Feb 20/GLD adds 1.79 tonnes of gold/No changes in SLV/Greece capitulates and gives in on all points to the EU/








Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold: $1204.40 down $2.70   (comex closing time)
Silver: $16.26 down 11 cents  (comex closing time)



In the access market 5:15 pm



Gold $1202.00
silver $16.24


Today, the big story was the deal between Greece and the EU folks which may not be a deal as Greece must summit the reforms it wishes by Monday.  If the Troika creditors  (sorry Institutions) do not like the reforms Greece wishes, then the deal is off and we have a GREXIT.  We have the complete breakdown of events for you tonight.



And now for gold/silver trading today.


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



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



The gold comex today had a fair delivery day, registering 81 notices served for 8100 oz.  Silver comex registered 0 notices for nil oz .


Three months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 257.31 tonnes for a loss of 46 tonnes over that period.


In silver, the open interest rose by a tiny 24 contracts as yesterday’s silver price was up by 12 cents. The total silver OI continues to remain relatively high with today’s reading at 171,196 contracts. The front month of March contracted by only 5,846 contracts with only 5 days before  first day notice.


We had 0 notices filed  for nil oz



In gold we had another surprising rise in OI even though gold was up by only $7.40 yesterday. The total comex gold OI rests tonight at 394,414 for a gain of 3,382 contracts. Today we had 81 notices served upon for 8100 oz.




Today, we had a good deposit of 1.79 tonnes with respect to inventory at the GLD Inventory 769.46 tonnes.



In silver, /SLV  no change in  of silver inventory to the SLV/Inventory 324.299



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 by another 3,382 contracts today from  391,032 all the way up to 394,414 even though gold was up by only $7.40 on yesterday (at the comex close). We are now in the big delivery month of the active February contract and here the OI fell by 4 contracts falling to 548. We had 0 contracts served upon yesterday, thus we lost 4 gold contract or an additional 400 ounces will not stand  in this delivery month . The next contract month of March saw it’s OI fall by 28 contracts down to 690. The next big active delivery month is April and here the OI rose by 2481 contracts up to 264,019. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was awful at 59,539. The confirmed volume yesterday ( which includes the volume during regular business hours  + access market sales the previous day) was poor at 124,804 contracts even  with mucho help from the HFT boys. Today we had 81 notices filed for 8100 oz.

And now for the wild silver comex results.  Silver OI rose by a tiny 24 contracts from 171,172 all the way up to 171,196 as silver was up by  12 cents yesterday. The bankers were not  able to shake some silver leaves from the silver.  We are now in the non active contract month of February and here the OI fell from 56 down to 20 for a loss of 36 contracts. We had 36 notices filed on yesterday so we neither gained  nor lost any silver ounces in this contract month. The next big active contract month is March and here the OI fell by only 5,846 contracts down to 52,876.  First day notice for the gold and silver February contract months is on Friday, Feb 27.2015 or 5 trading days away.  The March OI is extremely high. The estimated volume today was poor at 21,370 contracts  (just comex sales during regular business hours. The confirmed volume yesterday was excellent (regular plus access market) a t56,551 contracts.  We had 0 notices filed for nil oz today.

February initial standings


Feb 20.2015



Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz   32.15  oz (Manfra, one kilobar)
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz  nil
No of oz served (contracts) today 81 contracts (8100 oz)
No of oz to be served (notices)  467 contracts (46,700 oz)
Total monthly oz gold served (contracts) so far this month  717 contracts(71,700 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month

Total accumulative withdrawal of gold from the Customer inventory this month

 228,307.2 oz

Today, we had 0 dealer transactions

we had 0 dealer withdrawals:

total dealer withdrawal: nil oz



we had 0 dealer deposits:




we had 1 customer withdrawals

i ) Out of Manfra;  32.15 oz  (1 kilobar)


total customer withdrawal: 32.15 oz



we had 0 customer deposits:



total customer deposits;  nil oz


We had 1 adjustment

i) Out of Manfra:  96.45 oz was adjusted out of the dealer and this landed into the customer account of Manfra;



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 81 contract of which 0 notices were stopped (received) by JPMorgan dealer and 78 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 (717) x 100 oz  or 71,700 oz , to which we add the difference between the OI for the front month of February (548 contracts)  minus the number of notices served today x 100 oz (81 contracts) x 100 oz = 118,400 oz, the amount of gold oz standing for the February contract month.( 3.68 tonnes)

Thus the initial standings:

717 (notices filed for the month x( 100 oz) or 71,700 oz + { 548 (OI for the front month of Feb)- 81 (number of notices served upon today} x 100 oz per contract} = 118,400 oz total number of ounces standing for the February contract month. (3.68 tonnes)

we lost 400 oz of gold standing in this February contract month.



Total dealer inventory: 810,047.429 oz or 25.195 tonnes

Total gold inventory (dealer and customer) = 8.272 million oz. (257.29) tonnes)


Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 46 tonnes have been net transferred out. However I believe that the gold that enters the gold comex is not real.  I cannot see continual additions of strictly kilobars.







And now for silver


February silver: initial standings

feb 20 2015:



Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 29,6689.72  oz (Delaware, CNT)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory  806,597.910 (CNT, Scotia)  oz
No of oz served (contracts) 0 contracts  (nil oz)
No of oz to be served (notices) 20 contracts (100,000 oz)
Total monthly oz silver served (contracts) 420 contracts (2,100,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal  of silver from the Customer inventory this month  5,564,154.9 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 2 customer deposits:


i) Into CNT:  593,236.400 oz

ii) Into Scotia:  211,361.510 oz

total customer deposit: 806,597.910 oz


We had 2 customer withdrawals:

i) Out of CNT:  27,632.500 oz

ii) Out of Delaware: 2036.22 oz



total customer withdrawal: 29,668.72  oz


we had 0 adjustments




Total dealer inventory: 68,100 million oz

Total of all silver inventory (dealer and customer) 175.534 million oz


The total number of notices filed today is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in February, we take the total number of notices filed for the month (420) x 5,000 oz    = 2,100 oz  to which we add the difference between the OI for the front month of February (20)- the number of notices served upon today (0) x 5,000 oz per contract = 2,200,000 oz,  the number of silver oz standing for the February contract month

Initial standings for silver for the February contract month:

420 contracts x 5000 oz= 2,100,000 oz + (20) OI for the front month – (0) number of notices served upon x 5000 oz per contract =  2,200,000 oz, the number of silver ounces standing.

we neither gained nor lost any  silver ounces standing in this February contract month.

It sure looks like something is brewing inside the silver comex.  We are within a fraction of all time high in OI and yet the silver price is at all time lows.  Something must eventually give out!!


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

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





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

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

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

i) demand from paper gold shareholders

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

vs no sellers of GLD paper.




And now the Gold inventory at the GLD:



Feb 20/we had another good addition of 1.79 tonnes of gold into the GLD.  Inventory 771.25 tonnes


Feb 19/ a huge addition of 1.5 tonnes of gold into the GLD/Inventory 769.46


Feb 18/ a small withdrawal of .3 tonnes/no doubt to pay for fees/Inventory 767.96 tonnes


Feb 17/no changes in gold inventory at the GLD/Inventory 768.26 tonnes


feb 13. we another another withdrawal f 3.25 tonnes of gold from the GLD/Inventory 768.26 tonnes



Feb 12: we had a withdrawal of 1.8 tonnes of gold from the GLD/Inventory 771.51 tonnes


Feb 11.no change in gold inventory at the GLD/Inventory 773.31 tonnes


Feb 10 no change in gold inventory at the GLD/inventory 773.31 tonnes

Feb 9 no change in gold inventory at the GLD/Inventory 773.31 tonnes


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 20/2015 /we had an addition of 1.79 tonnes in gold inventory at the GLD

inventory: 771.25 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 : 771.25 tonnes.






And now for silver (SLV):



Feb 20 no change in silver inventory/324.299 million oz


Fen 19/ we had a huge addition of 4.082 million oz of silver into the SLV/Inventory 324.299 milllion oz



Feb 18.2015/ no change in silver inventory at the SLV/Inventory at 320.327 million oz


Feb 17 no changes in silver inventory at the SLV/Inventory at 320.327 million oz


Feb 13 no change in silver inventory at the SLV/inventory at 320.327 million oz.


Feb 12 no change in silver inventory at the SLV/inventory at 320.327 million oz


Feb 11 no change in silver inventory at the SLV/inventory at 320.327 million oz



Feb 10 no change in silver inventory at the SLV/inventory at 320.327 million oz



Feb 9  no change in silver inventory/SLV inventory at 320.327 million oz



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 20/2015 no change in  silver inventory at  the SLV

SLV inventory registers: 324.299 million oz






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

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

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



1. Central Fund of Canada: traded at Negative  6.9% percent to NAV in usa funds and Negative 6.6% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.7%

Percentage of fund in silver:37.9%

cash .4%


( feb20/2015)


2. Sprott silver fund (PSLV): Premium to NAV falls to + 3.65%!!!!! NAV (Feb 20/2015)

3. Sprott gold fund (PHYS): premium to NAV falls to +.20% to NAV(feb 20 /2015)

Note: Sprott silver trust back  into positive territory at +3.65%.

Sprott physical gold trust is back into positive territory at +.20%

Central fund of Canada’s is still in jail.







At 3:30 pm we get the COT report.




Let us first explore the gold COT:



Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
188,121 56,387 34,865 125,433 269,068 348,419 360,320
Change from Prior Reporting Period
-10,915 12,625 3,469 4,731 -22,225 -2,715 -6,131
149 80 75 51 53 231 183
Small Speculators  
Long Short Open Interest  
41,111 29,210 389,530  
-987 2,429 -3,702  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, February 17, 2015


 Our large speculators;


Those large specs that have been long in gold pitched a huge 10,915 contracts from their long side.


Those large specs that have been short in gold added 12,625 contracts to their short side ???


Our commercials:


Those commercials that have been long in gold added 4731 contracts to their long side


Those commercials that have been short in gold covered a monstrous 22,225 contracts from their short side.


Our small specs;

Those small specs that have been long in gold pitched 987 contracts from their long side

Those small specs that have been short in gold added 2479 contracts to their short side.



And now for silver COT:


please note the difference between gold and silver


Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
61,145 19,822 24,075 68,694 116,415
-889 4,652 3,637 4,256 -1,480
69 51 46 41 48
Small Speculators Open Interest Total
Long Short 175,193 Long Short
21,279 14,881 153,914 160,312
43 238 7,047 7,004 6,809
non reportable positions Positions as of: 132 127
Tuesday, February 17, 2015

Our large specs:


Those large specs that have been long in silver pitched a tiny 889 contracts from their long side

Those large specs that have been short in silver added 4652 contracts to their short side


Our commercials:

Those commercials that have been long in silver added 4256 contracts to their long side

Those commercials that have been short in silver covered 1480 contracts from their short side.


Our small specs:

Those small specs that have been long in silver added 174 contracts to their long side

Those small specs that have been short in silver added 278 contracts to their short side.


Conclusions: the commercials are covering like mad!!


