Feb 23/GLD no change/SLV no change/Greece delays by one day in issuing its promised reforms/

 

 

 

 

 

 WEB PAGE ADDRESS:  WWW.HARVEYORGANBLOG.COM

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold: $1200.30 down $4.10   (comex closing time)
Silver: $16.24 down 2 cents  (comex closing time)

 

 

In the access market 5:15 pm

 

 

Gold $1201.50
silver $16.31

 

I would like to point out that the Chinese traders have been absent from gold/silver trading as this is their New Year.  They will be back Wednesday.

No doubt that due to their absence our bankers are having an easy time of knocking our metals down.  What will end on Wednesday.

 

Today, Greece was supposed to file their reforms with the Troika and late this afternoon, it was delayed until tomorrow.  I may be wrong but it may be part of the Syriza party’s plan to get the Greek citizenry angry at the EU for demanding  more austerity from an already weakened society.  Remember that the Greek voters wanted to end austerity but also they wanted to stay in the Euro.  To have both is really impossible. If the citizenry is angry enough at the new measures demanded by the Troika, maybe that would be enough for them to vote in the affirmative to vacate the Euro.

 

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 96 notices served for 9600 oz.  Silver comex registered 3 notices for 15,000 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 fell by 2674 contracts as Friday’s silver price was down by 11 cents. The total silver OI continues to remain relatively high with today’s reading at 168,522 contracts. The front month of March contracted by only 12,651 contracts with only 4 days before  first day notice.

Also the entire silver complex has not collapsed yet as is their usual procedure when we approach the first day notice for an active contract month. We had 3 notices served upon for 15,000 oz.

 

We had 0 notices filed  for nil oz

 

 

In gold we had a tiny fall in OI even though gold was down by  $2.70 on Friday. The total comex gold OI rests tonight at 394,062 for a loss of 352 contracts. Today we had 96 notices served upon for 9600 oz.

 

 

 

Today,  no change in gold inventory at the GLD/Inventory at 771.25 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 fell by a tiny 352 contracts today from  394,414 all the way down to 394,062 as gold was down only $2.70 on Friday (at the comex close). We are now in the big delivery month of the active February contract and here the OI fell by 67 contracts falling to 481. We had 81 contracts served upon yesterday, thus we gained 14 gold contract or an additional 1400 ounces will  stand  in this delivery month . The next contract month of March saw it’s OI rise by 151 contracts up to 841. The next big active delivery month is April and here the OI fell by 1158 contracts down to 262,861. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was awful at 63,918. The confirmed volume yesterday ( which includes the volume during regular business hours  + access market sales the previous day) was poor at 115,098 contracts even  with mucho help from the HFT boys. Today we had 96 notices filed for 9600 oz.

And now for the wild silver comex results.  Silver OI fell by 2674 contracts from 171,196 all the way down to 168,522 as silver was down by 11 cents on Friday. The bankers are still not able to shake many silver leaves from the silver tree. We are still awaiting the usual collapse in OI as we get closer to first day notice. We are now in the non active contract month of February and here the OI rose from 20 up to 23 for a gain of 3 contracts. We had 0 notices filed on yesterday so we gained 3 contracts or an additional 15,000 ounces will stand in this February contract month . The next big active contract month is March and here the OI fell by only 12,651 contracts down to 40,225.  First day notice for the gold and silver February contract months is on Friday, Feb 27.2015 or 4 trading days away.  The March OI is still extremely high. The estimated volume today was poor at 28,825 contracts  (just comex sales during regular business hours. The confirmed volume on Friday was excellent (regular plus access market) at 73,373 contracts.  We had 3 notices filed for 15000 oz today.

February initial standings

 

Feb 23.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz   nil oz
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz  nil
No of oz served (contracts) today 96 contracts (9600 oz)
No of oz to be served (notices)  385 contracts (38,500 oz)
Total monthly oz gold served (contracts) so far this month 813 contracts(81,300 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 0 customer withdrawals

 

 

total customer withdrawal: nil oz

 

 

we had 0 customer deposits:

 

 

total customer deposits;  nil oz

 

We had 0 adjustments

 

 

Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 96 contract of which 0 notices were stopped (received) by JPMorgan dealer and 89 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 (813) x 100 oz  or 81,300 oz , to which we add the difference between the OI for the front month of February (481 contracts)  minus the number of notices served today x 100 oz (96 contracts) x 100 oz = 119,800 oz, the amount of gold oz standing for the February contract month.( 3.728 tonnes)

Thus the initial standings:

813 (notices filed for the month x( 100 oz) or 81,300 oz + { 481 (OI for the front month of Feb)- 96 (number of notices served upon today} x 100 oz per contract} = 119,800 oz total number of ounces standing for the February contract month. (3.728 tonnes)

we gained 1400 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.

 

 

end

 

 

 

And now for silver

 

February silver: initial standings

feb 23 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 349,820.29  oz (HSBC, CNT)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory  340,564.69 (CNT, Delaware)  oz
No of oz served (contracts) 3 contracts  (15,000 oz)
No of oz to be served (notices) 20 contracts (100,000 oz)
Total monthly oz silver served (contracts) 423 contracts (2,115,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal  of silver from the Customer inventory this month  5,913,752.2 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:  338,446.69 oz

ii) Into Delaware:  2118.0000 oz ??????

total customer deposit: 340,564.69 oz

 

We had 2 customer withdrawals:

i) Out of CNT:  229,716.28 oz

ii) Out of HSBC: 120,104.01 oz

 

 

total customer withdrawal: 349,820.29  oz

 

we had 0 adjustments

 

 

 

Total dealer inventory: 68.100 million oz

Total of all silver inventory (dealer and customer) 175.525 million oz

.

The total number of notices filed today is represented by 3 contracts for 15,000 oz. To calculate the number of silver ounces that will stand for delivery in February, we take the total number of notices filed for the month (423) x 5,000 oz    = 2,115,000 oz  to which we add the difference between the OI for the front month of February (23)- the number of notices served upon today (3) x 5,000 oz per contract = 2,215,000 oz,  the number of silver oz standing for the February contract month

Initial standings for silver for the February contract month:

423 contracts x 5000 oz= 2,115,000 oz + (23) OI for the front month – (3) number of notices served upon x 5000 oz per contract =  2,215,000 oz, the number of silver ounces standing.

we  gained 3 contracts or an additional 15,000  silver ounces will stand in this February contract month.

 

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

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

 

end

 

 

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

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

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

i) demand from paper gold shareholders

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

vs no sellers of GLD paper.

 

 

 

And now the Gold inventory at the GLD:

 

Feb 23.2015: no change in gold inventory at the GLD/Inventory at 771.25 tonnes

 

 

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 23/2015 / no change 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.

 

 

end

 

 

And now for silver (SLV):

 

Feb 23 no change in silver inventory/324.299 million oz

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 23/2015 no change in  silver inventory at  the SLV

SLV inventory registers: 324.299 million oz

 

 

end

 

 

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

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

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

 

 

1. Central Fund of Canada: traded at Negative  6.2% percent to NAV in usa funds and Negative 6.3% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.8%

Percentage of fund in silver:37.7%

cash .5%

 

( feb23/2015)

 

2. Sprott silver fund (PSLV): Premium to NAV falls to + 3.22%!!!!! NAV (Feb 23/2015)

3. Sprott gold fund (PHYS): premium to NAV rises to +.28% to NAV(feb 23 /2015)

Note: Sprott silver trust back  into positive territory at +3.22%.

Sprott physical gold trust is back into positive territory at +.28%

Central fund of Canada’s is still in jail.

 

 

end

 

 

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

 

 

 

Early gold trading from Europe early Monday  morning:

 

 

(courtesy Mark O’Byrne)

 

“Global System Catastrophe” Is Key Threat To Human Civilization

 

 

 – Oxford Scientists Cite “Global System Catastrophe” Among 12 Plausible Threats To Civilization

– “Global System Catastrophe” More Of A Possibility Than Most Western People Suspect

– Study Described As A “Scientific Assessment About The Possibility Of Oblivion”

– Other Threats Include Nuclear War, Environmental Degradation, Geological Events and Out of Control Technology

Recent research undertaken by scientists in Oxford University to identify possible threats to human civilisation has identified “system-wide failures caused by the structure of the network” as one of twelve major threats.

goldcore_bloomberg_chart1_23-02-15

Global economic collapse, artificial intelligence and nanotechnology have been named alongside nuclear war, ecological catastrophe and super-volcano eruptions as “risks that threaten human civilization” in a report by the Global Challenges Foundation.

The world’s economic and political systems face systematic risks because of their intricate and interconnected natures. The researchers say more work needs to be done to clarify what parts of the system could collapse and destroy western civilization.

The authors of the study say it is about “how better understanding of the magnitude of the challenges can help the world to address the risks it faces, and can help to create a path towards more sustainable development.”

The foundation was set up in 2011 with the aim of funding research into risks that threaten humanity, and encouraging more collaboration between governments, scientists and companies to combat them.

Apart from failure of the systems of civilization the report also looks at the threats posed by the following:

– extreme climate change

– nuclear war

– global pandemic

– major asteroid impact

– super volcano

– ecological catastrophe

– synthetic biology

– nanotechnology

– artificial intelligence

– future bad global governance

– unknown unknowns

The impact of human activities on our environment is the most pressing problem according to the study.

The report warns that ‘extreme climate change’ could lead to a nightmare scenario of famines, mass deaths, social collapse and mass migration igniting global conflict as civilization crumbles.

Cheery stuff !

We are not of the Armageddon persuasion and do not think the end of the world is nigh. However, we are of the view that economic collapse is possible given the unstable and unsustainable nature of our modern global financial, monetary and economic system.

Any of the risks outlined in the report could be the ‘Black Swan’ that leads to a new economic depression and a collapse of the ‘House of cards’ financial system and economy.

There are many environmental risks challenging us today. These include soil erosion and degradation, depletion and destruction of marine life, the collapse of the bee population – the pollinators of our food supply.

With all the focus on and with politicians and talking heads touting their “green” credentials by continuously talking man made global warming – a movement which has taken on a religious zeal as proponents aggressively defend a scientific model most do not understand – other, more pressing,  environmental risks loom unappreciated.

Fukushima is still spewing radioactive material into the Pacific. Fish stocks are being drastically depleted through over-fishing. Creatures upon which we do not directly rely are going extinct at a rate of up to 200 species every day as we annihilate anything that stands in the way of our pursuit of blind economic growth.

Processes that took millions of years of natural selection to hone are being tampered with as genetically modified organisms are forced into the biosphere with no understanding of the long term consequences.

The report discusses the possibility of somebody intentionally creating an “engineered pathogen” to wipe out humanity.

The risks posed by potential geological events such as an asteroidal impact or a mega-volcano are not understood by most people living today. Because our planet is covered with water and dense vegetation the scars of asteroid collisions are not immediately visible.

However, one look at our pock-marked moon through a telescope shows us that – in terms of the vast span of time in which our solar system has existed – such events are quite frequent.

Indeed, geological evidence has been emerging in recent years suggesting that the earth experienced such an event only 13,000 years ago, causing tsunamis and a 300-ft rise in sea-levels due to melting ice caps. This may be the origin of the flood stories that crop up in mythologies all over the world.

A similar event today, with a comparable rise of sea-levels, would destroy most of our cities which are located on the coast. It would have a devastating effect on our interconnected civilization.

The dust cloud that would enmesh the atmosphere as a result of an asteroidal impact or a mega volcano would contribute to global cooling and this, in time, would cause food shortages, famine, pestilence and instability.

The global pandemics of history – bubonic plague, small pox and “Spanish” flu – all thrived in scenarios of food scarcity. The major waves of plague in the “dark” ages were proceeded by periods where crops failed due to lack of sunlight. These periods of dullness are believed to correspond to volcanic activity.

Smallpox festered in the squalid western slums during the industrial revolution. Bernard Shaw, who wrote about that plague contemporaneously, was of the opinion that social programs which improved nutrition and sanitation, rather than vaccines, led to the eradication of the disease.

The “Spanish” flu broke out in 1918 helped along by the malnutrition and deprivation of the first world war. It infected 500 million people all over the world killing up to 100 million – 5% of the global population.

Today, we see pandemics occurring still in Africa, the poorest region in the world. As author Terence McKenna suggested –  in many parts of the world – the Apocalypse that western Christians anticipate is actually occurring right now.

While in the West we have access to good sanitation, our nutrition is lacking. We have more food but much of it is of low quality. We have epidemics of our own – diabetes, obesity, cancer. Our capacity to withstand a new plague is debatable.

The report also deals with artificial intelligence exterminating humanity in much the same way as we treat species less intelligent than ourselves. It touches on nanotechnology and how theoretically it could be used to make pocket-sized nukes.

With regard to a system failure the report says:

“The world economic and political system is made up of many actors with many objectives and many links between them. Such intricate, interconnected systems are subject to unexpected system-wide failures caused by the structure of the network”.

The risks to our existing system for acquiring the things we need and the means to conduct such transactions has been well documented on this blog. Cyber-terrorism and cyber-warfarehave the the potential to collapse our monetary system and our supply chain causing panic and shortages of the necessity of life.

The currencies of overly-indebted nations are also at risk. Given that, for the most part, currencies have no intrinsic value and are backed only by confidence – what happens when people lose faith in their governments, central banks and those currencies?

Will the farmer in the Philippines accept a hyper-inflating currency in exchange for his rice or will he demand something more tangible? What happens to our access to energy in such a scenario?

We would be more reliant on indigenous agriculture and industries as imports would fall dramatically. The cost of fuel to run these industries would likely make such industries unsustainable as the income and savings of the target customer is greatly reduced.

These would be short-term consequences but the political ramifications of such an event could lead to all kinds of chaos, authoritarianism and war.

These are interesting topics to contemplate. There is nothing on the list that human ingenuity is not capable of dealing with. What is lacking is the will.

For now, we have a short-sighted unsustainable economic system run by short-sighted, opportunistic corporations and governments.

All very cheery stuff !

Happy Monday !

Breaking News and Updates Here

MARKET UPDATE 

Today’s AM fix was USD 1,193.50, EUR 1,055.17 and GBP 777.12 per ounce.
Friday’s AM fix was USD 1,203.50, EUR 1,061.38 and GBP 782.51 per ounce.

Gold and silver were lower last week, with gold down 2.2% and silver a large 6.1%.

Gold fell 0.53% percent or $6.40 and closed at $1,201.00 an ounce on Friday, while silver slipped 0.98% percent or $0.16 closing at $16.23 an ounce.

Gold in US Dollars - 5 Days (GoldCore)

Gold reached its lowest price in 6 weeks on today at $1,192.00. In Singapore, gold was marginally higher on demand from India and South East Asia and reached $1,204.50 per ounce prior to aggressive selling in early European trading pushed the price below the important $1,200/oz level.

Some of the Greek related safe haven bid has waned after a conditional loan extension for Greece was reached on Friday.

But the last-minute deal over Greece’s bailout may not be accepted and uncertainty remains high, leaving the euro under pressure against the dollar, the pound and even the yen. Euro gold remains over EUR 1,050 and has begun to tick higher after initial losses in early European trading.

The absence of the world’s largest gold buyer China from the market may also be leading to weakness. Chinese physical demand will reemerge when Chinese markets open after the New Year on Wednesday.

A close below $1,200 today, would make gold vulnerable to a fall to test the low of $1,130 seen in early November.

