March 10/Troika are ready to step foot on Greek soil/China set to introduce their SWIFT system by September/ 100 tanks roll into Latvia/Russia states that there will be consequences/Ukraine needs the west to cut 15.4 billion USA from its debt before the IMF loans money/



Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold: $1160.10 down $6.30   (comex closing time)
Silver: $15.61 down 14 cents  (comex closing time)



In the access market 5:15 pm



Gold $1161.60
silver $15.62








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 0 notices served for nil oz.  Silver comex registered 41 notices for 205,000 oz .


Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 254.52 tonnes for a loss of 48.5 tonnes over that period. Lately the removals  have been rising!


In silver, the open interest rose by an astonishing 1,396 contracts even though yesterday’s silver price was down 3 cents. The total silver OI continues to remain relatively high with today’s reading at 167,631 contracts. The front month of March contracted by 16 contracts.

We had  41 notices served upon for 205,000 oz.


In gold we had a fall in OI despite the fact that gold was up by $2.30 yesterday. The total comex gold OI rests tonight at 413,701 for a loss of 1,669 contracts. Today, surprisingly we again had only 0 notices served upon for nil oz.




Today, we had no report on the  GLD/Inventory rests at 753.04  tonnes


In silver, /SLV  we had no change in inventory at the SLV/Inventory, remaining at 327.332 million oz




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



1.  The Greece affair.

It looks like the Troika are going to set foot on Greek soil. Greece also having problems with obtaining imported goods due to non payment

(zero hedge)


2.  China set to introduce their SWIFT system by September putting a huge dagger into the heart of the USA dollar.(zero hedge/Reuters)

3. Venezuela is now considered by the USA as a security risk. They are also going to fingerprint you when purchasing goods at the grocery store. (zero hedge)

4. 100 tanks are rolling into Latvia.  The Russian foreign minister states that there will be consequences.(zero hedge)


5. The Ukraine needs to get the west to agree to a 15.4 billion haircut in order to receive funds from the IMF (Reuters)




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 fell by a small margin of 1,669 contracts today from 415,370 down to 413,701 even though gold was up by $2.30 yesterday (at the comex close). We are now in the contract month of March which saw it’s OI lower by 31 contracts down to  117. We had 0 notices filed on yesterday so we lost 31 gold contract or an additional 3100 oz will not stand for delivery in this delivery month of March. The next big active delivery month is April and here the OI fell by 12,515 contracts down to 239,160. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 135,933. The confirmed volume yesterday ( which includes the volume during regular business hours  + access market sales the previous day) was poor at 147,647 contracts  with mucho help from the HFT boys. Today we had 0 notices filed for nil oz.

And now for the wild silver comex results.  Silver OI rose by a huge 1396 contracts from 166,235 up to 167,631 with silver down by 3 cents with respect to yesterday’s trading. We are now in the active contract month of March and here the OI fell by 16 contracts down to 935. We had 17 contracts served upon yesterday. Thus we gained 1 contract or an additional 5,000 oz will  stand in this March delivery month. The estimated volume today was poor at 16,850 contracts  (just comex sales during regular business hours. The confirmed volume on yesterday (regular plus access market) came in  at 27,645 contracts which is fair in volume. We had 41 notices filed for 205,000 oz today.

March initial standings


March 10.2015



Withdrawals from Dealers Inventory in oz  nil
Withdrawals from Customer Inventory in oz   96,450.000 oz /3000 kilobars (Scotia)
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 16,075.000 oz  /500 kilobars(JPMorgan/)
No of oz served (contracts) today 0 contracts (nil oz)
No of oz to be served (notices)  117 contracts (11,700 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

 246,606.5 oz

Today, we had 0 dealer transactions




total Dealer withdrawals: nil oz




we had 0 dealer deposit




total dealer deposit: nil oz


we had 1 customer withdrawals (and the farce continues)


i) Out of Scotia:  96,450.000 oz (3000 kilobars)

total customer withdrawal: 96,450.000  oz



we had 1 customer deposits:


i) Into JPMorgan:  16,075.000 oz (500 kilobars)

total customer deposits;  16,075.000  oz


We had 0 adjustments






Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 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 (117) and the number of notices served upon today (0) 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 (117) – the number of  notices served upon today (0) x 100 oz} =  12,200 oz or .3794 tonnes


we lost 3,1oo gold ounces standing in this March contract month.


Total dealer inventory: 656,644.474 oz or 20.424 tonnes

Total gold inventory (dealer and customer) = 8.182 million oz. (254.52) tonnes)


Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 48.5 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 10 2015:



Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 593,470.199  oz (Delaware,Scotia)
Deposits to the Dealer Inventory   nil oz
Deposits to the Customer Inventory nil  oz
No of oz served (contracts) 41 contracts  (205,000 oz)
No of oz to be served (notices) 894 contracts (4,470,000)
Total monthly oz silver served (contracts) 1731 contracts (8,655,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal  of silver from the Customer inventory this month  2,233,478.9 oz

Today, we had 0 deposit into the dealer account:



total dealer deposit: nil   oz


we had 0 dealer withdrawal:

total dealer withdrawal: nil oz


We had 0 customer deposits:




total customer deposit: nil oz


We had two customer withdrawals:


i) Out of Delaware:  533,211.929 oz

ii) Out of Scotia:  60,258.27 oz


total withdrawals;  593,470.199 oz


we had 1 adjustment

i) out of Delaware:  9,457.200 oz was adjusted out of the customer and this landed into the dealer account of Delaware;


Total dealer inventory: 68.864 million oz

Total of all silver inventory (dealer and customer) 177.442 million oz


The total number of notices filed today is represented by 41 contracts for 205,000 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 (1731) x 5,000 oz    = 8,655,000 oz to which we add the difference between the open interest for the front month of March (935) and the number of notices served upon today (41) x 5000 oz  equals the number of ounces standing.


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

1731 (notices served so far) + { OI for front month of March( 935) -number of notices served upon today (41} x 5000 oz =  13,125,000 oz standing for the March contract month.


we gained 1 contracts or an additional  5,000 oz will  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 10 no report on the GLD tonight/computer down/inventory remains 753.04 tonnes



March 9/ we had another huge withdrawal of 3.38 tonnes of gold from the GLD, no doubt heading for Shanghai/Inventory 753.04 tonnes


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



March 10/2015 / no report on  the GLD tonight

inventory: 753.04 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 : 753.04 tonnes.






And now for silver (SLV):




March 10/ no change in silver inventory/327.332 million oz



March 9/ no change in silver inventory at the SLV/327.332 million oz



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





March 10/2015 no change in    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  9.1% percent to NAV in usa funds and Negative 8.7% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.6%

Percentage of fund in silver:38.0%

cash .4%


( March 10/2015)


Sprott gold fund finally rising in NAV




2. Sprott silver fund (PSLV): Premium to NAV falls to + 1.96%!!!!! NAV (March 10/2015)

3. Sprott gold fund (PHYS): premium to NAV falls to -.28% to NAV(March 10  /2015)

Note: Sprott silver trust back  into positive territory at +2.03%.

Sprott physical gold trust is back into negative territory at -.28%

Central fund of Canada’s is still in jail.





And now for the important paper stories for today:



Early Tuesday morning trading from Europe/Asia


1. Stocks lower on major Chinese bourses/  / the  yen slightly rises  to 121.36

1b Chinese yuan vs USA dollar/ yuan strengthens  to 6.2623
2 Nikkei down 125.44 or 0.67%

3. Europe stocks all down  // USA dollar index up to 98.35/

3b Japan 10 year yield .45%/ (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 121.35/everybody watching the huge support levels of 117.20 and that level acting as a catapult for the markets. the Japanese yield at .45% becoming very ominous

3c Nikkei still  above 17,000/

3e The USA/Yen rate now above the 121 barrier this morning/
3fOil: WTI 49.52 Brent: 57.71 /all eyes are focusing on oil prices. This should cause major defaults as derivatives blow up.

