March 6/HSBC closing all 7 of its London gold vaults!! Why? They are custodians of GLD/Is gold backing the GLD?/Greece pays the IMF 310 million euros borrowing funds from its pension funds/zero contribution from foreigners on Greek auction/Where will next set of funds come from/ECB refuse an emergency meeting with Greek Prime Minister

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold: $1164.10 down $31.80   (comex closing time)
Silver: $15.78 down 35 cents  (comex closing time)



In the access market 5:15 pm



Gold $1167.20
silver $15.90








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 poor delivery day, registering 4 notices served for 400 oz.  Silver comex registered 8 notices for 40,000 oz .


Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 260.85 tonnes for a loss of 42 tonnes over that period.


In silver, the open interest rose by only 381 contracts even though Wednesday’s silver price was flat yesterday. The total silver OI continues to remain relatively high with today’s reading at 163,898 contracts. The front month of March contracted by 41 contracts.

We had  8 notices served upon for 40,000 oz.


In gold we had a rise in OI as gold was down by $4.70 yesterday. The total comex gold OI rests tonight at 406,719 for a gain of 3585 contracts. Today, surprisingly we again had only 4 notices served upon for 400 oz.




Today, we had a huge withdrawal of 4.48 tonnes of gold at the GLD/Inventory rests at 756.32  tonnes


In silver, /SLV  we had a huge addition of 1.34 million oz in inventory at the SLV/Inventory at 327.332 million oz /strange indeed!!




We have a few important stories to bring to your attention today…


1. The USA jobs report and dissection by zero hedge and Dave Kranzler

2. HSBC is closing all 7 of its vaults in London.  Remember these guys are the custodians to the GLD.  Are they closing because the gold is not there?  If it is there, to whom are they transferring the gold to? This is a very profitable business for HSBC, so why are they closing all physical vaults?

3.  The Greece affair.

As we outlined to you yesterday, the Greek Parliamentarians raided the pension funds in order to pay the iMF.  This was done on a Repo transaction.  They have to repay the pension accounts in 15 days.

The treasury bills auctioned this week must settle next week. We learned that no foreign accounts wished to purchase or roll their treasuries.  In other words, the foreigners do not want to gamble any longer and they want their cash.  If the money went to the IMF who is going to pay the sellers of the latest treasury bill auction.  Who is going to fund the next 3 weeks of IMF loans due.


Also Greece announced a hair brained scheme to try and collect the 76 billion euros of taxes owed.  They are going to hire hourly people for two months wearing a wire trying to catch tax evaders.  I wish them all the luck in the world..



4. As we reported to you yesterday, the high USA dollar is having a devastating effect on USA industrial production.  In the same token the lower Euro is helping Germany and other European nations with their exports.


We see how the higher dollar is having a negative impact on the USA trade deficit.

5. Even though silver was whacked today, the SLV added 1.34 million oz to its inventory/gold lost a massive 4.48 tonnes of gold.



we have these and other stories for you tonight.





Let us now head over to the comex and assess trading over there today.

Here are today’s comex results:



The total gold comex open interest rose by 3585 contracts today from 403,134 up to 406,719 even though  gold was down by $4.70 yesterday (at the comex close). We are now in the contract month of March which saw it’s OI remain constant at 153. We had 0 notices filed on yesterday so we neither gained nor lost any gold contracts standing for delivery in this  delivery month of March. The next big active delivery month is April and here the OI fell by 1736 contracts down to 251,003. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 106,952. The confirmed volume yesterday ( which includes the volume during regular business hours  + access market sales the previous day) was poor at 159,126 contracts even  with mucho help from the HFT boys. Today we had 4 notices filed for 400 oz.

And now for the wild silver comex results.  Silver OI rose by 381 contracts from 163,517 up to 163,898 with silver flat with respect to Thursday’s trading. We are now in the active contract month of March and here the OI fell by 41 contracts down to 956. We had 33 contracts served yesterday. Thus we lost 8 contracts or 40,000 oz will not stand. The estimated volume today was poor at 24,931 contracts  (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in  at 24,501 contracts which is also quite poor in volume. We had 8 notices filed for 40,000 oz today.

March initial standings


March 6.2015



Withdrawals from Dealers Inventory in oz  47,744.11 oz (Brinks)
Withdrawals from Customer Inventory in oz   2146.017 oz (HSBC,Brinks)
Deposits to the Dealer Inventory in oz 2000.12 oz (Brinks)
Deposits to the Customer Inventory, in oz 169,852.123 oz (JPMorgan/Manfra)
No of oz served (contracts) today 4 contracts (400 oz)
No of oz to be served (notices)  149 contracts (14,900 oz)
Total monthly oz gold served (contracts) so far this month 5 contracts(500 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month  114,790.651 oz

Total accumulative withdrawal of gold from the Customer inventory this month

 25,088.9 oz

Today, we had 2 dealer transactions


i) Out of Brinks:  47,744.11 oz


total Dealer withdrawals: 47,744.11 oz




we had 1 dealer deposit


i) Into Brinks 2000.12 oz


total dealer deposit:  2000.12 oz


we had 2 customer withdrawals


i) Out of HSBC: 602.797 oz

ii) Out of Brinks: 1,543.22 oz

total customer withdrawal: 2,146.017  oz



we had 2 customer deposits:


i) Into JPMorgan:  168,887.623 oz

ii) Into Manfra:  964.500 oz (30 kilobars)

total customer deposits;  169,852.123  oz


We had 1 adjustment


i) Out of Brinks:


385.80 oz was adjusted out of the customer account at Brinks and this landed in the dealer account of Brinks




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 4 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account.

To calculate the total number of gold ounces standing for the March contract month, we take the total number of notices filed so far for the month (5) x 100 oz  or  500 oz , to which we add the difference between the open interest for the front month of March (153) and the number of notices served upon today (4) x 100 oz equals the number of ounces standing.


Thus the initial standings for gold for the March contract month:


No of notices served so far (5) x 100 oz  or ounces + {OI for the front month (153) – the number of  notices served upon today (4) x 100 oz} =  15,400 oz or .4790 tonnes


we neither lost nor gained any gold ounces standing in this March contract month.


Total dealer inventory: 654,644.474 oz or 20.362 tonnes

Total gold inventory (dealer and customer) = 8.386 million oz. (260.85) tonnes)


Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 42 tonnes have been net transferred out. However I believe that the gold that enters the gold comex is not real.  I cannot see continual additions of strictly kilobars.







And now for silver


March silver initial standings

March 6 2015:



Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 1111.735 oz (HSBC,Brinks)
Deposits to the Dealer Inventory   nil oz
Deposits to the Customer Inventory 482,282.100  oz (Scotia)
No of oz served (contracts) 8 contracts  (40,000 oz)
No of oz to be served (notices) 948 contracts (4,740,000)
Total monthly oz silver served (contracts) 1673 contracts (8,365,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal  of silver from the Customer inventory this month  1,089,265.5 oz

Today, we had 0 deposit into the dealer account:



total dealer deposit: nil   oz


we had 0 dealer withdrawal:

total dealer withdrawal: nil oz


We had 1 customer deposit:


i) Into Scotia: 482,282.100 oz


total customer deposit: 482,282.100 oz




we had 0 adjustment



Total dealer inventory: 68.855 million oz

Total of all silver inventory (dealer and customer) 178.586 million oz


The total number of notices filed today is represented by 8 contracts for 40,000 oz. To calculate the number of silver ounces that will stand for delivery in March, we take the total number of notices filed for the month so far at (1673) x 5,000 oz    = 8,365,000 oz to which we add the difference between the open interest for the front month of March (956) and the number of notices served upon today (8) x 5000 oz  equals the number of ounces standing.


Thus the initial standings for silver for the March contract month:

1673 (notices served so far) + { OI for front month of March( 956) -number of notices served upon today (8} x 5000 oz =  13,105,000 oz standing for the March contract month.


we lost 8 contracts or 40,000 oz will not stand for delivery in March.



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







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:


March 6/we had a huge withdrawal of 4.48 tonnes of gold from the GLD/inventory rests tonight at 756.32/Also HSBC is getting out of the gold business in London and is giving up all of its 7 vaults.


March 5 no change in gold inventory at the GLD/760.80 tonnnes


March 4/ no change/inventory 760.80 tonnes


March 3 we had another 2.69 tonnes of gold withdrawn from the GLD. Inventory is now 760.80 tonnes.


March 2  we had 7.76 tonnes of withdrawal from the GLD today and this physical gold landed in Shanghai/Inventory 763.49 tonnes


feb 27.2015 no change in gold inventory at the GLD/Inventory at 771.25 tonnes



Feb 26. no change in gold inventory at the GLD/Inventory at 771.25 tonnes

Feb 25. no change in gold inventory at the GLD/Inventory at 771.25 tonnes


Feb 24.2015: no change in gold inventory at the GLD/Inventory at 771.25 tonnes


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







March 6/2015 / we lost 4.48 tonnes of gold from the GLD/

inventory: 756.32 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 : 756.32 tonnes.






And now for silver (SLV):



March 6: huge addition of 1.34 million oz of silver into the SLV/Inventory 727.332 million oz


March 5 no change in inventory/725.992 million oz


March 4 a slight reduction of  126,000 oz of silver/SLV inventory at 725.992 (probably to pay for fees)


March 3 a small deposit of 328,000 oz of silver into the SLV/Inventory at 726.118 million oz.


March 2/ no change in silver inventory tonight; 725.734 million oz



Feb 27.2015 no change in silver inventory tonight: 725.734 million oz



Feb 26. no change in silver inventory at the SLV/Inventory at 725.734 million oz



Feb 25. no changes in silver inventory/SLV inventory at 725.734 million oz

Feb 24.we had an addition of 1.435 million oz of silver to the SLV/SLV inventory at 725.734 million oz


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 million 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





March 6/2015   a huge addition of 1.34 million oz of silver inventory at the SLV/ SLV inventory rests tonight at 327.332 million oz











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

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

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



1. Central Fund of Canada: traded at Negative  8.5% percent to NAV in usa funds and Negative 8,7% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.5%

Percentage of fund in silver:38.0%

cash .5%


( March 6/2015)


Sprott gold fund finally rising in NAV




2. Sprott silver fund (PSLV): Premium to NAV falls to + 1.73%!!!!! NAV (March 6/2015)

3. Sprott gold fund (PHYS): premium to NAV falls to -.07% to NAV(March 6  /2015)

Note: Sprott silver trust back  into positive territory at +1.73%.

Sprott physical gold trust is back into negative territory at -.07%

Central fund of Canada’s is still in jail.