 

 

end

 

With its USA dollars reserves running low, Russia has decided to stop its gold buying spree in January.  However it did not sell any ounces of gold:

 

(courtesy Nicholas Larkin/Bloomberg/GATA)

 

Russia stopped gold-buying spree after prices soared in January

Section:

By Nicholas Larkin
Bloomberg News
Friday, February 21, 2015

Russia stopped buying gold for the first time in 10 months after prices had the biggest increase on record.

Gold reserves were unchanged at 38.8 million ounces, or about 1,207 metric tons, as of Feb. 1 from a month earlier, the country’s central bank said on its Internet site Friday. Bullion priced in rubles climbed 35 percent last month, the most in data going back to 2000. In dollar terms, the increase was the biggest in three years.

Higher gold prices “probably helped sway the central bank from adding to existing holdings,” Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen, said by e-mail. “They may be price-sensitive, just like we have seen with other major buyers in the past.” …

… For the remainder of the report:

http://www.bloomberg.com/news/articles/2015-02-20/russia-stops-gold-buyi..

 

end

 

 

An in depth look at the amount of gold reserves held by Greece.

They officially hold 117 tonnes (ex IMF gold).  Of that 50% is in Athens and the rest divided amongst the FRBNY, the Bank of England and Switzerland.  No doubt the 50% of the gold held outside the country has been leased or hypothecated.

 

(courtesy Ronan Manly/Koos Jansen/GATA)

 

Ronan Manly: Spotlight on Greece’s gold reserves and Grexit

Section:

11:48p ET Friday, February 20, 2015

Dear Friend of GATA and Gold:

Greece holds or claims to hold a fairly substantial gold reserve, GATA consultant Ronan Manly writes today, but where it’s held, whether it has been irrevocably pledged to the European Central Bank, whether Greece can recover it if it withdraws from the euro bloc, and whether it can be put in play or already has been put in play are open questions. Manly’s analysis is headlined “Spotlight on Greece’s Gold Reserves and Grexit” and it’s posted at Bullion Star’s Internet site here:

https://www.bullionstar.com/blog/ronan-manly/spotlight-on-greeces-gold-r…

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

 

end

 

Why the UK Telegraph will not touch the gold price suppression scheme:

 

(courtesy Chris Powell/GATA)

 

No wonder the Telegraph won’t touch gold price suppression

Section:

For starters, its owners are heavily indebted to a bullion bank.

* * *

1:36p ET Sunday, February 22, 2015

Dear Friend of GATA and Gold:

If you’re wondering why mainstream financial news organizations refuse to report the biggest financial news story in history — the rigging of all major markets by Western central banks — another reason has emerged in the last few days with the resignation of the chief political writer of the London Telegraph, Peter Oborne.

The Telegraph is a great newspaper with a wide scope, the standard bearer of the British Conservative Party, whose reporting is often cited favorably by GATA and frequently has been brave, as when a couple of years ago it exposed the scandal of expense padding by members of Parliament, including Conservative members.

But the Telegraph won’t touch surreptitious intervention by Western central banks in the gold market any more than any other respectable Western financial news organization will, and departing the Telegraph, Oborne complained that the newspaper had gone soft in its reporting about a big investment bank that is a major advertiser, HSBC. Reports about Oborne’s resignation are collected at the Google news archive here:

http://tinyurl.com/kxgj4fc

On Friday one of the Telegraph’s two main competitors among the serious British papers, the Financial Times, suggested that its rival’s softness on HSBC may involve far more than advertising:

* * *

Telegraph Owners’ Yodel owed L242 Million to HSBC

Henry Mance and Claer Barrett
Financial Times, London
Friday, February 20, 2015

A struggling delivery business controlled by the Barclay brothers, owners of the Daily Telegraph, owed L242 milions to HSBC at a time when the newspaper allegedly discouraged critical coverage of the bank.

Yodel, the UK’s second-largest parcel carrier, refinanced its debt with HSBC in December 2012. Peter Oborne, who resigned as the Telegraph’s chief political commentator this week, has said negative stories about the bank were discouraged from “the start of 2013 onwards.” …

… For the remainder of the report:

http://www.ft.com/intl/cms/s/0/d6af687c-b8d2-11e4-b8e6-00144feab7de.html

* * *

Of course in addition to being an accomplice lately in various crimes involving money laundering and tax evasion, HSBC is a major bullion bank as well as custodian of the gold purportedly held by the exchange-traded fund GLD even as the bank is believed to be a big short in the gold market, thereby putting its GLD clients in what may seem like the awkward position of entrusting their gold to an entity with a huge interest in keeping the monetary metal’s price down.

At least three editors of the Telegraph know all about the Western central bank gold price suppression scheme because your secretary/treasurer has corresponded with them about it for years and a couple of months ago even discussed it with one of them at great length in person in London. This editor was sympathetic, found gold price suppression entirely plausible now that most other markets are acknowledged to have been manipulated — and volunteered that any mainstream financial journalist who put a critical question about anything to any central bank probably would be fired.

That is, the huge indebtedness of the Telegraph’s owners to HSBC is probably not entirely why the newspaper can’t report gold market rigging by central banks, but of course that indebtedness can’t be encouraging investigative journalism either.

Seven years ago GATA figured that it might encourage news reporting about its work by placing a full-page color advertisement in the foremost financial publication in the United States, The Wall Street Journal. It was your secretary/treasurer’s idea, in large part because of his career as a newspaper editor. GATA’s board concurred and the ad was written, designed, and published at a cost of $264,000:

http://www.gata.org/node/wallstreetjournal

But absolutely nothing came of it. We didn’t even get invited to the Journal’s Christmas party that year, and now that we’re broke, your secretary/treasurer wishes that it all could be undone.

Your secretary/treasurer has often provided GATA’s documentation to several of the Journal’s reporters and a few years ago even met with one of them at length at the newspaper’s office in New York. But you’ll have to spend a lot more than $264,000 to get The Wall Street Journal to pay attention to gold price suppression when every other page of its first section carries advertisements from JPMorganChase, Goldman Sachs, and other banks involved in the gold market, including — yes — HSBC itself.

Freedom of the press, the American journalist and essayist A.J. Liebling noted, belongs to those who own one, and in recent decades most Western news organizations have been so conglomerated and corporatized that even if they are not owned outright by the financial establishment, they are owned in outlook and spirit.

Thank God for the Internet, whose ease of access is subverting all establishments. But while the Internet provides plenty of different views, it provides little more actual journalism than already was being provided without the Internet. Ninety-nine point nine percent of all journalism in the world continues to be provided by news organizations that preceded the Internet.

So one needs to learn how to read and watch news organizations. Nearly all have their political ideologies, blind spots, and sacred cows. Those who aspire to citizenship must strive to be as inclusive as possible, to pay attention to many sources of news, crediting and discounting them as necessary to adjust for their biases. On a worldwide scale, this means striving to bring to the East the news from the West that will be blocked by the government-controlled Eastern press, and to bring to the West the news that will be blocked by the government-controlled Western press.

A breach in the blockade will come eventually, through GATA’s work or someone else’s. This is all just another case of the phenomenon of human psychology described long ago by the Hans Christian Andersen fairy tale “The Emperor’s New Clothes,” in which nonsense that is obvious to all continues only because it can’t be acknowledged in polite company, as such acknowledgment would show that the leaders of society are as vain and foolish as everyone else.

Maybe as gold and silver mining companies increasingly fail while imaginary metal, “paper” gold and silver, becomes so much cheaper than the real thing, even a mining company executive may blurt out something, if only from frustration. But it sure won’t be from courage.

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

 

 

end

 

Avery Goodman: Lunar new year and pending Indian tax cut used to attack gold price

Section:

By Avery Goodman
Seeking Alpha
Monday, February 23, 2015

The Lunar New Year celebration closed stores and markets throughout China, Hong Kong, Singapore, Thailand, South Korea, and elsewhere in the Far East last week. That presented an opportunity to torpedo prices and trigger the stop loss orders of get-rich-quick dreaming paper-gold buyers. In addition, Indian buyers continue to wait for a big reduction in import tariffs. Part of the Indian government is recommending a reduction from 10 to 2 percent. This is expected toward the end of February. Accordingly, most Indian buyers hesitate to take delivery ahead of that big tax break.

Last week’s action in precious metals looks like a last-ditch effort by the banksters to close paper short positions. …

… For the full commentary:

http://seekingalpha.com/instablog/337451-avery-goodman/3764716-lunar-new…

 

 

end

 

and the CFTC only issues a subpeona to HSBC?  What about JPMorgan and all of their friends?

 

 

(courtesy Reuters/GATA)

 

 

CFTC subpoenaed HSBC Bank USA for documents on metals trading

* CFTC, Dept of Justice request documents on precious metals ops

* HSBC, other banks named in precious metals lawsuits last year

By Jan Harvey

LONDON, Feb 23 (Reuters) – The Commodity Futures Trading Commission issued a subpoena to HSBC Bank USA in January seeking documents related to the bank’s precious metals trading operations, HSBC said in its annual report and accounts statement on Monday.

The U.S. Department of Justice also issued a request to HSBC Holdings in November seeking documents related to a criminal antitrust investigation that the DoJ is conducting in relation to precious metals, it added.

“HSBC is cooperating with the U.S. authorities in their respective investigations,” the bank said. “These matters are at an early stage.”

HSBC was one of a number of banks named in lawsuits filed in U.S. courts last year alleging a conspiracy to manipulate gold, silver, platinum and palladium prices, plus precious metals derivatives, during the daily precious metals fixes.

HSBC said in Monday’s statement that it filed a response this month to an amended consolidated class-action complaint concerning gold that was filed in December 2014, and that it will respond next month to allegations of silver price fixing.

It did not disclose any details about the response.

The banks involved in production of precious metals benchmarks, known as the ‘fixes’, said last year that they would no longer administer that process.

An electronic daily silver price benchmark is now administered by Thomson Reuters and CME Group, while the London Metal Exchange provides twice-daily benchmark platinum and palladium prices.

ICE Benchmark Administration (IBA) will run an electronic gold price benchmark from March 20 to replace the century-old London gold fix. (Reporting by Jan Harvey; Editing by Veronica Brown and Keith Weir)

-END-

 

 

 

 

A terrific commentary and a must read…

 

(courtesy Bill Holter/Miles Franklin)

 

 

 

 

Behind the scenes?

 

 

 

So much is happening behind the scenes it’s mindboggling.  This past week we of course ended with “deal or no deal” over Greece.  The “deal” the markets were hoping for really was no deal at all, the markets were only hoping for more time and ONLY more time.  You see, Greece is broke.  They only have enough money for about another week, they don’t even have enough to make their early March debt payment.  The only possible “deal” from here on is to postpone reality.  Greece cannot be allowed to make any deal other than one that puts THE deal out into the future.  They cannot accept more “aid” because the markets will see through this.  They also cannot be allowed to exit because this would then be the thread which unravels the Eurozone.  The only deal acceptable to the markets will be one where THE deal is not “dealt with”.
  Friday afternoon this very scenario was announced and of course the equity markets short squeezed higher in response.  A bit prematurely in my estimation because the newly elected Greek parliament will need to ratify any agreement.  A ratification will be in direct conflict with the election results of last month, what do you suppose the populace might do?  In my opinion, the Greek people are about to explode onto the streets no matter what deal is arranged and agreed to.  Broke is broke and no deal and no amount of newly borrowed money will fix this.  As my title suggested, I believe only something from “behind the scenes” will fix their problem.
  The “fix” itself may end up being a geopolitical event that turns today’s perverted world on its head.  In my opinion, the very best fix for Greece is obvious and I believe is probably already in the works.  Before getting to this, it is important to understand how “gangs” are broken up.  “Gangs” can be broken in two ways.  You can either confront the leader and emerge victorious or, you can pick away at the weak sisters one by one.  Greece is obviously a weak sister but one very strategically located geographically and politically.  Greece is also a natural “bridge” from the Russia and the Middle East to Europe.  It is also part of the “old silk road” to China and will be part of trade in the new silk road.
  It is my belief that negotiations have been going on behind the scenes between Greece and the SinoRuso alliance.  Would it not make sense for Russia and China to try to woo Greece?  Greece could be offered a pipeline deal.  This would put people to work and Greece would actually receive an income royalty flow.  From a financial standpoint, this is the very best avenue for Greece because of the income aspect, they will actually get something rather than owe more.  For Russia and China not to be offering Greece a deal would be plain dumb in my estimation.  Think about it, if Russia does build a pipeline through Turkey, “someone” has to build a pipeline through Greece.  Why wouldn’t Russia want to be “the good guy” and to their own benefit?
  Additionally, think about the benefits in relation to the costs in Russia and China “picking off” Greece?  In one single and inexpensive deal, they pull the thread on NATO and the Eurozone simultaneously.  This would obviously be problematic for the Eurozone financially as debt, derivatives, banks and central banks are all wobbled.  This would then expose all of the West including the U.S..  The U.S., should Greece turn to Eastern partners, will be seen as powerless!  So you see, the catch 22 is this, no real deal can be done by the West because Greece has already been bankrupted.  They cannot be allowed to default, they cannot be forced to take on more debt AND they cannot be allowed to do what is in their own best interest, form a new partnership Eastward.  The “offers” behind the scenes must truly be unbelievable!
  One thing I believe is being totally missed here is the relations between Germany and the U.S..  What must Germany and Angela Merkel be thinking?  After she was spied on and hearing Victoria Nuland ‘s comment of “screw them”, how strong are the remaining bonds?  Wouldn’t it be easier …more profitable ,,,not to mention “warmer” if Germany were to pivot toward Russia and thus the Chinese?  They obviously know our credit line is nearly completely used up, doing business with Russia and the deep pocketed China only makes sense.  Any move like this will split the Euro yes, but there will be a point in time where nations will do what is best for them.  Moving away from hegemon and moving toward free commerce makes sense, will Germany remain silent as Greece does what is best for them?  A move Eastward may even be safer for Germany as she watches NATO hardware being moved into Ukraine.  Would it benefit Germany to aid in the fracture of NATO?  I think yes but time will tell.
  Elsewhere behind the scenes, Ukraine is a basket case.  The cease fire never was and the U.S. began shipping hardware including “tank busting” planes.  Ukranian troops dropped their arms and folded by the hundreds and it looks like pro Russian forces will soon, probably this week attain two goals.  They will more than likely control a corridor all the way from their own border to Crimea.  More importantly, they will probably have proof, either dead or alive of Western, non Ukranian boots on the ground.  This is important because of the rhetoric war.  Mr. Putin will be able to point at direct proof showing possibly even U.S. mercenaries as being part of the fight.  This will be a very ugly back eye for Western propaganda(ists).  All the while, the U.S. response is …more sanctions  http://www.nytimes.com/2015/02/22/world/europe/kerry-says-further-sanctions-on-russia-will-be-discussed-over-ukraine.html?hp&action=click&pgtype=Homepage&module=first-column-region&region=top-news&WT.nav=top-news&_r=0
  Now for the stuff behind the scenes that has gotten almost no media attention whatsoever.  Individually, many of these could be huge on their own, collectively, could they somehow be connected?  What is really up with Benjamin Netanyahu’s visit to Congress?  Is he trying to garner support versus Iran, or Syria?  President Obama is refusing to meet with him, how does this look?  Never mind Mr. Obama claiming that U.S. presidents do not meet with “candidates”, why would Mr. Netanyahu not have cancelled his trip before it was even announced?  Wouldn’t he have been told through back channels, “don’t come”?  But he is coming anyway?  Does this not show a split or at least “weakness” in our alliance?
  Another area is the west coast port problems. tankers are lining up day by day with nothing being offloaded.  Is this really because of the unions?  Or is it because of the port owners and operators?  What will this do to our economy and distribution chain which has run so long on “just in time” inventories?  Are the Chinese somehow behind this?  Is this a way to “stealth” pressure our economy and financial system?  They are actually scrapping some of their tankers, do they know something we don’t know…yet?  Other than alternative media, this has gotten virtually zero coverage, why?  Is this not huge news on its own?
  A very strange one this past week was seeing Langley on lockdown.  What is up with this?  I don’t even care what the official story may or may not be, because of the source.  How is it they were locked down?  Has this ever happened before?  Were they after one guy?  Re there “factions” involved?  Infighting?  Who knows, but this is very strange indeed.
  Then, there was 60 the nation “terrorist summit” in Washington http://thestatesman.com/news/world/india-among-60-nations-to-attend-white-house-summit-on-terror/48641.html , I could not find any U.S. coverage of this other than this link.  What was the outcome?  They apparently discussed ISIL among other terrorist groups.  Who is really funding them?  It is believed they were a creation of the CIA now run amok.  And what about 21 Christians being beheaded?  How much media coverage did this get?  Or is it not newsworthy or something our president should condemn.Speaking of the president, his immigration “stroke of the pen” was shot down in court, has he now been rendered completely lame?  Will he now be prevented from doing further damage?
  Here is how I see all of this, the pot is boiling and the warring factions are making stands, everywhere.  When I say “warring factions”, I am talking about everything from hawks and doves in the military and in the financial markets to as grand as the East versus the West.  So many people have been conditioned that the can will always get kicked down the road and nothing bad will ever be allowed to happen.  I disagree.  There are just too many flash points in multiple areas for this to continue.  Markets have priced in nothing bad from here to as far as the eye can see.  Compensation for “risk” does not exist anywhere.  I stick to my guns and warn you as sternly as possible, the markets are about to “gap”.  Something is going to break very soon and when it does, we will go into a complete lockdown of everything.  You will not be able to alter anything or any position you own.  You will not be able to “trade around” what is coming..  Whatever you own going into this is all you will own.  You will not be allowed to “change” investments as very likely the banking system itself goes on a holiday.  It is what’s going on behind the scenes which is oh so important, but, we cannot be privy to it.  We can however put enough data points together to see that financial, economic and currency “war” has already begun.  Do not wait until the media announces this, by then it will be far too late even if timely and reported the following day!  Regards,  Bill Holter