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)


Gold Down 1.5% This Week – Massive Complacency Regarding Greece as Geopolitical and Debt Crisis Loom

* Greek Bank Runs Accelerate as Possible ‘Grexit’ Looms
* Fatigue with Greek Crisis Breeding Massive Complacency
* Government in Kiev Forced to Take Diplomatic Approach
* Ukraine a Significant Setback for NATO
* Regional War in Eastern Europe Averted for the Moment
* Middle East, Israel and Iran Timebomb Ticking
* India Demand To Rise To 35 – 40 Tonnes This Month
* Gold Oversold – Fundamental and Technical Position Good 

The Greek debt saga continues and financial tragedy seems increasingly likely as the deadlock between Greece and the Eurogroup continues today.


The two sides remain far apart during the Eurogroup meeting in Brussels. The 240 billion euro bank bailout expires at the end of this month and Greece could run out of money by the end of March without new external funds, driving it nearer to the euro zone exit.

There is already quite a lot of chatter about the possibility of another summit should today’s talks end in stalemate.

It has dragged along for so long now that a false sense of security has developed as the situation becomes the “new normal.”

This complacency is unwarranted. The situation will come to a head sooner rather than later.

There are new reports of bank runs in Greece coming into this Bank Holiday weekend. Officials in the Greek banking sector told Greek newspapers that as much as 25 billion euros have been withdrawn from Greek banks since the end of December with outflows surging this week ahead of a bank holiday.

Bank runs continue as Greek depositors rightfully fret regardingbail-ins or a return to the drachma. The prudent money is diversifying their savings so as not to be financially decimated.

Greece officially applied for a six month extension to its loan agreement, Eurogroup chair Jeroen Dijsselbloem said on Twitter of all places yesterday. U.S. Treasury Secretary Jacob J. Lew contacted Greek Finance Minister Yanis Varoufakis yesterday and warned him that failure to strike a compromise would bring further hardship on the country.

Either Greece will acquiesce to EU demands and eventually default anyway, or Greece will exit the Euro and unilaterally default causing unforeseeable consequences or Europe will cave-in which will embolden the anti odious debt factions across the European periphery.

Greece may even avail of a bail-out from the BRICS bank which would bring further geopolitical instability to Europe and further undermine the dollar system.

The final outcome of the Greek crisis is far from certain and there are no solutions presented so far which will not cause instability for the euro and the possible end of the ‘single’ currency.

Regional War in Eastern Europe Averted for the Moment

Meanwhile, the Franco-German peace initiative of Francois Hollande and Angela Merkel for Ukraine appears to be bearing fruit, though the process is still very fragile.

The landmark Minsk agreement saw France and Germany, Europe’s de facto leadership, negotiate a foreign policy independent of it’s heavy-weight NATO allies – the U.S. and Britain.

Petro Oleksiyovych Poroshenko, the fifth and current President of Ukraine, talks to troops

It was apparently catalysed by John Kerry’s suggestion that the U.S. would begin arming the Kiev government in its war on the separatist regions of Luhansk and Donetsk.

Such a move would have caused a reciprocal response from Russia, who insist that, to date, they have not armed the separatist groups. Foreign minister Lavrov has consistently asked Washington to back up their accusations to the contrary with evidence. No evidence has been presented.

Should Ukraine’s civil war escalate into a proxy war between Washington and Moscow it would destabilise Eastern and central Europe and possibly suck Europe uncontrollably into full scale conflict with Russia.

This is a frightening vista for all right thinking people. It would lead to a renewal of old rivalries and bitterness surfacing within former Eastern block nations and the Balkans.

The recent capture of Debaltseve is being touted as a dishonourable violation of the ceasefire agreement by Putin. It must be remembered that the separatists were not party to the Minsk agreement.

While they are consistently referred to as “pro-Russian” it is worth recalling that when they voted to secede from Ukraine they voted for independence, unlike the people of Crimea who voted to join Russia. They are predominantly ethnic Russians and wish to maintain close relations with Russia but this does not necessarily mean that Putin speaks for them.

As the Minsk talks began the separatists had already surrounded Debalseve and it’s capture was more or less a foregone conclusion. Debaltseve is an extremely important strategic target, a rail hub connecting the Luhansk and Donetsk regions. As such, from the separatist point of view it could not be left under Kiev’s control.

Now that it has been captured it is likely that the separatists will opt for a political solution.

The Kiev government is also likely to look for a political settlement. Ukraine is bankrupt. The IMF cannot fund a country who is at war. This is why Kiev consistently referred to the war as an anti-terror operation.

Referring to the conflict as a civil-war is a criminal offense in Ukraine and at least one journalist has received a harsh prison sentence for doing so.

The Kiev government and its war has grown incredibly unpopular. There has been huge resistance to the policy of conscripting young men to fight their former compatriots. There have been reports that the military is also growing impatient with the Poroshenko government.

The EU are eager to restore stability to the region and hope to cooperate with Ukraine in that objective. Russia shares this objective.

“We are already helping people in Donbass, first of all by sending humanitarian aid. I hold that Russia will not leave itself out and surely will help to restore this region.”

“However, this will be a common task shared between Russia and Ukraine and I hope that our European partners will also participate,” state Duma speaker Sergey Naryshkin has been quoted as saying.

“Members of the State Duma understand that the dialogue with our Ukrainian colleagues would be very difficult, but there is no alternative to it and we must do everything to thwart any attempts from across the ocean to obstruct this dialogue,” he added.

It is clear that Russia views events in Ukraine as a deliberate attempt by NATO to encircle and extend control right up to Russia’s borders. France and Germany may not view the crisis in the same light but seems likely they fear the possible outcome – instability in central and eastern Europe.


When the EU views the extremism and chaos that U.S. intervention has unleashed across the Middle East and North Africa – it likely gives pause for thought.

So, for the moment, we can hope that a wider war has been averted but tensions between Moscow and Washington are unlikely to abate, especially as Russia continues to extricate itself from the SWIFT payment dollar system.

Middle East, Israel and Iran Timebomb Ticking
Meanwhile, the ticking time bomb that is the Middle East continues to quietly tick. This is something we will look at in more detail next week.

The global geopolitical situation is as tense as it has ever been in living memory. This uncertainty is not supportive of the already fragile financial and monetary system.

A diversification into physical gold, the universal money at all times and in all places is strongly advised.


Today’s AM fix was USD 1,203.50, EUR 1,061.38 and GBP 782.51 per ounce.
Yesterday’s AM fix was USD 1,217.75, EUR 1,068.30  and GBP 788.60 per ounce.

Gold fell 0.31 percent or $3.80 and closed at $1,207.40 an ounce yesterday, while silver slipped 0.37 percent or $0.06 closing at $16.39 an ounce.

Gold in US Dollars - 5 Days (GoldCore)

Gold rose marginally this morning as the dollar strengthened and European shares climbed ahead of the eurozone meeting about Greece’s debt programme. Gold looks set for its fourth weekly fall and a fall of some 1.5 per cent in dollar terms.

Gold reached its lowest price in 6 weeks on Wednesday at $1,197.56. Comex U.S. gold futures for April delivery were up $3.50 an ounce to $1,209.20. In Singapore, gold was flat and remained above the $1,200/oz level.

 Silver rose 0.2 percent to $16.40 an ounce, platinum dropped 0.8 percent to $1,158.77 an ounce, after touching a 5-1/2-year low at $1,151.50 earlier. Palladium fell 0.7 percent to $779.00 an ounce this morning.

 Market liquidity is relatively thin as China, the world’s number 2 buyer, and several other Asian countries are closed for a week long Lunar New Year holiday.

India Demand To Rise To 35 – 40 Tonnes This Month

India’s gold imports are likely to rise to some 35 to 40 tonnes this February as compared to 26 tonnes in February last year, according to bullion refiner MMTC Pamp.

 “The country has already imported 23.2 tonnes of gold in the first fortnight of this month. Total shipments at the end of the month could reach 35-40 tonnes,” a senior official at MMTC Pamp told the Indian News Agency, Press Trust of India.

 Gold imports could see further accelerate during the wedding season, which begins  in March, the official added.

 In January, imports rose marginally to 36 tonnes from 31 tonnes in the same month of corresponding year.

 Gold shipments have been steadily rising after the Reserve Bank in November 2014 scrapped the 80:20 rule, under which it was mandatory for traders to export 20 per cent of their imports.

 The RBI has been easing import curbs on gold since November 2014 after their attempt to curb gold imports and demand failed due to a huge wave of gold smuggling.

Gold Oversold and Technical Position Good

The quite sharp sell off in the last four weeks means that gold appears oversold – including on a number of important technical criteria including the RSI and stochastic position.

In less than a month gold has fallen by more than $100 per ounce, since January 22nd, and given up much of the gains seen in January.

Gold in US Dollars - 1 Month (GoldCore)

Gold’s technical position remains quite positive with good support and physical demand at the $1,200/oz level – seen very briefly on the inter day dip on Wednesday of this week.

Independent technical analyst Cliff Green of the Cliff Green Consultancy, is worth listening to regarding the technicals of gold and silver.

He spoke to Jan Harvey in the Thomson Reuters Global Gold Forum yesterday about the chart picture for gold after the recent price slide.

Global_Gold_Forum  Jan Harvey  thomsonreuters.com:Welcome, Cliff!
Global_Gold_Forum  Cliff Green  cliff-green.com  Thank you a pleasure to be here

Jan Harvey  thomsonreuters.com  We broke through the 100-day moving average at 1216 yesterday, to end the day down nearly 2 percent. How significant was the break of that level, and what are the new levels being targeted on the downside?

Cliff Green  cliff-green.com  The break down yesterday certainly did some damage and while a little support should be uncovered in and around the 1200.0/05.0 area beleive a retest of the 1170.0 egion is now possible.

Jan Harvey  thomsonreuters.com  Where does support come from around 1170?

Cliff Green  cliff-green.com  it was the corrective lows seenat the beginning of year prior to rallying imprssively to the 1308 area.

Jan Harvey  thomsonreuters.com  How strong do you expect support to prove there? If that gives way, how far could we fall?

Cliff Green  cliff-green.com  Think this should hold and if prices can regroup around there beleive this weakness could become a component of a broader bottoming process

Jan Harvey  thomsonreuters.com  I see. So you don’t think a return to last year’s low at 1131 is likely?

Cliff Green  cliff-green.com  However if it is decisively breached it opens up a retest of the 1133 region#

Cliff Green  cliff-green.com  Oscillators are beginning to look a little oversold and this should add some potency to supports around 1170

Jan Harvey  thomsonreuters.com  If support *does* hold there, how far would that support the view that the pull-back that began a few years ago has bottomed at 1131?

Cliff Green  cliff-green.com  It would add to that evidence. I think the bulls would take great encouragement from it.

Jan Harvey  thomsonreuters.com  If we do manage to rebound, what level would you want to see attained before calling a recovery in prices?

Cliff Green  cliff-green.com  Key nearby resistance waits in the 1240.0/45.0 area and a market close back above here would relieve the current downward pressure and trigger acceleration towards 1280 again

Cliff Green  cliff-green.com  Until/unless achieved immediate rebounds are likely to be restricted to corrective bounces only for the time being

Jan Harvey  thomsonreuters.com  What’s your view on silver after yesterday’s 4.1% fall? Would you say the picture is yet bearish, and if so, what levels are we targeting?

