March 13./Euro plummets below resistance/Greece is asked to stop paying pensioners and workers for 2 months/Huge amounts of gold leaving the gold comex/Silver OI near multi year highs with a low silver price/Russia lowers its interest rate by 1% down to 14%/ Oil falls into the 45 dollar handle/

Good evening Ladies and Gentlemen:



Here are the following closes for gold and silver today:



Gold:  $1152.60 up $0.50 (comex closing time)

Silver: $15.48 down 1 cent (comex closing time)



In the access market 5:15 pm



Gold $1158.00

Silver: $15.64



Gold/silver trading:  see kitco charts on the 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 35 notices for 175,000 oz .



Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 251.28 tonnes for a loss of 51.5 tonnes over that period. Lately the removals  have been rising!



In silver, the open interest rose by another astonishing 2,745 contracts even though yesterday’s silver price was up by only 8 cents. The total silver OI continues to remain relatively high with today’s reading at 174,702 contracts. The front month of March rose by 4 contracts. We are now within a whisker of multi year high in the OI with a record low price.  This dichotomy has been happening now for quite a while and defies logic.



We had  35 notices served upon for 175,000 oz.



In gold we had an absolutely astonishing rise in OI with gold down by $1.40 yesterday. The total comex gold OI rests tonight at 424,435 for a gain of 6799 contracts. Today, surprisingly we again had only 0 notices served upon for nil oz.



Today, we had a small withdrawal of .28 tones of gold at  the  GLD/probably to pay for fees/Inventory rests at 750.67  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, Strange data at the comex tonight: huge OI increases in both gold and silver despite lower prices/silver OI near multi year highs and yet silver is extremely low in price.  At the gold comex, we are witnessing massive amounts of gold leaving the vaults. (harvey)

2, The Euro plummets and it is now below the resistance level of 1.05.

(zero hedge)

3. The ECB increases the ELA to Greece by 600 million euros as they must have run dry of money. The EU tells Greece that they can stop paying workers and pensioners for 2 months to raise enough money to repay the IMF.  Greece is angry.


4.Russia lowers its interest rate by 1% to 14%

5. The USA admonishes the UK, its close friend for its “constant accommodation to China” .  Something is up here!!

6. In the Oil sector, WTI closed at $45.08.  The USA announced more rigs being shut down, yet production keeps rising.  The big Italian oil company ENI announced reduced CAPEX and the stoppage of all share buy backs. The globe is producing in excess 2 million barrels per day and this oil has to be stored somewhere. There will be no more storage space by June.

7. NASA scientist warns California has about 1 year of water left:




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 a wide margin of 6,799 contracts today from 417,636 up to 424,435 even though gold was down by $1.40 yesterday (at the comex close). We are now in the contract month of March which saw it’s OI remain constant at 130. We had 0 notices filed on yesterday so we neither gained nor lost any additional gold oz standing for delivery in this delivery month of March. The next big active delivery month is April and here the OI rose by 253 contracts up to 217,548. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 68,064. The confirmed volume yesterday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 199,009 contracts.  Today, I wonder what happened to our HFT boys…probably scared off with the lawsuit filed. Today we had 0 notices filed for nil oz.



And now for the wild silver comex results.  Silver OI rose by an extremely high 2,745 contracts from 171,957 up to 174,702 despite the fact that silver was up by only 8 cents with respect to yesterday’s trading. We are now in the active contract month of March and here the OI rose by 4 contracts up to 844. We had 3 contracts served upon yesterday. Thus we gained 7 contracts or an additional 35,000 oz will stand in this March delivery month. The estimated volume today was simply awful at 9,351 contracts  (just comex sales during regular business hours. Something scared our HFT boys today. The confirmed volume on yesterday (regular plus access market) came in  at 36,526 contracts which is fair in volume. We had 35 notices filed for 175,000 oz today.



