And now for the important paper stories for today:

Early Thursday morning trading from Europe/Asia

1. Stocks mainly higher on major Asian bourses  / the  yen falls  to 119.76

1b Chinese yuan vs USA dollar/ yuan slightly weakens  to 6.2454
2 Nikkei up 327.04 or 1.88%

3. Europe stocks all the green   // USA dollar index down to 94.63/

3b Japan 10 year yield huge rise to .40%/ (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.81/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  below the 120 barrier this morning/
3fOil: WTI 50.36 Brent: 56.07 /all eyes are focusing on oil prices. This should cause major defaults as derivatives blow up.

3g/ Gold up /yen down;

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

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

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

3j Oil rises this morning for  WTI  and Brent

3k Sweden enters NIRP/lowers it’s interest rate by 10 basis points to -.10% (see below)

3l  Greek 10 year bond yield :10.53% (down 7 basis points in yield)

3m Gold at $1223.00. dollars/ Silver: $16.85

3n USA vs Russian rouble:  ( Russian rouble  down 1 per dollar in value)  66.12!!!!!!

3 0  oil  into the 50 dollar handle for WTI and 56 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. They also limit the amount of treasuries that Greek can issue.  Greece rejects any more EU funds and thus rejects the European ultimatum to accept this funding!!

Meeting yesterday failed to decide Greece’s fate

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

3r the world still awaits the Greek decision today.

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

4. USA 10 yr treasury bond at 2.04% early this morning. Thirty year rate well below 3%  (2.62%!!!!)/yield curve flattens/foreshadowing recession
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid

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

Market Wrap: Whirlwind Manic-Depressive Session Sees Futures Slide Then Surge

So far it has been an overnight session which clearly forgot to take its Lexapro, with futures first tumbling after CNBC’s “leak” that a Greek deal had been reached was refuted, only to surge subsequently on both the Riskbank’s foray into NIRP and QE which crushed the Swedish currency and sent its stocks to recorder highs, and more importantly, on the latest ceasefire out of Minsk which has pushed Russian and European assets substantially higher. While only the most naive believe that any palpable end to Ukraine hostilities will emerge as a result of today’s delay, expect for Greek headlines to return with a vengeance as today it is Tsipras’ turn to speak at a summit of the 28 European Union leaders set to begin momentarily.

For now, however, the algos have been delighted to forget the latest Greek disappointment and focus on the utopia that central planners have in mind, if only for the 1%, and send US equity futures surging, and on pace to resume their grind higher to all time highs.

Looking at specific regions, Asian equity markets trade mixed after following suit from a lacklustre Wall Street close, which saw the S&P 500 finish relatively flat. The Nikkei 225 (+1.8%) outperformed bolstered by yesterday’s sharp fall in JPY which prompted the index to briefly break above the 18,000 level for the first time this year. Elsewhere, both the Hang Seng (+0.44%) and Shanghai Comp (-0.50%) fluctuated between gains and losses, with a rally in the telecoms sector helping overcome weakness across energy stocks, amid yesterday’s oil price slump.

The Eurogroup meeting on Greece failed to come to a meaningful conclusion last night and whilst this was expected amid ongoing tensions, the lack of cooperation between the two parties saw equity futures open lower this morning. However this trend reversed at the open of the cash markets, with stock specific news, such as positive earnings from the likes of Renault (+9.4%) and Credit Suisse (+9.6%), pushing European indices higher.

Sentiment was further bolstered through the morning after a technical break in the DAX future, where a spike took out stops out through the high before the EUREX close yesterday (10800) and the high on Tuesday’s session (10816). The move higher also prompted rumours of a deal being brokered between Greece and the Eurogroup, however these reports were not based on any information of substance. Another contributing factor has been Russia’s President Putin stated that a cease-fire has been agreed with Ukraine and is to start on Sunday (15th Feb).

Elsewhere, Gilts (-60 ticks) are underperforming in fixed income markets on the back of the BoE Quarterly Inflation Report, while T-Notes and Bunds are also lower, partially due to equity strength, with US traders await the final Treasury auction of the week in the form of USD 16bln in a 30yr note.

In FX, markets have seen abnormal volatility today, with the key event being the BoE’s Quarterly Inflation Report in which the MPC members revised down their short term CPI forecasts as a consequence of the fall in oil prices however stated that they expect inflation to rise back above the 2% target in the 2 year horizon. Other factors of the report that were perceived to be hawkish were that both growth and wages are set to increase and spare capacity will be eliminated within 18 months, compared to a forecast of 2-3 years at the last report. This saw GBP/USD climb above 1.5300 to mark the pairs highest level of the week while the EUR/GBP cross trades at 7 year lows.

Elsewhere, SEK weakened aggressively on the back of an unexpected 10bps rate cut from the Riksbank to -0.10%, after 12 of the 18 surveyed predicted that rates would be held. The announcement also saw the central bank state that they are to buy SEK 10bln of government bonds further exacerbating the weakness in the currency. Meanwhile, JPY strengthened this morning after comments from sources claiming that the BoJ thinks any additional stimulus will be ‘counter-productive’, which saw USD/JPY fall by over 60 pips in an initial fast money move to break back below the 120.00 level.

Finally, looking at commodities, oil prices have been strengthening during this morning’s session, aided by the weakening USD (-0.3%) to rebound from the lows yesterday, which saw WTI crude futures fall below the USD 50.00 handle after DoE inventories showed a larger build than expected (4868K vs. Exp. 3750K, Prev. 6333K).

Elsewhere, the metals complex sees gold experiencing a mild gain amid continued Greece concerns with prices remaining near 5 week lows after USD strength pressured the precious metal yesterday. Elsewhere, silver prices were notably lower amid technical selling with spot prices breaking below both the 50 DMA (USD 16.76/oz) and 100 DMA (USD 16.72/oz). JP Morgan sees gold falling by year end because of stronger USD, low inflation and low commodity prices however it may see some support on geo-political risks and seasonal demand. JPM think palladium and platinum looks cheap and palladium could be the best performer this year.

On today’s calendar, we get the retail sales print for January with the market expecting more energy related weakness at the headline. Jobless claims data is also due up and it’ll be interesting to see if the four-week average stays below 300k. Finally business inventories rounds off today’s releases.