3g/ Gold slightly down /yen slightly 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 down this morning for WTI  and  for Brent

3k European bond buying pushes yields lower on all fronts in the EMU

Except Greece which sees its 2 year rate rise to almost 16% /Greek stocks up by less than  1%/expect huge bank runs on Greek banks

3l  Greek 10 year bond yield :10.04% (up 60  basis points in yield)

3m Gold at $1167.60 dollars/ Silver: $15.80

3n USA vs Russian rouble:  ( Russian rouble  down 3/4  rouble / dollar in value)  61.22!!!!!!.

3 0  oil  into the 49 dollar handle for WTI and 57 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.

Rumours SNB may cut rates to negative 1.5%

3r Britain’s Serious fraud squad investigating the Bank of England/


3s  the 7 year German bund is now in negative territory/no doubt the ECB will have trouble meeting its quota of purchases and thus European QE will be a total failure  (see passage below)

3t Talks with Greece to start tomorrow/does not look good

4. USA 10 yr treasury bond at 2.17% early this morning. Thirty year rate well below 3%  (2.77%!!!!)/yield curve flattens/foreshadowing recession
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid



Futures Sell Off As Soaring Dollar Weighs On Risk, European Yields Slide To Fresh Record Lows


As noted earlier, starting early with the overnight sessionthere was already some serious fireworks in Asia, when first the USDJPY soared then tumbled, pushing the Nikkei lower some 0.7% with it, driven entirely by the surge in Dollar which rose to a fresh 12 year high overnight after gaining as much as 0.59%, in an extension of Friday’s post-NFP gains. Additionally, the EUR/USD slipped below 1.0800 to touch its lowest level since Sept’03 while USD/JPY rose above 122.00 for the first time since Jul’07, after breaching long-term resistance at 121.85. However, in recent trade the USDJPY has seen a straight line sell-off which in turn has sent US equity futures sliding, and the ES down about 14 points as of this moment. Meanwhile, the frontrunning of the ECB continues, with German 10 Year yields sliding -3bps to 0.281%, the lowest in series history. Also touching fresh record lows were Austrian, Belgian, Dutch, Finnish, Irish, Italian, Spanish 10 Year rates.

The problem for Europe everyone is that most are focusing primarily on the German curve, where the 7 Year just went negative as well. SocGen believes that with German bonds up to Oct. 2018 maturity already trading below the ECB’s deposit rate, making them ineligible for purchases under QE, Bundesbank may struggle to meet its quotas under the scheme. It adds that the outstanding sizes are large in shorter maturity bonds so not being able to buy these makes it difficult to see how Germany’s central bank is going to get its share of the program done. SocGen’s conclusion is that the ECB program will fall short of its €1.14 trillion purchase objective, or in other words Q€ will be a failure.

And while markets stage a mini turmoil session, in the background Greece has almost entered the endgame following yesterday’s European finance ministers’ announcement that aid time and money are running out with Greece still to make good on its bailout commitments; talks with creditors are  due to start tomorrow alongside technical monitoring in Athens.Draghi told Greek officials they face a critical situation and must let euro-area representatives return to Athens if they are ever going to obtain more aid. And thenGerman CDU lawmaker Fuchs, speaking on Bloomberg TV, said Greece not fulfilling its obligations currently and a Greek exit could be managed. In other words, the Syriza government has two choices: run out of money and face a civil war, or allow the hated Troika inspectors who are about to impose even more “austerity” on the Greek people, and be swept from power. Expect the epic fall from Grace of the Tsipras government to soon be a Harvard case study on (mis)managing pre-election expectations.

Asian equities fell after paring earlier gains following a positive Wall Street close, as the USD surged to fresh decade highs ahead of next week’s FOMC rate decision. Nikkei 225 (-0.7%) led the way with losses as the index decoupled from moves in the JPY, with the currency falling to multi-year lows against USD. Hang Seng (-0.9%) fell to a 7-week low weighed on by casino stocks, while the Shanghai Comp (-0.5%) saw some mild profit-taking after finishing yesterday’s session up 2%. Sentiment was further dented by Chinese PPI data which fell for a 36th consecutive month (Y/Y -4.8% vs. Exp. -4.3% (Prev. -4.3%). JGBs pared their earlier advance following the results of today’s JPY 400bln enhanced liquidity auction for old 20s, 30s and 40s, which saw the lowest b/c since December 2013.

European equities have traded lower since the open in sympathy with their Asian counterparts, although price action for stocks has been swayed more by notable underperformance in energy and basic material names as the USD-index weighs on the commodity complex. This has provided a bulk of the direction across equities thus far with the European session currently void of much in the way of macro newsflow. In fixed income markets, Bunds have continued the trend seen since yesterday with German paper continuing to be supported by the beginning of the ECB’s bond-buying programme, while other European paper has printed further record-low yields. Additionally, the German 5s/30s curve is the flattest since 2008 and therefore seeing a continued flattening of the German curve since last week’s ECB press conference were Draghi revealed the central bank would not buy bonds with a yield below -0.2%; a threshold which the German Schatz currently resides outside of. However, analysts at IFR note talk that the size of purchases today has fallen from the amount seen yesterday

QCOM to buyback USD 10bln (program now at USD 15bln) and boosts quarterly dividend by 14% to USD 0.48/shr from USD 0.42 vs. Exp. USD 0.47. (BBG) Verisk Analytics (VRSK) are to purchase Wood MacKenzie for GBP 1.850bln. (BBG) Fed’s Fisher (Non-Voter, Hawk) said the Fed may have to raise rates sharply if lift-off is postponed. Fisher repeated his preference is to hike rates early and gradually, adding that he trusts Fed Chair Yellen will not wait too long to raise rates. (RTRS/BBG) As a guide, Fisher is due to retire from his role as Dallas Fed President on 19th March.

In FX, the main mover so far has been the USD-index which surged to a fresh 12yr high overnight after gaining as much as 0.59%, in an extension of Friday’s post-NFP gains. Consequently, EUR/USD slipped below 1.0800 to touch its lowest level since Sept’03 while USD/JPY rose above 122.00 for the first time since Jul’07, after breaching long-term resistance at 121.85 (Dec 7th high). Overnight, poor business confidence data weighed on AUD, while NZD briefly saw an aggressive sell-off amid reports of a threat to contaminate infant milk formula with pest-control poison 1080. The NZ police later established there was no sign of contamination which provided some reprieve for the currency.

In Commodities, the main source of direction has stemmed from the broadly stronger USD with bearish sentiment for energy prices also stemming from comments from the Kuwaiti OPEC governor who said he expects OPEC to roll over current policy at the next meeting on June 5th. Furthermore, tomorrow’s DoE inventories are expected to reveal a build of 4.75mln bbls. In metals markets, both spot gold and silver have been weighed on by the USD, while iron prices overnight remained near record lows amid ongoing concerns of weakness in China’s steel industry and mixed data from China where consumer prices beat estimates but producer prices declined for a 36th consecutive month.

Brent decline is longest losing streak in almost 3 months; slumps below $58 for first time since Feb. 19 to near bottom of range since mid-Feb as Iran nuclear talks gain momentum and dollar gains. WTI below $50; EIA inventory data tmrw, Bloomberg survey median est. to show build. April Brent -55c at $57.98 as of 9:04am London, day range $57.89-$58.72; WTI -36c at $49.64, range $49.62-$50.36; volume -44%; WTI 1st-2nd mo. contango stable at -$1.63; settled yday at – $1.66, smallest since Feb. 24; WTI-Brent shrinks to -$8.31; settled at -$8.53, narrowest since Feb. 19

In Summary: European shares trade mixed with the real estate and travel & leisure sectors outperforming and oil & gas, basic resources underperforming. Central banks said to be buying German 5-year notes on day 2 of European QE. Euro continues decline against dollar. China Feb. CPI rise above estimates. Greece to resume talks with its creditors in Brussels on Wednesday. The Swiss and Dutch markets are the best-performing larger bourses, Spanish the worst. The euro is weaker against the dollar. German 10yr bond yields fall; Japanese yields increase. Commodities decline, with copper, nickel underperforming and natural gas outperforming. U.S. wholesale inventories, small business optimism, JOLT job openings due later.