And now for the important paper stories for today:



Early Friday morning trading from Europe/Asia



1. Stocks mixed on major Chinese bourses/  / the  yen rises  to 120.05

1b Chinese yuan vs USA dollar/ yuan strengthens  to 6.2658
2 Nikkei up 219.16 or 1.17%

3. Europe stocks mixed  // USA dollar index up to 96.81/

3b Japan 10 year yield .40%/ (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 120.05/everybody watching the huge support levels of 117.20 and that level acting as a catapult for the markets.

3c Nikkei still  above 17,000/

3e The USA/Yen rate still  below the 120 barrier this morning/
3fOil: WTI 50.95 Brent: 61.11 /all eyes are focusing on oil prices. This should cause major defaults as derivatives blow up.

3g/ Gold down /yen up;

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

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

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

3j Oil up this morning for WTI  and  for Brent

3k Today we have the USA job report important to the world as they see if the USA is also faltering

3l  Greek 10 year bond yield :9.52% (down 10 basis points in yield)

3m Gold at $1196.00 dollars/ Silver: $16.05

3n USA vs Russian rouble:  ( Russian rouble  up 1 3/4  rouble / dollar in value)  59.62!!!!!!.

3 0  oil  into the 51 dollar handle for WTI and 61 handle for Brent

3p  higher foreign deposits into China sees risk of outflows and a currency depreciation can spell financial disaster for the rest of the world.

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 Britain’s Serious fraud squad investigating the Bank of England

3s  lower Euro (in the 1.09 handle this morning) helping Germany as German Industrial production rises by a huge 1%.  Even Spain’s industrial production rises. The loser of course is the uSA which reported poor industrial numbers yesterday.

3t  IN USA jobs report/expect gain of 235,000.

4. USA 10 yr treasury bond at 2.12% early this morning. Thirty year rate well below 3%  (2.72%!!!!)/yield curve flattens/foreshadowing recession
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid





Overnight Wrap: Euro Plummets As Q€ “Priced In”, Futures “Coiled” Ahead Of Payrolls


If yesterday morning, the key macro data was the current , and projected, weakness in China (whose record jump in FX deposits indicates fears about capital outflows are alive and well, and that the highest currency depreciation risk in 2015 is for none other than the Chinese currency), then overnight we got more economic data out of Europe that, at least for now, suggest that the collapse in the Euro is boosting European factory order, with German Industrial Production not only beating expectations, but the prior month being revised from 0.1% to 1.0% – the fifth consecutive increase in production. Spain promptly met that “beat and raise”, when it also reported a better than expected 0.4% (est -0.3%) with December revised higher to 0.0%. All of which was to be expected – as we noted yesterday, the main reason for transitory European strength in a zero-sum world, is the soaring USD and the collapsing, recession-level US factory orders.

The question stands: how much longer will the Fed allow the ECB to export its recession to the US on the back of the soaring dollar, and how much longer will the market be deluded that “decoupling” is still possible despite a dramatic bout of weakness in recent US data. Look for the answer in today’s BLS report, which – if the Fed is getting second thoughts about its rate hike strategy in just 3 months – has to print well below 200,000 to send a very important message to the market about just how much weaker the US economy is than generally perceived.

For now, however, the ECB is getting its way, and the question of just how much European QE is priced in, remains open, with peripheral bond yields dropping to new all time lows for yet another day, while the EURUSD has plunged to fresh 11 year lows, sliding below 1.094, and making every US corporation with European operations scream in terror.

Looking at markets, US equities are just barely in the red, coiled to move either way when the seasonally-adjusted jobs data hits. it has been very quiet ahead of non-farm payrolls in core fixed income and equity markets, however peripheral curves have been bull flattening throughout the European session, with record low yields for Spanish, Portuguese, Italian and Irish 10y, while the German 10/30s curve resides at its flattest level since June 2012. Meanwhile, the EUR 5Y/5Y forward breakeven rate rose to a year high this morning, at 1.798%.

Elsewhere equity markets have traded sideways (EUROSTOXX 50: -0.03%), with many market participants looking ahead to the key event of the day, US non-farm payrolls scheduled at 1330GMT/0730CST (Exp. 235k). According to the latest Fed stress tests, all 31 US banks passed after exceeding minimum requirements, for the first time since the tests began in 2009. However, Goldman Sachs (GS), Morgan Stanley (MS) and JP Morgan (JPM) were among the five banks with the lowest readings for a capital ratio of at least 5%.

FX markets are still seeing repercussions from yesterday’s ECB press conference with EUR/USD breaking back below the 1.1000 handle and yesterday’s low of 1.0988 to reside around its lowest level since 2003, with a large option at 1.1000 (USD 2bln) set to roll off at the 10am NY cut. Elsewhere, there are large options in USD/JPY at 120.00 (USD 2.2bln) and 120.50 (USD 1.1bln) also set to expire at the 10am NY cut. GBP/USD fell to a four week low this morning in sympathy with the EUR as well as on the back of the BoE surveyed inflation forecast for the next 12 months (1.9%, Prev. 2.5%), the lowest since 2001.

The EUR weakness sees the USD-index continue to print fresh 11 and a half year highs and is set for its best weekly performance in over a month. While during Asian hours, AUD/USD broke above the 0.7800 handle after erasing almost all of yesterday’s losses, as AUD/NZD extended yesterday’s 1% gain.

As well as the non-farm payroll report, which may be slightly delayed today due to poor weather conditions in Washington DC, today also sees comments out of Fed’s Fisher (Non-Voter, Hawk) at 1830GMT/1230CST, with Fed’s Williams (Voter, Dove) stating overnight that by mid-year, the Fed should seriously discuss hiking rates and that it is safer to increase rates early and gradually than waiting and having to hike rates sharply.

The greenback’s 11 and a half year highs have weighed on the precious metals market, with gold and silver both in negative territory during the European session, while in base metals iron ore fell below USD 60/tonne during Asia hours to a 6yr low. In the energy complex, WTI crude futures trade relatively flat heading into the NYMEX open amid no major fundamental news and are on course for their first weekly gain in 3-weeks.

Today’s focus will of course be on the payroll report for February. The market is looking for a +235k print which is down from +257k in January. Indicatively everyone’s favorite weatherman, DB’s Joe LaVorgna, expected +250k forecast. According to Joe although inclement weather over the past month, which has coincided with unseasonably cold temperatures, may have been a factor weighing on economic activity the last few weeks, February nonfarm payrolls may have dodged most of the worst of the recent weather disruptions given that jobless claims plunged during the February employment survey week. Jobless claims for the period at 282k were 27k lower than the January payrolls survey period.  As a reminder Goldman also warned that due to snow, the NFP number is likely to be weaker although “snowstorms” may push wage data higher.

In summary: European shares remain mixed, though off intraday lows, with the insurance and travel & leisure sectors outperforming and telcos, real estate underperforming. German Jan. industry output above estimates. Euro drops to lowest since 2003 against dollar. The Swiss and Italian markets are the best-performing larger bourses, U.K. the worst. The euro is weaker against the dollar. Portuguese 10yr bond yields fall; Irish yields decline. Commodities gain, with silver, copper underperforming and Brent crude outperforming.  U.S. trade balance, consumer credit, nonfarm payrolls, unemployment, average earnings, labor force participation, due later.

Market Wrap

  • S&P 500 futures little changed at 2099
  • Stoxx 600 up 0.2% to 394.6
  • US 10Yr yield up 0bps to 2.12%
  • German 10Yr yield little changed at 0.35%
  • MSCI Asia Pacific up 0.7% to 146.2
  • Gold spot down 0.1% to $1196.9/oz
  • Eurostoxx 50 -0%, FTSE 100 -0.2%, CAC 40 +0%, DAX +0%, IBEX, -0.1%, FTSEMIB +0.4%, SMI +0.7%
  • Asian stocks rise with the Nikkei outperforming and the Shanghai Composite underperforming.
  • MSCI Asia Pacific up 0.7% to 146.2
  • Nikkei 225 up 1.2%, Hang Seng down 0.1%, Kospi up 0.7%, Shanghai Composite down 0.2%, ASX down 0.1%, Sensex up 0.2%
  • Euro down 0.53% to $1.0971
  • Dollar Index up 0.32% to 96.69
  • Italian 10Yr yield down 3bps to 1.27%
  • Spanish 10Yr yield down 4bps to 1.24%
  • French 10Yr yield down 1bps to 0.64%
  • S&P GSCI Index up 0.3% to 415.9
  • Brent Futures up 0.6% to $60.8/bbl, WTI Futures up 0.1% to $50.8/bbl
  • LME 3m Copper down 0.7% to $5796/MT
  • LME 3m Nickel little changed at $14205/MT
  • Wheat futures down 0.1% to 480.3 USd/bu

Bulletin Headline Summary from Bloomberg and RanSquawk

Spanish, Portuguese, Italian and Irish 10y print record low yields, while the German 10/30s curve resides at its flattest level since June 2012.

EUR/USD has broken back below the 1.1000 handle and yesterday’s low of 1.0988 to its lowest level since 2003 with GBP/USD falling to a four week low alongside a strong USD.

Looking ahead, US non-farm payrolls is scheduled at 1330GMT/0730CST (Exp. 235k) with Fed’s Fisher due to speak at 1830GMT/1230CST




DB’s Jim Reid as is customary completes the balance of overnight events




A confident, yield curve flattening, high beta enhancing Draghi. More European risk out-performance but offset by a weaker FX. A payrolls preview with lots at stake. A big optical change in Euro credit spreads given index changes at the end of last month, a preview of our latest HY monthly and thoughts on the UK where yesterday the BoE saw its 6th year anniversary of cutting rates to a now 321-year low. All this and a landmark day yesterday in my year. After 5 weeks and 5 days my knee brace was allowed off. My MCL is well on the road to being healed. Now starts 3 and a half weeks of physio before I can have surgery reconstructing my ACL and then back to another 6 month rehab-ing. My wife said to me that my best feature used to be my thighs, especially given all the cycling. After 5 and a half weeks of wastage she now thinks they’re my worst. They now wobble, look feeble, are weak and go alongside a right knee can only bend very slightly after all that time in a brace. So the hard work starts today.

From listening to Mr Draghi yesterday it seems he feels the hard work is over before they’ve even started QE. We learnt that they will start the program on Monday and that the ECB president was in confident mood at the meeting yesterday both on growth prospects and the likely success and functionality of the QE program. Surprisingly there was a bit of market nervousness going into the meeting concerning how committed they are to QE but the council appeared fully behind the plans they announced in late January.