March initial standings

March 13.2015





Withdrawals from Dealers Inventory in oz  nil
Withdrawals from Customer Inventory in oz   68,035.745  oz  (Scotia)
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz nil
No of oz served (contracts) today 0 contracts (nil oz)
No of oz to be served (notices)  130 contracts (13,000 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

 8,466,322.8 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: 68,035.745 oz

total customer withdrawal: 68,035.745 oz



we had 0 customer deposits:

total customer deposits;  nil  oz



We had 0 adjustments



Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 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 (130) 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 (130) – the number of  notices served upon today (0) x 100 oz} =  13,500 oz or .4199 tonnes


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



Total dealer inventory: 656,644.474 oz or 20.424 tonnes

Total gold inventory (dealer and customer) = 8.078 million oz. (251. 28) tonnes)

Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 51.5 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 13 2015:





Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 1,438,058.71 oz (Brinks,Scotia,Delaware,HSBC)
Deposits to the Dealer Inventory   nil oz
Deposits to the Customer Inventory 602,112.838  oz (CNT,Delaware)
No of oz served (contracts) 35 contracts  (175,000 oz)
No of oz to be served (notices) 809 contracts (4,045,000)
Total monthly oz silver served (contracts) 1770 contracts (8,850,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal  of silver from the Customer inventory this month  3,671,537.0 oz

Today, we had 0 deposit into the dealer account:

total dealer deposit: nil   oz



we had 0 dealer withdrawal:

total dealer withdrawal: nil oz



We had 2 customer deposits:


i) Into CNT;  600,277.738 oz

ii) Into Delaware:  1935.100 oz

total customer deposit: 602,112.828 oz



We had 4 customer withdrawals:

i) Out of Brinks:  271,038.23 oz

ii) Out of Scotia:  660,653.04 oz

iii) Out of Delaware: 12,651.59 oz

iv) Out of HSBC: 493,715.85 oz


total withdrawals;  1,438,058.71 oz



we had 1 adjustment

i) out of Delaware:  30,153.31 oz was adjusted out of the customer and this landed into the dealer account of Delaware;



Total dealer inventory: 68.859 million oz

Total of all silver inventory (dealer and customer) 176.346 million oz


The total number of notices filed today is represented by 35 contracts for 175,000 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 (1770) x 5,000 oz    = 8,850,000 oz to which we add the difference between the open interest for the front month of March (844) and the number of notices served upon today (35) x 5000 oz  equals the number of ounces standing.

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

1770 (notices served so far) + { OI for front month of March( 844) -number of notices served upon today (35} x 5000 oz =  12,895,000 oz standing for the March contract month.

we gained 7 contracts or an additional 35,000 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 13/ we had a small change in gold inventory at the GLD (small withdrawal/probably to pay for fees)/Inventory at 750.67 tonnes

March 12.we had a withdrawal of 2.09 tonnes of gold at the GLD/Inventory at 750.95 tonnes

March 11.2015: no changes in gold inventory at the GLD/Inventory at 753.04 tonnes

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 13/2015 /  the GLD had a small withdrawal of .28 tonnes/Inventory at 750.67 tonnes

inventory: 750.67 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 : 750.67 tonnes.








And now for silver (SLV):



March 13.2015: no change in silver inventory/327.332 million oz

March 12: no changes in silver inventory/327.332 million oz

March 11/no changes in silver inventory/327.332 million oz

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 13/2015 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)

Not available tonight

1. Central Fund of Canada: traded at Negative  7.9% percent to NAV in usa funds and Negative 8.2% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.8%

Percentage of fund in silver:37.8%

cash .4%

( March 13/2015)



Sprott gold fund finally rising in NAV

2. Sprott silver fund (PSLV): Premium to NAV falls to + 1.26%!!!!! NAV (March 13/2015)

3. Sprott gold fund (PHYS): premium to NAV falls to -.30% to NAV(March 13  /2015)

Note: Sprott silver trust back  into positive territory at +1.26%.

Sprott physical gold trust is back into negative territory at -.30%

Central fund of Canada’s is still in jail.





At 3:30 pm we get the COT report which gives position levels of our major players.   (from Tuesday to this past Tuesday)





Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
171,821 89,929 43,257 154,578 243,920 369,656 377,106
Change from Prior Reporting Period
-8,740 25,188 -901 14,498 -19,547 4,857 4,740
141 91 82 53 50 231 192
Small Speculators  
Long Short Open Interest  
41,262 33,812 410,918  
937 1,054 5,794  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of



Our large specs:

Those large specs that have been long in gold pitched a gigantic 8,740 contracts from their long side


Those large specs that have been short in gold ADDED A HUMONGOUS

25,188 contracts to their short side ??????


Our commercials:

Those commercials that have been long in gold added 14,498 contracts to their long side


Those commercials that have been short in gold covered a monstrous 19,547 contracts from their short side.


Our small specs;


Those small specs that have been long in gold added a tiny 937 contracts to their long side

Those small specs that have been short in gold added a tiny 1054 contracts to their short side.


Conclusion:  fraud?