Market Wrap

  • S&P 500 futures down 0.4% to 2068.8
  • Stoxx 600 up 0.1% to 393.6
  • US 10Yr yield up 0bps to 2.19%
  • German 10Yr yield down 3bps to 0.29%
  • MSCI Asia Pacific down 1.1% to 142.4
  • Gold spot down 0.7% to $1158.7/oz
  • Eurostoxx 50 -0.4%, FTSE 100 -0.2%, CAC 40 -0.2%, DAX -0.3%, IBEX -0.6%, FTSEMIB -0.3%, SMI +0.4%
  • MSCI Asia Pacific down 1.1% to 142.4
  • Nikkei 225 down 0.7%, Hang Seng down 0.9%, Kospi down 0.4%, Shanghai Composite down 0.5%, ASX up 0%, Sensex down 0.8%
  • Euro down 0.83% to $1.0762
  • Dollar Index up 0.76% to 98.33
  • Italian 10Yr yield down 5bps to 1.23%
  • Spanish 10Yr yield down 3bps to 1.24%
  • French 10Yr yield down 3bps to 0.57%
  • S&P GSCI Index down 0.6% to 408.1
  • Brent Futures down 1.2% to $57.9/bbl, WTI Futures down 0.8% to $49.6/bbl
  • LME 3m Copper down 1.7% to $5775/MT
  • LME 3m Nickel down 1.6% to $14270/MT
  • Wheat futures down 0.8% to 486 USd/bu

Bulletin Headline Summary from RanSquawk and Bloomberg

  • The USD-index has been the main-mover so far, pushing EUR/USD below 1.0800 and USD/JPY below 122.00 in an extension of the move seen since last week’s NFP report
  • The stronger USD has weighed on the commodity complex, causing underperformance in energy and material-related stocks in Europe
  • Looking ahead, ECB’s Nowotny, BoE’s Carney and McCafferty are all due on the speaker slate
  • Treasuries gain, following euro-area sovereigns, before week’s auctions begin with $24b 3Y notes; WI yield 1.125%, highest since April 2011.
  • Euro-area national central banks were said to have bought government bonds, including German debt that trades with a negative yield, in the second day of QE
  • European finance ministers said time and money are running out with Greece still to make good on its bailout commitments; talks with creditors are  due to start tomorrow alongside technical monitoring in Athens
  • Draghi told Greek officials they face a critical situation and must let euro-area representatives return to Athens if they are ever going to obtain more aid, according to two European officials
  • German CDU lawmaker Fuchs, speaking on Bloomberg TV, said Greece not fulfilling its obligations currently and a Greek exit could be managed
  • China’s consumer prices rose 1.4% in February, faster than economists forecast, after the central bank stepped up policy easing and the Lunar New Year holiday pushed up food and transport costs
  • New Zealand police said they are investigating a threat to poison infant formula, putting the reputation of the world’s biggest dairy exporting nation at risk and sending the local currency lower
  • Credit Suisse Group AG named Prudential Plc’s Tidjane Thiam to replace Brady Dougan as CEO as the bank grapples with declining profitability at the securities unit and weakened capital
  • Sovereign 10Y yields mostly lower. Asian, European stocks lower, U.S. equity-index futures decline. Crude, gold and copper fall



DB’s Jim Reid Concludes the Overnight Recap


Overnight the major news story has been February’s CPI and PPI in China. CPI came in notably above expectations at +1.4% yoy vs +1% expected but both Chinese officials and analysts have attributed the rise to Lunar New Year celebrations so it’s not easy to read much into the data. Meanwhile the PPI read of -4.8% YoY was below expectations of -4.3% and was the lowest since October 2009. The PPI number seems to be leading markets down in Asia this morning with its suggestion of a world ex-US struggling to maintain growth. The Shanghai composite is down around -0.2% as we type whilst the Nikkei is down -0.95% and the broad MSCI Apex 50 is down -0.7%. Asian credit markets are trading marginally wider.

Looking back to yesterday and markets were mixed with European government bonds and US equities notably outperforming European equities and global credit markets. On the first day of the ECB’s public purchase program core European government bonds rallied notably with French, German and Dutch 10y yields falling more than 8bps. At this daily rate of performance Bund yields will be -31% by the time the program finishes in September 2016!!! Peripheral yields underperformed a bit however with Italian and Spanish 10y debt closing only 4bps and 2bp lower whilst Greek debt widened by almost 70bps.

Not only did Greek government debt sell off notably, Greek equities also struggled yesterday with the Athex closing the day down 4.2%. The Greek under-performance was driven by yesterday’s disappointing eurogroup meeting which ended with Eurogroup chairman Jeroen Dijsselbloem urging Greece to, “stop wasting time,” as he said, “little has been done since the last Eurogroup (meeting two weeks ago) in terms of talks, in terms of implementation” (Reuters). The day ended with Dijsselbloem adding after the meeting that Greece could gain access to part of its remaining bailout money but only if it follows through on reforms saying, “we stand ready to further support the Greek government on the condition that we have an agreement on the whole package,”. Talks resume tomorrow with technical teams visiting Athens then too (Bloomberg). As DB’s George Saravelos concluded yesterday, “in terms of overall progress, we are therefore left where the Eurogroup was three weeks ago, with the government’s cash position the only source of pressure to reach an agreement.” George’s current best guess on when liquidity will cease is early April.

Over in the US equities and government bonds had a solid day with the S&P500 closing up +0.4% and the US 10y falling 5bps. European equities struggled with the Stoxx 600 closing down -0.3%. Credit lagged yesterday with indices wider across the board in both Europe and the US. In terms of other news beyond the start of ECB purchases and the disappointing Eurogroup meeting the only other major data point was German January export and import data which both came in weaker than expected. In other news the Ukrainian President said that pro-Russian rebels in the east had withdrawn a “significant” amount of heavy weapons in the latest sign that the February ceasefire agreement currently seems to be holding (BBC).

With ECB QE kicking off yesterday our fixed income team published an interesting note called, “The real (interest rate) story: Why Europe is not Japan”. The team discuss how comparisons between Japan and the Eurozone have become increasingly common as European bond yields continue their slide towards the very low levels witnessed in Japan since the 1990s, however they think that focusing on the nominal interest rates misses a crucial difference: the real rate / inflation expectation mix is completely different in Europe today relative to Japan in the 1990s. They conclude that barring another external deflationary shock, Europe should be on a different trajectory than Japan in the 1990s. You can read the full report here:…. For what it’s worth our take on why Europe won’t turn into Japan is due to politics. To us it seems highly unlikely that Europe could hold together politically if it endured a lengthy period of ultra low growth and inflation. Voters would likely rebel. So the end game in Europe is more binary in our opinion.

Looking ahead to the day ahead in Europe we have French and Italian January industrial production reads which are both expected to be weaker MoM. Elsewhere EU finance ministers are meeting in Brussels this morning, ECB board member Yves Mersch is speaking in Paris and the Bank of England’s Mark Carney will be up in front of the House of Lords committee. Over in the US it’s relatively quiet on the data front with January wholesale inventories (expected down) and JOLTS job opening reads (expected to rise). After payrolls there will be an even bigger focus on this important employment release.