In terms of the technicalities, the headline that caught the eye was that ‘purchases of nominal marketable debt instruments at a negative yield to maturity are permissible as long as the yield is above the deposit facility rate’, which is currently -0.20%. This should promote flatteners as the ECB bias purchases further out the curve. It also appears that there may be some flexibility for NCB’s should purchases of govvies and agencies in their respective jurisdiction prove insufficient by making ‘substitute purchases’ instead. Our European Economics team noted that substitutes could include international/supranational institutions in the euro area or, in exceptional circumstances, the market debt instruments of ‘public non-financial corporations’ within the jurisdiction in question. The 25% issue limit meanwhile will apply for the first six months, after which it will be subsequently reviewed by the Council.

With respect to Greece, the waiver on Greek collateral was not-reintroduced with the ECB continuing to play hardball. Our colleagues noted that with respect to the current funding situation, after yesterday it appears that financing T-Bills under ELA is not an option for Greece. Instead the focus will now be on the Eurogroup meeting where by an early disbursement of funds from the EU/IMF programme may be the main hope for Greece, however this will clearly depend on Greece’s incentive to agree to the correct conditions for any disbursement.

ECB President Draghi also presented the staff forecast for HICP inflation of 1.8% in 2017 which is slightly higher than DB’s forecasts. To be fair this was never going to be sub 1.5% or much more than 2% as it would indicate that their policies now aren’t appropriate. So it’s a bit of a meaningless forecast at this stage but an interesting one to track. On growth, the staff forecast are for real GDP to expand by 1.5%, 1.9% and 2.1% in 2015, 2016 and 2017 respectively. The upgraded forecasts are cumulatively 1.2pp more than the Bloomberg consensus number.

Sentiment was clearly better following the headlines. Equities in Europe closed firmer with the Stoxx 600 +0.81% higher and now just a shade off the all-time highs of 15 years ago. The DAX (+1.00%) and CAC (+0.94%) also closed higher, the former in particular extending all time highs. The better sentiment didn’t appear to help markets in the US however where bourses closed relatively subdued. The S&P 500 (+0.12%) closed a touch higher with the market appearing to be in hold mode ahead of payrolls today. However, with a 0.43% depreciation for the Euro versus the Dollar to $1.103 yesterday, this explains some of the differential. In fact, over the last two days, in USD terms the Stoxx 600 has returned -0.10% and the S&P 500 is -0.32%.

The better tone in Europe wasn’t just constrained to equity markets yesterday. Credit too had a firmer day as Crossover tightened 11bps. Meanwhile, supported by the news of the ECB buying bonds down to -0.2% yields, there was a strong bid for government bonds. The Bund curve flattened in particular as 2y and 5y notes tightened 0.1bps and 2.7bps respectively whilst 10y and 30y yields dropped 3.5bps and 8.8bps. 2y Bunds were in fact one of the underperformers on the day across Europe which was unsurprising given they already trade below the -0.2% cut off for the ECB (at -0.209%). Peripherals also benefited with 10y yields in Spain (-7.9bps), Portugal (-9.2bps) and Italy (-8.6bps) all tightening – the latter two in particular closing at fresh all-time lows in yield.

Also late yesterday we had the results of the Fed stress tests which showed the 31 largest banks meeting the necessary capital requirements under various hypothetical scenarios. It was in fact the first time since tests started in 2009 that all participating banks passed. The banks will now face a second round on Wednesday which will test the strength of a bank in returning money to shareholders. The WSJ reported that two banks in particular, Goldman Sachs and Zions Bancorp, had ratios close to the Fed’s minimum level which could well limit shareholder payouts.

Staying in the US, today’s focus will of course be on the payroll report for February. The market is looking for a +235k print which is down from +257k in January. Our US colleagues have a slightly more bullish +250k forecast. They argue that although inclement weather over the past month, which has coincided with unseasonably cold temperatures, may have been a factor weighing on economic activity the last few weeks, February nonfarm payrolls may have dodged most of the worst of the recent weather disruptions given that jobless claims plunged during the February employment survey week. Jobless claims for the period at 282k were 27k lower than the January payrolls survey period. They note that the four-week moving average for the February survey week was lower as well (283k vs. 307k in January) and in fact the third lowest for a payroll survey week since going back to April 2000.

Yesterday’s more subdued performance in the US appeared to be as a result of slightly softer macro data and also a decline in oil stocks. On the latter, the energy component (-0.62%) was the notable underperformer following a decline for WTI (-1.49%) and Brent (-0.12%). In terms of data, it was the jobless claims print which caught the eye with the 320k print well ahead of the 295k expected. The reading was in the fact the highest in nine months although it’s likely that the recent bad weather played its part. Elsewhere, factory orders (-0.2% mom vs. +0.2% expected) for January were softer than expected although both unit labour costs (+4.1% vs. +3.3% expected) and nonfarm productivity (-2.2% vs. -2.3% expected) surprised modestly to the upside.

Away from yesterday’s price action and looking more closely at credit markets we quickly wanted to highlight the impact on the EUR cash indices of the recent rating downgrades for both Gazprom and Petrobras, which have seen their bonds exit the iBoxx IG indices and join the HY indices. In total €6.75bn (notional outstanding) of Gazprom bonds and €6.9bn (notional outstanding) of Petrobras bonds have transitioned. Having been in the top 30 of issuers in the IG index they are now the 3rd and 4th biggest issuer in the HY index. But perhaps of more interest is what this has meant for index spread levels. First of all the impact on IG. The overall corporate index is now 6bps tighter as a result while the non-financial index has tightened by 9bps. However the most notable move comes in BBB non-financials where spreads are now nearly 20bps tighter. The addition of these names to the HY index has obviously seen indices widen, particularly the BB non-financial index, which is more than 30bps wider post the addition, while overall non-financial are around 20bps wider. Clearly all this is only optical but it’s a nightmare for us strategists as when we use spread charts we’re now clearly not looking at a consistent series. Woe is us.

Staying with credit, yesterday we published our latest HY monthly where we revisit our EUR vs. USD HY cross currency analysis. At a broad index level USD BBs appear to offer more yield and spread than EUR BBs while for single-Bs yields are at broadly similar levels while EUR single-B spreads still offer reasonable upside. These trends are also broadly present when we look at the analysis at a more micro bond level. So higher rated bonds spreads look more attractive in USD than EUR but as we move down the credit spectrum the EUR bonds offer the wider spreads. Therefore it’s difficult to come up with a definitive conclusion and any investment decision may actually be driven by factors other than simply relative valuations with implications of divergent monetary policy and the energy sector likely to play an important role.

Back to monetary policy, outside of the ECB, the BoE kept rates unchanged yesterday as was of course expected on what was the 6th anniversary of them cutting rates to 0.5%. In today’s EMR we repeat a well used graph of ours showing the UK base rate back to 1694 – the longest series for any global base rate. Prior to this current period, the lowest rates were hit was 2%. So it’s easy to forget in these days of negative yields just how unusual the whole interest rate situation is. There is no historical context for what has been seen in recent years. Interestingly in a conversation with George Buckley yesterday, he reminded me that at the start of this 6 year period the BoE suggested that rates couldn’t go lower than 0.5%. With the release of the last minutes they seemed to have changed their mind and left the door open for lower rates if the need arises. Just by doing nothing the BoE has gone from a low yielding early mover 6 years ago to now being a higher yielder in Europe. Interesting times.

Quickly refreshing our screens this morning, Asian bourses are generally firmer ahead of today’s data. The Nikkei (+1.03%), Shanghai Comp (+0.09%), Hang Sang (+0.06%) and Kospi (+0.68%) are all higher.

In terms of the day ahead, focus will of course be on payrolls this afternoon however before that we get more details on the Q4 GDP print for the Euro-area (market expecting +0.9% yoy) as well as industrial production out of Germany and trade data for France. Along with payrolls in the US, we get the usual associated employment indicators including unemployment, hourly earnings and the labour force participation rate. Consumer credit rounds off the calendar.








In Japan we have a “Mutiny on the Bounty” as Kiuchi votes against QE:


(courtesy zero hedge)


Mutiny At The BoJ: Board Member Warns Of “Dire Consequences”


There’s trouble in Keynesian paradise.

Earlier this week we noted that economist (and former BOJ member) Yuri Okina has become concerned about thedestabilization of the government bond market occasioned by Japan’s move to monetize all of JGB gross issuance. At issue is a lack of liquidity which in turn inhibits price discovery and promotes volatility. We also noted that while this exact same dynamic is unfolding in the US (asshadow banking liquidity dries up), Japan is probably the most vulnerable to violent swings in government bond yields:

What’s especially perturbing about this scenario, is that sapping liquidity from the market has the potential to create enormous volatility (as we saw on October 15 of last year when Treasurys staged a six standard deviation move in the space of a few hours), something the pot committed BOJ simply cannot afford lest the house of cards should come cascading down. In other words, if yields on JGBs become increasingly unwieldy because either traders lose confidence in the central bank’s ability to manage the ponzi or a lack of liquidity triggers excessive volatility (or both), it’s game over or, as BlackRock put it: “…the nightmare scenario would be a spike in JGB rates leading to a fiscal crisis.

We saw evidence of this just one day later when the monthly auction for JGB 10s was weak causing yields to jump. That same day, Abe adviser Etsuro Honda expressed further doubts about the utility of additional easing, saying (basically) that the BOJ should just quit while it’s ahead (or while it’s not as far behind as it would be if continues to double and triple down on the ponzi scheme).

Today, courtesy of Takahide Kiuchi (who voted against the latest round of QE), we get perhaps the strongest rebuke of Kuroda-style easing yet, as the BOJ board member warns of “dire consequences” if the central bank continues to blatantly disregard the “side effects” of its policies. 

What side effects you ask? Why, the very same illiquidity and volatility that we’ve been pounding the table on for years.

From Dow Jones:

Mr Kiuchi said if the bank continues with the current program, which absorbs nearly all of newly issued government debt, the market will see a drop in liquidity–the ease with which investors can buy or sell bonds when needed.Should liquidity fall, “there is a risk interest rates will rise sharply if some incident or event happens.” (ZH: We assume this “incident” or “event” is akin to the “accident” that the CFS predicted in its report on the steep decline of market financing)

“There is a possibility that (the BOJ) would suddenly become unable to buy” its targeted amounts of bonds through market operations, he said. That would call into question the future course of the bank’s policy, possibly causing “considerable confusion” in the market, he said.

For his part, Kuroda called the notion that demand for JGBs would dry up “very unlikely.”