Cliff Green  cliff-green.com  No I would not clssify silver as bearish. I think yesterday’s falls were yet a further component of a broad consolidation pattern that started back in October of last year

Cliff Green  cliff-green.com  Good support should be uncovered starting at 16.20 then again around 15.50.

Cliff Green  cliff-green.com   Increasing evidence suggests this could be a basing development.

 Jan Harvey  thomsonreuters.com  Thanks, Cliff! And thank you very much for joining us today

Cliff Green  cliff-green.com  Thanks Jan


The quite sharp sell off in recent weeks of over $100 means that gold appears oversold. China will return after its New Year festivities next Wednesday and demand is expected to be remain robust. SGE weekly withdrawals were 59.12 tonnes for the week ending Feb 13th.


This allied with the increasing Indian demand makes for strong support under the market and bolsters the technical position.

Gold looks oversold and looks well supported at $1,200 per ounce given the continuing Greek debt saga, risk of ‘Grexit’
and geopolitical risk in Eastern  Europe and the Middle East.

While most analysts believe that Grexit will not happen in the coming days, we believe that it is wrong to completely discount this possibility and we believe that Grexit looks inevitable now – the question is when rather than if.

Another supporting factor is the deteriorating situation in Ukraine and relations between the U.S., NATO and Russia.

Breaking News and Updates Here





the big date for the new gold fix is March 20.2015 and that is when the Chinese banks are part of the fix.  Will China raise the price of gold such that China becomes the gold fix?


( courtesy Wall Street Journal/GATA)



March date set for gold fix switch


By Ese Erheriene
The Wall Street Journal
Thursday, February 19, 2015

The deadline for the gold fix to enter the digital age is nearing.

The London Bullion Market Association said today that the gold benchmark will be set via an electronic platform managed by ICE Benchmark Administration beginning on March 20.

The new LBMA Gold Price will be set twice daily — at 10:30 GMT and 15:00 GMT — in dollars, euros, and sterling. It will replace the current private telephone conference between a group of four banks, the remnants of a cozy system that has existed since 1919. …

… For the remainder of the report:






(courtesy Egon Von Greyerz/Kingworldnews/Eric King)


Gold is cheaper in real terms now than it was in 2002, von Greyerz says


4:25p ET Thursday, February 19, 2015

Dear Friend of GATA and Gold:

Swiss gold fund manager Egon von Greyerz tells King World News today that gold is cheaper today in real terms than it was at $300 in 2002 even as the monetary metal has become far more strategic in international affairs. An excerpt from his interview is posted at the KWN blog here:


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







Finally, Dave Kranzler on the huge Chinese gold buying binge:


(courtesy Dave Kranzler/IRD)



Chinese Gold Buying Stampede

It seems the longer the Federal Reserve and its representative bullion banks keep a manipulative lid on the price of gold using paper gold naked shorts, the more physical gold the Chinese buy:

We can see elevated gold purchases on wholesale level (SGE withdrawals) of late, rapidly being sold to end consumers in the shops at the moment. China Gate News Channel reported on January 3rd a “stampede phenomenon” in a shopping mall in Beijing, were gold was sold at a rate of 400,000 yuan per minute (Bullionstar.com)

On the Shanghai Gold Exchange itself, another 59 tonnes were withdrawn last week (Bullionstar.com).  That makes a total of 374 tonnes YTD, which is up 17% year over year.  Please note:   This does not take into account the amount of gold being accumulated by China’s Central Bank, The Peoples Bank of China.   The PBOC is the only entity in China that is not required to source its gold from the SGE.   Here’s a snapshot of the of the massive gold accumulation going on in China (source:  goldchartsrus.com):


It is highly probable that China’s gold accumulation, including whatever amount the PBOC is taking down, exceeds the annual global mine supply. While the Fed/US Government maintains a tight policy of using paper gold to suppress the natural market price, the eastern hemisphere continues to gorge on cheap gold. By the time the mainstream in the west wakes up to what is going on, it will be too late.

While everyone is currently worried about what will happen to the euro and the EU if Greece defaults on its debt, one has to wonder what will happen when the west – specifically the Fed/bullion banks – defaults on its massive paper/leased/hypothecated gold short position, the size of which dwarfs the amount of outstanding sovereign Greek debt…

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 118.69

1b Chinese yuan vs USA dollar/ yuan slightly weakens  to 6.2563
2 Nikkei up 67.51 or 0.37%

3. Europe stocks mixed  // USA dollar index up to 94.59/

3b Japan 10 year yield huge rise to .40%/ (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 118.69/everybody watching the huge support levels of 117.20 and that level acting as a catapult for the markets. Poor Japanese auction causes the yield to rise

3c Nikkei now  above 17,000/

3e The USA/Yen rate still  below the 120 barrier this morning/
3fOil: WTI 51.85 Brent: 60.44 /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  The EU and Greece so far fail to come to an agreement/Germany rejects loan extension/

Greece formally asked for an extension on the “loan agreement”.  Germany said no that they must seek extension on the “programme agreement”

3l  Greek 10 year bond yield :9.95% (up 3 basis points in yield)

3m Gold at $1211.00. dollars/ Silver: $16.48

3n USA vs Russian rouble:  ( Russian rouble flat per dollar in value)  62.10!!!!!!.  Ukraine’s UAH:26.90 flat from last night

3 0  oil  into the 51 dollar handle for WTI and 60 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 68.3 billion euros for this funding. They also limit the amount of treasuries that Greek can issue.  Greece rejects any more EU funding on the previous program and thus rejects the European ultimatum to accept this funding extension as they cannot have more austere measures and cannot have a primary 4.5% surplus to GDP


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  USA planning an offensive in Iraq on Mosul as they try to obliterate ISIS

3s  Fighting in Eastern Ukraine continues despite ceasefire/rebels moving on to Mariupol

3t  Greeks very upset with the “trojan horse” quote yesterday with respect to their negotiation on the “loan” extension.


4. USA 10 yr treasury bond at 2.10% early this morning. Thirty year rate well below 3%  (2.72%!!!!)/yield curve flattens/foreshadowing recession
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid



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


Stocks Coiled To Soar On Any Positive Greek News


With the new and revised (until it is re-revised again to some future date), Greek D-Day set for today’s third in the past 2 weeks Eurogroup meeting, every favorable headline serves as a springboard for ES-buying algos, while every negative headline is promptly ignored. And since this is Europe’s style trial ballooning, there have been many of both with just these two hitting in the last hour:


Guess which one pushed ES into the green? Of course, what the “bullish” headline did not include was the subtext which was that “We have covered four fifths of the distance, they also need to cover one fifth,” according to the Greek  official and he added Greece wanted to clinch a deal on Friday, but that it would not back down in the face of pressure from the Eurogroup. “The official, speaking on the condition of anonymity, said Greece had made a lot of concessions to reach an agreement and that the euro zone should show some flexibility too.”

In other words, more hope interpreted as fact.

And just in case today’s summit achieves nothing, don’t you dare sell your stocks, because, drumroll, another meeting may be right around the corner, providng many more such risk-ramping opportunities as the market prices in yet another successful Greek deal and forgets to sell-off on the disappointment. Also from Reuters which is really covering all bases, because remember that the biggest source of revenue for Reuters is not resporting the news but FX trading, hence FX vol is quite welcome:

Euro zone finance ministers will try again on Friday to break a deadlock over Greece’s urgent need for further financing but it may take an emergency summit of the currency bloc in the coming week to clinch any deal.


With EU paymaster Germany and the new radical leftist-led government in Athens digging their heels in over demands that Greece stick to strict austerity conditions in its international bailout programme, the two sides seemed far apart hours before a crucial Eurogroup meeting in Brussels.


“The Greek government has done all it should at every level in an effort to find a mutually beneficial solution,” government spokesman Gabriel Sakellaridis told Mega TV.


“We are not discussing the continuation of the (bailout) programme,” he said. “The Greek government will maintain this stance today, although conditions have matured for a solution to be found at last.”

So aside from Greece, which is what everyone’s attention will be glued on, which starts at 14:00 GMT and whose press conference is tentatively scheduled for 18:00 GMT but will either be substantially delayed, or not even take place if for the third time Greece is unable to reach a deal, what else is moving markets?

European equities have been fairly resilient to this morning’s FX moves and concerns around Greek negotiations, and although the major bourses trade marginally lower, they have drifted within yesterday’s range. The FTSE 100 is outperforming its peers due to strength in index members, with Standard Life higher by 2.9% after an earnings update, Weir Group higher by 1.6% after a positive broker move pre-market, and the prospect of a dovish BoE supporting prices.

Ahead of the Eurogroup meeting attention will be paid to any comments from the German state after they rejected yesterday’s Greece proposal, comments from Eurogroup officials as they arrive at today’s meeting, and any draft documents leaked before the official release. Other than that focus will fall on today’s only tier 1 US data release with Manufacturing PMI due at 1445GMT and it is also worth bearing in mind that there are several options expiries across fixed income and equity futures.

Fed’s Bullard (Non Voter – Soft Hawk) reiterated his call for the Fed to start raising rates, saying zero is not the right rate given the US economy. Bullard added that removing “patient” at March meeting would allow but to obligate Fed to raise rates in June. (RTRS)

Despite a mixed Wall Street close and ahead of today’s Greece/Eurogroup crunch talks, the Nikkei 225 (+0.4%) traded at its 15-yr highs after extending on yesterday gains, to touch the highest level since May 2000. The ASX 200 (-0.4%) fell for a 2nd consecutive day, dragged lower by energy stocks which were weighed on by the continued oil sell-off. Chinese, Hong Kong, South Korean, Taiwanese and Singapore stock markets remained closed for a second day due to the Lunar New Year.

EUR and GBP have been in focus during trade this morning as uncertainty around a compromise in Greece continues to weigh on sentiment and dovish comments from the usually hawkish BoE member McCafferty. GBP saw further selling pressure on a technical break below yesterday’s low and 1.5400 and after overnight comments from one of the most hawkish members on the BoE who made relatively dovish remarks by saying that it is plausible that interest rates could turn negative at some stage as the MPC has ‘to consider all eventualities’.

Selling in EUR and GBP this morning have driven FX markets and caused the USD to move to fresh intraday highs and hence weakness in commodities names. CAD has been a notable outperformer with USD/CAD paring some of yesterday’s upside and CAD strength observed across major CAD crosses.

Gold, silver and crude futures all fell to intraday lows in early European trade as the USD strengthened to gain 0.2% before the US joined the market. Oil continues to slide in the wake of data showing stockpiles in the US sit at record highs although March WTI futures trade off yesterday’s low and firmly above USD 50/bbl. Commodities specific news-flow could remain quiet today given all this week’s inventory data is out of the way and China remain away from the market due to the Lunar New Year, however greater attention has been paid to the US Baker Hughes rig count in recent weeks which is due for release at 1pm Eastern.