They are baaaaack…. the Troika  coming to Athens ???:


*(courtesy zero hedge)


Eurogroup Humiliation Of Greece Complete: The Troika Is Coming Back To Athens


Having been shamed what seems like numerous times now by the Eurogroup in recent weeks, Greece suffered its greatest humiliation today. First, the farcical renaming of ‘Troika‘ to ‘Institutions’ was summarily dismissed as “semantics,” as France played good cop (asking for the group not to call it Troika) while Germany’s bad-cop Schaeuble used the T-word four times in one interview. And second, Eurogroup chairman Dijsselbloem stated that “technical teams will begin considering Greek reform plans on Wednesday,” adding that some of the negotiations will have to take place “in situ in Athens.” So instead of discussing reforms with institutions in Brussels, the Varoufakis-defined “cabal of technocrats” Troika will be back on Greek soil to straighten out the nation.


Reuters explains that, despite the Eurogroup deciding to call the Troika “institutions”…

The Eurogroup now calls the troika “the institutions” and the talks will, formally at least, be based in Brussels. EU ministers say they do not want “semantics” to get in the way of negotiations intended to prevent Greece going bankrupt and potentially being forced to abandon the single currency.

Not everyone did… (as The Guardian notes)

Greek officials are not hiding their frustration at the reappearance of the dreaded word “Troika” in statements made by several euro zone finance ministers today, reports Helena Smith.


The German finance minister Wolfgang Schauble, no less, used it four or five times – in what some are calling a deliberate act of spite.

To which the Greeks responded…

“Why couldn’t he just say institutions? We agreed on February 20th that there was no more Troika.”

And the French played peacekeeper…

“It’s important to make the effort” of not speaking about the troika anymore, says Sapin.

Then things got even worse for the Greeks credibility…

Greek Finance Minister Yanis Varoufakis has previously insisted the “troika is finished,” describing them as “a cabal of technocrats that used to enter ministries with power play that smacked of colonial attitude.”


He was instead willing to discuss reforms with the institutions in Brussels, but as The Guardian reports today, European Commission spokesperson Margaritis Schinas, stated some of the negotiations between Greek authorities and technical teams, aimed at fleshing out reforms,would have to take place “in situ in Athens.”


As Dijsselbloem explains, The Eurogroup discussed the current review of the Greece’s commitments under the existing arrangement. Ministers agreed that Greece and the European Commission, the European Central Bank and the International Monetary Fund would begin discussions on Wednesday (11 March), in Brussels.


Technical teams from the institutions will be welcome in Athens to support this process.

Greek FinMin Varoufakis stomped his feet a little… (as ekathimerini reports,)

“The idea of troika visits, comprising cabals of technocrats from the three institutions in lockstep walking into our ministries and trying to implement a program which has failed … that is a thing of the past,”

Then folded…

“We will consult wherever possible but #Greece can’t ask permission for every single thing” #Greece

*  *  *

So Troika is back with boots on the ground in Athens… austerity continues… and the country has 3 weeks or less cash until it is done… but apart from that – as Spain said this morning “I see no risk of Greek bankruptcy.”





As I mentioned in my commentary yesterday, the de dollorization is gaining momentum with now China completing its SWIFT program and they should be ready by September.


Two commentaries on this important issue

1. Zero hedge

2. Reuters


First:  zero hedge weighs in


(courtesy zero hedge)


The De-Dollarization Axis: China Completes SWIFT Alternative, May Launch As Soon As September



One of the recurring threats used by the western nations in their cold (and increasingly more hot) war with Russia, is that Putin’s regime may be locked out of all international monetary transactions when Moscow is disconnected from the EU-based global currency messaging and interchange service known as SWIFT (a move, incidentally, which SWIFT lamented as was revealed in October when we reported that it announces it “regrets the pressure” to disconnect Russia).

Of course, in the aftermath of revelations that back in 2013, none other than the NSA was exposed for secretly ‘monitoring’ the SWIFT payments flows, one could wonder if being kicked out of SWIFT is a curse or a blessing, however Russia did not need any further warnings and as we reported less than a month ago, Russia launched its own ‘SWIFT’-alternative, linking 91 credit institutions initially. This in turn suggested that de-dollarization is considerably further along than many had expected, which coupled with Russia’s record dumping of TSYs, demonstrated just how seriously Putin is taking the threat to be isolated from the western payment system. It was only logical that he would come up with his own.

There were two clear implications from this use of money as a means of waging covert war: i) unless someone else followed Russia out of SWIFT, its action, while notable and valiant, would be pointless – after all, if everyone else is still using SWIFT by default, then anything Russia implements for processing foreign payments is irrelevant and ii) if indeed the Russian example of exiting a western-mediated payment system was successful and copied, it would accelerate the demise of the Dollar’s status as reserve currency, which is thus by default since there are no alternatives. Provide alternatives, and the entire reserve system begins to crack.

Today, we got proof that it is the second outcome that is about to prevail following a Reuters report that China’s international payment system, known simply enough as China International Payment System (CIPS), which serves to process cross-border yuan transactions is ready, and may be launched as early as September or October.

According to Reuters, the launch of the will remove one of the biggest hurdles to internationalizing the yuan and should greatly increase global usage of the Chinese currency by cutting transaction costs and processing times.

It will also put the yuan on a more even footing with other major global currencies like the U.S. dollar, as CIPS is expected to use the same messaging format as other international payment systems, making transactions smoother.


CIPS, which would be a worldwide payments superhighway for the yuan, will replace a patchwork of existing networks that make processing renminbi payments a more cumbersome process.

In other words, while the west was using every provocation involving the Ukraine civil war as an opportunity to pressure Russia into developing its own cross-border payment system, it achieved not only just that but it also pushed China to accelerate the roll out of its own international payment system, in the process telegraphing to the world that the USD is replacable as a reserve currency and giving any other nations (such as the BRICs) the green light to think of SWIFT as an alternative to either the Russian or Chinese payment system (which with enough political and financial stimulus, they would be delighted to do).

But what is most disturbing is just how quickly the Chinese regime change is coming:

“If it’s all smooth, (the launch) will be in September or October. If there is a need for a bit more time, we are still confident about (rolling it out) before the year-end,” said the source, who declined to be named because he is not authorized to speak to the media.


The system was expected to be launched in 2014 but was delayed by technical problems, with most market participants anticipating it would not come on stream before 2016.

Needless to say, China will be delighted to have its own unified payment system, one that will further internationalize the Renminbi which at least check had become one of the top five payment currencies in November 2014, overtaking both the Canadian and the Australian dollar based on SWIFT data.

Until now, cross-border yuan clearing has to be done either through one of the offshore yuan clearing banks in the likes of Hong Kong, Singapore and London, or else with the help of a correspondent bank in mainland China.

“Misunderstandings under the current clearing system happen from time-to-time due to different languages and codings. The CIPS is a breakthrough since it will offer a united platform and enhance efficiency,” said Raymond Yeung, an analyst at ANZ in Hong Kong.


The launch of CIPS will enable companies outside China to clear yuan transactions with their Chinese counterparts directly, reducing the number of stages a payment has to go through.

It will also make it far more difficult for the NSA to track payments to and from the mainland when such compromised intermediaries as SWIFT are used.

This is how the Mercator Institute for China Studiespreviewed this major development:

The Chinese government is striving towards a controlled internationalization of China’s currency through a step-by-step expansion of the use of the RMB in Chinese foreign trade and investment. Towards this end, a worldwide network of agreements dealing with central bank currency swaps, the direct exchange of the RMB with other currencies, and RMB clearing hubs has been built. The establishment of an independent payment system (CIPS) for RMB transactions and an alternative to the existing SWIFT would further increase China’s autonomy vis-à-vis U.S. centred financial market structures.


Finally, as it becomes easier to transact in non-USD terms, it will merely accelerate the adoption of the Chinese Yuan as the primary currency of global trade, or what little is left of it, as opposed to the currency of financial engineering.