Bulletin Headline Summary

• Russia-Ukraine ceasefire helps boost sentiment around Europe after Greek stalemate overnight
• GBP spikes higher as the BoE’s Quarterly Inflation Report had a hawkish tone with growth and wages set to rise and slack in the economy to be eliminated faster than previously forecasted
• Looking ahead, out of the US today we have Advanced Retail Sales, weekly jobless data and a host of earnings, including AIG
• Treasuries fall, 30Y yields rise for sixth day before before quarterly refunding concludes with $16b long bonds; WI bid yield 2.63%, second lowest on record, vs record- low 2.43% award in January.
• USTs in mid-January began a seasonally bearish period lasting into the May refunding; 10Y yields breaking above 2% could target 2.08%, then 2.19% near term, ED&F Man head of rates and credit Tom di Galoma writes in note
• The leaders of Russia, Ukraine, Germany and France agreed on a cease-fire to stem the conflict that’s devastated eastern Ukraine and triggered the worst crisis in more than 20 years between Russia and its former Cold War foes
• EU leaders will take up the baton on Greece when they gather in Brussels today after finance ministers postponed decisions on country’s future financing until next week
• Greek lenders have almost exhausted Emergency Liquidity Assistance they received from the European Central Bank via the Bank of Greece, Skai Television reports in its evening news bulletin, without saying how it got the information
• Sweden’s central bank cut its main rate below zero and unveiled additional measures designed to jolt the largest Nordic economy out of a deflationary spiral
• Bank of England Governor Mark Carney signaled rates may increase faster than investors had anticipated as Britain’s economy gathers pace
• Bank of Japan policy makers view further monetary easing to shore up inflation as a counterproductive step for now, amid concern it could trigger declines in the yen that damage confidence, people familiar with the talks said
• The number of energy jobs cut globally have climbed well above 100,000 as once-bustling oil hubs in Scotland, Australia and Brazil, among other countries, empty out, according to Swift Worldwide Resources, a staffing firm
• Kaisa Group Holdings bonds slid after co. said lenders and bondholders “should not expect payments of principal and interest according to existing terms”
• Sovereign yields mostly lower; Greece 10Y falls ~23bps. Asian, European stocks gain, U.S. equity-index futures higher. Brent and WTI higher, gold and copper gain

Hoping to make some more sense of the overnight depressive euphoria is DB’s Jim Reid with his overnight recap

There may also be some sleepless nights ahead for European leaders after a stalemate yesterday after a late session and hours of talks at the Eurogroup meeting. The result largely lived up to our expectations with both Greece and Eurozone finance ministers failing to agree on an outcome. Instead, talks now move onto Monday’s Eurogroup meeting. The lack of any material outcome was summed up in a very short press conference shortly after in which both Greece and the Euro officials failed to agree on a joint statement – the Greek side rejecting language that might be seen as agreeing to an extension of the current programme. Head of the Eurogroup finance ministers Dijesslbloem said in the press conference after that ‘we covered a lot of ground but didn’t actually reach a joint conclusion on how to take the next steps’ and that ‘there has to be political agreement on the way forward’. Varoufakis meanwhile was quoted in the Greek press Ekathimerini shortly after the meeting as saying that ‘we explained why this bailout is not working’ and that ‘we want a new contract with Europe’.

Our resident expert George Saravelos believes that irrespective of today’s outcome, we now have some more visibility over how Monday could potentially play out. On the one hand Europe is offering a technical extension of the existing program and on the hand Greece is looking for maximum flexibility and the least amount of up-front commitments attached to completing the program review. George still believes that an agreement to move forward should be achievable but that successful completion in agreeing on the terms will be a close call given the large distance still clearly between Greece and European officials. Of course, failure to agree on moving forward on Monday or a deadlock will shift focus to next Wednesday’s ELA review by the ECB, where, in the event of failure we could see the ECB become more explicit on timing of potential ELA withdrawal.

The other focus last night was the Ukraine and Russia talks and as we go to print reports are breaking that leaders from France, Germany, Russia and Ukraine are set to sign an agreement according to Reuters. The talks have gone on for most of the night but the early signs appear to be positive and we are expecting a conference imminently. Staying on the Ukraine, we also heard from the IMF’s Lagarde yesterday who was quoted on Bloomberg saying that the IMF is ‘very close’ to a bailout agreement for Ukraine. An official announcement is expected this morning at 9am CET.

With the outcome of the meeting coming after close in the US, markets this morning have rebounded off the early weakness from the Greece news and bourses are trading firmer as we type – reflecting the breaking headlines from the Ukraine talks. The Hang Seng (+0.45%), Shanghai Composite (+0.33%) and Nikkei (+1.53%) are all firmer – the latter in part benefiting from strong machine orders data – whilst bourses in Taiwan and Korea have also rebounded off the day’s lows in recent moments. The Euro is 0.2% weaker versus the Dollar in trading this morning, having initially swung around last night with various headlines.

Before the Eurogroup meeting yesterday, markets were subdued in the US with the S&P 500 eventually closing unchanged on what turned out to be the third lowest volume day this year. The index did in fact trade as low as -0.5% intraday before paring losses into the close. It did cross into positive territory briefly as headlines over Greece began to emerge from the Eurogroup meeting. Energy stocks (-0.66%) declined as oil markets fell for a second consecutive day. WTI (-2.36%) and Brent (-3.14%) fell to $48.84/bbl and $54.66/bbl respectively after the latest IEA report which showed crude supplies rising to record levels once again last week. The earlier hopes of US production cuts do appear to have been put to one side for now.

Treasuries were also quiet up until the Eurogroup headlines started to leak. Although the 10y benchmark yield closed 2bps wider at 2.018%, the yield did at one point touch an intraday low of 1.969% during the meeting. Meanwhile the Dollar ended the day unchanged with the DXY having earlier traded some +0.36% firmer before declining in the last hour of trading. Data-wise it was quiet with just the monthly budget statement for January which saw a smaller than expected deficit at $17.5bn (vs. expectations of a deficit of $19bn). Fedspeak caught the eye once more however. The Dallas Fed’s Fisher was quoted on Bloomberg with regards to raising rates saying that ‘I wanted it to happen in March, and I lost the argument’.

It was a similar subdued picture in Europe earlier in the day. The Stoxx 600 finished the day 0.24% weaker whilst the DAX (-0.02%) finished more or less unchanged. Credit markets also closed generally flat. Greek assets were notably weaker in the lead up to the meeting however with Greek equities closing 4% weaker and 3y yields widening some 130bps. With little in the way of data, the market appeared to be in something of a wait and see mode for Greece. 10y Bund yields finished 1.5bps tighter at 0.353% and Spanish and Italian yields were 2-4bps wider. The Euro meanwhile finished 0.13% firmer at $1.1335 however in reality it bounced around with the end of day headlines. Elsewhere, having highlighted some examples of record low yields in recent reports, Switzerland yesterday sold CHF 10y bonds at a yield of just 0.011% – the lowest of any country on record.

It’s a busier day data wise today as the calendar picks up. The final inflation reading for Germany will likely be the highlight this morning with the market expecting a -0.3% yoy headline print. Industrial production for the Euro-area will also be worth keeping an eye on and we also get the BoE inflation report out of the UK and the Riksbank monetary policy decision. In the US this afternoon we’ve got the retail sales print for January with the market expecting more energy related weakness at the headline. Jobless claims data is also due up and it’ll be interesting to see if the four-week average stays below 300k. Finally business inventories rounds off today’s releases.

end

Last night the Swedish Central bank, the world’s oldest central bank and 4th oldest bank  (formed in 1668) decided to lower its interest rate by 10 basis points to -10 %.  It is also doing QE as they are buying an additional 10 billion SEK worth of bonds:

(courtesy zero hedge)

Sweden Central Joins The NIRP Club: Lowers Interest Rate To -0.1%, Launches QE

It’s a NIRP world and you are either in it, or are determined to lose the currency wars. And hours ago, the world’s oldest central bank, that of Sweden, announced that it too would join its NIRP peers in an attempt to preserve its currency’s fighting power in the global currency wars which make a mockery of what is going on in Ukraine, by lowering the benchmark interest rate to -0.1%, but also launch QE by buying SEK 10 billion of government bonds, thereby making sure that the stock of available debt in private hands is even lower and that central banks monetize even more than merely “all” of all net issuance in 2015.