Summary: European shares remain little changed, though off intraday lows, with the basic resources and autos sectors outperforming and real estate, media underperforming. Euro-area finance ministers hold emergency talks with Greek officials today on maintaining funding. Euro-area, German, French services PMI above estimates, manufacturing PMI below. U.K. January retail sales, budget surplus below estimates, retail prices fall most on record on annual basis. The U.K. and Swiss markets are the best-performing larger bourses, Dutch the worst. The euro is weaker against the dollar. Portuguese 10yr bond yields fall; Spanish yields decline. Commodities little changed, with copper, zinc underperforming and natural gas outperforming. * U.S. Markit manufacturing PMI due later.

Market Wrap:

  • S&P 500 futures up 0.1% to 2096.4
  • Stoxx 600 up 0.1% to 381.7
  • US 10Yr yield down 1bps to 2.1%
  • German 10Yr yield down 0bps to 0.38%
  • MSCI Asia Pacific up 0.1% to 144.9
  • Gold spot down 0.2% to $1204/oz
  • 10 out of 19 Stoxx 600 sectors rise; basic resources, autos outperform, real estate, media underperform
  • Euro down 0.28% to $1.1336
  • Dollar Index up 0.11% to 94.51
  • Italian 10Yr yield down 2bps to 1.59%
  • Spanish 10Yr yield down 4bps to 1.51%
  • French 10Yr yield down 1bps to 0.69%
    S&P GSCI Index up 0% to 418.5
  • Brent Futures up 0% to $60.2/bbl, WTI Futures down 0.2% to $51.1/bbl
  • LME 3m Copper down 0.6% to $5717.5/MT
  • LME 3m Nickel up 0.3% to $14025/MT
  • Wheat futures up 0.3% to 521 USd/bu

Bulletin Headline Summary

  • Ahead of today’s Eurogroup meeting attention will be paid to any comments from the German state after they rejected yesterday’s Greece proposal and comments from Eurogroup officials as they arrive at today’s meeting from 1400GMT
  • EUR and GBP drive FX markets in early European trade as yesterday’s lows are taken out, a compromise between Greece and the EU hangs in the balance, and dovish comments from BoE’s McCafferty weighs on prices
  • Treasury yields slightly lower in overnight trading after remaining within narrow ranges yesterday as statement suggesting a German rejection of a Greek proposal on loan extension was followed by indications Germany regarded the proposal as a basis for negotiation.
  • Greek Finance Minister Varoufakis returns to Brussels for a third meeting in two weeks with his euro-area counterparts in an effort to strike a deal that will let Europe’s most-indebted country avoid default
  • Bloomberg Greece Sovereign Bond Index shows those with money at stake aren’t seeing a significant increase in the chances of a euro-zone departure
  • New rules intended to make European banks stronger may end up encouraging them to get bigger, too
  • Major central banks are buying up so much government debt that investors have little choice other than to funnel ever more of their money into riskier corporate debt
  • Britain posted its biggest budget surplus in seven years in January as a deadline for filing personal income-tax returns boosted payments to a record
  • A rebel offensive that pushed Ukrainian troops out of the strategic town Debaltseve showed few signs of relenting amid a diplomatic push to preserve last week’s truce
  • The U.S. and Iraq are planning a spring offensive to retake the city of Mosul that will require 20,000 to 25,000 Iraqi troops to defeat 1,000 to 2,000 Islamic State fighters, according to an official from U.S. Central Command
  • Sovereign 10Y yields mostly lower led by Greece (down 8bps). Asian, European stocks mixed; U.S. equity-index futures slightly higher. Brent and WTI rise, gold and copper drop


As usual DB’s Jim Reid does the full overnight event summary


Its face-off Friday in Brussels today (2pm start London time) with little hint as to which way things will go for Greece and the EU at the latest Eurogroup finance ministers meeting. On the positive side it is a proper face to face meeting which wasn’t always assured, and reports suggest that Tsipras and Merkel spoke at length last night which shows dialogue has occurred at the key level. However on the negative side Germany were initially quite disdainful of Greece’s request for a loan extension, calling it a “Trojan Horse” designed to change the terms of the remaining aid. They then went on to suggest that Greece submit no more than a three-sentence letter in requesting an extension including a promise to complete the program.

It’s looking more likely that the more positive headlines generated from Merkel’s phone call with Tsipras were aimed at toning down initial comments from German finance minister Schaeuble rather than highlight any sort of contrasting views within Germany. Along with the ‘Trojan Horse’ comment, a spokesman for the Finance Minister was quoted as saying on Reuters that the proposal ‘goes in the direction of bridge financing without fulfilling the demands of the programme’. Following Chancellor Merkel’s phone call with PM Tsipras, Economy Minister Gabriel appeared to strike a more conciliatory tone however and was quoted on Bloomberg as saying ‘I would advise that we don’t rush to say yes or no, but that we engage in talks’.

The comments which appeared in yesterday’s press from various European officials do appear more mixed on the whole. The EC’s Juncker noted that the letter was a positive sign and could pave the way for compromise. French PM Valls meanwhile said that the letter was encouraging and that a quick solution is possible. However on the other side, Finish PM Stubb appeared to follow a similar line to Schaeuble saying that it lacked a commitment to structural reforms. US Treasury Secretary Lew has attempted to bring some balance to some of the comments however after speaking to Varoufakis, Dijsselbloem and French finance minister Sapin. Lew was reportedly urging both sides to tone down recent rhetoric and reach a pragmatic compromise (Bloomberg).

For Greece to ultimately receive any sort of funding, a mutual agreement needs to arise between both sides. Comments last night suggest that there is perhaps conflicting views in the European camp (even within Germany itself) which would certainly increase the risks to any sort of agreement on the proposal. DB’s George Saravelos noted that yesterday’s Greek proposal did not go as far as promising to not reverse previously-implemented legislation, but did in effect go halfway there. Clearly a lot to still be decided and plenty of risks remain despite yesterday’s step forward.

In terms of markets yesterday, the announcement of the Greek letter leant support to both equity and credit markets in Europe. The Stoxx 600 (+0.27%), DAX (+0.37%) and CAC (+0.71%) all eventually finished firmer whilst Greek equities also bounced over 1%. The negative comments around midday out of Germany did however create some doubt in the markets, albeit fairly short lived. The Stoxx 600 actually declined 0.5% following the headlines coming off intraday highs of +0.4%, only to then firm slightly into the close after more conciliatory comments emerged. Crossover meanwhile closed 6bps tighter and the Euro weakened following the Schaeuble comments to finish 0.25% lower versus the Dollar at $1.137. Peripheral bond markets also had a better day with 10y yields anywhere from 2bps to 5bps tighter. So not a lot of fear seemingly.

It was a quiet day data wise in Europe yesterday with French CPI falling more than expected (-0.4% yoy vs. -0.3% expected) although Euro-area consumer confidence did surprise to the upside (-6.7 vs. -7.5 expected). That flash print was in fact the highest since 2007 with the benefits of lower energy prices and ECB QE perhaps offsetting the Greek headlines for now. Just on the ECB, yesterday saw for the first release of monetary policy minutes from the Central Bank which covered the January 22nd meeting. Given the ECB holds a press conference following every policy meeting, the minutes didn’t appear to offer much new news although DB’s Mark Wall notes that over time the release of these minutes could help give a sense of the evolution of debate inside the council.

Unlike in Europe, US equities appeared to trade with little obvious direction yesterday. The S&P 500 finished the day -0.11% although in reality bounced around over most of the session as Greece, oil, data and earnings all played a part. Energy stocks (-0.78%) weighed on overall sentiment as WTI (-1.88%) and Brent (-0.53%) both declined for a second consecutive day. In fact both markets traded as much as 3-4% lower intraday after a supply report from the American Petroleum Institute, although markets then recovered when a similar EIA report suggested that stockpiles weren’t quite as high as initially thought – although still at record levels.

There was a similar lack of conviction in Treasuries yesterday as the benchmark 10y yield bounced around before eventually settling 3.4bps higher at 2.114%. The Dollar (DXY +0.2%) meanwhile closed firmer. Elsewhere data on the whole was mixed. Initial jobless claims (283k vs. 290k expected) continued the recent run of strong employment report with the four-week average dropping to 283.3k marking a three month low. The Philadelphia Fed business outlook for February disappointed however as the 5.2 reading fell 1.1pts from the January print. Finally the leading indicator dropped one-tenth to +0.2% in January (vs. +0.3% expected).

Looking at the early morning trading in Asia this morning, having closed at a 15-year high yesterday, the Nikkei (+0.31%) has extended gains this morning and the Topix (+0.24%) is also firmer despite a weaker than expected manufacturing PMI print for the region (51.5 vs. 52.5 expected). Credit markets in Japan are unchanged. Elsewhere the ASX (-0.38%) is weaker whilst oil markets have rebounded around a percent this morning as we go to print. The Euro (-0.04%) is more or less unchanged heading into today’s meeting.

Away from the obvious focus on the Eurogroup meeting this afternoon, attention will also be on the preliminary February PMI prints in Europe this morning where we get the services, manufacturing and composite prints for France, Germany and the Euro-area. As well as this, we get PPI out of Germany and retail sales for the UK. Across the pond this afternoon, we’ve just got the manufacturing PMI due.





Japan will now need a 4th arrow as their manufacturing PMI misses again:


(courtesy zero hedge)





“We’re Gonna Need A 4th Arrow” Japanese Manufacturing PMI Misses, Slips To 7 Month Lows


It would appear that monetizing more than 100% of your debt and constant daily reassurances that everything is awesome are not enough to create real world economic growth. Japanese manufacturing PMI slipped to 51.5 in February (missing expectations of 52.2), its lowest since July 2014 as New Orders & Employment slowed. Perhaps most worrying for the deflation-death match Abe is wagering, Output prices tumbled. Japanese stocks don’t care of course, having entirely decoupled from JPY when The BoJ scared the FX carry markets with its ‘hawkish’ bias and 5-4 vote.


PMI slipping…


As Output Prices tumble…

As Markit notes,

“However, employment growth weakened for the second successive month in February despite reports of an improving economy.”

*  *  *

Meanwhile, Japanese stocks and JPY have entirely decoupled since the BoJ hawkishness scare – almost as if someone wants the world to believe that Grexit is entirely irrelevant…





And now the wild no deal yet Greek deal with the Europeans:


in Chronological order today:


First: early this morning, the German led block stated that they are ready to let Greece leave the Euro, with the ECB preparing for a GREXIT.


(courtesy zero hedge)



German-Led Block Willing To Let Greece Leave Euro, ECB Prepares For Grexit


This is what peak bluffing looks like.

Moments after there was much hope for a deal, suddenly ze Germans yanked the carpet from under any potential leverage Greece may have thought it had when the Maltese foreign minister said:

  • “I think they’ve now reached a point where they will tell Greece if you really want to leave, leave”

This in turns follows minutes after a Spigel article said that the ECB prepares for Greek euro exit. From the article, google-translated:

The European Central Bank (ECB) is preparing for a Greek exit from the monetary union. To that effect, Employees by information obtained by SPIEGEL, an internal simulation games by how the rest of the euro zone could be held together.