And let us head over to the silver COT:


Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
57,966 31,994 23,489 65,853 99,116
1,624 6,859 880 2,400 -4,049
80 50 44 41 43
Small Speculators Open Interest Total
Long Short 169,125 Long Short
21,817 14,526 147,308 154,599
203 1,417 5,107 4,904 3,690
non reportable positions Positions as of: 142 120
Tuesday, March 10, 2015   ©

Our Large specs:


Those large specs that have been long in silver added 1624 contracts to their long side.


Those large specs that have been short in silver added a huge 6859 contracts to their short side


Our commercials;

Those commercials that have been long in silver added 2400 contracts to their long side

Those commercials that have been short in silver covered 4049 contracts from their short side.


Our small specs:


Those small specs that have been long in silver added a tiny 203 contracts to their long side


Those small specs that have been short in silver added 1417 contracts to their short side.


Conclusion: same as gold’s.


And now for your more important physical gold/silver stories:

Gold and silver trading early this morning

(courtesy Mark O’Byrne)


Gold Up 11% Euro This Year As Currency Wars Intensify

  • Gold has risen 11% versus the euro in 2015
  • Builds on 12% gains against the euro in 2014
  • Sentiment poor despite reasonable performance
  • Gold performing well considering significant gains in stocks and dollar
  • Dollar centric view misleading
  • Currency wars intensifying
  • Complacency and hubris rife

Gold rose 12% against the euro in 2014 and so far in 2015, gold has risen a further 11% versus the euro. The euro has fallen 23% against gold since January 2014. Gold has risen from EUR 880 per ounce in January 2014 to EUR 1,090 per ounce today.


The dollar-centric nature of most financial media and the tendency to focus on gold solely in dollars would give one the impression that gold has been devastated this year.

In dollar terms gold has not fared terribly well, it’s true, but that is more a function of the surge in the dollar than of weakness in gold. Gold’s performance has been quite good considering the significant strength in the dollar and the gains seen in stock markets.

Gold has an inverse correlation with the dollar and stocks over the long term.

How much longer the stock and dollar boom can continue in the face of deteriorating macro-economic data – the worst since the 2008 crisis – is anyone’s guess. The Federal Reserve, like its other central bank counterparts, has done an incredible job in levitating markets and risk assets thus far.

The dollar has soared against most of the currencies in the world but has only eked out very small gains versus gold. Gold has fallen just 2.7% in dollar terms.

When measured against other currencies, gold has risen versus many major currencies. In fact, it has only suffered modest declines in a few currencies this year. Despite all the negative gold sentiment against the backdrop of central banks globally racing to debase their currencies.

Gold in Euros - 1 Year - GoldCore

Priced in euros, gold opened the year at EUR 980.52. It quickly spiked to EUR 1,154.94 before what appears to be a 50% retrenchment. It then picked up again and at the time of writing, it is priced around the EUR 1,092 mark. So in Euro terms gold is actually up around 11% this year.

In GBP gold followed roughly the same pattern but did not rebound so well due to recent sterling strength and is currently trading slightly above its price at the start of the year.

We expect qold to be supported in the near term and to rise in the longer term as the ECB lurches into its QE program. The expectation that the ECB will inject massive liquidity into the financial system by buying up bonds en masse has been met with unquestioning enthusiasm.

Gold in Sterling - 1 Year - GoldCore

We do not share this enthusiasm. The anticipation of this monetary experiment has already caused the euro to plunge. This should aid exporters in the coming months. But in the longer term it will lead to inflation as importers have to pay more for their raw materials and the public have to pay higher prices for imported goods.

Also of vital importance is that most central banks are involved in competitive currency devaluations.

Therefore, in the medium and long term, currency devaluations will be of little benefit to exporters as most central banks are engaged in the same ‘beggar thy neighbour’ trade and currency wars. So far this year twenty four central banks globally have lowered interest rates in a bid to weaken their currencies to aid their export sectors and create jobs and economic growth.

The haphazard manner in which this QE experiment is being executed in the EU is also concerning. In the absence of a truly centralised central bank it has fallen to national central banks to purchase the bonds that will create a sustainable recovery. The lack of oversight is ripe for abuse of the system.

The experiment has only been in operation for four days and already there are serious questions over whether it can be actually implemented as planned. Due to arcane accountancy rules governing the quality of bonds which may be purchased it appears that there simply may not be enough bonds to meet demand.