 

 

And now for the important paper stories for today:

 

 

Early Monday morning trading from Europe/Asia

1. Stocks mixed on major Asian bourses  / the  yen falls  to 119.04

1b Chinese yuan vs USA dollar/ yuan slightly strengthens  to 6.2551
2 Nikkei up 134.62 or 0.86%

3. Europe stocks mostly up  // USA dollar index up to 94.79/

3b Japan 10 year yield huge rise to .38%/ (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.

3c Nikkei now  above 17,000/

3e The USA/Yen rate still  below the 120 barrier this morning/
3fOil: WTI 49.65 Brent: 59.28 /all eyes are focusing on oil prices. This should cause major defaults as derivatives blow up.

3g/ Gold down /yen down;

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

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

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

3j Oil falls this morning for  WTI  and Brent

3k   Greece to provide list of reforms today to the Troika/Germany will probably reject this out of hand…

 

3l  Greek 10 year bond yield :9.39% (down basis points in yield)

3m Gold at $1196.00. dollars/ Silver: $16.26

3n USA vs Russian rouble:  ( Russian rouble  down 2 roubles  per dollar in value)  64.10!!!!!!.  Ukraine’s UAH:28.04 flat from last Friday night

3 0  oil  into the 49 dollar handle for WTI and 59 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 agrees to  more EU funding on the previous program  and needs to provide a list of reforms that must be agreed by the Troika and then eventually passed by Greek Parliament..a very difficult task

 

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  Humphrey Hawkins testimony by Janet Yellen tomorrow night

4. USA 10 yr treasury bond at 2.12% early this morning. Thirty year rate well below 3%  (2.73%!!!!)/yield curve flattens/foreshadowing recession
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid

 

 

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

 

Initial “Greek Euphoria” Ends As Market Digests Road Ahead For Europe

 

If you thought the Greek tragicomedy is over, you ain’t seen nothing yet, because despite the so-called Friday agreement, the immediate next step is for Greece to submit its list of reform measures to the Troika, which will almost certainly result in an immediate revulsion in Germany’s finance ministry, and lead to another protracted back and forth between the Troika and Greece, which may once again well end with a Grexit, especially if the Greek liquidity situation, where bash is bleeding from both the banks and the state at a record pace, remains unhalted.

Assuming the proposed reform package is agreed upon in short notice (it won’t be), the next step would include detailed negotiations around the fiscal targets for this and next year and the required structural reforms to be undertaken. The Eurogroup has set an end-April deadline for this to be achieved, to be followed by the final step which is for it to be ratified by the Greek parliament – not a straight forward task given the outcome from Friday. Only when passed will funding be released. While this is being worked on there are concerns about how the Greece government and the banks will fund themselves over the next two months. There may have to be flexibility on t-bill issuance and ECB funding, or an accelerated agreement.

Whatever happens the pressure should remain on the Greek government, a government which as explained before is already facing an internal fissure as some of the most prominent Syriza members have very openly spoken up against the “negotiation.”

It is therefore not surprising that the ongoing decline in the EURUSD since the inking of the agreement, and the fact that the pair briefly dipped below 1.13 this morning – over 100 pips below the euphoric rip on Friday – is a clear indication that the market is starting to realize that absolutely nothing is either fixed, or set in stone. Furthermore, renewed strength in the USD this morning means that commodities are getting mauled once again, with gold earlier trading well under $1200, and WTI sliding into the mid-$49 range, and a retest of $48, and lower, may be iminent.

Still, while FX is starting to fade into a pessimistic view,European indices were buoyed early on by optimism surrounding a loan deal between Greece and Europe after reports late on Friday that an agreement had been made with the Eurogroup to extend financing for a further four months, although dependent on a series of measures to be proposed by Greece today. Despite the FTSE 100 opening above its record high closing price the index has ticked lower since the open, led by the FTSE 100’s second largest member HSBC (HSBA LN) as shares saw selling pressure in the wake of weaker pretax numbers in their earnings report.

Peripheral spreads are tighter across the board with Greece bonds supported by the prospect of a final agreement today with the Eurogroup despite the Greece stock market being closed today, and this is particularly evident in the short-end with the yield on the 3y down 248bps. Portuguese, Italian and Spanish yields have also fallen once again today as optimism spreads to other member states. Looking ahead focus will be on whether the measures put forward by the Greek government are accepted as adequate, particularly by Germany, and tier 1 US data later data with Existing Home Sales due at 1500GMT/0900CST.

Asian equity markets mostly rose with the exception of the Hang Seng (+0%) following the Lunar New Year. Sentiment was bolstered by Friday’s confirmation of an accord between Greece and the Eurogroup, which saw the DJIA and S&P 500 post record highs. Consequently, the Nikkei 225 (+0.7%) outperformed after building on its 15-yr highs while the ASX 200 (+0.5%) also finished in the green, after shrugging off a batch of poor earnings. JGBs rose 13 ticks with outperformance observed in the belly of the curve, after the BoJ bought JPY 400bln worth of debt with maturities ranging from 5-10yrs.

Weakness in UK financials filtered through into Europe alongside a weaker EUR with real money account said to be selling in the EUR/USD pair and as the USD gained ground in morning trade. Weakness in EUR was also further exacerbated by a lacklustre German IFO report with the Business Climate component coming in at 106.8 vs. Exp. 107.7. In terms of option expiries there is around USD 1bln in option expiries at 1.1320 due to roll-off at the 10am NY cut. Commodity linked currencies have been of particular focus this morning with CAD, RUB, and AUD all seeing weakness in-line with a downward trend in crude futures, as gold trades at a 7 week low and RUB weighed upon after Russia’s sovereign downgrade to junk by Moody’s late on Friday. On a technical note AUD/USD briefly broker Friday’s low and USD/CAD back above Friday’s high at 1.2565.

WTI and Brent crude futures trade in negative territory despite opening higher overnight following a bounce-back in the USD and news that Libya’s Zueitina port has now resumed exports after being out of action for almost a year, according to officials. However, heading into the North American crossover, it has been reported that adverse weather conditions has halted export. Elsewhere, it was reported that workers at the Motiva Port Arthur Refinery (largest in the US with a capacity of 600,250bpd) provided notice that they will begin a strike from 0600GMT/0000CST Saturday morning, according to sources. In precious metals markets, despite staging a modest recovery overnight, the broadly stronger USD has continued to hamper prices, while copper traded relatively range-bound overnight with price action subdues as China, the world’s largest consumer of the red metal, remained closed for Lunar New Year holidays.

 

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities trade in the green in the wake of Friday’s Greek/Eurogroup agreement, while the FTSE 100 trades lower following weak earnings from HSBC
  • USD has gained throughout the session in a pullback of Friday’s losses, with downside in EUR/USD exacerbated by real money account selling EUR and weak German IFO
  • Looking ahead, today sees the release of US Existing Home Sales at 1500GMT
  • Treasuries decline as market prepares for 2Y fixed/FRN/5Y/7Y note sales; Janet Yellen’s Humphrey-Hawkins testimony begins tomorrow amid demands for greater transparency and accountability from Fed.
  • Greek PM Tsipras walks another high wire over the next 24 hours as he tries to come up with financial measures that satisfy both the demands of euro-region creditors and his anti-austerity party; has until end of Monday to complete a list of policies in return for the continued funding
  • Spain took the toughest line with Greek Finance Minister Varoufakis as the bloc forced him to adhere to the terms of the country’s existing bailout, according to people with direct knowledge of the talks who asked not to be named because the conversations were private
  • Pro-Russia rebels attacked Ukrainian positions with  artillery, mortars and automatic weapons, the Defense Ministry in Kiev said, as a bomb killed two people at a pro-Ukraine rally in the eastern city of Kharkiv
  • Bill Gross’s $1.46b Janus Global Unconstrained Bond Fund trailed its benchmark in 4Q primarily because it had plowed about 5% of net assets into debt issued by U.S., Russian and Brazilian energy companies
  • Obama is picking a fight with Wall Street over the handling of Americans’ $11t of retirement savings, accusing brokers of skimming significant sums annually from small investors and urging new protections against biased financial advice
  • Denmark’s government rejected a report it could consider imposing capital controls as policy makers and economists try to explain the mechanisms through which the nation’s currency regime operates
  • Sovereign 10Y yields mostly higher. Asian, European stocks higher; U.S. equity-index futures fall. Crude falls, WTI trades below $50/bbl; gold and copper lower

 

DB’s Jim Reid concludes the overnight event summary

 

 

By tomorrow night will we be leaving Greece behind for a while and fully focusing on Mrs Yellen’s important semi-annual testimony? Well to a degree yes but there is a lot of unfinished business with regards to Greece even if Friday’s agreement provides the first step towards the can being ushered a little further along the ever winding road. It seems Greece were largely forced to back down in their pursuit of a more favourable deal as their banking system could have collapsed any day without an agreement and there was no obvious domestic contingency plan for a Greek exit or a huge electoral desire for it.

However as DB’s George Saravelos suggested in a note over the weekend “the road ahead remains long, and it remains unclear how the current government can navigate between the commitments it has made to Europe with competing domestic political demands – both internally within the SYRIZA party as well as with the electorate. A small step has materialized, but the hard work is about to begin”. Summarising briefly the next steps, today Greece will have to submit a list of “reform measures” it plans to undertake. Assuming this gets agreed the next step would include detailed negotiations around the fiscal targets for this and next year and the required structural reforms to be undertaken. The Eurogroup has set an end-April deadline for this to be achieved, to be followed by the final step which is for it to be ratified by the Greek parliament – not a straight forward task given the outcome from Friday. Only when passed will funding be released. While this is being worked on there are concerns about how the Greece government and the banks will fund themselves over the next two months. There may have to be flexibility on t-bill issuance and ECB funding, or an accelerated agreement. Whatever happens the pressure should remain on the Greek government.

Overnight DB has also published its latest House View which includes a special report looking at Greece in more detail. The report notes that a request for a bailout extension was the first step in what is likely to be a difficult path to compromise and breaks down the various approval steps and negotiation processes that are now upcoming. The piece also touches on why a Greek exit is a negative outcome for both parties and provides some details around how Europe is better prepared than in the past and why contagion risk is lower.

Before we move on, it’s interesting to see reports over the weekend suggesting that we may already be seeing the first signs of tension within SYRIZA following Friday’s agreement. Reuters has reported that a veteran member of the party has accused the government of creating an ‘illusion’ to voters before going on to apologise to Greek people himself for participating. As mentioned there is still a lot of work ahead and tensions domestically in Greece will be one of the many issues facing the current Tsipras’s government.

Refreshing our screens quickly this morning, bourses are largely trading firmer. The Nikkei (+0.52%) has extended recent gains and the Kospi (+0.29%) and ASX (+0.45%) are both higher. The Hang-Seng (-0.05%) is relatively subdued meanwhile. The Euro is largely unchanged.

In terms of the market reaction on Friday, with the announcement coming after the European close the impact was most felt in the US where the S&P 500 in particular bounced off intraday lows of as much as -0.6% to finish +0.61% at the close. The new level marked a fresh record high. Elsewhere, credit markets closed firmer with CDX IG nearly 1bp tighter whilst the Euro bounced off intraday low of $1.128 to finish at $1.138, +0.11% on the day and +2.2% off the pre-announcement lows. US Treasuries weakened into the close meanwhile to pare back earlier gains with the 10y finishing unchanged at 2.112%. Oil markets took a backseat as Brent finished unchanged and WTI fell -1.97%. The latest Baker Hughes rig count meanwhile showed the number of operating rigs falling by 37 last week – although this was the smallest drop in seven weeks.

It was a quiet day data wise in the US with just the preliminary February manufacturing PMI which came in above consensus (54.3 vs. 53.6 expected). This week however we’ve got a fairly busy calendar. We’ll run through the details at the end of the report however away from Greece, Fed Chair Yellen’s semi-annual monetary policy testimony before the Senate Banking Committee tomorrow night and the House Financial Services Committee on Wednesday night will no doubt attract much attention. Our US colleagues expect the testimony to, in large part, reflect the recent FOMC minutes however the latest payrolls print could mean we see a more upbeat view of the US economy. Will Yellen make a case to congress that time is approaching for the Fed to begin the process of policy normalization? When Yellen is about to speak we tend to have a bias towards thinking she’ll be fairly dovish and with inflation where it is globally at the moment this is likely to hold back any negative shock tomorrow night.