Kiuchi is also skeptical about the ability of further asset purchases to boost inflation and even went so far as to suggest that the BOJ’s prediction of 2% inflation by mid-2016 is nothing more than a fairytale.  As the following chart shows, he is almost certainly correct as the central bank’s previous efforts haven’t had the best track record when it comes to changing inflation expectations…



…which is entirely consistent with what we’ve seen across the globe…

More from Kiuchi:


…and from Reuters:

The Bank of Japan should give itself more time to achieve its ambitious price target, board member Takahide Kiuchi said, warning that an appropriate level of inflation forJapan is currently lower than the bank’s 2 percent target.


The remarks by Kiuchi, who has long been skeptical of the central bank’s radical stimulus program, contrast with Governor Haruhiko Kuroda’s conviction that Japan is on course to meet the inflation target during the year beginning in April.

Kiuchi repeated his calls for watering down the two-year timeframe for meeting the inflation target, warning that Japan will see prices rise only gradually given the economy’s low growth potential.


“Inflation may reach 2 percent at some point in the future if, as hoped for, structural reforms progress and boost Japan’s growth potential,” the former market economist told business leaders in Maebashi, a city north of Tokyo, on Thursday.


“But it’s important to guide policy based on the understanding that an appropriate level of inflation for Japan now is lower (than 2 percent),” he said.

*  *  *

We have long known that the BOJ has all but lost control in the market. Now, it would certainly appear that it is losing control of the narrative which, when one is playing a confidence game, is the worst thing that can happen.






The big story of the day. Greece has found enough cash to repay the IMF 330 million euros.  They must pay the iMF in installments each week for 4 consecutive weeks;


1. week #1:  310 million euros  (paid today) 

ii. week #2  350 million euros (next Friday)

iii) week #3  580 million euros (in 2 weeks)

iv) week #4  350 million euros  (in 3 weeks from today)


In Greece’s treasury bill auction, you will note that we had no foreign buyers as absolutely nobody wanted the risk. Actually the Greek parliamentarians borrowed from their social security trusts and with that capital, they bid at the auction in order to make it look successful.

The problem here is that this is repo money and it must be returned in 15 days.  If Greece cannot find any other monies from which to borrow, it will be game over for them.  What is also interesting is that because there is no foreign buyers, the funds raised much be used to pay the sellers of bonds tendered.  Where is this money going to come from?


a think that the Greek’s goose is cooked..


please read…


(courtesy zero hedge)


Despite Tsipras Complaining That “ECB Has Rope Around Our Neck” Greece Finds Enough Cash To Make IMF Payment


While the biggest economic event of the week was the US February jobs report, one of the lingering concerns following last week’s report that Greece is in financial dire straits, is whether the Eurozone member nation would default on its IMF loan as soon as today when it had a scheduled €310 million payment due to the IMF. Earlier today, in the build up to the NFP report, it was reported that indeed Greece had managed to dig deep under the cushion and find just enough cash to make the required partial loan repayment thus avoiding a technical default.

It was unclear how much if any of the funds paid to the IMF, which in turn will likely use some if not all of the cash to promptly give Ukraine a stabilizing loan and prevent the all out collapse of that particular economy, came courtesy of Greek pensioners which as also previously reported, is one place where the Greek government was looking for a source of funds.

As Reuters reports, “struggling to scrape together cash and avoid possible default, Athens made a 310 million euro (223.37 million pounds) partial loan repayment to the International Monetary Fund, while Tsipras pleaded to be allowed to issue more short-term debt to plug a funding gap.”

This is happening as Greece sent its euro zone partners an augmented list of proposed reforms on Friday ahead of a Eurozone meeting on Monday, “but EU officials said several more steps were required before any release of aid funds.”


Greece is running out of options to fund itself despite striking a deal with the euro zone in February to extend its EU/IMF bailout by four months.


European Central Bank President Mario Draghi has refused to raise a limit on Athens’ issuance of three-month treasury bills which Greek banks buy with emergency central bank funds. He said on Thursday the EU treaty prohibited indirect monetary financing of governments.

No matter the reality, Greece continued its defiant, if only on paper (literally) ways after Greek premier Tsipras complained in an interview with Germany’s Der Spiegel that “the ECB has still got a rope around our neck” adding that if the ECB continued to object, it would be assuming a grave responsibility.

“Then it would be back to the thriller we saw before Feb. 20,” Tsipras said, referring to the date when Greece agreed a four-month extension of its bailout with euro zone partners after market jitters ignited by political uncertainty.

That said, the thriller will continue on a weekly basis absent further Eurozone funding because even with this payment down, Greece has weekly IMF payments amounting to 350 million on March 13, 580 million on March 16 and another 350 million on March 20.

Where it will get the required funding if the Eurogroup continues to humiliate the now groveling government, is unclear. What is clear is that the tragicomedy is set to repeat again next week when Greece will again auction €1 billion of three-month treasury bills on March 11 to refinance a maturing issue, debt agency PDMA said on Friday, announcing its second sale this month as the government faces a cash crunch, Kathimerini reported.

Issuing T-bills is the only source of commercial borrowing for the left-right coalition government of Prime Minister Alexis Tsipras. The country’s EU/IMF creditors have set a 15 billion-euro cap on such issues which has already been reached.


The settlement date of the new T-bills will be March 13, when a previous 1.6 billion-euro issue of three-month paper matures. Only primary dealers will be allowed to participate and no commission is to be paid.

Earlier this week Athens sold six-month paper, successfully rolling over a maturing issue but at the highest yield in 11 months. Since foreign investors refused to participate in the auction the Greek government was forced to use part of the reserves of the Greek Social Security fund and other public entities held at Bank of Greece, to complete the required payment.

According to some sellside estimate, there is no more public entity funds available to “swap” for payment liquidity on a short term basis, so unless the Eurozone agrees to boost Greek funding, the country may run out of money as soon as its next IMF payment.




Wow!! we go from the sublime to the ridiculous!!  Yannis et al are planning to use hourly workers  (students etc) to catch tax cheats.  They will be wearing a wire. And these hourly workers have incentives to catch the tax evaders?  They will be on the job for only 2 months!!


totally unbelievable!!


(courtesy zero hedge)



Greece Proposes To Become A Tax-Collecting Police State: Will “Wire” Tourists And Unleash Them As “Tax Inspectors”


There were three notable items in the follow up, 11-page letter sent by Yanis Varoufakis earlier today to the Eurogroup, and its president “Jeroen.”

But first, by way of background, here is what happened as recapped by Reuters.

Earlier today Greece sent an augmented list of proposed reforms on Friday  (see the 11 page letter attached below) but EU officials said several more steps were required before any release of aid funds.  In the Yanis Varoufakis outlined plans to fight tax evasion, activate a “fiscal council” to generate budget savings and update licensing of gaming and lotteries to boost state revenues. All noble ideas, and all set to crash and burn since it has all been tried and failed  in the country in which paying taxes is considered theft (by the government).

However, the expanded list of reforms arrived too late for deputy finance ministers and European Commission experts who met on Thursday to scrutinise it before a regular meeting of finance ministers of the currency area next Monday. “Whatever proposals emerge (from Varoufakis), they can’t be seen in isolation,” said a senior EU official, who declined to be named due to the sensitive nature of the talks. “They have to been seen in the overall context of all policy measures … There is no connection with the disbursements.

One key condition for Greece to receive any more euro zone money is for Athens to reach an agreement with its three international creditors – the euro zone, the ECB and the IMF – on the implementation of reforms agreed by the previous government. Such talks have not even begun yet.

This is a problem because as we reported hours ago, following its €310 payment to the IMF, Greece now literally has no money left, and absent some last ditch generosity from the Troika (pardon the Institutions, more on the latest Greek fetish of renaming things shortly), the next €350MM payment to the IMF due on March 13 will simply not be made (let alone the €580MM payment on March 16 and the €350MM payment on March 20).

* * *

Which brings us to the topic of this post – the Varoufakis letter (pdf courtesy of the FT).

First, we were delighted to see that as we cautioned inAbout The Authorship Of The Infamous “Greek Reforms” Memo, when we said that “for anyone who is involved in the creation, drafting, and production of mission-critical documents, whose metadata can have huge downstream consequences, the best solution is to simply read the brief manual on Redaction of Confidential Information in Electronic Documents which nobody ever does at least not before they hint save, print or send.” Varoufakis appears to have done just that, and after the fiasco involving the authorship of the the first “Greek” letter to the Eurogroup, all the associated PDF metadata has been thoroughly scrubbed. Good job.


Second, among the various section headings, including:

  • 1st Reform: FISCAL COUNCIL: Activating the Fiscal Council, achieving economices, and expanding its remit
  • 3rd Reform: ‘ONLOOKERS’ VAT EVASION-FIGHTING SCHEME: Large numbers of causal (sic) “onlookers” to assist in the fight against VAT evasion
  • 4th Reform: TAX ARREAS: Improving existing legislation
  • 5th Reform: Immediate Public Revenue accrual through Online Gaming Services
  • 7th Reform – Provisions for the adoption of immediate measures to face the humanitarian crisis

There were a few notable findings, among which the estimation, cited by Varoufakis, that of the €76 billion in total tax arrears, only €8.9 billion are collectable; that Greece is considering tapping online/e-gambling as a “significant untapped public revenue opportunity) which could provide public revenue well “in excess of €500 million per annum”… however Greece admits it will require technical assistance “for monitoring internet-based gambling”, and so on, the most interest proposal was the following.

Meet wired tourist part-time tax inspectors!

And here comes the Greek tax collecting police state, in which “large numbers of non-professional inspectors are hired to pose on behalf of the tax authorities, while ‘wired’ for sound and video… We envisage that the recruits will come from all walks of life (e.g. students, housekeepers, even tourist in popular areas ripse with tax evasion) who will be paid hourly and who will be hard to detect by offending tax dodgers.”

And yes, while one can joke all day about wired tourists collecting hourly pay from the Greek government while moonlighting on behalf of the Greek tax collector agency (a process that will actually end up costing far more than collecting especially since the collectors have no incentive to actually catch anyone but to merely be paid as long as possible on an “hourly” basis), the real issue here is that Greece is effectively hoping to become  a tax-collecting Police state: in which “the news that thousands of casual “onlookers” are everywhere, bearing audio and video recording equipment on behalf of the tax authorities, has the capacity to shift attitudes very quickly, spreading a sense of justice across society and engendering a new tax compliance culture –especially if combined with the appropriate communication of the simple message that the time has come for everyone to share the burden of public services and goods.”

Actually, the only attitude it will shift is one toward civil war, as millions of Greeks, long used to generations of free-riding, are suddenly forced by the Greek Tax-collector police state to change their behavior, to which they will respond appropriately.

Ain’t gonna happen, especially when one considers what happens to the tax-collector hopefuls once of them is captured and beaten to an inch of his life or just an inch further.