Given that the ECB flagged its intention to engage in QE long in advance, the bond markets have already factored in anticipated massive central bank purchases. If it turns out that the central banks cannot buy their expected allocation of bonds it will likely cause chaos in the bond markets.

The uncertainty now hanging over the European bond markets cannot have been alleviated by reports that Greek Finance Minister Varoufakis said on Tuesday that “Greece would never pay back its debts,” which was followed by Prime Minister Tsipras confirming that “Greece cannot pretend its debt burden is sustainable.”

Greece’s future in the Eurozone is still questionable. The BBC is now warning that Greece may be pivoting towards Russia. They report that a “drove of Greek cabinet members will be heading to Moscow” in May, a month before the current bail-out arrangement expires.

Anticipation of ECB QE has also caused European stock markets to rise considerably. These price rises have not been matched by a rise in earnings or dividends indicating a liquidity driven bubble in some European and other indices.

Albert Edwards via SocGen

By some measures, US stock markets are more overvalued than they were in 2008.

The subprime bubble and meltdown of 2007 has now been surpassed by large bubbles in auto loans, student loans, many tech and biotech stocks, junk bonds and other sections of the bond market.

Compounding the risks is the fact that there is now $8 trillion more in public and private debt in just the United States alone.

The imbalances, distortions and malinvestment that caused the 2008 meltdown are much worse today than they were in 2008. As is the complacency and hubris.

And many of the same people who got us into this mess remain at the helm and are pursuing the same ultra loose monetary policies that got us into the debacle.

Given the risks of today – the euro and other currency QE experiments, competitive currency devaluations, currency wars, bail-ins, stock and bond market bubbles – gold will continue to protect and grow wealth over the long term.

Download Insight: Currency Wars: Bye Bye Petrodollar – Buy, Buy Gold


Today’s AM fix was USD 1,156.50, EUR 1,091.24 and GBP 779.58 per ounce.
Yesterday’s AM fix was USD 1,161.25, EUR 1,094.90  and GBP 774.48 per ounce.

Gold fell 0.06% percent or $0.70 and closed at $1,153.30 an ounce yesterday, while silver climbed 0.45% or $0.07 to $15.57 an ounce.

Gold in Dollars - 10 Years - GoldCore

In Singapore, bullion for immediate delivery inched up 0.5 percent to $1,159.30 an ounce near the end of day trading.  The yellow metal has seen nine straight sessions of losses which equates to its longest losing streak since August 1973, when it fell for ten consecutive days.

 In London, spot gold is trading at $1,156.88 or up 0.24 percent. Silver is down 0.49 percent at $15.56 and platinum is up 0.45 percent at $1,123.42.

Gold Sentiment Very Poor As Speculators Sell Yet Bullion Demand Robust

Gold looks to be headed for its sixth weekly drop in seven weeks. Sentiment towards gold is quite negative after the recent price falls.

Gold has been pressurised by liquidations from the more speculative side of the market – with ETFs and in the futures market. Holdings in the SPDR Gold Trust, the world’s largest gold exchange-traded fund, fell 0.28 per cent to 750.95 tonnes on Thursday – the lowest since late January.

Unusually, the fund hasn’t seen any inflows since February 20 – see chart on flows into the ETF, and how it’s been tracking gold prices, although gold has fallen by much more than the ETF holdings.

Gold is weaker and yet, there has been very little liquidations of physical coins and bars and bullion demand in China and India remained robust in recent weeks and actually picked up this week.

Premiums in India remain close to $2 and in China they remain over $5 per ounce.

Reuters report that traders in Asia spoke of robust demand this week. “Demand has increased a little bit because of the drop in prices but there is no big rush,” said Bachhraj Bamalwa, director at the All India Gems and Jewellery Trade Federation.

Asian buyers again are using weakness in gold and silver prices to accumulate bullion.

U.S. Mint figures show demand has been robust in March. Sales of gold American Eagle coins by the U.S. Mint have been strong, already almost matching last March’s total (at 20,500 oz so far this month, vs 21,000 oz last year) and outstripping February’s (18,500 oz).

Silver American Eagle sales aren’t doing so well, however. Sales total 1.3735 million so far this month, compared to 3.022 million oz in February and 5.354 million oz in March 2014.

Interestingly, according to Amanda Cooper of Thomson Reuters posting in the Global Gold Forum:

“Until yesterday, gold had fallen for 8 days in a row, which is pretty steep going even for the gold market when it gets gloomy. The last time gold fell that many days in a row was March 2009.