From the press release:

There are signs that underlying inflation has bottomed out, but the situation abroad is now more uncertain and this increases the risk that inflation will not rise sufficiently fast. The Executive Board of the Riksbank has therefore decided to cut the repo rate by 0.10 percentage points, to -0.10 per cent, and to adjust the repo-rate path down somewhat. At the same time, the interest rates on the fine-tuning transactions in the Riksbank’s operational framework for the implementation of monetary policy are being restored to the repo rate +/- 0.10 percentage point. Moreover, the Riksbank will buy government bonds for the sum of SEK 10 billion. These measures and the readiness to do more at short notice underline that the Riksbank’ is safeguarding the role of the inflation target as a nominal anchor for price setting and wage formation.

 

Economic activity in Sweden strengthening but inflation is too low

 

Although the recovery abroad is slow, growth in Sweden will benefit from the low oil prices, the weaker krona and the very low repo rate. GDP growth is expected to increase at a faster pace in the coming period and the labour market is expected to strengthen.

 

Inflation is still low, but there are now signs that underlying inflation, for instance, the CPIF excluding energy, has bottomed out and is rising. The krona is weaker than anticipated, which will also contribute to somewhat higher inflation. However, low energy prices are expected to hold down CPIF inflation in the year immediately ahead.

 

Readiness to do more

 

The measures the Riksbank is now taking underline that the Riksbank is safeguarding the role of the inflation target as a nominal anchor for price setting and wage formation. To ensure that inflation rises towards the target, the Riksbank is prepared to quickly make monetary policy more expansionary, even between the ordinary monetary policy meetings, should the need arise. This will primarily entail making further repo-rate cuts, postponing the first repo-rate increase and increasing the purchases of government bonds. In addition, there is the possibility of a programme of loans to companies via the banks.

As the WSJ adds, analysts were divided ahead of the rate decision about which way it would go. A small majority expected unchanged rates while others had forecast the repo rate could be cut as low as minus 0.25%. In response to the move, the Swedish krona weakened against the euro, which rose to around 9.65 kronor from 9.50 kronor.

It’s called NIRP for a reason: “Sweden’s two-year bond, which is more responsive to monetary policy changes than longer-dated bonds, traded at a yield of minus 0.23% after the decision compared with minus 0.18% before.”

While it is unclear if NIRP is the missing link that will fix all that ails the deflating Swedish economy, one thing is clear: the Riskbank has just given the all clear to BTFATH:

But no matter just how drastic this latest market intervention by yet another central bank, most wanted “moar”

Analysts were initially underwhelmed by the scale of the bond-buying program, known as quantitative easing, but noted the Riksbank’s comment that it is ready to do more in between scheduled meetings.

 

“Give me 10 billion kronor and I’ll say thank you very much but it’s the smallest quantitative easing ever,” said Société Générale analyst Kit Juckes.

 

SEB analyst Carl Hammer said he thought 10 billion kronor could be “just the beginning,” noting “they left the door open.”

 

Analysts at Nordea bank said the overall message from the Riksbank was “extremely soft.”

And sure enough, when this initial attempt to boost stock prices, pardon, inflation is found to be lacking, expect to see much more.

end

Greece goes on the offensive today and demands Draghi to monetize more Greek bonds along with other bonds from the periphery to stimulate the economy  as rumours spread that they reached their limit 0f 60 billion Euros of ELA  support (and maximum of 15 billion euros of treasury bill issuance).

(courtesy zero hedge)

Greece To ECB: “Get To Work, Mr. Draghi”

With talk that Greek banks have hit their emergency lending limit with the ECB (which has prompted a teleconference this morning among ECB polcy-makers), it seems the newly-found position of negotiating strength for Greece (perhaps encouraged by China or Russia behind the scenes) has prompted more demands:

• GREECE’S SYRIZA CHIEF ECONOMIST JOHN MILIOS PROPOSES OVERALL EURO ZONE DEBT OVERHANG REDUCTION BY ECB 
• ECB COULD BUY ALL EURO ZONE DEBT MATURING IN 2016-2020 AND ALL INTEREST PAYMENTS-SYRIZA’S MILIOS
• ECB WOULD FOOT THE BILL NOW, BUT BY 2040 IT WOULD BE ABLE TO ERASE ALL LOSSES THROUGH PROFIT RETENTION-MILIOS

Roughly translated – “Get back to work, Mr.Draghi”and monetize all of Europe’s debt. With negative net issuance (i.e. central banks already monetizing over 100% of 2015’s expected issuance) already here, this demand merely pushes the ‘independent’ monetary policymakers to enable more fiscal profligacy.

Greek bank liquidity running dry…

The ECB moved Greek banks onto ELA last week after it ended a waiver on the quality of the nation’s debt it accepts as collateral amid doubts that the newly elected government will conclude its aid program.

 

Greek banks have almost exhausted the 59.5 billion euros granted by the ECB, Skai Television reported yesterday, without saying how it got the information.

And so ECB policymakers are discussing what to do next… (as Reuters reports)

European Central Bank policymakers held a telephone conference on Thursday concerning the provision of Emergency Liquidity Assistance (ELA) to banks in Greece, two people familiar with the matter told Reuters.

 

The ECB has authorised Greece’s national central bank to provide the country’s lenders with some 60 billion euros ($68.08 billion) in ELA, people familiar with the matter have said, but this requires regular approval from the ECB’s Governing Council.

 

The ECB declined to comment, when asked about the telephone conference.

 

ELA provision is critical to the fate of Greece’s banks, and in turn the country’s fate, after the ECB cancelled its acceptance of Greek bonds in return for funding last week.

* * *

The question is – does The ‘independent’ ECB play hard ball and squeeze Greek banks by withholding more funding to aid Eurogropup negotiations into Monday? For now, Greek bank bonds and stocks are notably higher (for what reason is anyone’s guess)…

Last night a ceasefire was agreed to by all sides.  I wonder how long this will last!! The IMF supposedly is set to give a 4 year restructuring deal.

The amount is equivalent to 15 billion euros.  That amount will not last long.  Its currency the UAH has fallen to 25 UAH to the dollar from 15 to the dollar.  Hyperinflation is already setting into the Ukraine.

end

The latest calendar of events with respect to Greece and the EU:

(courtesy zero hedge)

Greece: Another Big Picture Update And The Latest Calendar Of Events

Confused by the whirlwind of conflicting facts, not to mention outright lies, leaks and rumors, surrounding the negotiations of what will either be the third Greek bailout of its first, and final, Greek exit from the Eurozone? The following summary should answer most questions.

From DB’s George Saravelos

The Emergency Eurogroup on Greece concluded late Wednesday evening with little progress being made. On the positive side, expectations were very low – all sides had suggested that no agreement should be expected today. On the negative side, it appears that the meeting concluded with the prospect that a joint Greece – Eurogroup statement could be signed by both sides. However, agreement on the phrasing of this statement broke down, with the Greek side ultimately rejecting the language as equivalent to an extension of the existing program – something which the prime minister explicitly ruled out in the Greek parliament a few days ago.

Semantics may be playing a role here, as the Greek side would clearly prefer a re-branded “bridge program” that may be more acceptable domestically. Substance cannot however be overlooked: the Greek prime minister has explicitly distinguished between a legal extension of the “loan agreement” (which the government desires and relates to funding disbursement) and a rejection of an extension of the “program”, which includes all the policy conditionality attached to financial assistance. Ultimately, the key difference between the two sides is that Greece doesn’t want to commit to the policy conditionality specified under the existing program, while the European side is requesting the opposite.