In fact, it would be more realistic if Greece asked to outsource all public and private communication to the NSA and then subcontract it to find who the tax evaders are. Especially since the NSA already knows all the perpetrators.

Of course, should this plan pass, the Varoufakis government has at most a few days before it is swept from power, most likely violently.

* * *

Which brings us to the third point, and the one which ties everything together. Because while Greece knows all too well that none of the proposed reforms are feasible, what it can do is ask for more money.

And it has, as can be seen below, only as Varoufakis calls it, don’t call it a third bailout and instead use “Contract for Recovery and Growth of the Greek economy.”


Which nicely rounds out everything the new government has achieved. Well, speaking loosely, because so far, all the Tsipras government has achieved is merely continue the much hated austerity policies enacted by Samaras and his predecessors, but it has managed to change a few terms around:

  • instead of “Troika” it is now “Institutions”
  • instead of “Liquidity” it is now “Cash Flow”
  • and instead of “Third Bailout” it is now “Contract for Recovery and Growth of the Greek economy.”

As for the conditions that the Troika, oops, Institutions, will impose in order to grant Greece the “Contract for Recovery and Growth of the Greek economy”, well… hopefully you don’t really need that left kidney.

If the Greek people are naive enough to fall for this, and believe this is how the radical-left government plans on “implementing” its campaign promises, then more power to them, if not to their pensions: those are about to be paid to the IMF so the IMF can then proceed to fund the US puppet regime in Kiev.








John Kerry states that military pressure is needed to oust Syria’s Assad:


(courtesy zero hedge)


John Kerry: “Military Pressure May Be Needed To Oust Syria’s President “


Last week, after reading a Time article titled “Why Bashar Assad Won’t Fight ISIS” written by a journalist whose recent work includes “The YouTube War“, and who sourced two unnamed, anonymous sources to reach the conclusion that Syria’s president Assad is in cahoots with ISIS, we made a simple conclusion: “The Stage Is Set For The Syrian Invasion.” Barely a week has gone by and the wheels for the Syrian invasion are indeed turning: earlier today, US Secretary of State John Kerry (who one hopes doesn’t use as a work email server) who is on a trip to Saudi Arabia unveiled the next steps when he said that “military pressure may be needed to oust Syria’s President Bashar al-Assad.

US Secretary of State John Kerry attends a meeting of Gulf foreign ministers at
Riyadh Air Base, on March 5, 2015 in the Saudi capital (AFP Photo/Evan Vucci)

But wait, wasn’t Obama’s war in Iraq, authorized by Congress, solely a means to fight the stateless Islamic State of Syria and Iraq “scourge”? Or was all of that merely a pretext to do what the US tried once already in 2013 and failed?

AFP quotes Kerry: “He’s lost any semblance of legitimacy, but we have no higher priority than disrupting and defeating Daesh and other terror networks“, he told reporters, using an Arabic acronym for the Islamic State group which has seized swathes of Syria and Iraq.

Actually, the highest priority is not “Daesh” which is a populist distraction aided by some truly Hollywood-grade video editing and YouTube clips, but who controls the ground under Assad’s feet: that all important gateway from the middle east into Turkey, and then, Europe. A gateway that is critical to the one nation that has all the natural gas in the world, and no end market to sell it to: Qatar.

Of course, Assad knows all of this: late last year, Assadtold French reporters, “let’s be honest: Had Qatar not paid money to those terrorists at that time, and had Turkey not supported them logistically, and had not the West supported them politically, things would have been different. If we in Syria had problems and mistakes before the crisis, which is normal, this doesn’t necessarily mean that the events had internal causes”.

Assad continued, daring to call the staged US spade precisely what it was: he called its air strikes “merely cosmetic” and said that “terrorism cannot be destroyed from the air.” Assad added that “saying that the alliance’s airstrikes are helping us is not true.” Which is why Time had to spin an unsourced article to “prove” that there was in fact a connection between the two.

Finally, Syria’s president explained that Syria was fighting against “not only gangs”, but also states that support them with “billions of dollars.”

All of that is, of course, irrelevant to the top diplomat of one of these “supporting countries”, and fast forwarding to today, Kerry told reporters in Saudi Arabia that “ultimately a combination of diplomacy and pressure will be needed to bring about a political transition. Military pressure particularly may be necessary given President Assad’s reluctance to negotiate seriously.

Negotiate what exactly: how to hand himself over to the US? And since the answer doesn’t matter, whatever it is what the US wants will have to be achieved in the same way that the staged Syrian war of 2013 was presented to the world: using false flag video clips, which resulted in a near-global confrontation involving Assad’s close ally over at the Kremlin.

Which brings us to the most important variable: Russia’s response to any “military pressure” applied against Assad. Again.

As RT reports, last November, Russia’s Foreign Minister Sergey Lavrov commented on the issue, saying that: “Russia condemns the use of extremist groups in efforts to change the regime [in Syria].” Clear, concise and the the point.

Today Russian Foreign Ministry spokesman Alexander Lukashevich added some more insight into how it feels about constant Western efforts to provoke a war with Syria:

That last assumes the west is interested in peace in Syria, when the entire point of introducing the ISIS “element” is precisely to destabilize the region and bring it to all out war.

The US-led coalition started air strikes in Syria last September as a part of a joint effort to battle the jihadist group, which had seized Syrian and Iraqi territories. Despite carrying out airstrikes in Syria, Washington has refused to work with the country’s government, stating that it wants to see Bashar Assad ousted.


Turkey backs the position of the US, and in March the two NATO allies began training “moderate” Syrian rebels to battle against the Islamic State militants.


This April, Moscow is set to host a meeting between the Syrian opposition and representatives of the government.

One can be confident that said meeting will achieve nothing, after the US makes it clear that no Moscow-brokered agreement is acceptable. Just as one can be confident that the ISIS “campaign” will continue and get ever closer to Damascus until yet another appropriately-framed YouTube clip appears and leads to another war with Assad. Because when petrodollar interests talk, mere innocent people are always expendable.








Oil related stories:


Good reason for Obama to veto the oil pipeline from Canada:


(courtesy zero hedge)


Dramatic Explosion Footage: Warren Buffett-Owned Oil Freight Train Derails, Bursts Into Flames



Back in March 2013 we wrote a post presenting “the new US petroleum pipelines” in which we explained “why crony capitalist #1, the “rustic” Octogenarian of Omaha, and Obama tax advisor #1, Warren Buffett has been aggressively attempting to corner the railroad market, while the administration relentlessly refuses to allow assorted new, and very much competing petroleum pipelines from America’s neighbor to the north to cross through the US.” The answer was shown on the chart below which showed the exponential increase in petroleum rail car loadings.


It also explains why after Buffett’s purchase of Burlington Northern Santa Fe (BNSF) in 2009, Obama has been so staunchly against allowing the Keystone XL pipeline: because if there is anything that would allow Buffett to preserve the momentum of his soaring oil transit business, it is maintaining a veto on any competing pipelines. A veto which Obama implemented for the latest time just a few days ago.

Of course, it would be uncouth of the US president to say that he is against a pipeline because one of his crony backers, his tax advisor (“push income tax higher all you want, but don’t you dare touch that capital gains and dividend tax”), and perhaps the biggest single beneficiary of the government bailout of Wall Street in 2008, tells him to. So instead Obama, to appease his progressive rank and file, decided to crack down on the “danger” of pipelines – after all, the world is riddled with horror stories about the tens of thousands of miles of US commodity pipelines spontaneously combusting, exploding or otherwise blowing up and destroying the pristine nature all around them.

Maybe not, but that’s where the “unbiased” media comes into play. The same media which we doubt will have much if anything to say about the train derailment, crash and subsequent massive explosion which took place at 1:20 pm in a rural area where the Galena River meets the Mississippi.

The train in question? One of Warren Buffett’s own: a BNSF Railway freight train loaded with crude oil.

BNSF said the train has 105 cars, 103 of which were carrying crude oil. The other two cars were buffer cars loaded with sand. A release from the Jo Daviess County Sheriff’s Department confirmed it was Bakken crude oil.

“The report that came back to me from them is that eight tanker cars had left the track,” Galena City Administrator Mark Moran said. “Two of those were still upright. The other six were not. They observed at least one of those tankers smoking.”

Conley said firefighters had to access the derailment site via a city bike trail. He said two cars were smoking when they arrived on scene and they attempted to fight a small fire among the cars but were unable to stop the flames.

And since they couldn’t reach the train, firefighters “had to pull back for safety reasons and were allowing the fire to burn itself out, Conley said. In addition to Galena firefighters, emergency and hazardous material responders from Iowa and Wisconsin were at the scene.”

A press release from the Jo Daviess County Sheriff’s Department sent just after 6 p.m. said the sheriff’s department was in the process of evacuating homes within one mile of the derailment site.

This derailment, and resultant fireball, takes place justtwo weeks after another train hauling crude oil derailed and exploded in West Virginia on February 17, displacing up to 1,000 residents and contaminating the local water supply.

Ironically, one can’t blame Buffett for not being honest about the threat that flaming trains post: it was exactly a year ago when he told CNBC that “It’s fair to say that we’ve found in [the] last year or so that it’s more dangerous to move certain types of crude than was thought previously. There’s no question about it.”

There sure isn’t.


And just to help the president with his next veto decision, which we hope will be to ban all oil transit via far more dangerous rail lines, here are some photos of today’s explosion:



 The battle for Tikrit rages on as ISIS ignites oil fields
(courtesy zero hedge)

ISIS Set Iraqi Oil Fields On Fire, Stalls Military Advance

Thick black smoke billowing from oil wells northeast of the city of Tikrit is obstructing Shi’ite militiamen and Iraqi soldiers attempts to drive ISIS from the Sunni Muslim city after militants set them on fire. Reuters reports a witness and a military source said Islamic State fighters ignited the fire at the Ajil oil field to shield themselves from attack by Iraqi military helicopters. As we noted previously, the battle for Tikrit is key as it will determine whether and how fast the Iraqi forces can advance further north and attempt to win back Mosul, the biggest city under Islamic State rule.


As Reuters reports,

Islamic State militants have set fire to oil wells northeast of the city of Tikrit to obstruct an assault by Shi’ite militiamen and Iraqi soldiers trying to drive them from the Sunni Muslim city and surrounding towns, a witness said.


The witness and a military source said Islamic State fighters ignited the fire at the Ajil oil field to shield themselves from attack by Iraqi military helicopters.


The offensive is the biggest Iraqi forces have yet mounted against IS, which has declared an Islamic caliphate on captured territory in Iraq and Syria and spread fear across the region by slaughtering Arab and Western hostages and killing or kidnapping members of religious minorities like Yazidis and Christians.