Indeed central banks continue to be the main driver of our view for 2015 and we’re continuing to see the impact on credit which supports our bullish view in Europe, especially for the weaker end of HY. Indeed the latest fund flow data is impressive. Having seen almost exclusively weekly outflows in the second half of 2014 European HY funds have seen a notable turnaround at the start of this year. Despite a slow start to the year as the first week of January saw further marginal outflows we have now had 6 consecutive weeks of inflows, totaling $2.6bn on a cumulative basis. This has included the two strongest weeks (in notional terms) ever within the data set going back to 2004. To put this number in context in the second half of 2014, a period when we saw just 6 weeks of inflows, total net cumulative outflows were $4.3bn. So the flows seen so far this year seem impressive in light of how negative the second half of 2014 was. In notional terms flows in the first 7 weeks of this year are also ahead of the $2.1bn of inflows seen during the same period in 2014 and comfortably ahead of the $1.2bn seen at the start of 2013. It’s also worth noting that the 4-week moving average is also at a record level ($541mn) in notional terms. That said given the strong growth in the size of European HY market in recent years on the back of record issuance levels the inflows as a percentage of NAV aren’t quite as impressive. Although that’s not to say they aren’t still fairly strong. YTD we have seen +5.4% which is not as strong as either 2014 (+6.6%) or 2013 (+7.5%). The outflows seen in the second half of 2014 accounted for around 10.4% of NAV. The trend in US HY fund flows is broadly similar with the 4-week moving average also at record level from a notional perspective while even as a percentage of NAV the current level is at a near 3 year high. That said something else worth considering is the strength in issuance this year. YTD European currency (EUR and GBP) non-financial HY supply (based on our calculations) is around €4bn ahead of each of the two previous years which both ended up being record years. Issuance is often a sign of market strength and demand so its difficult to be too worried on this but its worth being aware of.

Rounding off markets on Friday, equity markets in Europe traded in a fairly volatile fashion for most of the day before closing a touch firmer ahead of the conclusion of the Eurogroup. The Stoxx 600 (+0.23%) and DAX (+0.44%) finished higher whilst yields in the periphery ended 3-5bps tighter. Greek equities finished -0.27%. As well as the obvious attention on Greece, data flow on Friday attracted some interest with the release of PMI indicators for the region. In terms of the overall Euro-area print, the composite reading (53.5 vs. 53.0 expected) ticked up +0.9pts supported by a higher services (53.9 vs. 53.0 expected) reading. The manufacturing print (51.1 vs. 51.5 expected) meanwhile increased a tenth of a point but came in below expectations. Regionally, the services reading improved in both France (53.4 vs. 49.9 expected) and Germany (55.5 vs. 54.4 expected) although manufacturing prints for the former (47.7 vs. 49.6 expected) and latter (50.9 vs. 51.5 expected) disappointed.

Before we take a look at this week’s calendar, on Friday Moody’s downgraded Russia one notch to Ba1 and kept them on negative outlook. The current crisis in Ukraine, capital outflows and rising risks of political shocks impacting debt service payments all appeared to play a part. In terms of the latest on the Ukraine crisis, the FT reported over the weekend that Ukrainian troops and Russian-backed separatist exchanged prisoners and began to pull away heavy weapons from the front line in certain regions. However reports of explosions at a pro-Ukraine rally on Sunday continue to test the agreements put in place.

Taking a look at this week’s calendar, it’s a quiet start in Europe with just the February German IFO survey due whilst the ECB’s Mersch is also due to speak. In the US however this afternoon we’ve got the Chicago Fed national activity index, along with existing home sales and the Dallas Fed manufacturing activity print for February. Turning to Tuesday, the only notable release in the Asia timezone is small business confidence out of Japan. It’s a busier day in Europe tomorrow however. The final Q4 GDP report is due out of Germany along with the various trade data prints for the region. As well as this we’ve got the January inflation readings due out of the Euro-area with the market expecting a -0.6% yoy headline reading and +0.6% yoy core print. Focus on Tuesday in the US however will likely be on the aforementioned Yellen’s semi-annual testimony speech (formerly Humphrey-Hawkins). Elsewhere in the US tomorrow will also see the S&P/Case-Shiller index, consumer confidence and also the Richmond Fed manufacturing print. We start Wednesday in China with the preliminary February manufacturing PMI print whilst in Europe we’ve just got French consumer confidence due. In the US on Wednesday we have the conclusion of the semi-annual monetary policy meeting as well new home sales data due. Thursday starts with consumer confidence and unemployment data in Germany, along with money supply data for the Euro-area. Later in the morning we also get GDP data in the UK along with confidence indicators for the Euro-area. Over in the US the main focus for the market will most likely be on the inflation print for the region with the market looking for a +1.6% yoy core print. As well as this, durable goods orders, capital goods order, initial jobless claims, Kansas City Fed manufacturing index and FHFA house price index are due – so plenty to keep an eye one. We round out the week in Japan with housing starts data whilst in Europe preliminary February inflation data for Germany will be of focus. The ECB’s Constancio is also due to speak. In the US we close out a busy week with the Q4 GDP reading as well as pending home sales and the University of Michigan index.

 

 

end

 

 

A good summary of what to expect for Greece, the Euro and the Markets with the “deal/no deal signed by Greece on Friday:

 

(courtesy zero hedge)

 

 

 

 

What’s Next For Greece, The Euro, And Markets?

 

First, a quick recap of what happened yestrday, courtesy of the WSJ:

#1: Germany Got What it Wanted, for Now

Germany spent the last few weeks insisting that it wouldn’t scrap the bailout program and still lend money to Greece. The new left-wing government of Alexis Tsipras insisted that it wouldn’t extend the program and instead sought some “bridge” financing from the eurozone. In the end, Greece asked to extend the program and pledged to follow its rules. The extension lasts until the end of June, just weeks before Greece must make several large debt repayments.

#2: Greece Got the Prospect of Some Leniency

First, the eurozone appeared to offer some leeway on Greece hitting its budget target for 2015. Given the sharp deterioration in the Greek economy and government tax receipts, that seemed inevitable. The eurozone statement also doesn’t repeat the budget targets for future years of the existing program, which call for the government to run a surplus, excluding interest payments, of 4.5% of gross domestic product. Relaxing that requirement had been one of Mr. Tsipras’s main goals.

#3: The Deal May Not Hold

By the end of business Monday, Greece must submit a list of legal overhauls that it wants to adopt, based on the current program. Mr. Tsipras has said he wants to replace many of the mandated changes. But a number of the ones he dislikes most–such as cuts in pensions–are also the ones considered most vital by the eurozone and the IMF. If the eurozone doesn’t like his proposal, ministers will meet again to discuss their next move.

#4: Greek Politicians May Reject Deal

The deal appears to go against some of Mr. Tsipras’s campaign pledges. Greece will still be subject to oversight by the European Commission, the IMF and the European Central Bank, whom he had vowed to kick out. Rejecting such conditions would have left Greece without access to funds and at risk of its banks being cut off from the ECB. That could have forced Greece from the eurozone, something the Greek public still opposes. But Mr. Tsipras’s Syriza party and his coalition partner may not be happy.

#5: Greece Will Need More Money

Running lower budget surpluses this year, and possibly for years in the future, means Greece will need more funds. Eurozone officials have said they may lower interest rates on loans given to Greece, but it is unlikely to be enough. There is only around EUR15 billion ($17 billion) left in Greece’s bailout, around EUR10 billion of which is in a fund for Greek banks. As it stands now, the deal says those funds should be reserved for the banks and not for financing the Greek government.

* * *

And next, courtesy of Peter Tchir Of Brean Capital, is one outlook on What’s Next For Greece, The Euro, And Markets?

I’m sure that at this stage everyone is sick and tired of hearing about, reading about, or even thinking about Greece and GrExits, but it is impossible not to spend a couple of minutes looking at Friday’s “deal” and figuring out what that will mean for the future.

Garanimal 30%: These “mix-and-match separates makes clothes easy to pair and fun to wear” is my new term for the optimistic outcome. Greece starts aggressively collecting taxes, makes progress on other “hot button” issues for the rest of Europe and gets a package designed for long term sustainability. I think we see European equities rally. European bank stocks rally. Credit spreads narrow considerably, and very quickly, a new deal is cut for Portugal. That is followed by renewed efforts to kick-start the economies of Spain and Italy. This would all be very good, and is possible, but already seems like the market is putting a higher probability on this occurring than I am. Greek bonds should do extremely well in this case. For the Euro, I think I can create believable scenarios that have a short covering spike higher on the back of this sort of watershed event, but I can also think of plausible reasons why it would resume its QE inspired downtrend.

GrExit 40%: I put the likelihood of a Greek exit at 40%, making it my most likely scenario. The 4 months is merely an attempt by both sides to revamp their plans for an exit. On the bright side, that considerably increases the likelihood of an orderly exit. They have to renegotiate the terms of all their existing loans from Euros into Drachmas (they should probably do the same with the bonds, but the loans are their big issue). That way the rest of Europe can still say they are getting paid in full – just in Drachma at likely an overly generous conversion rate, rather than in Euros. Greece CANNOT start a new currency and keep all of its outstanding debt in Euros. It would also give the ECB (probably with strong encouragement from the Fed) the time to create a realistic way to make the transition palatable for the banks – the Greeks will need solvent banks in the new world order. I believe that an orderly exit is fine, and I think with 4 months to do it, they are 75% likely to find a solution that works for everyone. Given all the parties at the table, the precarious status of some of those parties (political or financially) there is a risk that the GrExit is messy, which I put at 25%. While the markets should largely be able to ignore a well negotiated reasonable exit strategy, it will encourage parts of Spain, Italy, Portugal, and possibly even Finland to discuss exiting the single currency (they will want to maintain as many benefits of being in the EU as possible, without the currency or some of the more onerous regulations). Under the good exit scenario, risk assets in Europe struggle to continue their strong performance (the CAC, DAX, MIB, and IBEX are all up 10% to 15% this year). The new “better” Euro appreciates as investors start to bet that other weak members, requiring the most ECB support, also look to leave, making the Euro look more and more like the Deutschemark and crushing the large short base. The “messy” Grexit scenario hurts all risk assets as questions arise about who will pay what debt and when.Even with QE, I would expect selling of periphery debt and I think the Euro would drop precipitously as investors fled Euro denominated assets in droves. So maybe this is actually two scenarios – the Good Exit and the Bad Exit.

Kick the Can 25%: The Germans, who apparently have a word for everything, also have a work for Kicking the Can – its “EU Summit”. There is no group that is better than kicking the can the EU, and betting on any summit resulting in a statement that sounds great, that is really more just can kicking is usually the odds on favorite. I put that at a reduced probability this time around, as it might be causing more instability at home for many politicians, rather than less. Having said that, the prospect of potentially working through July and, horror of horrors, August, could be daunting enough that another 4 month kick could be given – especially if Greece makes some progress, just not enough. Remember, the EU “bailout” largely goes to cover paying back previous EU, ECB, and IMF loans. Some is new debt to fund the country, but that is the smaller amount. This is more of the same. If this scenario looks likely, expect more small moves in all asset classes – the moves will be relatively small and particularly vicious – and feel random after the fact – just like the past 3 weeks. It would warrant fading any strong view either way without sufficient evidence.

GerExit 5%: While this seems like such a low possibility, it does seem that Germany is becoming more and more isolated from the rest of Europe (with the possible exception of Finland which seems even more separated, both physically and fiscally). Is there a point where Germany just decides that “I’m going to take my ball and go home!” Does it get too tiring being the “only adult in the room” or at least believing that you are the only adult in the room? Does Germany believe that its system is superior enough to withstand the immediate pain from moving to a much stronger currency? Would they be more comfortable dealing with the issues of having a the Bundesbank run a new Deutschemark instead of feeling that they have to constantly act as the police of the European banking system? At some point, does the feeling that they are the only owns really sticking to the original plan become so frustrating that they decide it isn’t worth it? Would a German exit from the Euro be welcomed by others? In theory, a Euro without Germany and maybe some other strong members, would sell off dramatically. It should help the rest of the countries become more competitive, and if they still allow visa free travel, it won’t hurt the tourist trade as relatively rich Germans still come to the Mediterranean to spend their shiny new Deutschemarks. This seems like a very low probability event as Germany has been a key architect of the Eurozone and done so much to keep it together, but, it does in many ways seems to solve the issues faster and more conclusively than any solution focused on Greece.

What This Means For Trading

I think Friday’s outcome and the potential future outcomes boil down to a few simple things to consider

  • Friday’s bounce was rather weak. The S&P and NASDAQ both only managed to climb by 0.6%. Since Europe had already closed down for the weekend, almost all the short covering related to announcements would have to have been done in the U.S. market – making the pop even less compelling. A classic example of “buy the rumor, sell the news”? Treasuries still wound up the day only unchanged as well.
  • Unless someone senior from Greece says they are defaulting, or someone senior from Germany says they are kicking Greece out, any headlines from Europe should be ignored. Over time which of the scenarios seems most likely should play out, but until then, this is mostly noise.
  • I will be looking to see how Spain reacts – will Rajoy’s opposition view Greece’s extension as a victory for Greece and put renewed pressure on Rajoy? Will the Greek people feel like their leaders sold out too quickly and try to put an actual radical party in charge? It seems that a few days of EU Summits can take the radical out of a party.
  • We can now focus on the domestic situation. On earnings and growth and what it means to have a Fed far more interested in “normalizing” policy than intervening at every market blip?

Be Careful What You Wish For

Yes, we are all sick and tired of the incessant Greek headlines, but I am not so sure we will like what we see when we resume focus on our own economy

I have to admit that the chart is far less compelling on a longer term time horizon, but I wanted to end this note with a good segue into the new “meme” that I expect to dominate the news waves over the coming weeks – what is going on with the U.S. economy and is it really as good as the last NFP report suggested?

 

 

end

 

 

 

Here is what ordinary Greeks think of the Friday deal:

 

(courtesy zero hedge)

 

 

 

 

What Ordinary Greeks Think Of Friday’s Deal: “We Went Through Two Months Of Agony To Realize We Are Still A Debt Colony”

For all the third-party analysis, punditry and opinions such as this one by the Irish finance minister Michael Noonan:

“Their political problem is that this a reversal of their election position. There is absolutely nothing on the table that could be considered a concession. They’re now compromising and compromising quite significantly,” he told national broadcaster RTE, but made clear Athens had little choice. “The biggest threat to Greece was that their banking system would go belly up next Wednesday.”

 

Noonan said Greece now faces another bailout on top of the two totaling 240 billion euros that it has taken since 2010. Friday’s deal had been “the first set of discussions to ensure Greece doesn’t collapse next week”, said Noonan. “Once you get them into the safe space for the next four months, there’ll be another set of discussions which will effectively involve the negotiation of a third program for Greece.”

… when it comes to Friday’s deal it all boils down to two things: promises, now broken:

  • February 15, 2015: “(Greece) will not continue with a program which has the characteristics of the programs of previous governments” – Gabriel Sakellaridis
  • February 16, 2015: “The “extend and pretend” game that began after Greece’s public debt became unserviceable in 2010 will end.” – Yanis Varoufakis
  • and February 20, 2015: “Greek finance minister says bailout extension is a great success”

But far more importantly, the real question is what the people on the ground think. Here is one answer:

Some Greeks wondered what the government had achieved. “We went through two months of agony, emptied the banks, to realize we are still a debt colony,” 54-year-old electrician Dimitris Kanakis told Reuters. “The paymasters call the shots.”

Here is Euronews with another:

Pensioner Paradisanos Rigas siad: “It looks to me that nothing has changed. Later on they’ll throw us some bones and say everything is fine. Syriza will be saying we put up a fight, while the other side will be saying you did nothing. And I think that it will be the same, just more of the same.”