Irrespective of today’s outcome, we now have a little more visibility around how the debate will evolve into Monday’s Eurogroup meeting: the European side is offering a technical extension of the existing program (rather than our initial expectation of a 3rdrd ESM program), with the Greek side desiring maximum flexibility and the least amount of up-front commitments attached to completing the program review.

Our baseline remains that an agreement to move forward should be achievable. After all, this will only involve a commonly agreed written statement by both sides that marks the first step in a three-part process:

• Step 1 consists of agreeing on a negotiating framework around which talks can begin (“the program extension”).
• Step 2 will then involve the actual negotiation over the fiscal path, structural reforms and debt sustainability (“the policy conditionality around the program”).
• Step 3 then requires the approval of any program conditionality by the Greek parliament before any formal disbursements to Greece are made.

Given the large distance separating the two sides, we view the successful completion of each of the three steps as a close call. Agreement at the Eurogroup on Monday will allow substantive negotiations to start, but any additional interim funding to Greece via increased t-bill issuance (if at all) is unlikely to be approved until progress on talks has been achieved. A continuation of the deadlock on Monday will immediately shift focus to Wednesday’s bi-weekly ECB review of the ELA limits of Greek banks: in the event of failure, we would expect the ECB to become more explicit on the timing of when ELA funding would be withdrawn or capped.

Ultimately, the alternative of ELA withdrawal and eventual capital controls for Greece is worse for all sides involved. But whether progress can be achieved under very pressing deadlines and large differences of opinion on the underlying policy path between the two sides remains to be seen.

Updated calendar

• Thursday February 12th – European Council of EU Leaders, Tsipras likely to meet Merkel on sidelines
• Sunday February 15th – Voting for new Greek President begins, EC Commissioner Avramopoulos most likely candidate, originating from New Democracy. Likely completed by second round on the following day requiring 151 MP majority
• Monday February 16th – Eurogroup
• Wednesday February 18th – Bi-weekly ELA review
• Tuesday February 24th – 595mio EUR of bond interest/principal due
• Saturday February 28th – Current EFSF program expires
• 6th March – 297mio EUR IMF repayment due / 1.2bn EUR t-bill matures
• 13th March – 334mio EUR IMF repayment due / 1.6bn EUR t-bill matures
• 16th March – 556mio EUR IMF repayment due
• 20th March – 334mio EUR IMF repayment due / 111mio EUR bond interest/principal due / 1.6bn EUR t- bill matures

end

The rumours are true:  the ECB hikes the ELA to 65 billion euros by raising the amount of money that they can raise via the treasury bill route:

(courtesy zero hedge)

Stealth Greek Bank Run Continues: ECB Hikes Emergency Lending To EUR 65 Billion

It would appear the un-sourced rumors of Greek banks having used up their Emergency line of credit with the ECB are true. Following a hastily put together conference calls this morning:

• *ECB RAISES GREECE ELA ALLOWANCE TO EU65BN: FAZ

Up from the previous EUR59.5 Billion. It appears the stealth bank run in Greece is showing no signs of slowing.

As Reuters repiorted yesterday,

The ECB moved Greek banks onto ELA last week after it ended a waiver on the quality of the nation’s debt it acceptsas collateral amid doubts that the newly elected government will conclude its aid program.

 

Greek banks have almost exhausted the 59.5 billion euros granted by the ECB, Skai Television reported yesterday, without saying how it got the information.

And so today, as Bloomberg reports,

*ECB DECIDED ON GREEK ELA ALLOWANCE IN TELEPHONE CONFERENCE: FAZ

 

The ECB’s Governing Council held a phone conference Thursday to raise the allowance for the Greek central bank to provide Emergency Liquidity Assistance by 5 billion euros, FAZ reports, without saying where it got the information

 

 

 

 

end

War of words:  ECB’s Noyer admits to the world that the GREXIT would be very painful.

It demands Greece to negotiate seriously ????

(courtesy zero hedge)

Despite media claims that the German-Greek relationship did not “look tense” at today’s EU leaders’ meeting; and in spite of the European market’s seeming exuberance at no deal but a possible deal but no deal, ECB’s Noyer has come out swinging:

• *NOYER SAYS GREECE NEEDS TO NEGOTIATE SERIOUSLY
• *NOYER SAYS GREEK EXIT FROM EURO WOULD BE `VERY PAINFUL’

This is odd in that markets have been managed to prove Grexit is ‘contained’.. Noyer added that the Emergency lending agreement (ELA) is adapted to the needs of the economy, and ironically explained Greece needed to focus on growth (ironic because Greece is expected to grow notably faster that eurozone this year).

end

Germany blinks;

still looks a little far fetched..

(courtesy zero hedge)

Greek Gambit Succeeds As Germany Said To Ease Bailout Terms

With tax receipts tumbling and ELA funding hitting its limit, the Greeks are up against it. On the other side, the Greek strength in the face of EU’s demands (and Eurogroup’s realization of the uncertainty this could lead to) has apparently led to the start of compromise. As Bloomberg reports,

• *GERMAN, GREEK OFFICIALS SIGNAL COMMON GROUND ON AID DEAL
• *GERMANY SAID NOT TO INSIST ALL PARTS OF CURRENT BAILOUT STAY
• *GREECE SAID TO BE OPEN TO SURPLUS, PRIVATIZATION DEBATE

As Merkel noted earlier, “Europe is always about finding a compromise,” and it appears they are getting closer  – as long as a ‘program’ continues. Bundesbank’s Weidmann has noted that Grexit would not solve either side’s longer-term problems.

As Bloomberg reports,

Greece and Germany are pursuing a deal on the conditions required to continue the Greek bailout as each side signals a willingness to compromise, according to government officials taking part in the talks.

 

Germany won’t insist that all elements of Greece’s current aid program continue,said two officials in Berlin. As long as the program is prolonged, they said, Germany would be open to talking about the size of Greece’s budget surplus requirement and conditions to sell off government assets.

 

For its part, Greece is prepared to commit to a primary budget surplus, as long as it’s lower than the current 4 percent of gross domestic product, according to Greek government officials.Prime Minister Alexis Tsipras’s coalition also might be willing to compromise on privatizations, one of the officials said.

 

All the officials asked not to be named because the deliberations are private and ongoing.

*  *  *

Merkel added:

“You make compromises when the advantages outweigh the disadvantages.Germany is ready for that, but you also have to say that Europe’s credibility depends on us sticking to the rules and that we deal with each other in a reliable way.”

So to summarize: Greece fails on its ‘promise’ to uphold one-third of its program’s requirements but because it upheld two-thirds, Germany insists that shows commitment and supports Merkele’s earlier comments that “Europe’s credibility depends on us sticking to the rules.”