A closer look at the chart reveals that gold has only ever fallen by that many days in a row three times since the gold standard was abolished in the 1970s. Since Reuters gold data began in 1968, gold has only fallen for 9 days once, back in August 1973.”

It is worth noting that in the months following the 8 days of falls in 2009, gold prices surged.Gold rose from $892 per ounce in March 2009 to over $1,200 per ounce just 8 months later in November 2009. This was a rise of nearly 35%. A similar rise today would see gold rise from $1,155 per ounce today to over $1,550 per ounce.

Caveat emptor and past performance is no guarantee of future returns.

It takes a brave or foolish investor to buy after such price falls and we always caution never to “catch a falling knife.”

However, an attractive buying opportunity looks set to soon present itself.

Dollar, pound and euro cost averaging into a physical position remains prudent.




The following is long but certainly well worth your time in understanding the mechanics of the Chinese gold market


(courtesy Koos Jansen)


Koos Jansen: The mechanics of the Chinese gold market


10:10a ICT Friday, March 13, 2015

Dear Friend of GATA and Gold:

Bullion Star market analyst and GATA consultant Koos Jansen, who alone in the world has made documented sense of the Chinese gold market — thanks in part to the Chinese sources he has cultivated and the Chinese friends who have kindly translated for him — yesterday published a comprehensive summary of the mechanics of that market, which seems likely soon to become the world’s primary gold market. Jansen’s report is headlined “The Mechanics of the Chinese Gold Market” and it’s posted at Bullion Star here:…

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





The following was presented to you on March 6.2015.

On March 20  (next Friday(, the new gold fix will now replace the old fix and end years of manipulation.  I am repeating Alasdair’s commentary today, just in case some of you may have missed this important article


(courtesy Alasdair Macleod/




The New London Gold Fix And China’s Gold Strategy


Submitted by Alasdair Macleod via,

This month the physical gold market will undergo radical change when the four London fixing banks hand over the twice-daily fix to the International Commodity Exchange’s trading platform on 20th March.

From 1st April the Financial Conduct Authority will extend its powers from regulating the participants to regulating the fix as well. This will transfer price control away from the bullion banks allowing direct access to the fixing process for all direct participants and sponsored clients.

From this flow two important consequences. Firstly, the London market is changing from an unregulated to a partially regulated market, reducing room for price manipulation. And secondly, the major Chinese state-owned banks, assuming they register as direct participants, have the opportunity to dominate the London physical market without having to deal through one of the current fixing banks. No announcement has been made yet as to who the direct participants will be, but it is a racing certainty China will be represented.

Implications of becoming a regulated market

Under the current regime a buyer or seller on the fix has to deal through one of the four fixing bullion banks. The information gained by them from seeing this business is crucial, giving them a quasi-monopolistic trading advantage over all the other dealers. Instead, buyers and sellers will be anonymous during the auction process.

The new platform should, therefore, ensure equal opportunity, eliminating the advantage enjoyed by the fixing banks. Crucially, it will change market domination from the privileged fixing members in favour of the deepest pockets. These are almost certain to be China’s through the state-owned banks which already control the largest physical market in Asia, the Shanghai Gold Exchange (SGE).

China’s gold strategy

China actually took its first deliberate step towards eventual domination of the gold market as long ago as June 1983, when regulations on the control of gold and silver were passed by the State Council. The following Articles extracted from the English translation set out the objectives very clearly:

  •     Article 1. These Regulations are formulated to strengthen control over gold and silver, to guarantee the State’s gold and silver requirements for its economic development and to outlaw gold and silver smuggling and speculation and profiteering activities.
  •     Article 3. The State shall pursue a policy of unified control, monopoly purchase and distribution of gold and silver. The total income and expenditure of gold and silver of State organs, the armed forces, organizations, schools, State enterprises, institutions and collective urban and rural economic organizations (hereinafter referred to as domestic units) shall be incorporated into the State plan for the receipt and expenditure of gold and silver.
  •     Article 4. The People’s Bank of China shall be the State organ responsible for the control of gold and silver in the People’s Republic of China.
  •     Article 5. All gold and silver held by domestic units, with the exception of raw materials, equipment, household utensils and mementos which the People’s Bank of China has permitted to be kept, must be sold to the People’s Bank of China. No gold and silver may be personally disposed of or kept without authorisation.
  •     Article 6. All gold and silver legally gained by individuals shall come under the protection of the State.
  •     Article 8. All gold and silver purchases shall be transacted through the People’s Bank of China. No unit or individual shall purchase gold and silver unless authorised or entrusted to do so by the People’s Bank of China.
  •     Article 12. All gold and silver sold by individuals must be sold to the People’s Bank of China.
  •     Article 25. No restriction shall be imposed on the amount of gold and silver brought into the People’s Republic of China, but declaration and registration must be made to the Customs authorities of the People’s Republic of China upon entry.
  •     Article 26. Inspection and clearance by the People’s Republic of China Customs of gold and silver taken or retaken abroad shall be made in accordance with the amount shown on the certificate issued by the People’s Bank of China or the original declaration and registration form made on entry. All gold and silver without a covering certificate or in excess of the amount declared and registered upon entry shall not be allowed to be taken out of the country.