And now that Greece has suffered its harshest hangover in years following several short weeks of hope that this time it may be finally different, it is time to repeat the farce from the beginning as yet another party will soon appeal to the Greek people with even greater and even more unrealistic promises, declaring that unlike Samaras, pardon, Tsipras, this time they will really show Germany who’s boss.

 

 

end

 

 

 

A terrific article from Raul Meijer, an expert on Greek affairs, and what he states is probably correct, in that Greece could not exit yet as they do not have a mandate from their electorate.  Only when Yanis V. hands in his list on Monday and that list is thwarted by the EU et al, then they can go to their electorate and state that they have bent over backwards to comply and they just turned us down so Greece can have more austerity.

 

a must read …and please see the video of Gordon Kerr who gives an excellent presentation of this very fact..

 

(courtesy, Meijer/Gordon Kerr, Cobden partners/)

 

 

50 Shades Of Greece

 

Submitted by Raúl Ilargi Meijer of The Automatic Earth

50 Shades of Greece

When it comes to the ongoing Greek question, I see a lot of people eagerly jump to conclusions, after the ‘debt deal’, that I don’t think are justified; certainly not yet. The overall conviction in the press seems to be that Syriza has given in on just about all fronts, and Germany and Dijsselbloem are the big winners.

But since that may well be the exact position Syriza wants ‘the other side’ to be in, where they think they have prevailed, one will have to try and think a few steps ahead before judging the situation. There’s far more grey area here than many pundits seem to assume, easily 50 shades of it.

If Greece wouldn’t have given Germany the idea that it was winning, Athens would have already come very close to an exit from the eurozone. The problem with that is that it is not part of the mandate Syriza has been given by Greek voters. Who have spoken out for an end to austerity, but within the existing euro framework.

Varoufakis et al. may long have concluded that such a set-up is simply not realistic, but they would still have to work up to a situation where, at some point, they can present this to the people. And that can only be done after they can convincingly show that Germany and Holland refuse to honor the democratically decided mandate Syriza brings to the table.

They would have to make absolutely sure that the other side gets the blame for the failed negotiations. They have to do that anyway, even if a Grexit is not their preferred outcome. They need to be able to prove that they bent over backwards and Germany still wouldn’t play ball.

The 4-month extension debt deal agreed on this week is still contingent on a set of measures Varoufakis is due to hand to his various European ‘partners’ on Monday. If the ‘partners’ throw out the package, or too much of it, then Tsipras can go to the Greek people and say:

“Look, they’re not acting in good faith, they refuse to honor your democratic vote, and the mandate you handed us with that vote. So what are we going to do now? Do you want to stay in the eurozone and the austerity programs it forces upon you, or are we going to try to find out what would happen if we leave the euro?”

Even if Tsipras et al had been relatively sure, before the recent elections that brought them to power, what the negotiations with the ‘partners’ would lead to, it couldn’t have those negotiations and show the results to the voters. Perhaps as early as this Monday, it may be able to. It was simply always going to be a necessary step in the process.

Over the past week, Syriza has shown its ample willingness to negotiate, to do concessions, so much so that it’s being accused of betraying its voters. Also a necessary step. But if Schäuble and Dijsselbloem overplay their hand the coming week in reacting to Varoufakis’ proposals for getting the 4-month extension, the trapdoor may fall shut, and Greece may start preparing to leave the euro. Either after getting the people’s mandate first, or after being thrown out by Brussels and Frankfurt.

Would that be such a bad thing for Greece? Nobody really knows, even if everyone is more than ready to opinionate about it. One must not forget that things are already very bad in Greece, so threats of armageddon could easily ring hollow.

An interesting perspective comes from a Bloomberg interview with Gordon Kerr, co-founder of Cobden Partners, a firm I know Varoufakis was urged to consider as financial advisors, before Syriza chose to go with Lazard (I can’t seem to embed the video, so please click the link and watch it on Bloomberg, it’s only 5 minutes and worth every second):

Euro Is One of the Worst Designed Currencies

 

Q: Why should they bail? Why should Greece go: you know what: we’re going it alone?

 

A: Because that’s probably the best alternative for them in the medium term, if not the very short term. I suspect the reason why Greece is clearly trying to do something with the European Central Bank in the next couple days is maybe they have no contingency plan ready to go.

 

Q: Is Europe ready for Greece to leave? Are the contingency plans in place?

 

A: I don’t think Europe has any contingency plans.

And a few more points from the conversation:

  • Even Citibank are saying that if the ELA’s (=ECB emergency loans) are not extended, Greece would be perfectly within its rights to repudiate up to €300 billion of debt
  • So the day after this happens, Greece will be €300 billion better off than it is right now.
  • Bulgaria’s currency collapsed in 1996; within a weekend it was restructured..
  • They [Greece] don’t have systemically important financial institutions dragging down their economy ..

I find it hard to believe Syriza wouldn’t know at least a good chunk of what Kerr says. And that would give them a lot more room to move than is generally assumed. Thing is, they need to get that mandate from their voters.

The long and short of it is there are a lot of possibilities, lots of shades of grey area, both when it comes to what people involved are thinking and in what they are doing. It doesn’t seem very wise to draw conclusions before having thought through the possibilities, like a strategist, like an army general or a chess player would.

Perhaps Syriza is just playing for time, perhaps that is their no. 1 priority, just so they create the space to come up with a contingency plan in case they leave the euro. But also perhaps they already have such a plan, and what is happening now is simply part of that plan.

And then there’s the option they’ve already been defeated and they’ll have to get ready for more humiliation next week. It’s just that that would make them look very short sighted, and awfully bad strategists.

 

 

 

end

 

 

 

 

Now we witness Greek infighting.  World War ii hero and Member of Parliament, Glezos reacts to the fact that the Syriza party capitulated on all points in their negotiation with the EU.

 

or…is this part of the plan!!

 

(courtesy zero hedge)

 

Greek Infighting Begins After Historic Syriza Member Slams Agreement, Apologizes For “Contributing To Illusion” Of Change

 

 

As the divergence between Syriza’s leadership perspective on debt talks – “success…won the battle” – and the Greek voters – “It looks to me that nothing has changed” – grows ever wider, and on the heels of apparent near mutiny last week, there is growing division in the ranks of the newly elected party. Syriza MEP Manolis Glezos penned a stunning rebuke of the party’s apparent U-turn and asks his electorate for forgivenessthere can be no compromise between oppressor and oppressed… Pity, and pity again… I apologize to the Greek people because I have contributed to this illusion… before it is too late, let us react!” 

In an article uploaded on the website of his Movement for Active Citizens, Keep Talking Greece notes Manolis Glezos – the historic member of the Greek left (best known for his participation in the World War II resistance) – expresses his deep disappointment about the way Syriza handles with the negotiations and calls for party members to decide if they accept this situation.

Via Manolis Glezos’ Movement for Active Citizens website (via Google Translate):

“Renaming the Troika into Institutions, the Memorandum of Understanding into   Agreement and the lenders into partners, you do not change the previous situations as in the case renaming meat into fish.

 

Of course, you cannot change the vote of the Greek people at the elections of January 25, 2015.

 

The people voted in favor of what SYRIZA promised: to remove the austerity which is not the only strategy of the oligarchic Germany and the other EU countries, but also the strategy of the Greek oligarchy.

 

To remove the Memoranda and the Troika, abolish all laws of austerity.

 

The next day after the elections, we abolish per law the Troika and its consequences.

 

Now a month has passed and the promises have not turned into practice.

 

Pity. and pity, again.

 

On my part, I APOLOGIZE to the Greek people because I have contributed to this illusion.”

He then goes on to call for action…

Before it is too late, let us react.

 

Syriza members, friends and supporters at all levels of organizations should decide in extraordinary meetings whether they accept this situation.

 

Some argue that to reach an agreement, you have to retreat. First: there can be no compromise between oppressor and oppressed. Between the slave and the occupier is the only solution is Freedom.

 

But even if we accept this absurdity, the concessions already made by the previous pro-austerity governments in terms of unemployment, austerity, poverty, suicides have gone beyond the limits.

As KeepTalkingGreece reports, to Glezos’ sharp criticism, Syriza reacted rather cool and with respect to the senior veteran.

Government sources commented that“most probably Glezos is not well informed about the tough negotiations.”

 

However, the article triggered a vivid exchange of ‘verbal attacks’ on internet with opposition parties supporters  -mainly pro-austerity – to mock Syriza ‘that even Glezos admitted you named the meat fish”.

Somewhere the leaders of the last Greek party that promises “change”, the neo-fascist Golden Dawn, are grinning.

 

 

 

 

end

 

And then this from a new Syriza MP:

 

Syriza MP Asks $330bn Question: “How Will 4-Month Extension Improve Our Negotiating Position?”

 

 

While the tone may not be as vociferous as historic Syriza MEP Manolis Glezos’ recent statements over the Greek ‘new deal’, the rhetoric of Costas Lapavitsas (newly-elected Syriza MP) blog post is clearly questioning the decision-making of his party’s leadership. With regards “our commitment to the Greek people, we have deep concerns,” he begins, detailing five major questions that must be answered, perhaps most importantly, “What exactly will change in the next four months of ‘extension’, so that the new negotiation with our partners to become of better places? What will prevent the deterioration of the political, economic and social situation of the country?”

 

Via Costas Lapavitsas blog,

The agreement of the Eurogroup is not completed, partly because we do not know yet what ‘reforms’ will be proposed by the Greek government today (Monday, February 23) and which of them will be accepted. But those who have been elected on the basis of SYRIZA program and believe the promises of Thessaloniki as our commitment to the Greek people, we have deep concerns. It is our obligation to record.

The general outline of the agreement is as follows:

1.The Greece asks for extension of the current credit support agreement, which is based on a series of commitments.

 

2.The aim of opening is to enable the completion of the evaluation of the current agreement and to give time for a possible new agreement.

 

3.The Greece will immediately submit a list of ‘reforms’ which will be assessed by ‘institutions’ and finally agreed in April. If the evaluation is positive, will be released the money not given even the current agreement plus reimbursements from the ECB profits.

 

4.The existing funds of the Financial Stability Fund will be used exclusively for the needs of banks and will be out of Greek control.

 

5.The Greece is committed to fully and timely meet all its financial obligations to its partners.

 

6.The Greece is committed to ensuring ‘appropriate’ primary surpluses to guarantee the sustainability of the debt on the basis of the Eurogroup decision of November 2012. The surplus for 2015 will take into account the economic conditions of 2015.

 

7.The Greece will not revoke measures, or make unilateral changes that can have a negative impact on the budgetary targets, the economic recovery, or financial stability, as will be appreciated by those institutions’.

On this basis, the Eurogroup will start national processes for a four-month extension of the current agreement and urges the Greek authorities to immediately start the process for the successful completion of its evaluation.

It is difficult to see that through this agreement will be implemented announcements ‘Thessaloniki’ involving the deletion of most of the debt and the immediate replacement of memoranda with the National Reconstruction Plan. Those who were elected by the Syriza pledged to move forward in the implementation of the National Plan regardless of the negotiations on the debt, because we need to restart the economy and relieve society. It is necessary therefore to now explain how these will be implemented and how will the new government to change the tragic situation he inherited.

To be more specific, the National Plan included four pillars at a cost for the first year as follows:

I) Addressing the humanitarian crisis (1.9 billion).

 

II) Restart the economy with tax cuts, setting “red loans” establishment Development Bank, reset the minimum wage to 751 euros (total 6.5 billion).

 

III) Public Employment Programme for 300000 jobs (3 billion in the first year and another 2 billion in the second).

 

IV) Transformation of the political system with interventions in local government and in parliament.

The sources of funding again for the first time planned as follows:

I) Settlement of debts to the tax office (3 billion)

 

II) Combating fraud and smuggling (3 billion)

 

III) Financial Stability Fund (3 billion)

 

IV) NSRF and other European programs (3 billion)

Given therefore the release of Eurogroup, I ask:

1. National Reconstruction Plan

 

How to fund the National Reconstruction Plan, where 3 billion of the Financial Stability Fund is now outside Greek control? The removal of these funds makes even more pressing the collection of large amounts of tax avoidance and settlement of debts in a very short time. How feasible is this prospect?

 

2. Remission

 

How will the debt cancellation, when Greece is committed to fully and timely fulfill all financial obligations to their partners?

 

3. Austerity Waiver

 

How to be a waiver of austerity, when Greece is bound to succeed ‘appropriate’ primary surpluses to make the existing huge debt ‘sustainable’? The ‘sustainability’ debt – as estimated by the Troika – was exactly the reason for the irrational primary surpluses hunting. As the debt is not reduced significantly, it will cease to exist primary surpluses that are catastrophic for the Greek economy and the essence of austerity?

 

4. Supervision and financial cost

 

How to proceed any progressive change in the country, when the institutions’ will exert strict supervision and prohibit unilateral actions? They will allow the ‘institutions’ implementation of pillars ‘Thessaloniki’ as a direct or indirect financial costs?

 

5. The future negotiation

 

What exactly will change in the next four months of ‘extension’, so that the new negotiation with our partners to become of better places? What will prevent the deterioration of the political, economic and social situation of the country?

The moments are absolutely critical to society, the nation and of course the Left. The democratic legitimacy of the government rests in Syriza program. The minimum requirement is to have an open discussion on party members and the Parliamentary Group. Key responses should immediately give these questions to keep the great support and momentum gives us the Greek people. The answers will be given the next period will determine the future of country and society.

 

 

end

 

 

 

Sunday night, zero hedge wrote this:

(courtesy zero hedge)

 

 

 

 

If The Troika Says “Nein” Tomorrow, Here’s What The “New Drachma” Will Look Like

 

While Greek officials remain ‘confident’ of their ability to deliver a reform package that the Troika-esque “institutions” will accept tomorrow (notably a bank holiday in Greece), it appears the Germans are not so sure. Hans Michelbach, a finance expert of the Christian Social Union, told the Handelsblatt newspaper it is“inconceivable that the German parliament can make a final decision on the bridge program for Greece before the end of February.” Having already seemed to capitulate on the promises made to the electorate, and now beginning to crack down on tax evasion, we wonder how long it will be before the dreaded ‘Drachmatization‘ occurs (by dictat or revolution).

After the cabinet council on Saturday Yanis Varoufakis told reporters…

“I am almost certain our list with the reforms will be approved by the institutions, they won’t say no. If institutions say No on Monday, there will be a eurogroup meeting on Tuesday. I hope they say Yes.”

The Greek proposals are thought as structural reforms to be legislated and implemented for the time of the “Bridge-Program”, but the “institutions” do not seem as confident…

The German parliament is unlikely to approve extending Greece’s bailout before it expires at the end of the month, a senior lawmaker of Germany’s ruling coalition said Sunday, according to Bloomberg…

Hans Michelbach, a finance expert of the Christian Social Union, told the Handelsblatt newspaper it is “inconceivable that the German parliament can make a final decision on the bridge program for Greece before the end of February.”

 

The CSU is the Bavarian sister party of Chancellor Angela Merkel’s Christian Democrats. The finance ministers of Greece and the other eurozone countries agreed on Friday to an extension of the bailout program for the highly indebted country, which has to be approved by the parliaments of some of the supporting countries, including Germany.