Black smoke could be seen rising from the oil field since Wednesday afternoon,said the witness, who accompanied Iraqi militia and soldiers as they advanced on Tikrit from the east.


Control of oil fields has played an important part in funding Islamic State, even if it lacks the technical expertise to run them at full capacity.


Before IS took over Ajil last June, the field produced 25,000 barrels per day of crude that were shipped to the Kirkuk refinery to the north-east, as well as 150 million cubic feet of gas per day piped to the government-controlled Kirkuk power station.


An engineer at the site, about 35 km (20 miles) northeast of Tikrit, told Reuters last July that Islamic State fighters were pumping lower volumes of oil from Ajil, fearing that their primitive extraction techniques could ignite the gas.


Bombing in August damaged the Ajil field’s control room, according to the U.S. Energy Information Administration.


The outcome of the battle for Tikrit, best known as the home town of executed Sunni president Saddam Hussein, will determine whether and how fast the Iraqi forces can advance further north and attempt to win back Mosul, the biggest city under Islamic State rule.


The army, backed by Shi’ite militia and Kurdish Peshmerga fighters, has yet to reconquer and secure any city held by Islamic State, despite seven months of air strikes by a U.S.-led coalition, as well as weapons supplies and strategic support from neighboring Iran.


Read More Here…

*  *  *

In the background of this clip (of Iraqi special forces attacking ISIS), one can see the start of the fires…


*  *  *

As we noted previously, there is still much confusion all around since pretty much everyone in the middle east is now somehow involved in this war on Iraqi/ISIS soil, so to provide some clarity, here is a simple map showing who controls what in this latest diversionary war designed merely to get Syria’s president committed so the US has a legitimate pretext to obliterate him.


As many of you know, we use the baltic dry index as a very good reliable indicator of how the economy is performing.  Brandon Smith gave a terrific commentary on that topic yesterday, so I hope you got to read it.


Today we have another good indicator: lumber. The market is in total meltdown!!


(courtesy zero hedge)


Lumber Is Liquidating


The most economically-sensitive commodity is plunging once again. Lumber prices have cratered today to their lowest since June 2013, seemingly tracking the collapse in US Macro data over the last 2 months. First it was Lumber Liquidators, and now the underlying is seeing the biggest weekly drop in six months (and down 5 weeks in a row). As a reminder, the last time lumber and stocks diverged like this… it did not end well…


First it was Lumber Liquidators…




Deja vu…


Charts: Bloomberg






Rigs are disappearing as well as oil related jobs something that the BLS does not seem to recognize.  Remember that even though the rigs are disappearing, oil volumes are still rising for the while as  each rig may have many wells and the oil dug comes on stream…


(courtesy zero hedge)




Rig Count Decline Re-Accelerates To 2nd Biggest Drop In 22 Years


Following last week’s slowing in the pace of rig count, crude prices dropped and then spiked, and it makes today’s data under more scrutiny. At around $49.50, WTI prices have round-tripped back almost perfectly to the scene of the crime before today’s rig count data hit. The total oil rig count dropped almost 6%, down 75 to 1,192 meaning a re-acceleration of the rig count decline and the 2nd biggest drop since 1993.


2nd biggest rig count decline since 1993


Total rig count has now dropped 38% in the last 13 weeks – just shy of the move in 2009…



Before today’s data, oil had tumbled all the way back to unchanged from last week’s rig count data…


The reaction was a rally higher and drop back..


But production continues to hit record highs…


*  *  *

Finally, here is Bloomberg to explain the ‘link’ between wells, production, and rigs…



Charts: Bloomberg




And now for your humourous story of the day:


(courtesy Simon Black/the Sovereign Man)


From Denmark:


The Weirdest Thing You’ll See Today


Submitted by Simon Black via Sovereign Man blog,

You know that we talk a lot about the insane level of government interference in our lives. About what we can and cannot put in our bodies. The amount of interest we’re entitled to receive on our savings. Etc.

But I’m noticing now even more ridiculous trends of governments wanting to get involved in people’s sex lives.

Last year the Danish government promoted an initiative called “Do it for Denmark”, encouraging Danes to travel abroad and have sex while on holidays. They even have a pretty racy Youtube video featuring a scantily clad gorgeous blonde waiting to do her duty for her country and procreate.


Singapore as well has a catchy jingle about going out and making babies, brought to you by the same guys who did the Mentos theme song.

The Swedish government actually spent taxpayer money on its new genitals song, so it can start indoctrinating children early on how they can make babies.

Here in Japan, which has one of the lowest birthrates in the world, the government is desperate to find solutions to what it calls its libido crisis.

According to their data, Japanese men aren’t terribly interested in sex and the women find sex to be bothersome.

Japanese being expert process engineers are coming up with a government solution to reengineer sexual desire in their country.

(I have to imagine that if this solution reached US soil, the government option would include the smooth sounds of Barack Obama whispering some pillow talk: “C’mon, lemme give you this big tax cut, baby…”)

Easily the most ridiculous solution they came up with is to impose a ‘handsome tax’ on attractive men. I thought this was a headline from the Onion, the greatest news source in the world, but it turned out to be true.

The idea being that if you tax handsome men, then less attractive men would have more money and hence be able to attract women.

Zerohedge covered this in fantastic detail—I encourage you to check it out. This is not a joke.

The thing that many of these countries have in common, Japan, Denmark, etc., is a rapidly declining birthrate.

A declining birthrate is disastrous for an economy, particularly for an ageing place like Japan.

Ironically, the oldest person in the world turned 117 years old yesterday—and no surprise that she’s Japanese. In fact, Japan is home to one of the oldest populations in the world and has one of the longest life expectancies.

Curiously they also have one of the largest pension programs in the world. You put all that together and you have fewer and fewer young people paying more and more of their income to support a disproportionately large population of retirees who are living for decades after they stop working.

Each one of these governments is trying to find a solution to fix this unsustainable fiscal problem.

In Denmark they seem to think that people aren’t going on vacation enough. In Japan they think it’s a problem of sexual desire. But in actuality it has everything to do with cost of living.

Month to month, year to year, it’s hard to notice the subtle changes in costs of living and standards of living, but after a long period of time it’s easy to look back and remember how things used to be.

You used to be able to support a family on a single income. You used to be able to afford medical care and higher education.

It’s often said that the greatest expense that someone will have in their life is his or her home. That’s total nonsense.

Now, I’m not saying it’s not worth it, but the biggest expense most people will have is family, and particularly children.

And after years and years of suffering through pitiful, destructive policies that have chronically made people less prosperous, it’s no surprise that they’re coming to the conclusion—you know, we can’t really afford to have a child right now.

There are consequences to conjuring money out of thin air. There are consequences to destructive policies.

So destructive in fact that central bankers and politicians even have the power to make a population disappear.

How ironic that they try to fix their own problem by trying to introduce themselves into our bedrooms.





Your more important currency crosses early Friday morning:




Eur/USA 1.0941 down  .0090

USA/JAPAN YEN 120.05  d0wn .0040

GBP/USA 1.5172  down .0073

USA/CAN 1.2466 down .0018


This morning in Europe, the euro is down by a huge amount again, trading now well below the 1.10 level at 1.0941 as the attempt at Europe being supported by other nations trying to keep the Euro afloat is failing. Europe is reacting to deflation, announcements of massive stimulation, the default at Austrian Hypo bank and the possible default of the Ukraine and Greece.   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 slightly up again in Japan by 1/2 basis point and settling well above the 120 barrier to 120.05 yen to the dollar. The pound was down this morning as it now  trades just below the 1.52 level at 1.5172.(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 and now the HSBC criminal probe). The Canadian dollar was up again as the  oil price is higher and is trading  at 1.2466 to the dollar. It seems that the 4 major global carry  trades are being unwound. (1) The total dollar global short is 9 trillion USA, and as such we now witness a sea of red blood on the streets as derivatives blow up with the massive rise in the dollar against all paper currencies.We also have the second big yen carry trade unwind as the yen refuses to blow past the 120 level.(3) the Nikkei vs gold carry trade. (4) short Swiss Franc/long assets  (European housing), the Nikkei, etc. These massive carry trades are terribly offside as they are being unwound. It is  causing deflation as the world reacts to a lack of demand. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT.

The NIKKEI: Friday morning : up 219.16 points or 1.17%

Trading from Europe and Asia:
1. Europe stocks mixed

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

Gold very early morning trading: $1196.00



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


USA dollar index early Friday morning: 96.81  up 43 cents from Thursday’s close.



This ends the early morning numbers, Friday morning




And now for your closing numbers for Friday:







Closing Portuguese 10 year bond yield: 1.76% down 3 in basis points from Thursday


Closing Japanese 10 year bond yield: .40% !!! par in basis points from Thursday


Your closing Spanish 10 year government bond,  Friday up 2 in basis points in yield from Thursday night.


Spanish 10 year bond yield: 1.30% !!!!!!


Your Friday closing Italian 10 year bond yield: 1.32% up 1 in basis points from Thursday:



trading 2 basis points higher than  Spain.




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


Euro/USA: 1.0850  down .0181

USA/Japan: 120.70 up .642

Great Britain/USA: 1.5048 down .0198

USA/Canada: 1.2613 up .0130



The euro fell apart this afternoon as it was down  on the day by 181 basis points finishing the day well below the 1.09 level to 1.0850. The yen was well down in the afternoon, and it was down by closing to the tune of 64 basis points and closing well above the 120 cross at 120.702. The British pound lost huge ground during the afternoon session and was down on the day closing at 1.5048. The Canadian dollar was well down again today along with oil.  It closed at 1.2630 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: 2.23 up 12 in basis points from Thursday (this is ominous)






Your closing USA dollar index: 97.66 up 1.28 cents on the day.!!!



European and Dow Jones stock index closes:


England FTSE  down 49.34 points or 0.71%

Paris CAC up 0.84 or 0.02%

German Dax up 46.96 or 0.41%

Spain’s Ibex down 32.500 or 0.29%

Italian FTSE-MIB up 269.00. or 1.22%



The Dow: down 278.94 or 1.54%

Nasdaq; down  57.66 or 1.16%



OIL: WTI 49.61 !!!!!!!

Brent: 59.77!!!!



Closing USA/Russian rouble cross: 60.17 up 5/8   roubles per dollar on the day.