Despite all the denials to urge the European monetary authorities the Greeks to finally introduce capital controls. According to the findings of the ECB, the Greeks have a day more than one billion euros abroad.


The International Monetary Fund ( IMF ) holds a Greek exit from the monetary union for the rest of the euro zone manageable. The Europeans had pulled up in recent years firewalls that may prevent skipping the crisis to other countries, according to Washington.


For a Greece leaving the euro zone would be related to the IMF, with significantly higher costs than if the country would be free to pursue further reform.

The bluffs will continue until one or the other sides admits defeat.







And the German Press stating :  Nein…..


(courtesy zero hedge)





German Press Summarizes Today’s Greece Negotiations In One Cartoon

As clear as it gets.

h/t @damomac

Finally, late in the day Greece caves in.  They get an extension on the “existing deal” for 4 months and then the EU will determine if the “programme” was successful. Why 4 months ending in June?  Because the huge amount of money that comes due owing by Greece to the entities come due in early July!!   They get no money until they complete their programme deal.

(courtesy zero hedge)


Full Eurogroup Statement On Greece


Just out from the Eurogroup, the final statement. Bottom line: Greece caves on pretty much everything, however the dreaded “Troika” words has been replaced with “institutions.”  Sarcasm aside, Greece has just kicked the can for four months. Why four months? Because that’s just ahead of the big Greek debt maturity.

Eurogroup statement on Greece

The Eurogroup reiterates its appreciation for the remarkable adjustment efforts undertaken by Greece and the Greek people over the last years. During the last few weeks, we have, together with the institutions, engaged in an intensive and constructive dialogue with the new Greek authorities and reached common ground today.

The Eurogroup notes, in the framework of the existing arrangement, the request from the Greek authorities for an extension of the Master Financial Assistance Facility Agreement (MFFA), which is underpinned by a set of commitments. The purpose of the extension is the successful completion of the review on the basis of the conditions in the current arrangement, making best use of the given flexibility which will be considered jointly with the Greek authorities and the institutions. This extension would also bridge the time for discussions on a possible follow-up arrangement between the Eurogroup, the institutions and Greece. 

The Greek authorities will present a first list of reform measures, based on the current arrangement, by the end of Monday February 23. The institutions will provide a first view whether this is sufficiently comprehensive to be a valid starting point for a successful conclusion of the review. This list will be further specified and then agreed with the institutions by the end of April.

Only approval of the conclusion of the review of the extended arrangement by the institutions in turn will allow for any disbursement of the outstanding tranche of the current EFSF programme and the transfer of the 2014 SMP profits. Both are again subject to approval by the Eurogroup.

In view of the assessment of the institutions the Eurogroup agrees that the funds, so far available in the HFSF buffer, should be held by the EFSF, free of third party rights for the duration of the MFFA extension. The funds continue to be available for the duration of the MFFA extension and can only be used for bank recapitalisation and resolution costs. They will only be released on request by the ECB/SSM.

In this light, we welcome the commitment by the Greek authorities to work in close agreement with European and international institutions and partners. Against this background we recall the independence of the European Central Bank. We also agreed that the IMF would continue to play its role.

The Greek authorities have expressed their strong commitment to a broader and deeper structural reform process aimed at durably improving growth and employment prospects, ensuring stability and resilience of the financial sector and enhancing social fairness. The authorities commit to implementing long overdue reforms to tackle corruption and tax evasion, and improving the efficiency of the public sector. In this context, the Greek authorities undertake to make best use of the continued provision of technical assistance.

The Greek authorities reiterate their unequivocal commitment to honour their financial obligations to all their creditors fully and timely. 

The Greek authorities have also committed to ensure the appropriate primary fiscal surpluses or financing proceeds required to guarantee debt sustainability in line with the November 2012 Eurogroup statement. The institutions will, for the 2015 primary surplus target, take the economic circumstances in 2015 into account.

In light of these commitments, we welcome that in a number of areas the Greek policy priorities can contribute to a strengthening and better implementation of the current arrangement. The Greek authorities commit to refrain from any rollback of measures and unilateral changes to the policies and structural reforms that would negatively impact fiscal targets, economic recovery or financial stability, as assessed by the institutions.

On the basis of the request, the commitments by the Greek authorities, the advice of the institutions, and today’s agreement, we will launch the national procedures with a view to reaching a final decision on the extension of the current EFSF Master Financial Assistance Facility Agreement for up to four months by the EFSF Board of Directors. We also invite the institutions and the Greek authorities to resume immediately the work that would allow the successful conclusion of the review.

We remain committed to provide adequate support to Greece until it has regained full market access as long as it honours its commitments within the agreed framework.




Of course he is right!!


(courtesy zero hedge)





Shots Fired: Schauble Says “Greeks Certainly Will Have A Difficult Time To Explain The Deal To Their Voters”


Did anyone honestly not think the German finance minister would not have the final word?


He’s right.



Yanis V explains himself but he puts his foot in his mouth:


(courtesy zero hedge)


Greek FinMin Varoufakis Explains Himself – Live Feed



Greek Finance Minister Yanis Varoufakis is holding a press conference to explain the decisions that led up to what by appearance seems to be a Greek fold…



It’s A Deal… (he is speaking Greek first, then English)







And now the fine print:  Greece must list the reforms it wishes to do by Monday.  If the institutions  (creditors = Troika) say no;  the deal is off and we have a GREXIT.


(courtesy zero hedge)




Germany Gives Greece Just Enough Rope: Varoufakis Says If Troika Rejects Reforms “The Deal Is Dead And Buried”


As usual, the fine print of any European “deal” is revealed not only after the agreement, but after the US market close. So for all those waiting for the real punchline, here it is – it also is the reason why Greece got until Monday to reveal the list of “reforms” it would undertake:

“We’re in trouble next week if creditors don’t accept Greece’s reforms“, Greek Finance Minister Yanis Varoufakis says. “If our list of reforms is not backed by the institutions, this agreement is dead and buried.”

That’s bad. But… “But it’s not going to be knocked down by the institutions.”

For his sake, let’s hopes he is correct in predicting what the Troika, pardon, Institutions will do. Because this is precisely what Schauble meant when he said that the “Greeks Certainly Will Have A Difficult Time To Explain The Deal To Their Voters“: under the conditionality of the Troika’s approval, the Tsipras government now has to walk back essentially all the promises it made to the Greek people – promises which by some accounts amount to over €20 billion in additional spending – or the Troika, pardon Institutions, will yank the entire deal and the Grexit can then commence.

And that’s the bottom line.

It’s also the reason Schauble was gloating: because he gave the Greek government just enough rope with which to hang itself.

Then again, if and when the Tsirpas government is booted out next once the Greek euphoria turns to disgust and disillusionment, does Germany really want to negotiate with Golden Dawn instead?

Open Europe now breaks down the “deal” for us and you can see how Greece has folded on just about every point:
(courtesy Open Europe/zero hedge)

How Greece Folded To Germany: The Complete Breakdown


Having, as we previously explained, been given ‘just enough rope’ by the Germans, we thought it worth looking at just what Greece capitulated on (or perhaps a shorter version – what they did not capitulate on) and how Tsipras and Varoufakis will sell this to their fellow politicians… and most of all people.As OpenEurope explains,

What points has Greece capitulated on?

1. Completion of the current review – Greece has basically agreed to conclude the current bailout. Any funding is conditional on such a process: 

Only approval of the conclusion of the review of the extended arrangement by the institutions in turn will allow for any disbursement of the outstanding tranche of the current EFSF programme and the transfer of the 2014 SMP profits. Both are again subject to approval by the Eurogroup.

This is a clear capitulation for Greek Prime Minister Alexis Tsipras, who said the previous bailout was “dead” and the EU/IMF/ECB Troika is “over”. 

2. Remaining bank recapitalisation funds – Greece wanted this money to be held by the Hellenic Financial Stabilisation Fund (HFSF) over the extension period, and possibly be open for use outside the banking sector. However, this has been denied and the bonds will return to the EFSF, although they will remain available for any bank recapitalisation needs. 

3. Role of the IMF – The Eurogroup statement says, “We also agreed that the IMF would continue to play its role”. Again, Greece has given in on this point and the Troika continues to exist and be strongly involved in all but name. 

4. No unilateral action – According to the statement, 

The Greek authorities commit to refrain from any rollback of measures and unilateral changes to the policies and structural reforms that would negatively impact fiscal targets, economic recovery or financial stability, as assessed by the institutions.

In light of this, a large number of promises that SYRIZA made in its election campaign will now be hard to fulfil. In the press conference given by Eurogroup Chairman Jeroen Dijsselbloem and EU Economics Commissioner Pierre Moscovici, it was suggested that this pledge also applied to the measures which were announced by Tsipras in his speech to the Greek parliament earlier this week – when he announced plans to roll back some labour market reforms passed by the previous Greek government. 

5. Four months rather than six months – Greece requested a six-month extension, but the Eurogroup only agreed to four months. This is a crucial point: it means the extension expires at the end of June. As the graph below shows, Greece faces two crucial bond repayments to the ECB in July and August which total €6.7bn. This is a very tough hard deadline. There is limited time for the longer term negotiations which will take place – provided that a final agreement on the extension is reached. It is very likely we will be back in a similar situation at the end of June. 

150211_Open_Europe_graph itemprop=

*  *  *

Has Greece secured any wins?

Greece has received a couple of small fillips in the wording: 

The institutions will, for the 2015 primary surplus target, take the economic circumstances in 2015 into account.

This suggests that Greece may, during this year and the extension in particular, get more fiscal leeway. As we predicted many times, this would manifest itself as a lower primary surplus target. A small victory which may provide a bit of temporary breathing space for the government. In practice, though, it was already looking difficult for Greece to meet its target this year given significant shortfalls in tax revenue. 

Greece also managed to get the word “bridge” into the statement, and a specific promise to discuss a fresh programme and approach: 

This extension would also bridge the time for discussions on a possible follow-up arrangement between the Eurogroup, the institutions and Greece.

*  *  *

What happens now?

As was stressed in the press conference, Greece will on Monday “present a first list of reform measures, based on the current arrangement”. Moving forward from this agreement, which is still largely in principle, will be conditional on these measures being judged as sufficient by the EU/IMF/ECB as a step towards completing the current bailout. 

Once that is confirmed work will begin on getting the “national procedures” in place, so that all the necessary parliaments (such as Germany and Finland) have approved the extension by the end of next week. 

In the not too distant future, discussions will begin on the “possible follow-up arrangement”. As we outlined in extensive detail here, there are a huge amount of differences which need to be resolved. The crucial ones being labour market and pension reforms, as well as debt relief. Chances of an agreement remain unclear, but we would expect Greece to struggle once again to get what it wants. 

Finally, the Greek government has to return to Greece and sell what is almost an entire capitulation to its own MPs (some of whom would have rather left the Eurozone than abandon their aims), its coalition partner, and the public (which has strongly supported the hard-line stance). We got a taste of this in the presser, when Finance Minister Yanis Varoufakis said: 

From the very first day, we refused to see these negotiations as a zero sum game.

We’re beginning to be co-authors of our destiny.

The Eurogroup statement is a good example of ‘constructive ambiguity’ on primary surplus targets.