Brilliant!

end

Then late this evening, the tone certainly did not look like it was compromise-prone:

(courtesy zero hedge)

Dijsselbloem Pours Cold Water On Greek Compromise: “Don’t Get Your Hopes Up”

Just over an hour ago, what appears to have been a strawman now was issued by Bloomberg via leaked sources from Greek and German officials that proclaimed talk of a “compromise” deal that makes everyone happy in Europe. However, as the leaders exited today’s summit,the tone of their responses did not exactly sound compromise-prone:

• *DIJSSELBLOEM SAYS GREECE PROCESS GOING TO BE V. DIFFICULT, “DON’T GET YOUR HOPES UP YET” ON GREECE
• *MERKEL URGES GREECE TO MAKE UP ITS MIND SOON ON FINANCING

Hardly the resoundingly positive spin we saw earlier. Poland’s Tusk, Finland’s Stubb, and good old Juncker also chimed in with the latter commenting on Greece’s “anti-social” behavior. Tsipras made some neutral statements, then came out swinging, “The MoU as we knew it is over. The same goes for the troika. All these years, the burden fell on the poorest. Our aim is to restore the sense of justice.”

Juncker

“We have heard that the Greek government wants to cancel some measures ‘cos they are antisocial. Indeed, they may be antisocial.”

Eurogroup

• *DIJSSELBLOEM SAYS `DON’T GET YOUR HOPES UP YET’ ON GREECE
• *DIJSSELBLOEM SAYS `VERY CAUTIOUS’ ON GREECE
• *DIJSSELBLOEM SAYS GREECE PROCESS GOING TO TAKE TIME
• *DIJSSELBLOEM SAYS GREECE PROCESS GOING TO BE V. DIFFICULT

“I’m very cautious on the political side, it’s going to be very difficult and it’s going to take time and don’t get your hopes up yet”

 

“The technical assessment will be a comparison to see what the common ground is between the current program and the political program of the new Greek government. The Greek minister has said before that he thinks 70 percent of the current program he could take for his responsibility. So we could look at the 70 percent, we could also look at the 30 percent; what has to come out, what could be put in place and these have to of course be valid measures and that’s the kind of work we’re going to do this weekend and maybe we can make some political progress again on Monday.”

Germany

• *MERKEL SAYS TSIPRAS MADE GENERAL STATEMENT ON GREECE GOALS
• *MERKEL URGES GREECE TO MAKE UP ITS MIND SOON ON FINANCING

Finland

• *STUBB SAYS CONVERSATION ON GREECE WAS `VERY GOOD’
• *STUBB SEES GREECE PROPOSAL BY MONDAY

“We had a very good conversation and discussion about a possible avenue and path forward and I am sure that they will be working on some kind of a program with the institutions over the coming days and put forward the proposals on Monday”

Poland

• *TUSK SAYS EU LEADERS DIDN’T ENTER INTO NEGOTIATIONS ON GREECE

*  *  *

Then Tsipras spoke:

• *TSIPRAS SAYS DIJSSELBLOEM STATEMENT IS POSITIVE STEP FOR GREECE
• *TSIPRAS: EUROGROUP TO DISCUSS MONDAY TRANSITION TO NEW PROGRAM
• *TSIPRAS SAYS GREEK DEBT PROBLEM NEEDS TO BE TACKLED
• *TSIPRAS VOWS TO TACKLE VESTED INTERESTS IN GREECE
• *TSIPRAS SAYS NO ONE WANTS TO CREATE RIFT WITHIN THE EURO AREA
• *TSIPRAS SAYS GREECE IS `SPECIAL CASE’ AMONG BAILOUT COUNTRIES

“The MoU as we knew it is over. The same goes for the troika.”

“All these years, the burden fell on the poorest. Our aim is to restore the sense of justice.”

end

The following was written before the announcement that Germany has blinked.  The key point in the following Meijer paper is that a GREXIT will have a devastating effect on the EU and its members:

(courtesy Raul Meijer/the Automatic Earth)

The Greek Issue Just Got Personal

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

It was already present over the past two weeks, for example in Yanis Varoufakis’ meetings with Eurogroup head Jeroen Dijsselbloem and German FinMin Schäuble, awkwardly obvious in facial expressions and body language. A touch of personal discomfort. A touch of a threat that required chest-thumping and hubris to be brushed off. ‘You better do what we say or else’. Back then, perhaps it was still experienced from a political, deal-making, perspective. But in the course of yesterday it became clear something has changed.

It has become personal, you could feel it in the air, and that raises the danger level considerably. It’s not personal from the Greek side; Alexis Tsipras and Varoufakis merely act according to – their interpretation of – the mandate handed them by their voters. It’s the other side(s) that have started making it personal. They see themselves, their positions, as being under attack. And they blame Greece’s new Syriza government for that. Which may seem logical at first blush, but that doesn’t make it true. The people sitting on the other side from Varoufakis have dug themselves into these positions.

Which, as they rightfully fear, are now threatened.Not because Syriza means to do so, but because they come to the table with that mandate, to put an end to what has caused Greece to sink as deep as it has. There’s nothing personal about that, it’s democracy at work, it’s politics. Still, it’s perceived as personal, because it makes the ‘old’ leadership uncomfortable. They haven’t seen it coming, they were convinced, all the way, that they would prevail. They mostly still are, but in a now much more nervous fashion.

It’s started to dawn on them that perhaps Syriza will not back down on its demands, that yet another – mostly superficial – political deal is not in the cards. CNBC reported last night that a deal on an extension of the existing bailout was near, and markets reacted quite strongly. It would appear, therefore, that both media and investors have been as deaf as the EU to what Syriza has been consistently saying, that it’s not interested in such an extension. It was never on the table, not from the Greek point of view.

Perhaps a headline such as yesterday’s ‘Greece Warned To Expect No Favors’ sums it up best. The EU side sees – or at least publicly presents – any negotiation with Greece as handing out favors, while Syriza says it doesn’t want any favors, it wants something that will give the Greek people back a future. And there is nothing that will make them not want that.

There is of course a fear within the EU that what is granted to Greece will eventually also have to be handed to other countries. Interestingly, though, the incumbent governments of the countries involved, Spain, Portugal, Italy, have a vested interest in Syriza failing. Because if it doesn’t, their powers are set to dwindle. This is most urgently obvious in Spain, where PM Rajoy’s ruling party is already way behind Podemos in the polls.

Podemos leader Pablo Iglesias, writing in the Guardian, made his position very clear:

If The Greek Olive Branch Is Rejected, Europe May Fall

During his swearing-in speech as Greece’s prime minister, Alexis Tsipras was clear: “Our aim is to achieve a solution that is mutually beneficial for both Greece and our partners. Greece wants to pay its debt.” The European Central Bank’s response to the Greek government’s desire to be conciliatory and responsible, was also very clear: negative. Either the Greek government abandons the programme on which it was elected, and continues to do the very thing that has been disastrous for Greece, or the ECB will stop supporting Greek debt.

 

The ECB’s calculation is not only arrogant, it is incoherent. The same central bank that recognised its mistakes a few weeks ago and began to buy government debt is now denying financing to the very states that have been arguing for years that the role of a central bank should be to back up governments in protecting their citizens rather than to rescue the financial bodies that caused the crisis.

And though Portugal may not – yet – have a full-fledged Syriza or Podemos, it’s economy is in straits as dire as those of its peers, as Ambrose EP explains today:

Germany Faces Impossible Choice As Greek Austerity Revolt Spreads

It is unfair to pick on Portugal but its public and private debts are 380% of GDP – the highest in Europe and higher than those of Greece – making is acutely vulnerable to toxic effects of deflation on debt dynamics. Portugal’s net international investment position (NIIP) – the best underlying indicator of solvency – has reached minus 112% of GDP. Public debt has jumped from 111% to 125% of GDP in three years. The fiscal deficit is still 5%. The country’s ranking in global competitiveness is close to that of Greece.