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




Your New York trading for today:



Some Folks Were Selling: “Great” Job Number Sends Markets Into Turmoil



Only one thing for it really…


Stocks did not ‘love’ the great headline jobs data…worst day for S&P and Dow since Jan 5th



Bonds did not ‘love’ the great headlines jobs data – Treasury yields soared 10-13bps on the day and 20-25bps on the week (2Y +11bps on the week) – 2nd worst week for bonds sine June 2013’s Taper Tantrum –  note that 30Y rallied 3bps off the highs as stocks accelerated lower…


Commodities did not ‘love’ the great headlines jobs data


Global currencies did not ‘love’ the great headlines jobs data – best week for the US Dollar since September 2011


But apart from that… everything is awesome?

AAPL in The Dow… awesome


Nasdaq 5000… so long ago now…


On the day – the S&P and Dow had their worst day since Jan 5th…


All major indies are now red for March… (and the week)


All sectors back into the red now on the week…


Year-To-Date, Trannies are comfortably red, Dow dropped back to practically unch…



On the week, Treasury yields were smashed higher…


The US Dollar surged all week…


Commodities faded all week as the USD strengthened (apart from oil) but once crude woke up to what China did, it dumped…


Who could have seen this coming?

cost of funding?




One last thing – for everyone confused at how everything can be sold? Where did all the money go? Where did it rotate to? The answer is very simple – it’s not real money – its leveraged carry trades and the expectations for a rate hike dramatically raise the risk of those positions and thus that leverage is reduced and credit extinguished… it does not “go” anywhere…

Charts: Bloomberg





The Official news on the Jobs Report:



February Payrolls Surge To 295K, Smash Expectations Of 235K, Unemployment Rate Drops To 5.5%


Well, a June rate hike it is, because despite all the talking down of the February NFP number which was supposed to be whacked due to snow, it just came out and it is a doozy at +295K, smashing expectations of 235K, and above the January 239K (revised lower from 239K). The household survey showed a weaker gain of only 96K, however this follows the whopping 759K addition in January.

The unemployment rate came in lower than expected as well, printing at 5.5%, versus the 5.6% expected and down from 5.7% last month, as a result of the participation rate dropping again from 62.9% to 62.8%.

But the number everyone was looking at this month, the change in average hourly earning, came in at 0.1%, once again missing expectations of 0.2%, and sliding from 0.5%. So much for winter storms boosting wages as Goldman speculated.

As the chart below showing average hourly earnings shows, the January surge in wages was a fluke, and the number rose by a tiny 3 cents in February to $25.78, an increase of just 2.0%, and far below the Fed’s target of 4.0%


More from the report:

Total nonfarm payroll employment rose by 295,000 in February, compared with  an average monthly gain of 266,000 over the prior 12 months. Job gains occurred in food services and drinking places, professional and business services,  construction, health care, and in transportation and warehousing. Employment in mining declined over the month. (See table B-1.)


In February, food services and drinking places added 59,000 jobs. The industry had added an average of 35,000 jobs per month over the prior 12 months.


Employment in professional and business services increased by 51,000 in February and has risen by 660,000 over the year. In February, employment continued to trend up in management and technical consulting services (+7,000), computer systems design and related services (+5,000), and architectural and engineering services (+5,000).


Construction added 29,000 jobs in February. Employment in specialty trade contractors rose by 27,000, mostly in the residential component. Over the past 12 months, construction has added 321,000 jobs.


In February, employment in health care rose by 24,000, with gains in ambulatory care services (+20,000) and hospitals (+9,000). Health care had added an average of 29,000 jobs per month over the prior 12 months.


Transportation and warehousing added 19,000 jobs in February, with most of the gain occurring in couriers and messengers (+12,000). Employment in transportationand warehousing grew by an average of 14,000 per month over the prior 12 months.


Employment in retail trade continued to trend up in February (+32,000) and has grown by 319,000 over the year.

Manufacturing employment continued to trend up in February (+8,000). Within the industry, petroleum and coal products lost 6,000 jobs, largely due to a strike.


Employment in mining decreased by 9,000 in February, with most of the decline in support activities for mining (-7,000).


Employment in other major industries, including wholesale trade, information, financial activities, and government, showed little change over the month







However the total number of Americans that are not in the labour force rises to a record 92.9 million poor souls.(the number not in the labour force rose by 354,000 people) Thus the participation rate declines to 62.8%

Americans Not In The Labor Force Rise To Record 92.9 Million As Participation Rate Declines Again

For those (very few now, with even the Fed admitting the unemployment rate has become a meaningless, anachronistic relic) still wondering why the unemployment rate dropped once again, sliding from 5.7% to 5.5%, the reason is that while the number of unemployed Americans dropped by 274K thousand while those employed rose by 96K, the underlying math is that the civilian labor force dropped from 157,180 to 157,002 (following the major revisions posted last month), while the people not in the labor force rose by 354,000 in February, rising to a record 92,898,000 (people who currently want a job rose to 6,538K) matching the all time high number of Americans not in the labor force.

End result: the labor force participation rate dropped once more, declining to only 62.8%, which as the chart below shows is just off the lowest print recorded since 1978.

Source: BLS





Now the farce begins:  Did the BLS forget to count the 100,000 jobs losses in the oil sector?  Looks like they did!!


(courtesy zero hedge)

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


A month ago we asked if the “BLS Forget To Count Thousands Of Energy Job Losses” when as we showed, the BLS reported that only 1,900 jobs were lost in the entire oil and gas extraction space, which was a vast underestimation of what is taking place in reality, when compared to not only corporate layoff announcements, but what Challenger had reported was going on in the shale patch, when it calculated that some 21,300 jobs were lost in January in just the energy sector.

Today we ask again: did the BLS once more forget to add the now tens of thousands of jobs lost in the US energy sector? We ask because the divergence is getting, frankly, ridiculous.

In the February NFP report, the establishment survey reported that just 1.1K jobs were lost in the “Oil and Gas Extraction” industry: this is lower than the downward revised number of 1.8K in January, and adds up to only 2900 jobs lost in 2015.

As a reminder, this is what Challenger said just yesterday:

Once again, the energy sector saw the heaviest job cutting in February, with these firms announcing 16,339 job cuts, due primarily to oil prices.


Falling oil prices have been responsible for 39,621 job cuts, to date. That represents 38 percent of all recorded workforce reductions announced in the first two months of 2015. In February, 36 percent of all job cuts (18,299) were blamed on oil prices.


“Oil exploration and extraction companies, as well as the companies that supply them, are definitely feeling the impact of the lowest oil prices since 2009. These companies, while reluctant to completely shutter operations, are being forced to trim payrolls to contain costs,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

It even provided a handy chart to understand which is the weakest sector in the US economy right now, which as we said yesterday, “is the one chart that the BLS, if it ignored everything else, should look at.”


It didn’t.

As a result, this is what the job losses in the energy sector look like based on the calculation of the BLS and of Challenger, which actively counts the layoffs, and has no White House-driven agenda to paint a rosier than realitypicture.

One wonders: just what is the BLS waiting for to finally admit the real picture in the energy sector (and frankly, just what is the methodology used by the BLS to calculate “jobs” if it is failing so miserably to account for what is clearly happening) and will it serve the steaming surprise pile just after the Fed decides to hike rates some time in the coming months?







The big job gains was again in our old favourite, low paying jobs like bartenders.




Why No Wage Increases: More Than Half Of Jobs Added In February Were Lowest-Quality, Lowest-Paying

It has become a running joke: month after month after month, the punditry says wages hikes are coming…  they are coming any second, just be patient. And month after month the punditry refuses to accept the simple reason why not even the BLS’ goalseeked data does not permit this long awaited wage surge to take place – simply said, the quality of jobs (or rather “jobs” as these are all merely 1s and 0s that only exist in some BLS spreadsheet) added every month is absolutely atrocious, so bad that not even the BLS’ actuarial tables allow its goalseek program to attribute higher wages to the “jobs” it creates out of thin statistical air.

Ironically moments ago US labor secretary Thomas Perez said that the “quality of jobs is going up.”

No it isn’t, as anyone who spends even two minutes with the BLS report can find out.

Don’t have two minutes? Here is the full breakdown. As the chart below shows, the three biggest single-category jobs added in February (because Professional services includes numerous occupations), were also the three lowest quality, lowest paying ones:

  • Leisure and Hospitality, added 66K jobs
  • Education and Health added 54K
  • Retail trade added 32K

Together these three job categories accounted for 152K jobs, or more than half the total February job gains. They also represent the lowest paid jobs in the US.

And that’s why there is no wage increase.

All this in chart format.

Source: BLS





And now our resident expert on the jobs report, Dave Kranzler dissects the fraudulent jobs number:


(courtesy Dave Kranzler/IRD)


Non-Farm Payroll Headlines Are A Complete Fraud

“A lie told often enough becomes truth” – Vladimir Lenin.

The Government-programmed mass financial media gleefully reported this morning that the “jobs recovery” continues as the Government is telling us that 295,000 jobs were produced in February and the employment rate dropped to 5.5%.   Unfortunately, those headline statistics are complete Orwellian propaganda.  In fact, as I will demonstrate using the same payroll report used to derive the headline numbers, the employment situation in this country continues to get worse by the month.

The table below comes from the Bureaus of Labor Statistics actual employment report (BLS – Household Data Table A-1) – please click to enlarge:


I’ve highlighted the most important data.   According to the Government’s own statistics, the working age population (“civilian noninstitutional population) grew by 176k in February BUT the number of people in the labor force declined 178k.   The labor force participation rate once again declined to 62.8% – a level of employment as a percent of the working age population not seen since the late 1970’s.   This is the definition of an employment depression.

According to the Government’s own numbers per the household survey above, the number of people employed increased by 95,000.  BUT the number of people “not in the labor force” increased 354,000. 

Those are the relevant numbers that need to be examined and debated.  Not the statistically manipulated garbage that the Government feeds into the media headlines. The employment situation grows worse by the day in this country.  Tens of thousands of oil industry workers have already been fired this year.   Hewlett Packard just announced 54,000 job cuts.  IBM is cutting over 100,000.  Both of those totals are for the global operations but a significant number will occur in this country.

As just one example of the Government lies embedded in the headline statistics, the BLS is reporting that construction added 29k jobs.  Yet, we found out yesterday that construction spending plunged 1.1% in January (Wall St. was expecting a .3% gain).  Retailers supposedly added 32k jobs in February.  Yet, we know that several retailers filed chapter 11 in January/February.  This list goes on.

If you have not watched it yet, this is a must-see short video by John Titus of Bailout Films which explains in detail how the monthly Government payroll report is a complete farce:  The Fed Is Blowtorching The Economy With QE.

The bottom line is that the Government’s non-farm payroll report has zero credibility.  Moreover, it grows more absurdly fraudulent by the month.