Global yuan payments increased by 20.3 percent in value in December compared to a year earlier, while the growth for payments across all currencies was 14.9 percent for the same period, SWIFT said.


China has accelerated the pace of yuan internationalization in recent years. The central bank assigned 10 official yuan clearing banks last year, bringing the total number to 14 globally that can clear yuan transactions with China.

The final observation to make here is that if indeed it was the Obama administration’s brilliant ploy to kick out Russia – and by geopolitical affiliation, China – out of a monetary transaction mechanism that is controlled and supervised by the US and force the two biggest challengers to US global dominance into their own (or joint) payment system, then well, congratulations: it succeeded.





The Reuters story from the above zero hedge commentary:


(courtesy Reuters/Chen/GATA)


China’s international payments system is ready, could launch this year, Reuters says


By Michelle Chen and Koh Gui Qing
Monday, March 9, 2015

China’s long-awaited international payment system to process cross-border yuan transactions is ready and may be launched as early as September or October, three sources with direct knowledge of the matter told Reuters.

The launch of the China International Payment System (CIPS) will remove one of the biggest hurdles to internationalizing the yuan and should greatly increase global usage of the Chinese currency by cutting transaction costs and processing times.

It will also put the yuan on a more even footing with other major global currencies like the U.S. dollar, as CIPS is expected to use the same messaging format as other international payment systems, making transactions smoother. ..

… For the remainder of the report:…










First shortages for imports due to non payment is starting to surface in Greece:




(courtesy zero hedge)



Greeks Face First Product Shortages As Cash Runs Out, “It’s Worse Than In 2012”

Just when you thought it was getting better (or so you would believe if you listened to the mainstream media’s punditry) Greece faces what ekathimerini reports is a“situation worse than in 2012.” From well-known Belgian beer to electronics equipment, the first occurrences of shortages in imported goods and raw materials have arisen as a result of Greek enterprises’ inability to pay with cash in advance.

In 2013, there were food riots as people could not afford the staples as a six-day strike led to food shortages…

Hundreds of people jostled for free vegetables handed out by farmers in a symbolic protest earlier on Wednesday, trampling one man and prompting an outcry over the growing desperation created by economic crisis.


Images of people struggling to seize bags of tomatoes and leeks thrown from a truck dominated television, triggering a bout of soul-searching over the new depths of poverty in the debt-laden country.


“These images make me angry. Angry for a proud people who have no food to eat, who can’t afford to keep warm, who can’t make ends meet,” said Kostas Barkas, a lawmaker from the leftist Syriza party.


Other lawmakers from across the political spectrum decried the images “of people on the brink of despair” and the sense of “sadness for a proud people who have ended up like this“.


People have seen their living standards crumble as the country faces its sixth year of recession that has driven unemployment to record highs.



The free food handout in Athens began peacefully as hundreds of Greeks lined up in advance outside the agriculture ministry, where protesting farmers laid out tables piled high with produce, giving away 50 metric tonnes (55.11 tons) of produce in under two hours.


Tensions flared when the stalls ran out of produce and dozens of people – some carrying small children – rushed to a truck and shoved each other out of the way in the competition for what was left.


One man was treated for injuries after being trampled when he fell to the ground in the commotion.


“I never imagined that I would end up here,” said Panagiota Petropoulos, 65, who struggles to get by on her 530-euro monthly pension while paying 300 euros in rent.


“I can’t afford anything, not even at the fruit market. Everything is expensive, prices of everything are going up while our income is going down and there are no jobs.”

*  *  *

*  *  *
But now there are actual shortages due to no payments (as ekathimerini reports,)

The first occurrences of shortages in imported goods and raw materials have arisen as a result of Greek enterprises’ inability to pay with cash in advance for the entire cost of the commodities they import, and the situation is even worse than in 2012.


Market professionals have told Kathimerini that there are already some problems in the cases of mechanical equipment and electronic appliances, while in the food and drinks sector there are shortages in certain premium products such as a well-known Belgian beer.


Difficulties have also been noted in imports of chemical commodities, both end products and raw materials, which is hampering the production of fertilizers and pesticides.


Even reliable clients have been hit with the same demands from foreign suppliers, while the phenomenon is creating a chain reaction across other sectors as well.


“A number of tourism companies wanted to renew their equipment ahead of the new season but now face a serious problem,” Ioannis Papageorgakis, the president of the Athens Association of Commercial representatives and Distributors (SEADA), told Kathimerini.

*  *  *

Of course the new radical left-wing government will have a solution… simply deciding what is ‘fair’ and what is not ‘fair’ food and beverage for Greeks to eat (or drink).

But Greece is not Venezuela… yet.

The following is what Greece and all of us will probably have to face:
(courtesy zero hedge)

Venezuela To Start Fingerprinting Supermarket Shoppers

Back in August, when we wrote about the latest instance of trouble in Maduro’s socialist paradise, we cautioned that as a result of the economic collapse in the Latin American nation (and this was even before the plunge in crude made the “paradise” into the 9th circle of hell), Venezuelans soon may need to have their fingerprints scanned before they can buy bread and other staples. This unprecedented step was proposed after Maduro had the brilliant idea of proposing mandatory grocery fingerprinting system to combat food shortages. He said then that “the program will stop people from buying too much of a single item”, but did not say when it would take effect.

Privacy concerns aside (clearly Venezuelans have bigger, well, smaller fish to fry) there was hope that this plunge into insanity would be delayed indefinitely, as the last thing Venezuela’s strained economy would be able to handle is smuggling of the most basic of necessities: something such a dramatic rationing step would surely lead to.

Unfortunately for the struggling Venezuelan population, the time has arrived and as AP reported over the weekend, Venezuela “will begin installing 20,000 fingerprint scanners at supermarkets nationwide in a bid to stamp out hoarding and panic buying” as of this moment.

The government has been selectively rolling out the rationing system for months at state-run supermarkets along the western border with Colombia where smuggling of price-controlled goods is a major problem.


On Saturday, President Nicolas Maduro said that seven large private retail chains had voluntarily agreed to install the scanners.

Last month the owners of several chains of supermarkets and drugstores were arrested for allegedly artificially creating long queues by not opening enough tills.

It gets better: Maduro also accused Colombian food smugglers of buying up price-controlled goods in state-run supermarkets along the border.

For the first time in recent history the economists who say the effort is bound to fail, are right. They blame Venezuela’s rigid price controls that discourage local manufacturing and the recent slide in world oil prices that has further diminished the supply of dollars available to import everything from milk to cars.

As BBC further adds, in January the hashtag #AnaquelesVaciosEnVenezuela (“Empty shelves in Venezuela”) became a worldwide Twitter trend, with over 200,000 tweets as Venezuelans tweeted pictures of empty supermarket shelves around the country.

‘Empty shelves in Venezuela’ became a worldwide Twitter phenomenon

Last week South American foreign ministers said the region would help Venezuela address the shortages.

The lack of staple foods and medicines has contributed to discontent and to frequent large, often violent anti-government demonstrations.

What assures that Venezuela is bound to become the next Greece is that the one saving grace the socialist nation had left, high oil prices, aren’t coming back for a long time, which effectively makes the country’s oil production industry a drain of cash, cash the country can’t afford to spend, at current oil prices. As a reminder, crude oil amounts for 95% of the country’s exports. Venezuela’s plummeting currency rates and the falling price of oil by nearly half since November has diminished its supply of dollars to buy imported food.

The good news is that with the world having no lack of failed countries in the past year, for the IMF this should be a token state-rebuilding exercise for Christine Lagarde and her henchmen. One knows they have had more than enough “sovereign bail out” experience in the past year, the one in which the world was supposedly on the road to “recovery.”