 

The Greek overhaul proposals must be examined thoroughly by the governments and the parliaments, and that process won’t be concluded by Feb. 28, Mr. Michelbach said.

 

If there is a “nein” tomorrow then Tsipras has stated that he will call for an emergency Eurogroup meeting on Tuesday.

 

Meanwhile, as The BBC reports, as if the capitulation on promises were not enough to stir the angst-ridden heart of the Greek population, the Greek government will crack down on tax evasion and streamline its civil service in its bid to secure a bailout extension, minister of state Nikos Pappas says…

The government is working on a package of reforms that it must submit to international creditors on Monday.

 

If the reforms are approved, Greece will be granted a vital four-month extension on its debt repayments.

 

Mr Pappas said the reforms being proposed would take the Greek economy “out of sedation”.

 

“We are compiling a list of measures to make the Greek civil service more effective and to combat tax evasion,” he told Greece’s Mega Channel.

 

He added that talks this week would be “a daily battle… every centimetre of ground must be won with effort”.

*  *  *
And so, while the world appears to believe a deal is done… it remains very much in limbo at the mercy of the Germans. And in case anyone was wondering, The Greeks have already drawn up the “New Drachma” notes… just in case…

As News247 reported in 2013, the 6 banknotes (designed by Paul Vatikioti) of 50, 100, 200, 500, 1000 and 10,000 drachmas have pictures of Cornelius Castoriadis, Odysseus Elytis, Yiannis Moralis, Georgios Papanikolaou, Melina Mercouri and Maria Callas…

*  *  *

Good luck tomorrow Yanis…

 

 

end

 

 

Monday:

 

Early this morning we get some of the proposals and it sure looks like Germany will say Nein to all of them:

 

(courtesy zero hedge)

 

 

Why Germany Will Throw Up On The Greek “Reform Proposals”: Wage Hikes, Foreclosure Protection, “Red Lines”

 

 

For those keeping tabs on the Greek tragicomedy, now in its 5th season, today before midnight Yanis Varoufakis will submit a list of “reform measures” it plans to undertake to the Troika, pardon, Institutions. But while we patiently await the reveal of the full list of proposed Greek reforms, we can fast forward to the German reaction, because we already know what it will be:

Why? Because as Bloomberg reported earlier today, citing government spokesman Gabriel Sakellaridis says in interview broadcast live on Skai TV today, the Greek government will implement legislation allowing taxpayers to repay overdue taxes in 100 installments. This not new: in fact, it was proposed back in November, when Greek Enikos said “the country’s international lenders are not pleased with the new law voted by the government, which allows tax payers to pay off their debts towards the State in 100 installments.”

So while the Troika will ask why nothing has been done on this until now, Greece will have no retort but instead will say that the easier repayment terms for overdue taxes will boost liquidity in state coffers especially since the cash situation “is not easy.”

Among the other proposal is that the government will introduce legislation tackling NPLs issue in the summer, not immediately; target is to strengthen country’s financial system. This is a key issue because Greek NPLs, currently around 40%, are far above where Cyprus banks were in March 2013 when the infamous bail in hit.

Which begs the question: why does anyone assume that just because Greece has a deal, as tentative as it may be, that the Greek bank run is over? If anything, the local banks have merely bought the local population some breathing room in which to quietly and effectively withdraw as much ECB-backed funds as they can before the capital controls and/or “bail-in” trapdoor slams shut.

But what is sure to make Schauble go berserk with rage is that Greece is now openly tearing apart the “existing programme” with its firm demand that the protection of primary residences from foreclosure will be upheld, saying that it creates no burden for banking system or the state budget: a state budget which as a reminder will be out of cash some time this week!

Needless to say Germany will cross this proposal out with a very bright, very red pen…. as well as then next: “Minimum wage will be raised gradually until 2016, to allow businesses to adapt to labor cost increase.”

At this point Germany will point out the deflationary vortex in which Greece has been stuck in the past 5 years and say “what labor cost increases”, and cross that “reform” as well.

We also learn the Greek government plans to restore labor relations, labor law, collective bargaining saying the current regime resembles “dark age” (it does – thank the common currency for putting you there) which is incompatible with European labor culture, and will assesses proposals to secure liquidity of pension system, aim is not to cut pensions further. The German response to the latter? You guessed it.

The punchline: “Red lines still apply and government will respect popular mandate.”

And… cue Germany’s reply:

Because from the start, this was all an exercise in Germany showing Greece that no, the popular mandate, is irrelevant when Germany pays the bills, which will be the case as long as Greece is in the Eurozone.

And this is why as soon as Germany sees the Greek “reform” proposal it will stamp it with “Nein, Nein, Nein” from top to bottom, and tomorrow’s “emergency” Eurogroup meeting is assured, in which the Troika throws back the proposal in Greece’s face and demands that it strip all its “reforms” to comply with whatever was in the original memorandum, in the process making the Tsipras government nothing more than an extension of the hated Samaras administration.

Because Greece bluffed… and lost, and now it no longer has any leverage in negotiations with Europe until the next, even more unpredictable Greek government, comes to power.

end
Then late this afternoon we get a delay:

Greece Misses 1st Commitment: Delays Reform List Delivery Until Tuesday

 

Well that didn’t take long…

  • *GREECE TO SUBMIT LIST OF REFORM COMMITMENTS TO EU TOMORROW: OFFICIAL

So we are less than 3 days into the ‘new deal’ and Greece has missed its first deadline. We can’t help but wonder if the initial draft, just as we warned, was thrown up all over by the Germans.

As George Saravelos, strategist at Deutsche Bank notes:

The Greek government’s capacity to agree and deliver on the conditionality of the current program remains the key source of uncertainty under the current agreement. Most immediately, the government will have to navigate the fallout from today’s agreement, as well as the ‘reform list’ that will need to be submitted on Monday.

 

On a more forward-looking basis, it is likely that the government will have to agree to fresh revenue generating measures: even with a downward adjustment to this year’s fiscal targets, budget execution for this year is meaningfully off-track. The road ahead remains long, and it remains unclear how the current government can navigate between the commitments it has made to Europe with competing domestic political demands – both internally within the Syriza party as well as with the electorate.

 

A small step has materialized, but the hard work is about to begin.

 

end

 

 

And finally it is this chart that is bothering our friends over at the EU:

 

The Chart That The Eurogroup Is Really Worried About

 

The Eurogroup’s apparent ‘non-negotiation’ stance with Greece reflects one main worry we suspect – conceding to Greece would increase rather than reduce political risk, emboldening the resurgent anti-austerity and anti-euor extremist parties across Europe. With Spain and France seeing ‘extremist’ parties in the lead, the following chart is likely the one that keeps Dijsselbloem up at night…

 

 

Source: Deutsche Bank

 

 

end

 

 

 

This is a dagger into the heart of the uSA dollar, as the new BRICS bank is set to start at the end of December 2015. The bank is patterned after the IMF. The bank is to provide infrastructure loans to countries that cannot obtain the said loan because of policy differences with the USA.

 

(courtesy zero hedge)

 

 

De-Dollarization: Russia Ratifies $100 Billion BRICS Bank

 

A BRICS Bank – as an IMF alternative and to enable nations to become less dependent on the global reserve currencywas originally discussed at The BRICS Summit in 2012. Then at the 2014 BRICS Summit, the framework for The BRICS Bank was approved as “a system of measures that would help prevent the harassment of countries that do not agree with some foreign policy decisions made by the United States and their allies.” Headquartered in Shanghai and chaired by Russia, this week saw what appears to be the final step in the creation of BRICS New Deverlopment Bank as RT reports, The Russian State Duma has ratified the $100 billion BRICS bank that’ll serve as a pool of money for infrastructure projects in Russia, Brazil, India, China and South Africa. It is expected to start fully functioning by the end of 2015. Isolated?

As RT reports,

The Russian State Duma has ratified the $100 billion BRICS bank that’ll serve as a pool of money for infrastructure projects in Russia, Brazil, India, China and South Africa, and challenge the dominance of the Western-led World Bank and the IMF.

 

The New Development Bank is expected to start fully functioning by the end of 2015, according to the Russian Finance Ministry.

 

Russia has agreed to provide $2 billion dollars from the federal budget for the bank over the next seven years.

 

It will have three-tiers of corporate governance, with a Board of Governors, Board of Directors and a President.

 

The bank’s board of directors will hold its first meeting in Ufa in Russia in April. Russian Finance Minister Anton Siluanov is likely to become the bank’s first Chairman of the Board of Governors, according to Deputy Finance Minister Sergei Storchak talking on the Russia 24 TV channel.

 

The decision to establish the BRICS bank, along with a $100 billion reserve currency pool, was made in July 2014. Each of the five member countries is expected to allocate an equal share of the $50 billion startup capital that will be expanded to $100 billion.

 

The bank will be headquartered in Shanghai, India will serve as the first five-year rotating president, and the first Chairman of the Board of Directors will come from Brazil.

*  *  *

*  *  *

Simply put, as Sovereign Man’s Simon Black warns,“when you see this happen, you’ll know it’s game over for the dollar…. I give it 2-3 years.”

 

 

 

end

 

 

 

 

This is interesting as Europe is also terribly hurt by the Russian sanctions.

French Journalist, Eric Zemmour calls for an alliance between France, Germany and Russia:

 

 

(courtesy zero hedge)

 

 

 

Prominent French Journalist Calls For France-Germany-Russia Alliance

 

With the Ukraine civil war – courtesy of the constant prodding of the US State Department – inching ever closer to an all out military confrontation with Russia, and further escalation in terms of western sanctions on the Kremlin, as well as even more acute countermeasures and retaliation by Russia, increasingly more in Europe are asking themselves the question, if not in those exact words, “if the US said to fuck the EU, then why should the EU allign with the US?”

One person doing just that is prominent and controversial French writer and political journalist Eric Zemmour, who on Friday said that France and Germany, following the historical tradition, should work on forming an alliance with Russia.

“NATO is doing its utmost to present Russia as an enemy of the West and thereby justify its existence,” Zemmour wrote in Le Figaro Magazine. “Fortunately, France and Germany in due time blocked Ukraine’s accession to NATO, and that’s a positive fact,” the journalist said.

“Now when they finally coordinated their positions on establishing relations with Moscow, they should not stop halfway and should move towards forming a tripartite alliance with Russia,” he said, recalling numerous efforts in the past by “kings, emperors and presidents” of the three countries to set up such an alliance.

As further cited by Tass, such a bloc “will be the only chance for Europe to get rid of the United States protectorate and become, in the words of General de Gaulle, a ‘Free Europe’.

“An alliance with Russia is absolutely necessary to fight against Islamists in Syria, Libya, Iraq, Mali, Central African Republic, Nigeria, Pakistan and Afghanistan, where these extremists are trying not only to erase all the traces of a Western and Christian presence, but to pave the way for carrying the war into the European territory,” Zemmour added.

Sounds crazy? Maybe, but then again just 2 years ago anyone suggesting that a Grexit is inevitable, was branded as a conspiracy theory sociopath and prepped for burning at the Brussels stake. Now, it is all but a done deal.

So when looking at the future of Europe, will it be this:

 

or this:

 

end

 

 

 

Draghi is going to have a tough time engaging in QE as European bondholders refuse to sell their bonds back to the ECB. Why?  if they cash the bonds, they get Euros and they only receive negative interest rates.  So why sell!!

 

Two commentaries:

 

(courtesy zero hedge)

 

 

 

Why European Bondholders Refuse To Sell To The ECB

Just weeks before Mario Draghi’s “whatever it takes” trillion-euro Q€ bond-buying-fest is set to come true, The ECB faces a problem they likely never expected –unwilling sellers. On the heels of our analysis showingcentral banks will monetize over 100% of government bond issuance this year, Reuters reportsthat mere weeks before the ECB begins their program, banks, pension funds and insurers across the continent arehoarding them for regulatory or accounting reasons.“We prefer to hold on to them,” said Antoine Lissowski, deputy CEO at French insurer CNP Assurances. “The ECB’s policy … is reaching its limits now.”

 

Yet another unintended consequence of massive monetary manipulation… monetizing >100% of issuance in 2015; the net issuance of government debt in 2015, which will not only be the lowest in history, but – for the first time ever – be negative, explains all one needs to know.

 

Has, as Reuters reports, left European asset managers forced to hold what they have (and unwilling to sell to the ECB)…

At the height of the euro zone debt crisis in 2012, ECB President Mario Draghi’s problem was how to convince investors to hold on to European bonds. Now he faces a struggle to make them sell.

 

 

That may complicate implementation of the quantitative easing program, aimed at reviving growth and inflation in the euro zone. The ECB might have to pay way above market prices, or take additional measures to encourage investors to sell.

 

“We prefer to hold on to them,” said Antoine Lissowski, deputy CEO at French insurer CNP Assurances. “The ECB’s policy … is reaching its limits now.”

 

Banks, which buy mainly short-term bonds, use government debt as a liquidity buffer. Selling would force them to invest in other assets, for which — unlike government bonds — regulators ask banks to set cash aside as a precaution. Alternatively, they can deposit money with the ECB, at a discouraging interest rate of minus 0.20 percent.

 

Insurers and pension funds typically buy long-term debt. They could make hefty profits selling to the ECB. But the money would have to be re-invested in other bonds whose yields would be much lower than their long-term commitments to clients — a regulatory no-no.

 

 

“If we were to sell bonds, we would make huge capital gains, but we will then have to reinvest that money at a yield of 0.5 percent, set against liabilities at 3.50-3.75 (percent),” said Bart de Smet, the CEO of Belgian insurer Ageas.

 

Dutch banks ING and Rabobank, Spain’s Bankinter and rescued lender Bankia and France’s BNP Paribas said they were unlikely to sell when the ECB comes knocking.

 

“The volume of sovereign bonds we own at the moment is not linked to monetary policy,” BNP Paribas deputy CEO Philippe Bordenave said. “It’s linked to the regulation.”

 

 

But everything has a price. RBS strategists see a 40 percent chance that ECB purchases would help turn German 10-year Bund yields negative this year.

 

“There’s a lack of bonds to meet current demand globally, so it’s going to be difficult to see a lot of sellers,” said Patrick O’Donnell, portfolio manager at Aberdeen Asset Management, who does not plan to sell.

 

“The risk is that if the ECB is serious about buying at the rate of 60 billion a month, the price impact could be quite material.”

*  *  *
Perhaps most ironically, if Greece were to leave the euro, selling pressure might increase, which would thus enable The ECB to print moar, monetize moar, and buy moar bonds…

 

 

end

 

 

And the second commentary as to why Draghi will have a difficult time purchasing European bonds:

 

(courtesy zero hedge)

 

 

 

 

The Ultimate “Easy Money Paradox”: How The ECB’s Previous Actions Are Assuring The Failure Of Its Current Actions

 

Experiments, by their very nature, tend to have unintended consequences and on the eve of Q€, it appears as though the ECB’s previous policy decisions may have caused the central bank to unwittingly paint itself into a corner. Having pledged to purchase some €1 trillion in assets over the next 18 or so months, Mario Draghi now faces the rather perplexing logistical challenge of finding enough bonds to buy. What’s obvious from the following tables is that convincing domestic banks, insurers, and pension funds to sell is particularly important but will, for reasons outlined below, likely prove well nigh impossible.