I’m pleased to report that our commitments are commitments we wanted to make anyway.

Focusing on the longer term and selling the openness of the negotiation as an escape from the current programme. This may or may not be true, it is in the end a negotiation. 

Read More Here…

*  *  *

As we said yesterday,

Greece has folded this hand but the game of poker continues. Greece is now short stack and living hand to hand (day to day). It continues to be in a very tough position and how the evaporation of the vision which SYRIZA sold at the election is a crucial and potentially explosive unknown.

*  *  *






Dave explains to us the real problem that Germany et al wants to avoid:


(courtesy Dave Kranzler/IRD)


Hate To Say “I Told You So, But I Told You So”



Three weeks ago I wrote that the ECB and the Greeks would reach a “kick the can down the road” agreement – that everything in between would be staged grandstanding for the benefit of Germany’s restless anti-euro population (you know, the ones that want to hold the Bundesbank accountable for the gold that the Bundesbank has claims to have). Well, guess what? They kicked the can down the road: Bloomberg, Zerohedge.

It was simple to figure this:  follow the money.   The real money wasn’t in the exposure to the Greek sovereign debt that everyone was blathering about.  The real money is in the OTC derivatives connected to the Greek sovereign debt, the former to which big Too Big To Fail Banks have a huge exposure.   I can guarantee you that the U.S. Treasury and the Fed had played a huge role in engineering this latest maneuver to put off the day of reckoning.

“You can ignore reality, but you can’t ignore the consequences of reality.”  Ayn Rand






Beppe Grillo leader of the 5 star party totally against the EU and the ECB correctly talks that the Eurozone chess game has entered its final stage and he claims that Germany will  win in 3 moves.  He explains why….


a must read…



(courtesy zero hedge)



Beppe Grillo: “The Eurozone Chess Game Enters Its Final Stage: Germany Wins In Three Moves”


With everyone’s attention focused these days on Greece’s Tsipras (and Varoufakis), and also casting concerned glances at Spain’s Pablo Iglesias, head of the poll-leading Podemos party which may well be the next Syriza, many have forgotten that Italy has its own “anti-austerity” voice, that of Beppe Grillo, a voice which had been relatively quiet in the recent past. However, judging by his latest blog post, he too will want to be heard in the seaschange in Europe in the aftermath of the Syriza surge and the resultant chaos that has shaken the Eurozone to its core.

From Beppe Grillo’s blog

The Euro’s up in smoke

The Eurozone chess game has entered its third and final stage. Germany wins in three moves – Euro, deflation and purchase of public debt by the ECB (QE) – and in the last few years it has found a way to maximise its profits and reduce to zero its risks as Europe’s creditor.

Germany’s risks

Let’s try analysing the problems of the Eurozone as they really are: problems of conflicting interests of creditors and debtors regulated by demand and supply. If you agree to make a loan to your neighbour, you open yourself up to three risks:

  • that he’ll pay you back in a different currency that has perhaps been devalued unless you had a prior agreement about the repayment currency (currency risk);
  • that with the amount you get back, you can buy fewer goods or property (inflation risk);
  • that you don’t even have either of the first two problems because your neighbour simply goes bust and thus you lose everything (capital risk).

How Germany gains

Germany is the Eurozone’s only big creditor with about 600 billion Euro loaned to various countries, most of which are on the periphery of the Eurozone, including Italy. The Euro has given it this enviable status. If you produce lots and you consume and invest very little and you keep domestic wages and prices low, then you’ll always have cheap unconsumed goods to sell to your neighbours. And you might also be able to make money by providing credit that they will probably ask you for so that they can buy your goods that are so cheap and so good. This is Germany’s situation. It has always had this approach to the market economy in European affairs ever since 1870 with its roots in Calvinism. Thus to sell and lend to the countries on the periphery of Europe was always Germany’s preferred economic activity when everything was going well, before the crisis in 2008. Since then its only objective has been to get that credit returned and to protect its purchasing power.

Germany’s checkmate

Basically, QE will give Germany the time needed to achieve the final objective needed to get checkmate: to get rid of the national jurisdiction over as much of the debt as possible and thus to reduce its own capital risk as much as possible. Only the debt issued under Italian jurisdiction can be redefined in a new currency and thus could impose losses on foreign creditors, mainly German, via devaluation of the new currency. Today that proportion stands at about 93%. So only 7%, not more than 150 billion of public debt, cannot be redefined and has to be paid by in Euro, in accordance with the contract. Assuming that there’ll be devaluation of 30%, implies that the cost of a Euroexit for Italy in relation to its public debt, would have been no greater than about 50 billion euro before QE. With the de facto QE, this number has gone up to about 80 billion given that if there’s a collapse, the cost of a “haircut” of let’s say 30% on 100 billion government bonds (BTP) that would be bought by the Bank of Italy, would be a cost borne by all of us. In the eyes of a German creditor, restructuring our debt or an exit with the devaluation of the new currency, in fact present the same capital risk.

So, from now on, the only thing that counts for us Italians in the game of “creditor v debtor” is not to lose jurisdiction over our debt, so that we maintain the right to redefine it. This means we get the benefit if we do exit. Germany’s objective is exactly the opposite: remove our jurisdiction over our debt and thus increase the cost of an exit for us and give the advantage to them, thus continuing to protect the interests of the creditors, which is something it’s really good at.

If we wait too long before leaving the Euro, then Germany will get checkmate and after cashing in all the benefits of our entry into the Euro, it will also cash in on the benefits of our exit.





Mr Putin is not a happy camper tonight with its downgrade:

The faster they go to the gold back Rouble the better;


(courtesy Moody’s zero hedge)




Moody’s “Junks” Russia, Expects Deep Recession In 2015



Having put Russia on review in mid-January, Moody’s has decided (somewhat unsurprisingly) to downgrade Russia’s sovereign debt rating to Ba1 (from Baa3) with continuing negative outlook. The reasons:


We assume the low external debt, considerable reserves, lack of exposure to US Treasuries, and major gold backing were not considered useful? Moody’s concludes the full statement (below) by noting that they are unlikely to raise Russian sovereign debt rating in the near-term.

*  *  *

Kind of ironic then that Russia is the best performing stock market in the world this year!!

*  *  *

Full Moody’s Statement:

Moody’s Investors Service has today downgraded the government of Russia’s sovereign debt rating to Ba1/Not Prime (NP) from Baa3/Prime-3 (P-3). The rating outlook is negative. This rating action concludes the review for downgrade that commenced on January 16, 2015.

Moody’s downgrade of Russia’s government bond rating to Ba1 is driven by the following factors:

(1) The continuing crisis in Ukraine and the recent oil price and exchange rate shocks will further undermine Russia’s economic strength and medium-term growth prospects, despite the fiscal and monetary policy responses;

(2) The government’s financial strength will diminish materially as a result of fiscal pressures and the continued erosion of Russia’s foreign exchange (FX) reserves in light of ongoing capital outflows and restricted access to international capital markets;

(3) The risk is rising, although still very low, that the international response to the military conflict in Ukraine triggers a decision by the Russian authorities that directly or indirectly undermines timely payments on external debt service.

The assignment of the negative outlook reflects the potential for more severe political or economic shocks to emerge, related either to the military conflict in Ukraine or a renewed decline in oil prices, which would further impair Russia’s public and external finances.

In a related decision, Moody’s has lowered Russia’s country ceilings for foreign currency debt to Ba1/NP from Baa3/P-3; its country ceilings for local currency debt and deposits to Baa3 from Baa2; and its country ceiling for foreign currency bank deposits to Ba2/NP from Ba1/NP. A country ceiling generally indicates the highest rating level that any issuer domiciled in that country can attain for instruments of that type and currency denomination.




The first driver for the downgrade of Russia’s government bond rating to Ba1 relates to the effects of the ongoing crisis in Ukraine, as well as the fall in oil prices and of the ruble exchange rate on the country’s economic strength and financial stability.

In Moody’s view, the existing and potential future international sanctions, the erosion of the country’s foreign exchange buffers and persistently lower oil prices plus high and rising inflation will take a negative toll on incomes as well as business and consumer confidence. As a result, Russia is expected to experience a deep recession in 2015 and a continued contraction in 2016. The decline in confidence is likely to constrain domestic demand and exacerbate the Russian economy’s already chronic underinvestment.

It is unlikely that the impact of recent events will be transitory. The crisis in Ukraine continues. While the fall in the oil price and the exchange rate have reversed somewhat since the start of the year, the impact on inflation, confidence and growth is likely to be sustained.

The authorities’ policy response is gradually coalescing. However, policymakers confront a multi-faceted dilemma characterized by a falling exchange rate, sizeable capital outflows, declining economic activity and rising inflation. In Moody’s view policymakers are unlikely to be able to resolve these policy tensions in order to reverse the economic decline.

The monetary authorities face the conflicting objectives of keeping interest rates high enough to restrain the exchange rate and bring down inflation and keeping rates low enough to reinvigorate economic growth and bank solvency. While the interest rate cut in January coincided with a rise in oil prices that cushioned the otherwise negative initial reaction of the exchange rate, a too-rapid reduction in interest rates risks further currency depreciation and higher inflation, which would further compress domestic purchasing power and extend and/or deepen the economic downturn.

Meanwhile, the authorities’ revamped fiscal strategy will attempt to consolidate the budget to achieve balanced budgets at the lower oil prices and devalued exchange rates that now prevail. Details of this strategy will be made public in coming months. However, Moody’s believes that financial conditions in Russia are inherently vulnerable to renewed volatility, which would in turn trigger fresh capital flight and further downward pressure on the exchange rate and the balance of payments.

As a consequence, Moody’s believes that the government will face substantial difficulty in dealing with the wide range of economic, fiscal and monetary challenges that the country is facing.


The second driver for the downgrade of Russia’s government bond rating to Ba1 is the expected further erosion of Russia’s fiscal strength and foreign exchange buffers. As the rating agency noted in January when initiating its review for downgrade, the government’s ability to sustain its fiscal and financial strength was the main factor supporting Russia’s investment grade rating. Following the review, Moody’s expects further deterioration in the government’s financial strength despite the authorities’ fiscal policy responses.

Taking at face value the government’s plans to proceed with its planned fiscal consolidation for 2015, Moody’s expects a consolidated government deficit of approximately RUB1.6 trillion (2% of GDP) as well as a widening of the non-oil deficit. The deficit would likely be financed by drawing on the Reserve Fund, which is specifically designed for circumstances when oil prices fall below budgeted levels. Moody’s also expects that widespread demands for fiscal easing are likely to emerge if, as the rating agency projects, the recession persists into 2016. In a scenario in which the government would turn to borrowing in the domestic market to finance at least a share of these deficits, higher spending could result in an increase of the debt-to-GDP ratio to 20% or more.

In the rating agency’s view, therefore, the government’s debt metrics are likely to deteriorate over the coming years, albeit from low levels. Low debt and robust external buffers have been the key factors sustaining the rating in investment grade until now, given the country’s relatively lower economic and institutional strength and higher exposure to event risk than Baa-rated sovereigns.