 

“The situation in Portugal is very different,” says Paulo Portas, the deputy premier. Sadly it is not. Once you violate the sanctity of monetary union and reduce EMU to a fixed-exchange system, the illusion that Portugal is out of the woods may not last long. Markets will test it. Only two people can now stop the coming train-wreck. Chancellor Angela Merkel and her finance minister Wolfgang Schauble, a man who masks his passion for the EU cause behind an irascible front.

Ambrose also quotes Italy’s Beppe Grillo:

Beppe Grillo’s Five Star movement – with 108 seats in parliament – is openly calling for a return to the lira. Mr Grillo proclaims that Syriza is carrying the torch for all the long-suffering peoples of southern Europe, as it is in a sense. “What’s happening to Greece today, will be happening to Italy tomorrow. Sooner or later, default is coming,” he said.

Maybe for the reigning ‘kings and queens’ of the EU and its member states it’s inevitable that all this should become personal at some point. They’ve certainly tried hard enough to trivialize Grillo as some kind of clown through the years. Perhaps, also, it’s the demeanor, the popularity and the person of Varoufakis, the ‘new heart-throb of the thinking German woman’, as Ambrose characterized him. And I don’t think he meant Angela Merkel. Christine Lagarde, perhaps, who showed up yesterday in the sort of attire that seemed designed to blend in with Yanis.

But I still think the main reason things got personal is that with the arrival of Syriza on the scene, the ‘kings and queens’ can just ‘intuitively smell’ the changes that are afoot, and that don’t spell anything good for their own plush seats. For a while they could pretend it was all only – mostly right-wing – extremists that expressed feelings critical of the EU. And of course, Syriza is still habitually labeled ‘extreme left wing’ and ‘Marxist’, but Varoufakis clearly isn’t seen by people in Germany et al as some extremist nutcase.

The usual bag of tricks no longer works. And the subject Varoufakis brings to the table, that the EU and ECB economical policies have been an abject failure – at least for the people in Greece’ Main Street – is not some extreme notion either. Schäuble and Dijsselbloem can try and cling to the idea that Greece seeks to swindle German and Dutch voters out of even more money than they already have, and that still works to an extent, but it is wearing thin.

The contagion from Syriza success can be considerable, and though it pretends otherwise, the EU has no idea what it would mean down the line.Every single option they look at that is NOT Varoufakis surrendering, must scare them out of their socks. Anything they give up will be seen as a sign of weakness, and it will encourage parties for which Syriza ‘carries the torch’, and likely raise their support and votes.

However, if the Eurogroup don’t give up anything at all in the negotiations, there may be a Grexit, even with Russia and/or China stepping in to fund Athens. While there are all sorts of reports claiming that Grexit is manageable for the EU, don’t believe a word of them: nobody knows. And none of the present big shots wants to be held responsible for blowing up the common currency.

They have come to the realization over the past week that Syriza can be a ground-breaking force in Europe, not just a minor nuisance. They will have to adapt their attitude and their way of thinking, real fast. Monday February 16 comes to mind. Because Syriza will not back down and go for a bailout extension. For the simple reason that it is not what they see as their mandate. The Eurogroup had better be prepared for that, or it might become irrelevant in no time.

And no, no matter what they think, it’s not personal.Not for Varoufakis it isn’t. He merely represents the Greeks without access to health care who line up at soup kitchens. But you’re right, for those people, living in the third world that Europe has created within its borders, it’s very personal.

end

Early this morning, the Ukraine and the rebels reached a deal with a ceasefire.  The details are provided below.  The IMF is set to give 17.5 billion USA in aid to the Ukraine.  However today, the UAH fell again to 26.5 UAH/dollar.

(courtesy zero hedge)

Ukraine Ceasefire Deal Agreed After Negotiations All-Nighter; Doubts Remain About Its Implementation

It would have simply been too much to handle for Europe and the risk off algos if hours after the embarrassing failure of the emergency Eurogroup meeting in Brussels failed to reach any deal involving Greece, the Ukraine ceasefire negotiations in Minsk were also to fall apart.Again. Which is probably why after a marathon session lasting 17 hours, and following repeated trial balloons that a deal had and/or had not been reached, a short while ago all major media outlets were delighted to finally blast some Risk On news namely that leaders of France and Germany brokered a renewed deal to end Ukraine’s 10-month civil war in the separatist eastern region, which means that we have a Minsk-signed Ukraine ceasefire.Again.

As the WSJ reports, “details of the agreement weren’t immediately available” but it involves a cease-fire starting on February 15, Sunday, with each side pulling back heavy weapons, as well as steps to give greater autonomy to the Russia-backed separatist regions in eastern Ukraine. All negotiators, namely Ukraine’s Petro Poroshenko, Russia’s Vladimir Putin, Germany’s Angela Merkel, and France’s Francois Hollande said there are no alternatives to peaceful solution.

Some more from Bloomberg according to which Ukraine would start getting border control day after regional elections and full control after constitutional reforms, including decentralization, according to copy of document signed by contact group in Minsk, Belarus.

• Cease-fire to start Feb. 15, midnight Sat. to Sun. in Kiev
• Accord sets amnesty covering conflict in Donetsk, Luhansk regions
• Accord sets a minimum 50km buffer zone, 70-140km for missile systems;
  withdrawal set from front line as of Sept. 19 for rebels, current front
  line for Ukraine army 
• Ukraine to pass constitutional reforms, including permanent special status to Donetsk, Luhansk, by end-2015
• Ukraine to restore economic ties, banking links, pension, social benefits to east
• Withdrawal of heavy artillery to start no later than 2nd day after cease-fire starts; to be completed w/in 14 days
• Agree to create oversight mechanism to ensure peace accord is implemented
• Agree to support 3-way talks w/ Ukraine, Russia, EU on gas supplies
• Germany, France to help rebuild banking system in Ukraine regions affected by conflict
• All “illegal” groups to disarm

Ukraine’s president Poroshenko was quick to preempt accusations that this was yet another major concession by Ukraine which has already ceded Crimea to Russia – a topic that was not touched with a ten foot pole -and said that there will be no autonomy for the separatist, natural gas and industry-heavy Donbas region and that the agreement won’t move to federalization. Still one can’t quite explain the 50km buffer zone, whose purpose is not exactly clear if not to provide precisely that: autonomy.

Others were quick to point out that the agreement was not really a breakthrough, such as Germany’s foreign minister, Frank-Walter Steinmeier, who said in e-mail that parties to Minsk talks sought to gain more from agreement sealed Thursday but achieved most important goal of sealing ceasefire. “We achieved something while  chance remains that Feb. 15 ceasefire accord could be upturned by intervening violence.”

“Today’s agreement is not a comprehensive solution and not at all a breakthrough” but added that the most “important” aim of ceasefire achieved in talks.  “For the first time we have clear tasks with time allotments for the implementation of the Minsk obligations: on voting, border controls, exchanging prisoners among others.”

Others chimed in as well: “Much, much work is still necessary,” Ms. Merkel said after the talks ended. “But there is a real chance that things will turn for the better.” Merkel said both Mr. Putin and Mr. Poroshenko acted constructively in the negotiations.

“President Putin indeed did all he could to achieve the possibility of ending the bloodshed,” Ms. Merkel said. She added: “In the end, President Putin also put pressure on the separatists” to agree to a cease-fire taking effect Saturday night.