As discussed previously, the ECB’s predicament (i.e. the reason it’s looking for sellers) is the result of a supply shortage. Fixed income net issuance across the Eurozone has only averaged around €340 billion over the last four years, meaning supply can’t possibly keep up with the ECB’s demand. In fact, at the individual country level net supply less-Q€ will be negative for Germany, France, Italy, Belgium, Netherlands, Austria, Finland, Portugal, and Greece in 2015. Put simply: someone, somewhere has to be willing to sell in order for the bank to have any hope of executing its plan

The problem, as several sources told Reuters last week, is that there simply aren’t a lot of willing sellers. Ironically, the ECB’s own policy maneuvers are ultimately responsible for creating this situation. That is, the fallout from previous forays into ultra accommodative monetary policy is now hampering the implementation of quantitative easing – call it the ultimate easy money paradox.

For instance, last September, the ECB cut its deposit facility rate to -0.2% in an effort to fight low inflation and encourage banks to put capital to work. Of course, this effectively eliminated one option for where prospective sellers might choose to park their proceeds should they decide to unload their EGBs to the ECB. That is, if I’m a bank, I’m not going to be too thrilled about the prospect of selling an interest-bearing asset only to turn right around and pay 20 bps for the right to hand the cash I just received right back to the buyer. The ultimate irony here is that, as mentioned above, the deposit facility rate cut was meant to counter disinflation, as is Q€. So what we’re witnessing is one deflation-fighting policy stymying another.

Another problem for the ECB is that sellers of EGBs expose themselves to the very real possibility that proceeds will have to be reinvested at lower rates. For some EGB holders, like insurers, this prospect simply isn’t feasible from a regulatory perspective. Here’s Morgan Stanley:

The biggest holders, Eurozone banks and insurers, will be reluctant sellers, given it will mean reinvesting at lower yields. If the ECB responds by pushing yields lower in an attempt to incentivise sellers, this could have an opposite effect, as lower yields could actually deter banks and insurers from selling.

 

Regular harvesting of unrealised gains, undertaken in part to meet life policyholder obligations, is expected to continue and may be a source of limited supply [but] our base case is that insurers will not seek to take advantage of the ECB bid and sell bonds in size, given their overriding priority to ensure as strong as possible matching of assets and technical liabilities.

As for banks, selling to the ECB would likely have the effect of compressing NIM, exacerbating the negative effect QE already has on margins. Domestic banks are unlikely to volunteer for something that will squeeze them further when they’re already concerned about the effect ECB asset purchases will have on their bottom line. Just ask Deutsche Bank’s Anshu Jain who, less than 24 hours before Draghi’s January presser, had the following to say about Q€:

“…it means very low interest rates and a real destruction of net interest margins, which of course will be a huge challenge. So the best parts of our businesses, the deposit taking and the flow franchise businesses will all suffer.”

To drive the point home, here’s Morgan Stanley on why domestic banks won’t sell:

Eurozone banks own ~one-fifth of Eurozone debt (more in the south than north).

 

We suspect banks will be reluctant to sell because this would reduce NIMs and loan demand is yet to recover. The ongoing deleveraging in Europe may diminish banks’ capacity to sell bonds as deposit growth may continue to outpace loans.

Again we see existing easy money policies restricting the effectiveness of new easy money policies, or more accurately, the central bank’s previous efforts to drive down rates are thwarting its current plans to … drive down rates. This may well be the ultimate Keynesian boondoggle.

At the end of the day, it appears as though the ECB may need to turn its gaze outward:

We think Global asset managers have the ability to sell tactically, and may look to do so, given rich euro valuations vs. other sovereign markets. Global fixed income asset managers benchmarked to market-weighted indices have a large benchmark exposure to euro sovereigns (31% of their index), but generally have discretion to diverge from these benchmarks. As a result, they have the ability to tactically reduce their euro sovereign exposure if they think EGBs are likely to underperform other global government bonds. Syndication data show non-domestic investors, primarily asset managers, were significant buyers of euro sovereign paper in 2014, much of which we think was reducing previous underweight positions. However, we think they could be significant sellers to the ECB, given the richness of euro sovs cross market.

To summarize, the ECB will have to turn to foreign holders (who, as a reminder, ran the other direction during the height of the Eurozone crisis at the first mention of a periphery government bond) and, in yet another irony of ironies, the central bank may find some sellers there precisely because CB policy has created unsustainably rich valuations in € credit.

 

end

 

Without a doubt the following is the biggest problem facing the globe, the high debt to GDP by many countries.  We generally look at two figures: the debt to GDP of the sovereign and then total debt to GDP of a country.  We now have 9 countries with debt to GDP over 300% with Japan at 400%.  We have reached peak debt and no wonder governments are scrambling to inflate as this will make the debt burden lighter.  If the world deflates then the debt is larger and almost impossible to serve interest costs.

 

a very important commentary..

 

(courtesy zero hedge)

 

 

 

 

This Is The Biggest Problem Facing The World Today: 9 Countries Have Debt-To-GDP Over 300%

If anyone has stopped to ask just why global central banks are in such a rush to create inflation (but only controlled inflation, not runaway hyperinflation… of course when they fail with the “controlled” part the money paradrop is only a matter of time) over the past 5 years, and have printed over $12 trillion in credit-money since Lehman, the bulk of which has ended up in the stock market, and which for the first time ever are about to monetize all global sovereign debt issuance in 2015, the answer is simple, and can be seen on the chart below.

It also shows the biggest problem facing the world today, namely that at least 9 countries have debt/GDP above 300%, and that a whopping 39% countries have debt-to-GDP of over 100%!

 

We have written on this topic on countless occasions in the past, so we will be brief: either the Fed inflates this debt away, or one can kiss any hope of economic growth goodbye, even if that means even more central bank rate cuts, more QEs everywhere, and stock markets trading at +? while the middle class around the globe disappears and only the 0.001% is left standing.

Finally, those curious just how the world got to this unprecedented and sorry state, this full breakdown courtesy of McKinsey should answer all questions.

 

 

The fight for Mariupol is on:

 

(courtesy Jason Ditz/)

 

 

Ukraine Rebels, Military Both Build Up Near Mariupol

Ceasefire Holding, But Both Sides Remain Uneasy

by Jason Ditz, February 21, 2015

 

Ukraine’s military abandonment of Debaltseve continues to pay dividends for the ceasefire, which is again holding today, and prisoner exchanges today add to hope that the deal will hold.

Not that there hasn’t been any fighting in the past couple of days, as some shelling has been reported against the rebel capital of Donetsk, though its minor compared to the fighting before the ceasefire began a week ago.

The town of Novoazovsk seems to be another potential site of tensions, as Ukraine is accusing the rebels of building up on the outskirts, and are themselves building up at the town.

Novoazovsk would be the route through which fighting would take place in Mariupol, a major port city that would likely be the rebels’ next target if the ceasefire falls.

It’s only natural, as both sides continue to redeploy troops during the ceasefire, that they are both positioning their forces to maximum advantage for reacting if the ceasefire falls. Still, the momentum seems to be with the ceasefire holding for now.

 

 

end

 

Early this morning the Hryvnia drops to 31.5 to the dollar as the country tries to tighten capital controls:

 

(courtesy Bloomberg)

 

 

Ukraine Tightens Capital Controls as Hryvnia Drop Fuels Risk

 

Withdrawing Hryvnia from an ATM
Ukrainian troops queue to withdraw hryvnia cash from an automated teller machine in Artemivsk, Ukraine, on Feb. 20, 2015. Photographer: Vincent Mundy/Bloomberg

 

 

 

 

(Bloomberg) — Ukraine’s central bank tightened limits on capital movement to counter a hryvnia selloff that’s straining the country’s finances before debt restructuring talks.

The National Bank of Ukraine will curb importers’ purchases of foreign currencies and has banned banks from lending to clients seeking to sell the hryvnia in the market, Governor Valeriya Gontareva told reporters in Kiev on Monday. More tools are available if needed to limit outflows, she said.

Ukraine is grappling with a 10-month pro-Russian insurgency that has deepened the economic recession and forced the nation to seek International Monetary Fund bailout loans to stay afloat. The currency’s 44 percent slump this year is adding to the financial distress by driving up the cost of imports including oil and natural gas and boosting the foreign-debt burden as the government seeks a deal with bondholders by June.

“The hryvnia at this level is bad pretty much from every angle, driving up local energy prices and making external debt less sustainable,” Fyodor Bagnenko, a fixed-income trader at Dragon Capital in Kiev, said by phone on Monday. “War-related fears and delays in the IMF program are prompting companies to hoard hard currencies, while the central bank’s ability to break the spiral is limited by critically low foreign reserves.”

The hryvnia, the world’s worst-performing currency fell as much as 11 percent to record 31.5 per dollar after Gontareva’s comments before trading unchanged at 28 as of 7:12 p.m. in Kiev. It has depreciated 68 percent in the past 12 months as the NBU’s foreign-currency reserves shrank to a record-low $6.4 billion in January from $17.8 billion a year earlier.

‘High Time’

“The central bank said repeatedly that if the foreign-exchange market situation worsens, we can always impose additional administrative restrictions,” Gontareva said. “We analyzed the market situation last week. We think it’s high time to impose new restrictions.”

The junk-rated nation’s bonds fell for a seventh day to a record, with its $2.6 billion of 9.25 percent notes due July 2017 dropping 2.6 cents to 41.5 cents on the dollar and lifting the yield to 56.4 percent. Holders of Ukrainian debt have lost 25 percent this year, the most among 58 nations in the Bloomberg USD Emerging Market Sovereign Bond Index.

The country’s financial distress is worsened by the fact that its U.S. and European allies have adopted a “leisurely approach to supporting Ukraine,” which has received no IMF support in six months, according to Timothy Ash, chief emerging-markets economist at Standard Bank Group Ltd. in London.

‘Financial Meltdown’

“Such an extreme exchange-rate move risks payments problems, a deeper recession, bigger budget imbalances, bigger losses in banks, and much lower gross domestic product in dollars,” Ash said by e-mail on Monday. “Let’s not beat around the bush — Ukraine is facing economic/financial meltdown,” causing “a solvency as well as a liquidity problem,” he wrote.

The sovereign debt extended last week’s record selloff as Ukraine reported more fighting near the port city of Mariupol following a fatal bomb blast in government-controlled Kharkiv on Sunday. A planned pullback of heavy weaponary from the front lines can only take place once a cease-fire agreed this month in Belarus takes hold, the military said on Monday.

“This could mark a new phase in the conflict with similar terror attacks elsewhere in Ukraine,” Ash said. Such a strategy would aim at “creating a sense of insecurity, undermining domestic political stability and also hurting the economy,” he said.

The violence and falling hryvnia risk further economic pain as the government seeks to save as much as $15 billion on debt payments in a deal with bondholders. It is also looking to receive final approval from the IMF on a $17.5 billion funding package agreed on earlier this month.

The bonds are set to extend declines as investors are underestimating losses in the planned debt reorganization, analysts at Goldman Sachs Group Inc. and JPMorgan Chase & Co. said Friday in separate reports to clients.

To contact the reporters on this story: Krystof Chamonikolas in Prague atkchamonikola@bloomberg.net; Daryna Krasnolutska in Kiev atdkrasnolutsk@bloomberg.net

To contact the editors responsible for this story: Wojciech Moskwa atwmoskwa@bloomberg.net Stephen Kirkland, Andrew Langley

from Mr Putin to Mr Obama:

 

(courtesy zero hedge)

 

 

 

To Obama, From Russia With Love… And 20 Megatons

 

As Russia celebrates ‘Defender Of The Fatherland’ Day,they had an interesting message on the side of the parade’s missiles: “To be personally delivered to Obama.”

 

 

h/t @rConflictNews

 

 

end

 

The Baltic Dry Index stopped just short of 500 and it is at it’s all time low. Today another large shipper, South Korea’s Daebo shipping corporation filed for bankrutpcy as they claimed that their shipping to and from China has slowed dramatically:

 

 

 

 

(courtesy zero hedge)

 

Record Low Baltic Dry Casualties Emerge: Third Dry-Bulk Shipper Files For Bankruptcy In Past 3 Weeks

 

The unintended consequences of a money-printed, credit-fueled, mal-investment-boom in commodities (prices – as opposed to physical demand per se) and the downstream signals that sent to any and all industries are starting to bite. The Baltic Dry Index has plunged once again to new record lows and the collapse of the non-financialized ‘clean’ indicator of the imbalances between global trade demand and freight transport supply has the real-world effects are starting to be felt, as Reuters reports the third dry-bulk shipper this month has filed for bankruptcy… in what shippers call “the worst market conditions since the ’80s.”

 

Spot the credit-based mal-investment boom

 

After 2 brief days of very marginal gains, The Baltic Dry Index dropped again…

 

As Reuters reports,

A third dry cargo shipper has filed for bankruptcy this month following a collapse in freight rates to historic lows in what shippers call the worst market conditions since the 1980s.

 

South Korea’s Daebo International Shipping Co Ltd filed a court receivership, a form of corporate bankruptcy, on Feb. 11, mainly due to poor dry bulk market conditions, a company official said on Monday. It is the third known bulk shipper bankruptcy this month.

 

Weaker demand from China and an oversupply of ships has led to the industry downturn, pushing the Baltic dry index .BADI – the industry benchmark for freight rates – to an all-time low this month. The index has slumped by nearly two-thirds in the past 15 months.

 

“The dry bulk market is in a really bad shape, which has hit us hard,” the Daebo International official told Reuters by phone. He declined to be identified as he was not authorized to speak to media. “We did our best but we cannot help it.”

 

 

Daebo International mainly provides panamax-sized dry bulk shipping services such as iron ore, coal, grains and steel products, according to its website.

 

South Korea is the latest major shipping country to be hit by a bankruptcy in the sector.

 

China’s Winland Ocean Shipping Corp filed for Chapter 11 bankruptcy protection in the United States on Feb. 12, court documents show, also citing difficult market conditions.

 

In Denmark, privately owned Copenship filed for bankruptcy earlier in February after losses in the dry bulk market.

 

“The combination of lower steel demand in China and the huge volume of new tonnage coming on line is what is causing panic and making this the worst bulk market since the mid-1980s,” Hsu Chih-chien, chairman of Hong Kong and Singapore-listed dry bulk shipper Courage Marine said this month.

*  *  *

More to come…

 

Oil related stories:

 

Early this morning:

 

Commodities Crushed: WTI Plunges To $48 Handle, Copper Breaks Key Support

 

Perhaps the world is beginning to realize that “it’s the demand, stupid” as crude oil prices are collapsing this morning (not helped by “all out production” news from Oman). While ‘markets’ rallied peculiarly after last week’s epic surge in inventories and production data, that has all been given back as one trader noted“the market got ahead of itself, even though the rig count has been falling it is not until mid-yr that we are going to see some impact on supply.” WTI is back under $49.  To complete the gloom, Copper is probing lower, breaking key support with projections to 222.50 if this move takes shape.

 

As Bloomberg reports,

Oman, the biggest Middle Eastern oil producer that’s not a member of OPEC, is boosting crude output to as much as possible with the global price rout over,Salim Al Aufi, undersecretary of the oil and gas ministry, said.

 

Oman will produce 980,000 barrels a day this year, Al Aufi said in an interview in Muscat on Sunday. That would be 4 percent higher than in 2013, according to BP Plc data. Oman will provide 2014 production figures in April, Al Aufi said.

 

“It’s crucial that we continue executing the future projects,” Al Aufi said. “It’s crucial that we continue the seismic activities and the exploration activities because when the market turns around, we need to have these opportunities identified and ready to go.”