Then last night Obama issues the declaration that Venezuela is a national security risk and he is ready to issue sanctions against them.
Maduro fights back:
(courtesy zero hedge)

Venezuela’s Maduro Mocks Obama, Grants Himself “Special Powers” To Defend Against “Imperialist Aggression”

Maybe it is because the soap-opera factor of the puppet proxy civil war in east Ukraine is dying down, it is time for another major geopolitical diversion, and it appears that the administration’s attention this time has fallen on Venezuela.

Perhaps he was tired of being accused for being too soft and engaging in a detente with not only Iran but Cuba, and so he decided to turn his attention on the one country he knew had absolutely no way of retaliating especially now that Venezuela’s only asset, has become a liability and all production at current prices is a loss maker for Caracas.

Whatever the reason, as Reuters reported yesterday, the United States on Monday yesterday declared Venezuela a national security threat and ordered sanctions against seven officials from the oil-rich country in the worst bilateral
diplomatic dispute since socialist President Nicolas Maduro took office in 2013.

U.S. President Barack Obama issued and signed the executive order, which senior administration officials said did not target Venezuela’s energy sector or broader economy. But the move stokes tensions between Washington and Caracas just as U.S. relations with Cuba, a longtime U.S. foe in Latin America and key ally to Venezuela, are set to be normalized. Declaring any country a threat to national security is the first step in starting a U.S. sanctions program. The same process has been followed with countries such as Iran and Syria, U.S. officials said.

The presented reason for the latest escalation was that, according to the White House, there are people whose actions undermined democratic processes or institutions, and who had committed acts of violence or abuse of human rights, and were involved in prohibiting or penalizing freedom of expression, or were government officials involved in public corruption. So just your run on the mill generic excuse to exercise waning superpower status.

Venezuelan officials past and present who violate the human rights of Venezuelan citizens and engage in acts of public corruption will not be welcome here, and we now have the tools to block their assets and their use of U.S. financial systems,” White House spokesman Josh Earnest said in a statement.


“We are deeply concerned by the Venezuelan government’s efforts to escalate intimidation of its political opponents. Venezuela’s problems cannot be solved by criminalizing dissent,” he added.

And to think that in reality Maduro is perhaps the closest ideological peer to the US president.

As for the Venezuela president, he wasn’t going to take this assault on his persona by the “imperialist” US president lying down. According to RT, he promptlyt accused the US of trying to “defeat” and “intervene in” his government.

Maduro called the sanctioned officials heroes.“President Barack Obama, representing the US imperialist elite, has personally decided to take on the task of defeating my government and intervening in Venezuela to control it,” Maduro said in a national TV address. “That’s why they have taken today’s measure.”


Maduro called the move a “colossal mistake” and “imperialist arrogance” similar to that of former US leaders such as Richard Nixon and George W. Bush.

Not surprisingly, Maduro promptly tried to turn Obama’s action into his advantage by rounding the population “around the pole” of imperialist overreach, and casting himself as the tragic protagonist:

“I congratulate them,” he said, adding “it’s an honor” to be included on the US sanctions list. Maduro even named one of the sanctioned officials – national intelligence head Gustavo Gonzalez, the new interior minister.

And the biggest punchline: the Venezuela ruler will use the Obama executive order precisely as the catalyst to grant himself even more powers, because as Bloomberg reports, today Maduro will request the passage of an ‘anti-imperialist’ enabling law.

“I have put together a special law that gives me special powers to preserve the peace, the integrity and the sovereignty of the country before any situation that presents itself due to this imperialist aggression,” Venezuela President Nicolas Maduro says on state television.

Vice President Jorge Arreaza to deliver request tomorrow to National Assembly President Diosdado Cabello for a “special and extraordinary enabling law to defend the peace, the sovereignty, the tranquility and the integrity of our homeland,” Maduro says

“I will request an anti-imperialist enabling law to prepare us for all the scenarios,” Maduro said, adding that “I am obligated as head of government to apply the constitution in its entirety.”

Just like that with the stroke of a pen, Obama succeeds in cementing the public opinion against the US of yet another nation.  And perhaps just to show where Latin America’s socialist allegiance really lies, despite Obama’s “shift in policies” moments ago we saw this: CUBA SAYS `UNCONDITIONAL SUPPORT’ FOR VENEZUELA AGAINST US: AFP.

Well, as long as Putin is the one who is isolated…





And Victoria Nuland confirms?????


(courtesy zero hedge)



US Sends Over 100 US Tanks, Armor To Latvia As Nuland “Confirms” Russia Delivering Weapons

No lesser trustworthy character than Assistant Secretary of State Victoria Nuland explained this morning that the US can “confirm” new Russian weapons delivery to Ukraine and that they “can tell” when Russia sends in new weapons (though offering no explanation of this statement). This comment to the Senate Committee comes a day after the US delivered ‘lethal aid’ to Latvia – 120 armored units (including tanks) – with US Army General John O’Conner who witnessed the tanks arriving on Latvian soil said, “Freedom must be fought for, freedom must be defended.” And finally, one more shot in the eye of the germans, deputy under-secretary of Defense Brian McKeon said the US is “actively consideringmore weapons for Ukraine,” seemingly implying they alreadt sent some?

The rhetoric is heating up


And this comes a day after the US delivered lethal aid to Latvia…

As RT reports,

Latvia has confirmed more than 120 armored units, including tanks, have been delivered by the US. According to the Latvian Ministry of Defense, these include M1A2 Abrams tanks and M2A3 Bradley armored vehicles.


The move to deploy yet more tanks and armored vehicles was welcomed by Latvian Minister of Defense Raymond Vejonis.“The presence of our allies (US and NATO) in Latvia is a confirmation of solidarity and security in the region,” Vejonis said in a statement on Twitter.


The tanks were delivered to Latvia via Riga Freeport after being offloaded from the carrier ship Liberty Promise on Monday. US Army General John O’Conner who witnessed the tanks arriving on Latvian soil said,“Freedom must be fought for, freedom must be defended,” as reported by the US Embassy Riga Twitter feed.



He also added their delivery would “demonstrate resolve to President Putin and Russia that collectively we can come together,” while General O’Connor also mentioned, they would stay “for as long as required to deter Russian aggression,” as reported by AFP.

*  *  *


*  *  *

Leaving the situation ever more dangerous…


*  *  *

But Nuland wasn’t done yet. As Sputnik news reports,

The United States government is applying pressure to European countries that oppose sanctions against Russia, US Assistant Secretary of State for European Affairs Victoria Nuland said at a US Senate hearing on Tuesday.


“We continue to talk to them bilaterally about these issues,” Nuland said of Hungary, Greece, and Cyprus, whose leaders have opposed anti-Russian sanctions. “I will make another trip out to some of those countries in the coming days and weeks.”


Nuland noted that “despite some publically stated concerns, those countries have supported sanctions” in the European Union Council.

*  *  *





Russia states that they will respond to NATO buildup next to Russian borders:
(courtesy Reuters/Sputnik and special thanks to Robert H for sending this to us)

Moscow Will Respond to NATO Military Buildup Near Russia’s Border – Lavrov

© REUTERS/ Kacper Pempel

12:41 10.03.2015(updated 12:56 10.03.2015)
Russian Foreign Minister Lavrov said that Moscow would respond to NATO military buildup near Russian border “in an adequate way.”

NATO military buildup near Russia’s border does not contribute to the restoration of trust in the Euroatlantic space, Russian Foreign Minister Sergei Lavrov said Tuesday.”We have confirmed our stance that military buildup near our border does not contribute to the restoration of trust in the Euroatlantic,” the Russian foreign minister said during a news conference with his Spanish counterpart.

Lavrov added that “we are forced to react in an adequate way, but we are sure that these problems need to be solved through an equal dialog based on mutual respect.”