USA trade deficit climbs again:


US Trade Deficit Worse Than Expected As Auto Exports Tumble



Here we go again:  JPMorgan cuts first quarter GDP!!

Why!!! with such a stellar addition of jobs????


(courtesy zero hedge)


JPM Cuts Q1 GDP: Warns “Here We Go Again” As “It Is Feeling Eerily Like Q1 Of Last Year”


Three days ago we revealed what we dubbed a “GDP Shocker: Atlanta Fed Calculates Q1 Growth Of Only 1.2%“, which as we clarified the next day showing the spreadsheet used by the Fed, is based almost entirely but not exclusively on the collapse in energy capex and its resultant adverse impact on non-residential construction (in addition to a drop in consumption and trade). We said that not only is this entirely reminiscent of the GDP collapse in Q1 of last year, but that it was only a matter of time before the sellside picked up on this huge divergence and proceeded to slash their own GDP numbers.

Well, in the aftermath of today’s super-strong (supposedly) jobs number, one would think that the sellside would be rushing to hike their GDP estimates, right.

Wrong. Because moments ago, JPM’s Michael Feroli released a note which confirmed we were right on both counts: not only did Wall Street just now realize how far behind the real-time curve it is, but that – just as we cautioned – Q1 of 2014 is back, precisely one year later.

Quote JPM:

Revising down Q1 GDP (here we go again?)


In light of the data we’ve received this week –January reports for real consumer spending, construction spending, and net exports that varied from disappointing to downright weak, as well as a softer February print for car sales –– we are marking down our tracking for annualized realGDP growth in Q1 from 2.5% to 2.0%.Even after this revision risks are more skewed to the downside than upside.

And what Zero Hedge readers knew three days ago, JPM’s paying clients are finally catching up to, i.e., where the Atlanta Fed is seeing Q1 GDP as of this moment, and that it is very likely that GDP will catch down to it rather than to the previous consensus estimate in the mid-2% range. To wit:

By way of comparison, the Atlanta Fed’s tracking estimate of Q1 recently came down to 1.2%. It’s still relatively early in the quarterly data flow, even so, it is feeling eerily like Q1 of last year. In both cases the quarter began with high expectations, estimates were brought down as the quarter progressed, weather was blamed, but most forecasts remained upbeat on the medium-term outlook. The calm that generally prevailed last year proved correct, as the economy quickly bounced back from the -2.1% print for 14Q1.

For those who forgot, this is what we showed on Tuesday:

The rest of the note is self-explanatory for anyone who can actually think independently and away from the penguin crowd of conformist, yet utterly hollow, chatterboxes:

Looking back it seems a few lessons are relevant for thinking about the economy today. First, parsing out the noisy components of GDP can deliver a better read on the trend in the economy. We advocate private domestic demand as a useful “core GDP” measure. It’s not that government, foreign trade, and inventories don’t matter, it’s just that they can impart a lot of quarterly volatility to GDP. Currently, private domestic demand is tracking around mid-2’s for Q1, not great but not terrible either. Similarly, in 14Q1 private domestic demand increased at a 1.0% pace, three percentage points better than the headline GDP print.


Second, production-side indicators of the economy – particularly job growth – can give a useful check on the more familiar spending-side data used to estimate GDP. This may partly reflect the fact that Gross Domestic Income – partly estimated using payrolls data – is a good check on GDP. But it may also be the case that hiring partly reflects business expectations, and so should be smoother than output. In any case, payrolls averaged an above-trend 207,000 per month in Q1 of last year, and so far are averaging 267,000 per month in Q1 of this year.


Lastly, expect the Fed to weight the jobs data more than the expenditure data. Of course better GDP growth would hasten the path to normalization, but if jobs and GDP conflict, expect the Fed to hew to the mandate, which relates to employment. In Q1 of last year the Fed steadily tapered at a $10 billion per meeting pace. This occurred even though the Fed insisted that tapering was data dependent (which is a story for another day). At any rate, we think that currently the Fed will remain more focused on the improvement in the job market than the disappointment in GDP.

Yes, yes, one should perhaps also include AAPL and the seasonally-adjusted ISM sentiment surveys in one’s definition of GDP (as well as hookers and blows as Europe has done) any time underlying reality does not conform with one’s wrong model.

The problem for JPM and everyone else is that now that the jobs numbers have been absolutely bombastic (if completely goalseeked and seasonally adjusted beyond any relevance, completely failing to account for the plunge in energy sector jobs) Wall Street will no longer be able to blame the weather on the immiennt GDP collapse. That bridge has been burned.

As for the late year rebound in 2014 GDP, as we have explained countless times, it was all on the back of Obamacare and the surge in healthcare spending, as well as the not one but two downward revisions to the US savings rate, which on paper, and only on paper, led to a boost in consumer spending. A savings rate which is now rising rapidly higher and denying all the permabulls their hoped for spending spree as a result of lower gas prices. Gas prices, which incidentally are now rising, so the sweet spot for any realistic boost to spending has now passed.

Which means that as we get closer to that preliminary Q1 GDP announcement in two months, watch as the narrative collapses, when on one hand there are massaged job numbers, even if unaccompanied by actual wage increases, boosting the case for a rate hike, while the underlying economy once again grinds to sub-stall speed.





Elizabeth Warren on the warpath against the Fed and Wall Street


(courtesy Martin Armstrong)


Warren Leads Charge Against the Federal Reserve & Wall Street Banker’s Days R Numbered?

Posted on March 6, 2015 by Martin Armstrong

Senator Elizabeth Warren is leading the charge against the Federal Reserve being too close to the bankers in a Hearing on Fed Accountability and Reform in the Senate. This week, the Senate Banking Committee held the first of its hearings on widespread demands to reform the Federal Reserve to make it more transparent and accountable. What will take down the Fed is its manipulation by the Wall Street Money-Center Banks.

This is the mirror image of what is going on in London. But will it gain traction? It seems it is just a touch premature. Hold this AFTER 2015.75 and the other politicians taking contributions from the bankers will have no place to hide. Both Jeb and Hillary are courting Goldman Sachs who will hand both tons of cash buying both sides of the isle.

Senator Elizabeth Warren is putting her finger on the pulse of a growing public outrage over how the Federal Reserve conducts much of its operations in secret and is in bed with the Wall Street bankers succumbing to their every desire. Warren harped on the secret loans that the Fed made to Wall Street during the financial crisis as follows which illustrates my point – they may try to manipulate markets in search of that risk free trade, but they always fail and have the government backing them up each time. Warren began:





Let us conclude the week with this wrap up courtesy of Greg Hunter


(courtesy Greg Hunter/USAWatchdog)


WNW 180-Netanyahu Iran Nuke Crisis, Hillary Clinton Emails, Obama Care & Supreme Court


Clearly, the biggest story of the week was the speech Israeli Prime Minister Benjamin Netanyahu gave to a joint session of Congress.  Netanyahu’s speech can be summed up with this Associated Press headline that reads “Israeli leader: Nuclear pact a bad deal.”  Now I know why President Obama did not want him to talk to Congress.  Netanyahu had one standing ovation after another from both sides of the aisle.  Sure, about 50 Democrats did not show up and even criticized the Prime Minister after the speech, but that really made the Democrats look even more disheveled and weak.  There is so much propaganda and disinformation surrounding this deal to curtail Iran’s nuclear program it is hard to get a handle on what is happening.  According to international inspectors, the Iranians are hiding nuclear facilities and are not being totally honest about what they have.  On the Israeli side, Netanyahu himself was accused by his own intelligence agency of over-hyping the progress Iran made in getting a nuclear bomb back in 2012.  Fast forward to today, and there are still plenty of countries who are nervous of Iran’s nuclear ambitions.  Secretary of State John Kerry is in the Middle East trying to sell this deal to our Arab allies.  You know things are bad when Arabs and Israelis team up against a common threat, and in this case it is Iran.

Meanwhile, Iran and its forces are taking the lead in attacking Tikrit, an ISIS strong hold in Iraq.  Saudi Arabia has accused the Obama Administration of effectively giving Iraq to Iran.  John Kerry is also on record this week about using military force to remove the Assad regime in Syria.  Wait, the Iranians are attacking ISIS in Iraq, and the Iranians are supporting Assad in Syria.  Meanwhile, the so-called “moderate Rebels” are in the middle between the two.  Talk about a convoluted mess, you cannot make this up.

It is also reported that Saudi Arabia is in talks with Pakistan that some say is to buy off-the-shelf nuclear weapons.  This is not the first time we have heard the Saudis in talks to buy nuclear weapons from Pakistan.  Published reports said that the Saudis had “ordered” nuclear weapons from Pakistan as far back as 2013.  One can only suspect the Saudis have nukes and might be adding to their arsenal and a counter to Iran.  All I can say is that selling a nuclear deal to Iran, the Arabs and Israel is going to be a very tough sell.  Both the Saudis and Israelis have implied many times they would go to war to stop Iran’s nuclear program.

Obama Care could be in trouble after oral arguments this week in the Supreme Court.  The health care law is being challenged on the fact the IRS is giving subsidies to everybody in America when it was only supposed to give subsidies to states that set up exchanges.  Around 35 states did not set up exchanges.  This could kill the law because it would make enforcement of it impossible in states that did not set up exchanges.  So far, two lower federal courts have ruled that the IRS could not expand Obama Care to cover all 50 states.  Stopping Obama Care, which I think is the biggest concocted policy lie in U.S. history, could be the way to give the biggest boost to the economy and poor working people.  They could get 40 hours a week and snag overtime if it came available.  The decision from the Supreme Court comes this summer.

Hillary Clinton is in big trouble over her use of private email while she was Secretary of State.  It’s reported she had her own account and did official government business from her own account instead of using government accounts that are required to be saved and accounted for by law.  Ironically, Clinton told her staff at the State Department to be sure not to use private emails for security reasons.  This comes on the heels of news of foreign donations given to the Clinton Foundation while she was Secretary of State.  Then, there is also news of Bill Clinton hanging around with a convicted pedophile.  At some point, when does a potential 2016 presidential candidate have too much baggage?  The Democrats are having a hard enough time getting people to get onboard with their socialist message.  Are the Dems going to dump Hillary?  We will see.

Join Greg Hunter as he looks at these stories and more in the Weekly News Wrap-Up.


  1. Flightstick · · Reply

    Hi Harvey – I am really grateful for your service – but please give your website to a programmer/design kid for a visual make-over – less work for you and easier to follow for us. Thanks again for your great service!


  2. Maury Hafernik · · Reply

    Why is your site the ONLY one I’ve ever seen where the text is only about 6 words across? Get someone to help you fix your site !!!


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