It appears the humans took over from the machines again…

 

 

And copper is breaking down…

 

Through key support levels…

 

h/t @TrueSinews

 

 

end

 

 

The Nigerians are desperate to get oil higher.  They faked there was going to be an emergency OPEC meeting on oil pricing

 

(courtesy zero hedge)

 

 

 

Oil Pumps-And-Dumps On Nigeria Comments On Emergency OPEC Meeting; OPEC Denies

Tyler Durden's picture

UPDATE: *OPEC SAID TO HAVE NO PLANS FOR EMERGENCY MEETING

 

Crude oil oprices have spiked higher after The FT reports:

  • *OPEC MEMBERS MAY HOLD EMERGENCY MEETING ON CRUDE SLIDE: FT
  • *FT CITES NIGERIA OIL MINISTER ON POSSIBLE OPEC MEETING

This would entirely contradict Saudi Arabia’s previous statements and, we suspect, means this was more a hope than a statement as the Nigerian Naira collapses…

 

The market’s reaction suggest doubt…

 

As The FT reports,

Members of Opec have discussed holding an emergency meeting if crude continues to slide, according to Nigeria’s oil minister, in a sign of their growing alarm over the impact of a lower oil price on their economies.

 

The comments by Diezani Alison-Madueke come three months after the cartel’s decision to hold production at 30m barrels a day, even as the oil price has plunged since mid-June.

 

 

“Almost all Opec countries, except perhaps the Arab bloc, are very uncomfortable,” said Ms Alison-Madueke, who as president of Opec is responsible for liaising with member countries and the producer group’s secretary-general in the event of an emergency meeting.

 

If the price “slips any further it is highly likely that I will have to call an extraordinary meeting of Opec in the next six weeks or so”, she said in an interview with the Financial Times. “We’re already talking with member countries.”

 

 

Although the price has since recovered to around $60, Ms Alison-Madueke said she was not convinced a floor had been reached.

 

“It is hoped that [the price] will stabilise at no less than $60, but we cannot be sure,” she said.

*  *  *

This, unfortunately has all the indications of a “Nigerian scam”-esque move by a desperate nation as the Naira broke above 205 earlier today:

Nigeria’s oil minister says OPEC needs better relationships with other large producers, including the US and Russia, “to remain strongly relevant”

*  *  *

It seems the market is not as excited about this ‘spoof’ as various talking heads are…

 

Of course the short squeeze that it created has not roundtripped…

end

 

 

James Kunstler sums up perfectly the two big problems facing the globe today,  Greece and the Ukraine/Russian affair:

 

(courtesy James Kunstler)

 

The Math Doesn’t Add Up

 

Submitted by James H Kunstler via Kunstler.com,

Oh, you didn’t notice that World War Three is underway, actually has been for more than year?Well, that’s because most of it has been taking place in the banking sector, which for most people is just an alternative universe of math. The catch, which many people either miss or don’t care about, is that the math doesn’t add up.

For instance, the runaway choo-choo train of linked European sovereign bond obligations with its overloaded caboose of interest rate swaps and other janky derivatives of mass destruction. That train left the station in Athens a few weeks ago bound for Frankfurt. Ever since, the German government and its cohorts in the EU, the ECB, and the IMF have been issuing reassurances that the choo choo train will not blow up when it reaches its destination.

Few people grok that Greece is an entity with an economy not much bigger than North Carolina’s, yet it is burdened with roughly $350 billion of old debt that will never be paid back. The only thing at issue is how it will not be paid back, that is, what mode of pretense will be employed to disguise the inability to pay back this debt. The mode du jour has been the crude one of lending Greece more money to pay back the interest on the old debt. A seven-year-old ought to be able to understand where that leads.

It’s kind of up to the Greeks this week to possibly opt out of that farcical deal. They have at least two other present options: return to being a sunwashed semi-medieval backwater of olive farmers, shepherds, and inn-keepers, or perhaps lease out some cozy corner of their vast Mediterranean coastline to the Russian navy for enough annual walking-around money to keep the lights on for the aforementioned farmers, shepherds, and inn-keepers. Of course, that would drive the US and its NATO quislings batshit crazy.

We’ve already got our knickers in a twist over Ukraine, a so-called nation whose highest and best purpose over the millennia has been as a sort of lethal doormat in front of Russia, leaving adventurers like Napoleon and Hitler bleeding in the snow as they crawled back to their nations of origin. In short, Ukraine has worked so well for Russia that we must be insane to imagine that it would give up that traditional relationship. Yet the US and NATO persist in their foolishness and attempt to back up their Kievan intrigues with financial “sanctions” against Russia.

Russia is doing what it has always done in the face of adversity, which is to suck it up. And, anyway, these western financial monkeyshines don’t hold a candle to ordeals like the siege of Stalingrad. What’s more, the Russians, despite their peculiar alphabet and thuggish demeanor, are at least as clever with computers as our code jockeys. We (in the USA) think just because we’ve made it possible for everyman to drool over Kim Kardashian’s booty on an iPhone screen that we have some kind of immunity against cyber counter-attack from way out east.

It seems to me that Russia (with China and others) is very busy constructing an alternate financial network that will allow for international money transfers and other necessities for conducting normal trade operations, outside of systems like the SWIFT code, which the US has been using as a knout against our imagined enemies. The upshot will leave America high and dry in a lot of what remains of international trade, especially in oil.

Meanwhile we continue to tell ourselves the false and idiotic story of “energy independence,” based on the shale oil Ponzi scheme that blew up last fall— the consequences of which won’t really be felt for about another eight months, when all those wells drilled and fracked in 2013-14, start to fall off their production cliff, and the replacement wells will not have been drilled.We’re still importing almost 8 million barrels of oil a day, contrary to all the fairy tales we tell ourselves. What happens when the sellers decide they won’t take US dollars for it? Hmmmm…

 

Your more important currency crosses early Monday morning:

 

 

Eur/USA 1.1310  down  .0070

USA/JAPAN YEN 119.04  up .077

GBP/USA 1.5356 down .0027

USA/CAN 1.2593 up .0065

This morning in Europe, the euro is well down, trading now well below the 1.14 level at 1.1310 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 down again in Japan by 8 basis points and settling well below the 120 barrier to 119.04 yen to the dollar. The pound was down this morning as it now trades well below the 1.54 level at 1.5356.(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 down again reacting to the lowerer oil price and is trading  at 1.2593 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: Monday morning : up 134.62 or 0.73%

Trading from Europe and Asia:
1. Europe stocks mostly up

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

Gold very early morning trading: $1196.00

silver:$16.26

 

Early Monday morning USA 10 year bond yield: 2.12% !!!  par  in basis points from Friday night/

 

USA dollar index early Monday morning: 94.78  up 53 cents from Friday’s close.

 

 

This ends the early morning numbers, Monday morning

 

 

 

And now for your closing numbers for Monday:

 

 

 

 

 

 

Closing Portuguese 10 year bond yield: 2.14% down 9 in basis points from Friday

 

Closing Japanese 10 year bond yield: .38% !!! down 1 in basis points from Friday

 

Your closing Spanish 10 year government bond,  Monday down 8 in basis points in yield from Friday night.

 

Spanish 10 year bond yield: 1.42% !!!!!!

 

Your Monday closing Italian 10 year bond yield: 1.50% down 8 in basis points from Friday:

 

 

trading 8 basis points higher than Spain.

 

IMPORTANT CURRENCY CLOSES FOR TODAY

 

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

Euro/USA: 1.1330  down .0049

USA/Japan: 118.87 down .095

Great Britain/USA: 1.5457 up .0075

USA/Canada: 1.2580 up .0052

 

 

The euro rose a bit  this afternoon but it was still down on the day by 49 basis points finishing the day well below the 1.14 level to 1.1330. The yen was well up in the afternoon, and it was up by closing to the tune of 9 basis points and closing just below the 119 cross at 118.87. The British pound gained a lot of ground during the afternoon session and was up on  the day closing at 1.5457. The Canadian dollar was down again today due to the lower oil price.  It closed at 1.2580 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: 2.06 down 6 in basis points from Friday

 

 

 

Your closing USA dollar index: 94.58 up 33 cents on the day.

 

 

European and Dow Jones stock index closes:

 

England FTSE  down 3.04 points or 0.04%

Paris CAC  up 31.40 or 0.65%

German Dax up 80.28 or 0.73%

Spain’s Ibex up  110.80 or 1.02%

Italian FTSE-MIB up 121.72 or 0.56%

 

 

The Dow: down 23.60 or 0.13%

Nasdaq; up 5.01 or 0.10%

 

 

OIL: WTI 49.15 !!!!!!!

Brent: 58.83!!!!

 

 

Closing USA/Russian rouble cross: 63.56 down almost 2   roubles per dollar on the day.

 

closing UKrainian UAH:  (hryvnia) 28.25 UAH to the dollar. (lost another .25 UAH per dollar./Friday 28.04 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:

 

Nasdaq Closes Green For Two Weeks In A Row: AAPL Grows By $100 Billion In February

 

The “Institutions” comments to Greece’s first draft reforms plan… which appeared to stumble stocks today…

 

The NASDAQ win streak accelerates to 9 days (2 calendar weeks in a row)… (but The Dow and S&P closed red)

 

AAPL’s Relative Strength Indicator (RSI) just topped 85 – a level that in the past has marked a trend change…

 

But overall, stocks are holding their “Greece is fixed” gains… with the most totally fucking idiotic meltup at the close…

 

 

Nigeria’s hopeful comment on an Emergency OPEC meeting spiked oil, which in turn ramped a decent short squeeze in stocks – which took a while to revert when OPEC denied any such talk…

 

Treasuries rallied from the middle of the Europe session as uncertainty over Greece came back to mind…

 

EUR weakness provided the impetus for USD strength today but Swissy was once again the biggest loser…

 

Hhmm…

 

Oil was the only major loser in commodity land – despite the USD strength – with copper and gold unch and silver leading (having spiked notably early on as Crude dumped)…

 

Close up on the OPEC pump and dump…

 

Crude appears to be rolling over again…

 

And we note that the Front-to-2nd month contango has reached 4 year highs…

 

Charts: Bloomberg

Bonus Chart: The only chart you need… up 15 of the last 18 days… it’s AAPL bitches!

end

 

 

 

Existing home sales plunge as we have another indicator of just how bad the economic scene is:

 

(courtesy zero hedge)

 

Existing Home Sales Plunge (and Don’t Blame The Weather)

With homebuilder sentiment slipping, blamed on the weather (despite improvement in the Northeast), Architecture billings down, and lumber prices down, it should not be totally surprising that existing home sales collapsed in January, which they just did tumbling -4.9% against expectations of -1.8% to a worse than expected 4.82 million SAAR (4.95 expected). This was the biggest January drop since 2010, and is the lowest existing home sales since April.

Oh – and before the talking heads blame the weather – the biggest drop in home sales was in The West(with its warm, dry, sunny home-buying climate). Considering that existing home sales most recent peak in 2014 failed to take out the previous government-sponsored peak in 2013 and remains 30% or more below the 2005 peak, and claims that the housing recovery is in tact are greatly exaggerated.

Lower highs and the weakest sales since April 2014

 

Last year it was the “weather’s” fault, when California led the decline. Guess what: in January 2015, California, aka the “West” again saw the biggest drop:

So we can’t blame the weather… but since Lawrence Yun, NAR chief economist said the housing market got off to a somewhat disappointing start to begin the year with January closings down throughout the country, something has to be blamed, right?  We know: let’s blame lack of supply…

“January housing data can be volatile because of seasonal influences, but low housing supply and the ongoing rise in home prices above the pace of inflation appeared to slow sales despite interest rates remaining near historic lows,” he said.

 

“Realtors are reporting that low rates are attracting potential buyers, but the lack of new and affordable listings is leading some to delay decisions.”

… for lack of transactions.

There is only one problem: if there was not enough supply, existing home prices would rise not, well, see the chart below:

Slowly but surely, all the lies and easy money propaganda is falling apart.

 

 

end

 

Let us close with this interview with legendary John Browne

 

(courtesy John Brown/Greg Hunter/USAWatchdog)

 

 

 

Obama Makes Dire Strategic Mistake in Ukraine-John Browne

 

 

 

Financial and geo-political expert John Browne was an advisor on Russia to Prime Minister Margret Thatcher.  So, does he think the war in Ukraine is a dire threat?  Browne says, “Oh yes, I think it is dire particularly because President Obama has had the wrong end of the stick, and he follows a strategic mistake. When President Reagan and Secretary of State Gorbachev, with the assistance of Margret Thatcher, achieved an end to the cold war, in other words, the colder part of Second World War in the mid 1980’s, it was agreed, if not in writing but tacitly, that neither side would try to poach on the old buffer states of NATO and the Warsaw Pact.  From the Russian point of view, they see a number of countries have voted quite democratically, like Poland, to go into the European Union and be associated with NATO and things like that.  They have also seen activity by the secret services of the West, most notably the CIA in the Ukraine, to persuade them to go.  This has angered the Russians, and when you come to the Ukraine and Crimea, you are treading on vital interests of Russia.  It is very similar to the situation in October of 1962, when Khrushchev of the Soviet Union decided to put intercontinental ballistic missiles in Cuba, right in the soft underbelly of the United States, threating the vital interests of the United States.  In that confrontation, President Kennedy had to win even if it meant nuclear war.  He had to win that battle.  In this case, we have the West interfering in the soft underbelly of Russia, notably the Ukraine and in Crimea.  This threatens the vital interest of Russia like a warm water port with access to the Eastern Mediterranean, which they have sought for 200 years.  Putin, who enjoys 80 percent domestic support, has to win even if it means going to war.”

On this turning into a nuclear war in Ukraine, Browne goes on to say, “This would have a very high risk of slipping into nuclear war.  Russia has enormous ground forces, and Putin has updated the Russian armed forces tremendously.  They have very sophisticated rocket weapons, and if we saw massive numbers of our troops being slaughtered, maybe we would be the first to press the nuclear button. . . . So, this is a desperate situation.”

On the Greece bailout crisis, Browne says, “Germany has exerted its force.  Basically, they have a four month reprieve, but even the funds that will come in on Tuesday of this week, they are going to have monitoring which the Greeks have accepted.  They said they would never accept monitoring, and they have accepted monitoring and have accepted conditions.  These are steps for Germany gradually turning the knot on Greece and getting them to heal. . . . This is the reality of real politics of major nations. . . . I think Germany has won. . . . How is the new Prime Minister of Greece going to sell this to the electorate who just voted him to do absolutely no corroboration with the West at all?”

On the U.S. economy, Browne says, “I think things are slipping because we have leadership of an appalling bad quality. . . . At the moment, we have massive injections of money . . . The total is $50 trillion of money that has been created out of nowhere.  It is so-called ‘click money’ where it is no longer printed, but clicked on a computer.  So, there is lots of money swirling around, but value is being eroded.  It’s giving us the pretense, the wonderful feeling that this is a great party.  The band is fantastic, but if reality dawns and someone switches the lights on and the musical instruments go dark, what could go wrong?  Reality sets in.”

Join Greg Hunter as he goes One-on-One with John Brown, Senior Economic Consultant at Euro Pacific Capital.

(There is much more in the video interview.)

end

We  will see you on Wednesday.

bye for now

Harvey,

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