Following Crimea’s reunification with Russia in March 2014 and the start of an internal armed conflict in Ukraine’s southeast in April, NATO has been boosting its military presence near Russia’s borders, including in the Baltic states.On February 5, NATO defense ministers agreed to set up a new high-readiness force dubbed Spearhead Force as part of the NATO Response Force. Altogether, the enhanced Response Force will be increased and count up to around 30,000 troops.

The ministers also decided to establish six command and control units in Bulgaria, Estonia, Latvia, Lithuania, Poland and Romania tasked with “ensuring that national and NATO forces from across the Alliance are able to act as one from the start” if a crisis arises.

Read more:

We wish the UKraine all the luck in the world:
(courtesy Reuters and special thanks to Robert H for sending this to us)

Exclusive: IMF assumes Ukraine to get $15.4 billion from creditor talks

Mon Mar 9, 2015 4:11pm EDT


WASHINGTON (Reuters) – The International Monetary Fund’s bailout program for Ukraine assumes Kiev will be able to get $15.4 billion from talks with its creditors, according to four sources familiar with the IMF’s documents.

The assumption is necessary to ensure Ukraine’s sovereign debt can fall to 70 percent of gross domestic product by 2020, a level the IMF would deem sustainable, according to three people.

Under its rules, the IMF cannot lend to countries unless it believes they will be able to pay back the money eventually.

Targeting a particular level for debt renegotiation, considering debt talks have not yet begun, points to the uncertainty surrounding the $40 billion international rescue package for Ukraine announced last month.

After a year of political upheaval and war, Ukraine’s economy is in tailspin with a currency that just pulled back from record lows and the highest interest rates in 15 years.

Under the IMF program, Kiev must make deep changes to its energy sector and banking system, and tackle decades of corruption, even as it battles pro-Russia separatists in its eastern regions.

An IMF spokeswoman was not immediately available to comment. Last month, the IMF declined to share details of the financing package, and said it had not made any assumptions about a debt restructuring for private creditors.

The Washington-based fund announced a preliminary agreement for a new $17.5 billion, four-year loan program for Ukraine last month, alongside pledges from the World Bank, the United States, the European Union and other countries.

The IMF’s board is widely expected to approve the program when it meets on Wednesday after Kiev passed a new draft budget last week to help it clinch the deal.

Finance Minister Natalia Yaresko also said the Ukrainian government expects to get $15 billion from talks with holders of its sovereign bonds, and should begin the discussions after the IMF deal goes through.

Boutique investment firm Rothschild has invited investors to organize a Ukraine creditor group ahead of the talks, which are expected to be difficult in light of Ukraine’s ongoing war, sources familiar with the situation told Reuters.

(Reporting by Anna Yukhananov; Editing by David Chance and Alan Crosby)

Oil related stories
Two more problems in the oil patch but other problems associated with the low price of oil:
(courtesy Tony Sagami/Mauldin Economics)
 March 10, 2015

Oil, Divorce, and Bear Markets

Everybody loves a parade. I sure did when I was a child, but I’m paying attention to a very different type of parade today.

The parade that I’m talking about is the long, long parade of businesses in the oil industry that are cutting jobs, laying off staff, and digging deep into economic survival mode.

The list of companies chopping staff is long, but two more major players in the oil industry joined the parade last week.

Pink Slip #1: Houston-based Dresser-Rand isn’t a household name, but it is a very important part of the energy food chain. Dresser-Rand makes diesel engines and gas turbines that are used to drill for oil.

Dresser-Rand announced that it’s laying off 8% of its 8,100 global workers. Many Wall Street experts were quick to point the blame at German industrial giant Siemens, which is in the process of buying Dresser-Rand for $7.6 billion.

Fat chance! Dresser-Rand was crystal clear that the cutbacks are in response to oil market conditions and not because of the merger with Siemens. The reason Dresser-Rand cited for the workforce reduction was not only lower oil prices but also the strength of the US dollar.

If you’re a regular reader of this column, you know that I believe the strengthening US dollar is the most important economic (and profit-killing) trend of 2015.

Pink Slip #2: Oil exploration company Apache Corporation reported its Q4 results last week, and they were awful. Apache lost a whopping $4.8 billion in the last 90 days of 2014.

No matter how you cut it, losing $4.8 billion in just three months is a monumental feat.

Of course, the “dramatic and almost unprecedented” drop in oil prices was responsible for the gigantic loss, but what really matters is the outlook going forward.

CEO John Christmann, to his credit, is taking tough steps to stem the financial bleeding, and that means:

  • Shutting down 70% of the company’s drilling rigs.
  • Slashing it’s 2015 capital budget to between $3.6 and $5.0 billion, down from $8.5 billion in 2014.

Those aren’t the actions of an industry insider who expects things to get better anytime soon.

I don’t mean to bag on Dresser-Rand and Apache, because they’re far from alone. Schlumberger, Baker Hughes, Halliburton, Weatherford International, and ConocoPhillips have also announced major layoffs.

And don’t make the mistake of thinking that the only people getting laid off are blue-collar roughnecks. These layoffs affect everyone from secretaries to roughnecks to IT professionals.

In fact, according to staffing expert Swift Worldwide Resources, the number of energy jobs lost this year has climbed to well above 100,000 around the world.

From Global to Local

Sometimes it helps to put a local, personal perspective to the big-picture national news.

In my home state of northwest Montana, a huge number of men moved to North Dakota to work in the Bakken gas fields. Montana is a big state; it takes about 14 hours to drive from my corner of northwest Montana to the North Dakota oil fields, so that means those gas workers don’t make it back to their western Montana homes for months.

Moreover, the work was six, sometimes seven days a week and 12 hours a day, so once there, they couldn’t drive back home even if they wanted to. This meant long absences… and a good friend of mine who is a marriage counselor told me that the local divorce rate was spiking because of them.

Now the northwest Montana workers are returning home because the once-lucrative oil/gas jobs are disappearing. That news won’t make the New York Times, but it’s as real as it gets on Main Street USA.

From Local to National

Of course, the oil industry’s woes aren’t a carefully guarded Wall Street secret. However, I do think that Wall Street—and perhaps even you—are underestimating the impact that low oil prices are going to have on economic growth and GDP numbers going forward.

Let me explain.

Industrial production for the month of January, which measures the output of US manufacturers, miners, and utilities, came in at a “seasonally adjusted” 0.2%.

A 0.2% gain isn’t much to shout about, but the real key was the impact the mining component (which includes oil/gas producers) had on the industrial-production calculation.

The mining industry is the second-largest component of industrial production, and its output fell by 1.0% in January. It was the biggest drag on the overall index.

However, the Federal Reserve Bank said, “The decline [was] more than accounted for by a substantial drop in the index for oil and gas well drilling and related support activities.”

How much did it account for? The oil and gas component fell by 10.0% in January.

Yup, a double-digit drop in output in just one month. Moreover, it was the fourth monthly decline in a row.

Last week’s weak GDP caught Wall Street off guard, but there are a lot more GDP disappointments to come as the energy industry layoffs percolate through the economy. Here’s how my Rational Bear readers are getting ready for GDP and corporate-earnings disappointments that are sure to rattle the markets.

Can your portfolio, as currently composed, handle a slowing economy and falling corporate profits? For most investors, the answer is “no.” Click above to find out how to protect yourself.

Tony Sagami
Tony Sagami
Mauldin Economics

Oil prices could drop further as USA storage tanks are running close to the brim:
(courtesy zero hedge)

US May Run Out Of Oil Storage Space As Soon As June


On Sunday, we noted that the economics of the floating storage play could spell further declines for crude prices. With a global stock increase that’s some 3 times larger than that which occurred during the last period of oversupply, expect cheap, on-land storage to prove inadequate necessitating the use of VLCCs. According to Soc Gen, determining how far the front end of the curve would have to fall in order for traders to arbitrage the difference between buying and storing physical oil and selling paper forward is a good indicator for where prices may find a floor:

…the bank is looking for the front end of the curve to fall until the contango is wide enough to make the floating storage play enticing. 