Moreover, under the stress exerted by a shrinking economy, wider budget deficits and continued capital flight — in part reflecting the impact of the Ukraine crisis on investor and depositor confidence — and restricted access to international capital markets, Moody’s expects that the central bank’s and government’s FX assets will likely decrease significantly again this year, cutting the sovereign’s reserves by more than half compared to their year-end 2014 level of approximately USD330 billion.

In a more adverse but not unimaginable scenario, which assumes smaller current account surpluses and substantially larger capital outflows than in Moody’s baseline forecast, FX reserves including both government savings funds would be further depleted. While the government might choose to mobilise some form of capital controls to impede the outflow of capital and reserves, such tools are not without consequences. Capital controls, which might include a rationing of retail deposit withdrawals and/or prohibition upon repatriation of foreign investment capital, would weaken the investment climate further and undermine confidence in the banking system.


The third driver for the downgrade of Russia’s government bond rating to Ba1 relates to the very low but rising risk that the international response to the conflict in Ukraine triggers a decision by the Russian authorities that directly or indirectly undermines timely payments on external debt service.

Moody’s acknowledges the current and prospective efforts by the country’s policymakers to contain the economic and financial consequences of the many challenges they face: the Ukraine crisis as well as the collapse in global oil prices and the ruble exchange rate. However, the sovereign faces predicaments that few would have predicted six months to a year ago, and the government’s reaction to a possible escalation of these challenges is difficult to foresee. In Moody’s view, the risk of policy decisions being taken that pose a threat to the repayment of Russian debt obligations remains very low, but that risk is rising.


The negative outlook on the Ba1 rating reflects Moody’s view that the balance of economic, financial and political risks in Russia is slanted to the downside, with scenarios incorporating either an escalation of the Ukraine crisis and/or damage caused by recent shocks being greater than in Moody’s baseline scenario. Essentially, the probabilities associated with the downside scenarios are higher than those associated with an upside scenario in which the recession is shorter and shallower than Moody’s baseline.

For example, it seems more likely that Russia will face additional sanctions than that current sanctions are lifted in the coming months. The associated economic risks are also biased to the downside. Similarly, the likelihood of a further shock to confidence, with associated capital outflows and damage to investment and consumption intentions, seems greater than that of a return of confidence and a cessation of capital outflows or a material resumption of inflows.


Moody’s is unlikely to upgrade Russia’s sovereign debt rating in the near term given the negative outlook. However, Moody’s would consider stabilizing the outlook on the Russian government rating if the macro-economic and financial market conditions were to stabilize, if the risks of financial market volatility were to subside, and/or if there was a serious prospect of the Ukraine crisis being resolved in such a way that the risk of ongoing or escalating military hostilities and further sanctions were to dissipate.

Moody’s would consider downgrading Russia’s government bond rating if the macroeconomic and financial market conditions were to deteriorate substantially below the rating agency’s base case, or were the government to water down or abandon its fiscal and structural reform plans. The rating agency might also downgrade if the military conflict were to escalate and result in the introduction of additional sanctions that further undermine the country’s economic strength. Finally, actions that create greater uncertainty around the government’s capacity or willingness to continue to service its debt would also likely result in a downgrade.

GDP per capita (PPP basis, US$): 24,298 (2013 Actual) (also known as Per Capita Income)

Real GDP growth (% change): 1.3% (2013 Actual) (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec): 6.5% (2013 Actual)

Gen. Gov. Financial Balance/GDP: -1.3% (2013 Actual) (also known as Fiscal Balance)

Current Account Balance/GDP: 1.6% (2013 Actual) (also known as External Balance)

External debt/GDP: 35.1% (2013 Actual)

Level of economic development: Moderate level of economic resilience

Default history: At least one default event (on bonds and/or loans) has been recorded since 1983.

On 17 February 2015, a rating committee was called to discuss the rating of the Russia, Government of. The main points raised during the discussion were: The issuer’s economic fundamentals, including its economic strength, have materially decreased. The issuer’s fiscal or financial strength, including its debt profile, has materially decreased. The issuer has become increasingly susceptible to event risks.





OH OH!!  looks like there is smoke in Deutsche bank’s derivatives


(courtesy zero hedge)



The Are Two Big Problems With Deutsche Bank Failing The Fed’s Stress Test


There are two big problems with Deutsche Bank failing the Fed’s stress test as the WSJ just reported it would.

This is what the WSJ reported moments ago:

Large European banks including Deutsche Bank AG and Banco Santander SA are likely to fail the U.S. Federal Reserve’s stress test over shortcomings in how they measure and predict potential losses and risks, according to people familiar with the matter. Failing the stress tests would likely subject the U.S. units of Deutsche Bank and Banco Santander to restrictions on paying dividends to their European parent companies or other shareholders.

Why is this an issue?

Well, the first problem is that Deutsche Bank recently passed the ECB stress test with flying colors. Then again, since that was a “test” which not even in its worst-case scenario modeled for deflation (as a reminder, Europe just suffered its record worst deflation in history on par with the Great financial crisis), one can now roundly dismiss any and all current or future analytical, regulatory and executive tasks conducted by the ECB. We will ignore the fact that the world’s biggest bond buying program is currently being undertaken by precisely said clueless central bank. We will also ignore the other fact, that the bank of the former FDIC-head Sheila Bair, Santander – a bank which is currently the biggest subprime auto loan lender – will also fail the stress test: to dwell too much on that particular irony would give us a headache.

The WSJ did provide a token explanation for this particular “oversight” by the ECB:

Deutsche Bank Trust Corp. is expected to be found adequately capitalized by the Fed but will likely receive a warning on qualitative shortcomings, according to people familiar with the matter.


Both Deutsche Bank and Santander passed European Central Bank stress tests in October.Those tests focused on whether the banks had enough capital to withstand a two-year recession but didn’t assess such things as governance, risk management, and other more subjective factors like the Fed’s test.

Actually, the explanation that Deutsche Bank is lacking in its “risk management” department should be enough to give one a chill, especially when one considers the second big problem. Then again technically it not just a second problem: it is some 62.2 trillion problems, which is what the gross notional exposure of all derivatives on the Deutsche Bank balance sheet is pre-netting (and as Lehman showed us, netting only works in a perfect world in which there isn’t one single counterparty failure: if there is, there is no netting and gross instantly becomes net, simple as that).


So a bank which has €54.7 trillion, or a little over $62 trillion at today’s exchange rate, in derivatives – a number that is 20 times greater than the GDP of Germany –  just failed a central bank stress test due to lacking governance and risk management controls and, just maybe, has insufficient capital? What can possibly go wrong.





Oil related stories:


USA oil rig count tumbles again to July 2011.  However remember that oil production will still rise!


(courtesy zero hedge)





US Oil Rig Count Tumbles To July 2011 Lows, Pace Slows


For the 11th week in a row (2008/9 saw 20 weeks in a row), US rig counts fell and production hit record highs. Rig counts are tracking the lagged price of oil’s decline almost perfectly, with total rigs having dropped 32% from the highs. Notably last week’s rig count drop was the smallest in 4 weeks (down just 48 to 1310) with oil rigs dropping 37 to 1,019. Oil prices dropped on this news on worries at the slowing pace of rig count closure.


Rig counts itracking 4mo lagged price perfectly but pace of rig count decline slowed this week – total rig count now down 32% ion last 11 weeks…


Price is dropping on the slowinghpace of rig count declines…


Rig count collapses as firms focus on efficieny and cash flow – raising production to record highs…



Charts: Bloomberg






Your more important currency crosses early Friday morning:



Eur/USA 1.1317  down  .0049  (with every country on earth buying euros to support it due to the Greek crisis)

USA/JAPAN YEN 118.69  up .290

GBP/USA 1.5373 down .0044

USA/CAN 1.2450 down .0042

This morning in Europe, the euro is well down, trading now well below the 1.14 level at 1.1317 as Europe is supported by other nations keeping the Euro afloat,  Europe reacts to deflation, announcements of massive stimulation,  and the Greek crisis .   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 29 basis points and settling well below the 120 barrier to 118.69 yen to the dollar. The pound was down this morning as it now trades well below the 1.54 level at 1.5373.(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 was well up again reacting to the higher oil price and is trading  at 1.2450 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 as well as the potential for a GREXIT.

The NIKKEI: Friday morning : up 67.51 or 0.37%

Trading from Europe and Asia:
1. Europe stocks mixed

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 red/

Gold very early morning trading: $1211.00



Early Friday morning USA 10 year bond yield: 2.10% !!!  par  in basis points from Thursday night/


USA dollar index early Friday morning: 94.62  up 22 cents from Thursday’s close.



This ends the early morning numbers, Friday morning




And now for your closing numbers for Friday:







Closing Portuguese 10 year bond yield: 2.23% down 3 in basis points from Thursday


Closing Japanese 10 year bond yield: .39% !!! par in basis points from Thursday


Your closing Spanish 10 year government bond,  Friday down 5 in basis points in yield from Thursday night.


Spanish 10 year bond yield: 1.50% !!!!!!


Your Friday closing Italian 10 year bond yield: 1.58% down 2 in basis points from Thursday:



trading 8 basis points higher than Spain.




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

Euro/USA: 1.1379  up .0015

USA/Japan: 119.09 up .102

Great Britain/USA: 1.5395 down .0023

USA/Canada: 1.2540 up .0050



The euro rose a bit  this afternoon following the “positive” news on the Greece crisis.  However there is concerns on the continual war raging  rebels going after Mariupol.  It was up on the day by 15 basis  points finishing the day just below the 1.14 level to 1.1379. The yen was well down in the afternoon, and it was down by closing to the tune of 10 basis points and closing just above the 119 cross at 119.09. The British pound lost a lot of ground during the afternoon session and was down on  the day closing at 1.5395. The Canadian dollar was down again today due to the lower oil price.  It closed at 1.2540 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: 2.12 up 2 in basis points from Thursday (worth watching as lately it has been rising in yield)


Your closing USA dollar index: 94.35 down 6 cents on the day.



European and Dow Jones stock index closes:


England FTSE  up 26.30 points or 0.38%

Paris CAC down 2.38 or 0.05%

German Dax up 48.70 or 0.44%

Spain’s Ibex down  31.10 or .29%

Italian FTSE-MIB up 52.59 or 0.24%



The Dow: up 154.67. or 0.86%

Nasdaq; up 27.97 or 0.57%



OIL: WTI 50.76 !!!!!!!

Brent: 60.10!!!!



Closing USA/Russian rouble cross: 61.88 par in  roubles per dollar on the day.


closing UKrainian UAH:  (hryvnia)  28.04 UAH to the dollar. (lost another 1 UAH per dollar./yesterday 26.90 UAH/per dollar)

Since November the currency has lost half its value.