Merkel concludes by saying that “All things considered I would like to say that what we’ve reached now is giving us more hope than if we hadn’t agreed on anything. I don’t have any illusions, we don’t have any illusions that a lot of work is still required but there’s a real chance for things to take a turn for the better.”

Mr. Hollande described the pact as cause for “serious hope,” and said France and Germany had committed to verifying the implementation of the deal. “Everything is not yet accomplished, but this is a serious hope for Ukraine and a relief for Europe,” he said.

But the questions already emerged: the negotiations hit some snags along the way. Mr. Putin blamed the last-minute delay on what he called Ukraine’s refusal to negotiate directly with the separatist leaders. There was no immediate response from Kiev to that.

Mr. Putin also said one area of disagreement remained about the town of Debaltseve, where Ukrainian forces have been under siege from rebels for days. Separatist leaders called on Kiev’s forces to surrender and abandon the town, something Ukraine so far has refused to do.

 

By Mr. Putin’s account the agreement appears to split the difference on one key area of controversy—the dividing line between the two sides on the ground.

 

Mr. Putin said Kiev’s troops would pull back heavy weapons from the current front line, which reflects months of rebel gains, while the rebels would pull their equipment back from the line in the original September agreements.

Even before the negotiations had reached an agreement, the IMF sent out a notice that its staff had agreed on new US$ 17.5 billion extended fund facility with Ukraine.

“The mission has reached a staff-level agreement with the authorities on an economic reform program, which can be supported by a four-year Extended Fund Facility, in the amount of SDR 12.35 billion (about $17.5 billion, €15.5 billion), as well as, by considerable additional resources from the international community. The staff level agreement is subject to approval by IMF Management and the Executive Board. Consideration by the Executive Board is expected in the next few weeks, following the authorities’ implementation of decisive front-loaded actions to achieve program goals.

 

“The policies under the new arrangement, developed by the Ukrainian authorities jointly with Fund staff, are designed to address the many challenges confronting the Ukrainian economy. Economic activity contracted by around 7-7½ percent in GDP in 2014, weighed down by the conflict in Eastern Ukraine, which has taken a significant toll on the industrial base and exports, undermined confidence and ignited pressures on the financial system. The economic reform program focuses on immediate macroeconomic stabilization as well as broad and deep structural reforms to provide the basis for strong and sustainable economic growth over the medium term.

 

“The 2015 budget initiates an expenditure-led adjustment to strengthen public finances within the availability of resources. This required bold, but necessary, measures, including keeping nominal wages and pensions fixed. The budget is supported by revenue reforms, including increasing the progressivity of the personal income tax and streamlining the tax system. The authorities are committed to medium term reforms of the civil service and the important health and education sectors, aiming to improve quality and efficiency, as well as widening the tax base and improving customs and tax administration. Fiscal consolidation would continue over the coming years which together with the debt operation envisaged by the authorities will strengthen debt sustainability.

Alas, with Ukraine having no gold left, the probability of the IMF staying to implement a long-term structural reform in the country is slim to none which means hyperinflation is almost certainly inevitable, but while Ukraine may or may not have reached a (temporary) ceasefire, it will at least have the cash to pay for its external obligations. Mostly to Russia.

Finally, as a reminder, this is the second time Ukraine peace has been signed on paper in Minsk, only for hopes to crash and burn in the days that followed. Many are skeptical this time will not be different, most certainly if headlines such as the following continue to appear in the coming hours and days, until the actual ceasefire is implemented on Sunday.

end

The terms of the ceasefire

(courtesy Strafor)

The Terms Of The Ukraine Cease-Fire: Presenting “East Ukraine”

From Stratfor

The Terms of Ukraine’s Cease-Fire

Following marathon talks in Minsk that lasted more than 17 hours, the leaders of Germany, France, Russia and Ukraine reached an agreement that appears to align with the Kremlin’s demands. The document calls for a cease-fire to begin Feb. 15, the withdrawal of weapons and the enactment of constitutional reforms in Ukraine. Though Ukrainian President Petro Poroshenko has denied that the agreement includes provisions for the creation of autonomous regions or the federalization of Ukraine, the document on the whole does fulfill several of the Kremlin’s long-standing demands with regards to the status of Donbas.

The new cease-fire agreement is based largely on the original one that went into effect Sept. 5. It focuses on the withdrawal of heavy artillery systems, which have been prominent throughout the conflict, within 14 days of the cease-fire’s implementation. The new cease-fire requires these artillery systems to be withdrawn far beyond their maximum effective ranges, a move that will create a buffer to prevent escalation and heavy artillery fire on the demarcation line. Missing from the agreement, however, is a decision on the fate of the still heavily contested Ukrainian positions in Debaltseve. Because both sides will have to withdraw their artillery systems, the result will be a very deep area without artillery cover in the center of the demarcation line.

The agreement’s most important impact on the military balance is its requirement to withdraw foreign forces and mercenaries from Ukraine. Separatists have depended heavily on the combat power of the Russian military and Russian volunteer forces. Without these, the separatists would have been incapable of repelling the Ukrainian offensive, and in the future would be rendered much weaker than their Ukrainian counterparts.

The signing of the new Minsk agreement, as well as Russian President Vladimir Putin’s direct participation in the negotiations, points to the Kremlin’s willingness to at least partially de-escalate the conflict at this time. The agreement includes some vague measures and conditions that all sides may ultimately chose not to implement. Several key points of contention remain unaddressed, and there are still many opportunities for the agreement to break down if they are not resolved. Therefore, political will, rather than the actual terms of the agreement, will determine whether a significant de-escalation is to take place.

end

Unbelievable!!  did the  USA blink on the potential to roll back sanctions on Russia?

what about the Crimea?

(courtesy zero hedge)

US Blinks: Kerry Says Prepared To Roll Back Sanctions On Russia

Did The US just blink? Perhaps under pressure from Merkel having enough of Obama’s “costs”, Secretary of State John Kerry just released the following statement…

Ukraine Ceasefire Agreement

John Kerry

The United States welcomes the news that the OSCE-led Trilateral Contact Group, supported by Chancellor Merkel and Presidents Hollande, Poroshenko, and Putin, reached agreement on a ceasefire and heavy weapons withdrawal in eastern Ukraine, and on the implementation of the September Minsk agreements. We particularly commend the diplomatic efforts of our European Allies, Chancellor Merkel and President Hollande, and their teams in making this agreement possible. Actions will be what matter now. The first test of this agreement and the prospects for a comprehensive settlement will be the full implementation of the ceasefire and the withdrawal of heavy weapons by all parties – by Ukraine, the separatists, and Russia. All the parties must show complete restraint in the run-up to the Sunday ceasefire, including an immediate halt to the Russian and separatist assault on Debaltseve and other Ukrainian towns.

 

The parties have a long road ahead before achieving peace and the full restoration of Ukraine’s sovereignty. The United States stands ready to assist in coordination with our European Allies and partners. We will judge the commitment of Russia and the separatists by their actions, not their words. As we have long said, the United States is prepared to consider rolling back sanctions on Russia when the Minsk agreements of September 2014, and now this agreement, are fully implemented. That includes a full ceasefire, the withdrawal of all foreign troops and equipment from Ukraine, the full restoration of Ukrainian control of the international border, and the release of all hostages.