The example Soc Gen uses shows that Brent needs to see ~$49 before the trade is sufficiently profitable. 

The takeaway, we noted, is that storage availability and contango should be taken into account when considering the future direction of oil prices. With production still climbing despite the decline in rig count, it seems supply may, in short order, outstrip storage capacity for as the following two charts show, crude storage capacity in the US is now at 60% and is set to be completely exhausted by June: 


From the EIA:

Crude oil inventory data for the week ending February 20 show that total utilization of crude oil storage capacity in the United States stands at approximately 60%, compared with 48% at the same time last year. Most U.S. crude oil stocks are held in the Midwest and Gulf Coast, where storage tanks were at 69% and 56% of capacity, respectively, as of February 20.


Capacity is about 67% full in Cushing, Oklahoma (the delivery point for West Texas Intermediate futures contracts), compared with 50% at this point last year.


What this means is that over the next few months, the contango breakeven trade will become increasingly more unprofitable as the cost of remaining storage goes through the roof (i.e. prices would need to fall even farther for the the floating storage play to be economically viable).

Here’s FT:

Demand for facilities where it is easy to move crude and refined products in and out has increased: from European and US hubs, to South Africa, South Korea and Japan. In Europe, it is understood traders are in talks about the construction of new tanks, which is a characteristic of the 2008-09 “supercontango”.


US storage levels are being closely watched as commercial crude stock piles rise rapidly. They hit 444.4m barrels last week, the highest level for this time of year since the 1930s, according to government data.

Come June, when all available on-land storage is exhausted, each incremental barrel will have to be dumped on the market forcing prices lower and inflicting further pain on the entire US shale complex (just as Q1 results are released which will invariably show huge writedowns as companies will no longer be able to hide behind the SEC-mandated accounting trick that made Q4 results appear respectable). Here’s Soc Gen:

…oil markets can be impatient and prices could drop considerably lower. As we have written previously, we are currently more concerned about downside risk than upside risk.

Meanwhile, investors (who never, ever learn and whopiled into oil ETFs ahead of the widest contango in four years) are diving in head first:

From WSJ:

Investors are snapping up new stock and bonds from energy producers as they search for bargains amid the tumult caused by the plunge in oil prices.


Some investors are lured by cheap prices, while others are hoping to prop up companies in which they have already invested and keep creditors at bay. High interest rates on the new bonds—12% annually on some—are also attracting buyers at a time when rates on safe government debt are low.


“If you like a company, you can get something at half-price,” said John Groton, a senior equity research analyst at Thrivent Asset Management, an investment-management firm that oversees roughly $96 billion.


What’s that old saying about falling knives again?



Now it is Chevron’s turn to cut its costs yet still ramp up production of shale assets:
(courtesy zero hedge)

WTI Crude Slides To $48 Handle As Chevron Cuts Costs, Ramps Production


The almost-$2 surge in WTI crude prices on Friday – proving recovery is here and stability is back – is gone… long gone. Following comments from Chevron of major cost cutting, slashing capex (down 13% YoY), butramping production of shale and tight assets, WTI crude has tumbled back to a $48 handle.


WTI gives up Friday’s gains…


And then Chevron added:






Your more important currency crosses early Tuesday morning:




Eur/USA 1.0752 down  .0082

USA/JAPAN YEN 121.36  down .067

GBP/USA 1.5061  down .0046

USA/CAN 1.2648 up .0028


This morning in Europe, the euro is down by a consierable amount, trading now well below the 1.08 level at 1.0752;  Europe is reacting to deflation, announcements of massive stimulation, the ramifications of a default at Austrian Hypo bank, crumbling bourses 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 7 basis point and settling well above the 121 barrier to 121.36 yen to the dollar. The pound was down this morning as it now trades well below the 1.51 level at 1.5061.(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 down again reacting in sympathy to the lower  oil price and lower bourses around the world/ It  is trading  at 1.2648 to the dollar. It seems that the 3 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..(2) the Nikkei vs gold carry trade. (3) 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: Tuesday morning : down 125.44 points or 0.67%

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

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

Gold very early morning trading: $1165.00



Early Tuesday morning USA 10 year bond yield: 2.17% !!!  down 2 in basis points from Monday night/


USA dollar index early Tuesday morning: 98.35  up 76 cents from Monday’s close.



This ends the early morning numbers, Tuesday morning




And now for your closing numbers for Tuesday:







Closing Portuguese 10 year bond yield: 1.71% down 5 in basis points from Monday


Closing Japanese 10 year bond yield: .47% !!! up 3 in basis points from Monday/ extremely ominous/Japanese interest costs no doubt will exceed 50% of all tax revenues.


Your closing Spanish 10 year government bond,  Tuesday down 4 in basis points in yield from Monday night.


Spanish 10 year bond yield: 1.24% !!!!!!


Your Tuesday closing Italian 10 year bond yield: 1.22% down 6 in basis points from Monday:



trading 2 basis points lower than  Spain.




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


Euro/USA: 1.0696  down .01360

USA/Japan: 121.14 down .287

Great Britain/USA: 1.5060 down .0046

USA/Canada: 1.2683 up .0064



The euro fell dramatically this afternoon, after cascading on Friday. It  was well down on the day by 136 basis points finishing the day  well below the 1.07 level to 1.0690. The yen was up in the afternoon, and it was up by closing to the tune of 29 basis points and closing well above the 120 cross at 121.14. The British pound lost some ground during the afternoon session and was down on the day closing at 1.5060. The Canadian dollar was well down again today along with oil.  It closed at 1.2683 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: 2.13 down 7 in basis points from Monday






Your closing USA dollar index: 98.65 up $1.06 on the day.!!!



European and Dow Jones stock index closes:


England FTSE  down 173.63 points or 2.52%

Paris CAC down 55.25 or 1.12%

German Dax down 81.73 or 0.71%

Spain’s Ibex down 152.00 or 1.38%

Italian FTSE-MIB down 218.58. or 0.97%



The Dow: down 332.78 or 1.85%

Nasdaq; down 78.82 or 1.59%



OIL: WTI 48.66 !!!!!!!

Brent: 56.60!!!!



Closing USA/Russian rouble cross: 62.30 /down 2  roubles per dollar on the day.









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




Your New York trading for today:



From Nasdaq 5,000 To S&P Red For 2015 In 6 Days


As the massive global dollar shortage ripples its way through carry unwinds and into every asset class… The “truth” is out there…

Wait What? Who couldanode?


This is the worst run for the S&P in 2 months… and the S&P (and Dow) have closed below their 50DMA…


Dow down over 600…


As yesterday’s dead-cat-bounce (as we noted) is crushed… (with Nasdaq lagging notably) NOT OFF THE LOWS


It appears the exuberance of Nasdaq 5,000 is now a long way behing us…


and if you’re waiting for short covering… think again…


With S&P and Dow joining the Trannies in the red year-to-date…


Credit smelled it coming….

Thanks to Moar Surging by the USDollar…Swissy, EUR, Aussie all monkey-hammered…


This is the fastest rise in The USD In 34 Years…


and EM FX is baumgartner’d


Treasury yields – having shurgged off last week’s major corporate issuance – are resuming their plunge… (down 4-7bps today and notably flatter)… NOTE: TSY Yields are now 3-4bps lower on the year (outperforming stocks). Bonds have retraced all of the Jobs losses.


Dollar strength dominated commodities today…


With crude clubbed back below $49… Stable?



Charts: Bloomberg







And now the next big mega bailout:  the student loans debacle

which has over 1.1 trillion outstanding and 1/3 of that uncollectable:


(courtesy zero hedge)


Next Mega-Bailout On Deck: White House Studying “New Bankruptcy Options” For Student-Loan Borrowers



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