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


Your New York trading for today:


Acropolis Wow: US Stocks Soar To Record Highs On Greek Deal Headlines


All wee the feeling from US investors towards Greece has appeared to be…

But once the headlines crossed that a deals (which is not a deal yet and has plenty of room for Greece to SNAFU it still) hit – stocks exploded higher… because…




Since Greek Talks Failed on Monday…


And the week…



Treasury yields ended the week higher (and the curve notably steeper) with the excepotion of 2Y yields which ended unchanged (after everything whiplashed higher in yield afteer the Greek deal)


Though it’s pretty clear what was drivcing stocks to the record highs… As Meghan Traynor might say :”It’s all about the Yen… no data”



The US Dollar dropped briefly back to unchanged as EUR rallied on deal news today but rallied into the close to end the week up 0.3% – note the giant swings in Swissy


Silver slumped to its worse week since Sept 2013 closing down 6.4%, Crude was also clubbed lower


Crude saw its worst week in the last 4…


And finally… one last thing for the weekend sir…


Charts: Bloomberg






Markit PMI signals that the uSA has entered a slower growth phase:


(courtesy Markit/zero hedge)





Manufacturing PMI Signals “US Economy Has Entered A Slower Growth Phase”; Employment, New Orders Tumble



Having hovered at its lowest level in 12 months in January, February’s Markit US Manufacturing PMI printed 54.3 (modestly above expectations of 53.6). Under the covers it is a very different story with New orders dropping to their lowest level since Jan 2014 and employment falling. While the headline will likely steal the day (though initial equity reactions are negative), as Markit concludes, “the rate of economic growth remains well down on last year.”



And employment plunged…


As Markit notes,

“The survey therefore adds to the sense that, while still expanding at a solid pace, the US economy has entered a slower growth phase.


February data indicated greater caution in terms of job hiring across the manufacturing sector. Payroll numbers increased only modestly and at the slowest pace for seven months. Meanwhile, manufacturers pointed to the slowest rise in input buying since January 2014 and inventory volumes increased only slightly since the previous month


“the rate of growth remains well down on last year’s peaks, and a slowing of new orders growth to the weakest for just over a year looks to have caused employers to take a more cautious approach to hiring. Worries over Russia and the eurozone also continue to dampen risk appetite”

And Deflation looms…

“manufacturing costs, now falling at the fastest rate since mid-2012, should help drive inflation down further in coming months and allow policy to be kept looser for longer if needed.”

*  *  *


Charts: Bloomberg




Now the cuts to the USA first quarter GDP:


(courtesy zero hedge)

It Begins: Goldman Cuts Q1 GDP Due To Snow

we think that negative snowstorm effects could potentially subtract as much as half a percentage point from Q1 growth compared with a neutral baseline, although there is still plenty of time for activity to bounce back within the quarter. In light of our analysis, we reduced our Q1 GDP tracking estimate by two-tenths to +2.8%.

      – Goldman Sachs, February 20, 2015


Back on Monday, we warned that “The Last Time This Happened, US GDP Crashed By 5%“, and by this we of course mean the Polar Vortex 2.0 that has gripped the US in a spell of Russian revenge by way of the “Siberian Express” which has blanketed the US in record cold weather.



As a reminder, it was precisely a year ago that economists, clearly unable to realize during the fact that heavy snowfall (in the winter) is disastrous toseasonally-adjusted GDP, decided to blame the harsh weather after the reported GDP fact. After what fact? After seeing Q1 2014 GDP rising as much as 2.5% just shortly before the BEA announced that Q1 GDP was in fact… -2.9%!


This led to such hilarious episodes of weatheconomistsgoalseeking their models to “reality” as the following:


In any event, our conclusion on Monday was the following:

So clearly the question is now that Q1 GDP estimates are once again facing the same trajectory as precisely a year ago (and that doesn’t even include the real threat of the West Coast port strike spilling over and truly slamming the US economy), how long until the current consensus economic forecast…



… is slashed by the same 5% that the Polar Vortex of 2014 magically crushed seasonally-adjusted Q1 2014 GDP growth by?


Or perhaps this time will be different, and the laughable cadre of propaganda sycophants known as tenured and/or Wall Street economists finally admits that cold weather in the winter had nothing to do with the economic plunge a year ago, and everything to do with the fact that when it comes to integrity and accuracy of economic data and estimations, the US now ranks pari passu with the Chinese department of truth?

Turns out it wasn’t different: it was just that Wall Street’s massively overpaid economists needed a few weeks of observing record cold weather and massive snow fall to put two and two together and realize that they have seen al of this a year ago.

As a result, the time to start slashing GDP and blaming it on the weather has arrived.

And here comes the first one, courtesy of Goldman, which just cut its Q1 GDP estimate to 2.8%, saying “negative snowstorm effects could potentially subtract as much as half a percentage point from Q1 growth” – because remember: nothing is as unpredictable, and nothing is as unseasonally unadjustable as snow in the winter.

Here is Goldman with Can the Economy Climb Out of the Q1 Snowbank…. because the so-called 5% GDP growth in Q3?

  • Last winter’s colder- and snowier-than-normal weather had a significant negative effect on macroeconomic data. In today’s Daily, we review the likely impact of the weather so far this winter. On balance, we expect the extent of weather distortions to be quite a bit smaller than last year, although above-average snowfall will probably still result in a drag.
  • Temperatures this winter have been more seasonally normal, as measured by population-weighted heating degree days. Somewhat colder-than-normal temperatures in the densely populated Northeast were offset by significantly warmer-than-normal temperatures in much of the West. Since November, fluctuating temperatures have contributed to swings in seasonally-adjusted utility output, with little net impact.
  • Snowfall has been higher than normal—in particular in New England—although national snowfall has not yet been as extreme as it was last year. This year’s major storm of the winter, which occurred in late January, managed to fall outside of the January and February reference weeks for the payroll report. However, the storm may have had a negative impact on January retail sales. In addition, flight cancellations are elevated, which may show up in the air travel spending numbers.
  • On balance, we think that negative snowstorm effects could potentially subtract as much as half a percentage point from Q1 growth compared with a neutral baseline, although there is still plenty of time for activity to bounce back within the quarter. In light of our analysis, we reduced our Q1 GDP tracking estimate by two-tenths to +2.8%.

Last winter’s colder- and snowier-than-normal weather had a significant negative effect on macroeconomic data. Consumer spending grew slowly and construction activity fell, contributing—along with other special factors—to a shockingly-bad 2.1% contraction in GDP in the first quarter of the year. With this experience fresh in memory, cold temperatures in the Eastern US and recent winter storms including “Juno” and “Octavia” have raised questions of whether we are in for a repeat of 2014. In today’s Daily, we review the likely impact of the weather so far this winter.


Starting with the temperature, our preferred quantitative measure is the National Oceanic and Atmospheric Administration (NOAA)’s population-weighted heating degree day (HDD) series. HDDs measure the number of degrees by which a day’s average temperature falls below 65 degrees F, with more positive numbers indicating colder temperatures. Exhibit 1 shows that, in contrast to last year’s “polar vortex,” cumulative HDDs this year have been roughly in line with historical norms.



This may be surprising to readers in the Eastern US who have recently been experiencing colder-than-average temperatures. Exhibit 2 shows the cumulative deviation in heating degree days from historical “normals,” with red coloring indicating hotter-than-normal temperatures and blue coloring indicating colder-than-normal temperatures. While much of the Eastern part of the country has been colder-than-normal this year, essentially the entire Western half of the country—including California, the most populous state—has been warmer than normal. That said, the relationship between temperature and economic activity is complex, and warmer-than-average winter temperatures in areas of the country that are typically warmer probably have a different effect than warmer-than-average winter temperatures would have in areas that are typically colder.



Snowfall has probably been a more significant factor. This is particularly the case in New England, where Boston is on track for record-breaking snowfall this winter. Exhibit 3 shows one measure of the cumulative impact of snowfall for the US as a whole—a running total of the number of people experiencing snowstorms with at least 6″ of accumulation. Per the chart, snowfall this year has exceeded seasonal norms, but has not yet matched last winter’s extremes. However, this measure does not include the impact of winter storm Octavia earlier this week—which resulted in the closure of federal government offices in Washington, DC—as the figures have not yet been tabulated by NOAA.


Overall, it appears likely that the weather will again be a drag on Q1 GDP growth, although by significantly less than last year. A very simple forecasting model of real GDP growth which takes into account momentum and reversion effects, augmented with weather variables, would suggest that the drag could potentially be as much as half a percentage point (compared with about a full percentage point in Q1 of 2014). However, we do not yet have a significant amount of construction data in hand for the quarter, typically the most weather-sensitive sector of the economy. January housing starts held up relatively well, down only 2% after rising 7% in December. (Compare this with the 18% cumulative drop in housing starts during December 2013 and January 2014.) In addition, there is still plenty of time for activity to bounce-back within the quarter, especially if the snow lets up and unseasonably cold temperatures in the East give way to a spring thaw. Nonetheless, in light of our analysis we reduced our Q1 GDP tracking estimate by two-tenths to +2.8%.

Because what above-trend growing economy can possibly handle a few extra feet of snow?  What really!?

Laughter aside, expect another round of GDP cuts by the, how did we put it, “laughable cadre of propaganda sycophants known as tenured and/or Wall Street economists” due to not only snow in the winter, but also the West Coast port strike as predicted here 2 weeks ago, to take place in 2-4 weeks, once the reality of the latest sharp US slowdown filters through their goalseek-o-trons.

In the end, we wouldn’t be surprised if the final Q1 GDP print at 0% or negative, now that Obamacare can no longer “boost” GDP, now that household savings have been revised as low as they can go (pushing GDP higher in the process as explained previously), and now that the blistering issuance of subprime loans to buy rapidly amortizing cars by deadbeats is fading fast. All that will be blamed on the weather .

we still do not have confirmation on this;
(courtesy zero hedge)

Dockworkers Reportedly Reach Deal Following US Labor Secretary Threat

Following threats from the US labor secretary “that they have until Friday to reach a contract or they’ll have to negotiate in Washington D.C.,” Dockworkers and their bosses, according to JOC.com, have reached an agreement (despite Reuters reports that no deal was reached last night).

As Reuters reports, no deal was reached last night…

Shipping executives and union leaders for dockworkers at 29 West Coast ports ended a third straight day of contract talks late on Thursday without a settlement, despite arm-twisting from the U.S. labor secretary, but planned to meet again on Friday.


Labor Secretary Tom Perez joined the talks in San Francisco on Tuesday at the behest of President Barack Obama, who has come under growing political pressure to intervene in a dispute that has rippled through the trans-Pacific commercial supply chain and could cost the U.S. economy billions of dollars.


The International Longshore and Warehouse Union, representing 20,000 dockworkers, has been locked in negotiations for nine months with the bargaining agent for shippers and terminal operators, the Pacific Maritime Association (PMA).

Despite threats from the government…

The U.S. Labor Secretary on Thursday told the International Longshore and Warehouse Union and the Pacific Maritime Association that they have until Friday to reach a contract or they’ll have to negotiate in Washington D.C.

But now, as JOC.com reports,


West Coast dockworkers, employers reached 5-yr agreement last night, JOC.com reports, citing unidentified people familiar with internal reports by a “major forwarder.”


To wrap up this week:
Greg Hunter of USAWatchdog
(courtesy Greg Hunter/USAWatchdog)

WNW 178-Obama Blocked on Immigration, Ukraine Ceasefire Off, ISIS Beheading Christians

We  will see you on Monday.

bye for now



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