 

We also welcome the news that the Government of Ukraine and the IMF have reached an agreement that will allow the IMF to provide Ukraine with $17.5 billion in financial assistance in support of economic reforms. This agreement will enable Ukraine to continue implementing the reforms it needs to build a stronger, more prosperous, democratic future for the people of Ukraine.

So Crimea, which was not mentioned, and whose “annexation” by Russia so infuriated the western leaders, is Vlad’s to keep

end

The following commentary from Graham Summers, summarizes in simple language the 9 trillion USA dollar short and what it means to the global finances:

(courtesy Graham Summers/Phoenix Research Capital)

The Problem Country That’s Bigger Than Greece, Spain Italy and France Combined

The financial world focuses far too much on stocks.

Today, the market is roaring higher… for no real reason. Nothing substantial has come out of the EU talks with Greece. And the world has much bigger problems to deal with than Greece.

The US Dollar carry trade is over $9 trillion in size.

This means that over $9 trillion has been borrowed (in US Dollars) and plunged into various asset classes and investment projects around the world.

Greece’s GDP is $241 billion in size. Even if you add in the economies Spain, Italy, AND France, the US DOLLAR CARRY TRADE IS LARGER.

Again, if the US carry trade was a single country it’d be bigger than Greece, Spain, Italy, AND France combined.

When you BORROW in US Dollars you are effectively SHORTING the US Dollar. So when the US Dollar rallies… you have to cover your SHORT or you blow up.

And the US Dollar is rallying… HARD.

This move took out an entire industry (oil shale). That was just the beginning. Anyone who has borrowed in US Dollars to finance an investment or project and didn’t hedge their currency risk is blowing up.

This is just the start of a multi-year bull market in the US Dollar. The US Dollar has broken out of a massive falling wedge pattern going back to the early ‘80s.

No one will be safe from this. Commodities, emerging markets, all of them are at risk of severe collapses in asset prices. We are talking about a financial trade that is larger than the economies of Spain, Italy, Greece and France combined… blowing up.

Just like 2008.

end

Last night after Raufeissen’s bonds collapsed due to huge amount of Swiss franc mortgages, the CEO goes on the air to complain about short sellers:

(courtesy zero hedge)

Austria’s 3rd Largest Bank Goes Full Bear Stearns: CEO Blames “Short Sellers” For Firm’s Demise

The NIKKEI: Thursday morning : closed

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

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

Gold very early morning trading: $1223.00

silver:$16.85

Early Thursday morning USA 10 year bond yield: 2.04% !!!  up 5  in basis points from Wednesday night/

USA dollar index early Thursday morning: 94.63  down 35 cents from Wednesday’s close.

This ends the early morning numbers.

And now for your closing numbers for Thursday:

Closing Portuguese 10 year bond yield: 2.47% down 10 in basis points from Wednesday

Closing Japanese 10 year bond yield: .40% !!! par in basis points from Wednesday and this is worth watching

Your closing Spanish 10 year government bond,  Thursday down 3 in basis points in yield from Wednesday night.

Spanish 10 year bond yield: 1.62% !!!!!!

Your Thursday closing Italian 10 year bond yield: 1.65% down 5 in basis points from Wednesday:

trading 3 basis points higher than Spain.

IMPORTANT CURRENCY CLOSES FOR TODAY

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

Euro/USA: 1.1412  up .0102

USA/Japan: 118.88 down 1.37

Great Britain/USA: 1.5244 down .0014

USA/Canada: 1.2484 d0wn .0135

The euro rose considerably  this afternoon this news that Germany blinked with respect to the Greece crisis and the ceasefire in the Ukraine as it was up by 162 basis  points finishing the day well above  the 1.14 level to 1.1412. The yen was well up in the afternoon, and it was up  by closing  to the tune of 137 basis points and closing well below  the 119 cross at 118.88 and finishing again below the key yen carry trade of 120. The British pound gained considerable  ground during the afternoon session and was up on  the day closing at 1.5404. The Canadian dollar was up again today due to the higher oil price.  It closed at 1.2484 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. The last asset still rising are the stock exchanges.

Your closing 10 yr USA bond yield: 1.98 down 1 in basis points from Wednesday

Your closing USA dollar index: 94.11 down 87 cents on the day.

European and Dow Jones stock index closes:

England FTSE  up 9.94 points or 0.15%

Paris CAC up 46.82 or 1.00%

German Dax up  167.54 or 1.56%

Spain’s Ibex up  197.40 or 1.90%

Italian FTSE-MIB up 437.15 or 2.13%

The Dow: up 110.24 or 0.62%

Nasdaq; up 54.61 or 1.14%

OIL: WTI 51.20 !!!!!!!

Brent: 56.15!!!!

Closing USA/Russian rouble cross: 65.02 up  1/8  rouble per dollar on the day.

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

Your New York trading for today:

VIXnado Sends Stocks Near Record Highs, Dollar Slammed

Worst back-to-back retail sales since the financial crisis explodes the narrative that low gas prices are a stimulus, a truce in Ukraine (which we already had and by the way the Hyrvnia imploded to fresh record lows today – not exactly signaling exuberance), some chatter of compromise in Europe (though we’ve heard that before)… which leaves VIX… which was monkey-hammered to ensure record highs prove (despite a total collapse in macro and earnings fundamentals) everything is awesome and confidence is maintained…

Stocks went up… a lot…

VIX went down… a lot… lowest close since 12/26/14… at 15.3

AAPL went up… again…

From the “CNBC Greek Deal” rumor highs last night, we dumped on the denials then soared all day… after Ukraine news (with a slight pause for the shittiest retail sales datas in 6 years)

On the week – everything is awesome…

Away from that tom-foolery – FX and credit markets turmoiled quite significantly…

Treasury yields spiked higher on “truce” news, the collapsed on the dismal retail sales data only to bounce higher after a tiny tail in the 30Y auction… before yields fell (bonds rallied) into the close – Treasuries rallied

Umm yeah!

The USDollar lost significantly today as JPY strengthened (BoJ sounding a little hawkish) and EUR strength (Ukraine? and maybe Greece) – but everything rallied against the USD.

Despite the USD weakness, gold and silver flatlined as copper and crude surged…

With another epic pump-and-dump early on in WTI…

About that oil and stocks are not correlated bullshit…

Energy stocks rose to valuation levels not seen since the peak of the dot-com bubble…

If the rally was predicated on a Ukraine “truce” deal, why did the Hyrvnia collapse even further?

So let’s take a look at Stocks, Bonds, The USDollar, and VIX over the day’s events…

Charts: Bloomberg

end

Retail sales which is 70% of USA GDP  plunges again and worse than expected.  This is the second month in a row of poor retail sales numbers and yet the Dow continues to rocket northbound;

(courtesy zero hedge)

Retail Sales Plunge Twice As Much As Expected. Worst Back-To-Back Drop Since Oct 2009

Following last month’s narrative-crushing drop in retail sales, despite all that low interest rate low gas price stimulus, January was more of the same as hopeful expectations for a modest rebound were denied. Falling 0.8% (against a 0.9% drop in Dec), missing expectations of -0.4%, this is the worst back-to-back drop in retail sales since Oct 2009. Retail sales declined in 6 of the 13 categories.

Retail sales disappoint… again…

In worse back-to-back drop since oct 09…

Full Breakdown…

Charts: Bloomberg