hourly earnings, the reality as even Goldman’s Jan Hatzius is quick to note, is that on an annual basis, wage growth is still stuck near the lowest levels recorded since the Great Financial Crisis.

 

So once again, for all those who scratch their heads trying to explain why this wage erosion continues despite the “best efforts” of the Fed (to make billionaires into trillioinaires), here is a simple explanation: in January the number of waiter and bartenders rose by 35K to 10.946 million. On the other hands, that one job category that once made America a great country and the dollar the global reserve, manufacturing, rose by just 22K to 12,330K, the lowest monthly increase since November.

And in context, as the chart below shows, the difference between America’s manufacturing workers and waiters has dropped to a record low of just 1.387 million. The same difference was 11.3 million on January 31, 1990.

end
Dave Kranzler comments on the ridiculousness of the jobs report
(courtesy Dave Kranzler/IRD)

Today’s Employment Report Is The Biggest Lie They’ve Told To Date

There’s no BS like the brown stuff tossed at us by the BLS (Bureau of Labor Statistics).  Not only do they want us to believe that the economy produced 257,000 jobs in January, during a time in which the energy sector – the largest source of jobs growth since 2009 – was cutting 10’s of thousands of workers, they revised November’s supposed 353k job gain up to 423k.  It was the second biggest monthly jobs increase this century.    Anyone believe that?

It’s gets better:   the notoriously ridiculous birth-death model modeled in a 257k net loss in jobs.  How is it possible that economy generated any jobs growth if big companies are dumping workers (see IBM + big oil + oil shale + Radio Schack, etc) and the traditional engine of jobs growth – new business start-ups – were unloading jobs?   I’ll tell you how:  pure, unadulterated statistical lies.

Oh wait. The BLS one-upped itself on its lies.   It took the number of jobs supposedly “created” by the economy in 2014 up to 3.2 million from the original lie of 2.95 million.   Now, how is that all possible when we have THIS (source:  Zerohedge.com, edits are mine – click to enlarge):

LFPR

Just a reminder, the only way that the labor force participation rate declines is when the number of people who leave the “labor force” exceed the number of people entering the “labor force.” It essentially means that there’s a huge “reservoir” of people out there who simply gave up looking for work and are permanentlyunemployed on the Taxpayer payroll – i.e. unemployment, Social Security Disability, welfare.

Please see this video for a detailed description of just how blatantly distorted the Government’s employment report really is:

I guess in order to make lemonade out of this cyanide-infused lemon the Government served up today, the best part about any Government economic report is watching grown men debate and agonize over the numbers, when the numbers are a complete fairy-tale. It’s like watching supposedly well-educated adults debating the merits of “Spongebob Squarepants” vs. “Sesame Street.”

 

 

 

 end
Consumer credit misses and even car loans have weakest increase!
The economy is in a tailspin despite the phoniness of the jobs report
(courtesy zero hedge)

Consumer Credit Growth Misses: Revolving Credit Surges As Student, Car Loans Have Weakest Increase Since February 2012

Following a significant downward revision to November’s data, December consumer credit growth printed a gain of $14.755 billion, missing expectations of $15 billion (for the 5th month) and hovering near one-year lows. The most notable aspect was the $5.77 billion surge in revolving credit (e.g. credit cards) as Americans extended and pretended into the holidays – the biggest rise since April, and the second biggest monthly increase since the GFC.

 

Evan as credit card usage surges…

 

Then again, here it is in context:

 

More troubling however, those mainstays of the US economy, student and auto loans rose by the smallest amount since February 2012!

And without “student loans”, just how will Apple sell tens of millions of iPhones every quarter?

We  will see you on Monday.

bye for now

Harvey,

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2 comments

  1. Hello Harvey,

    Is there any way i can find out whether the banksters are naked short selling or going long?

    can you fore warn us when the comex is surrounded by short or longs?

    Spot Gold and silver was smashed by bankster naked short selling a few days ago.

    I find it difficult to utilize the above mentioned info, am i missing something?

    Cheers

    Like

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