Additionally, China has deliberately developed her gold production regardless of cost so that she is now the largest producer by far in the world today. State-owned refineries process this gold along with doré imported from elsewhere. None of this gold leaves China.

The regulations quoted above formalise the State’s monopoly over all gold and silver which is exercised through the People’s Bank, and they allow the free importation of gold and silver but keep exports under very tight control. On the basis of these regulations and as subsequently amended the People’s Bank established the SGE, which remains under its total control. The intent behind the regulations is not to establish or permit the free trade of gold and silver, but to control these commodities in the interest of the state.

This being the case, the growth of Chinese gold imports recorded as deliveries to the public since 2002 is only the most recent evidence of a deliberate act of policy embarked upon thirty-two years ago. China had been accumulating gold for nineteen years before she allowed her own nationals to buy any when private ownership was finally permitted. Furthermore, the bullion was freely available, because in seventeen of those years gold was in a severe bear market fuelled by a combination of supply from central bank disposals, leasing, scrap, rapidly-increasing mine production and investor selling, all of which I estimate totalled about 76,000 tonnes in all. The two largest buyers for all this gold for much of the time were the Middle East and China. The breakdown from these sources and the likely demand are identified in the table below taken from my article for GoldMoney on the subject published last October, where a more detailed discussion of global bullion distribution during those years can be found.

Put in another context the cost of China’s 25,000 tonnes of gold equates to roughly 10% of her exports over the period, and the eighties and early nineties in particular, also saw huge capital inflows when multinational corporations were building factories in China. However, the figure for China’s gold accumulation is at best informed speculation, but given the determination expressed in the 1983 regulations and subsequent events it is clear she had deliberately accumulated a significant undeclared stockpile by 2002.

So far China’s long-term plans for the acquisition of gold appear to have achieved some important objectives. Deliveries to the public through the SGE since only 2008 totalled 8,459 tonnes, gross of returned scrap, probably more than 9,500 tonnes since 2002 given estimated domestic mine production of 1,352 tonnes between2002-2007.

With such a large commitment to this market, we must now anticipate the next stage for China’s gold policy, which is why the changes in London may be important.

China now has the opportunity to take a dominant role in London, without having to direct its order flows through the fixing banks. Therefore, it is no exaggeration to say that from 20th March, China will be able to control the global physical gold market, which will permit her to manage the price. She has the deepest pockets, backed by the largest single stockpile.

China’s motives

China’s motives for taking control of the gold bullion market have almost certainly evolved. The regulations of 1983 make sense as part of a forward-looking plan to ensure that some of the benefits of industrialisation would be accumulated as a counterparty risk free national asset. This reasoning is similar to that of the Arab nations capitalising on the oil-price bonanza only ten years earlier, which led them to accumulate their hoard for the benefit of future generations. However, as time passed the world has changed both economically and politically.

2002 was a significant year for China, when geopolitical considerations entered the picture. Not only did the People’s Bank establish the SGE to facilitate deliveries to private investors, but this was the year the Shanghai Cooperation Organisation (SCO) formally adopted its charter. This merger of security and economic interests with Russia has bound Russia and China together with a number of resource-rich Asian states into an economic bloc. When India, Iran, Mongolia, Afghanistan and Pakistan join (as they are committed to do), the SCO will cover more than half the world’s population. And inevitably the SCO’s members are looking for an alternative trade settlement system to using the US dollar.

At some stage China with her SCO partner, Russia, will force the price of gold higher as part of their currency strategy. You can argue this from an economic point of view on the basis that possession of properly priced gold will give her a financial dominance over global trade at a time when we are trashing our fiat currencies, or more simply that there’s no point in owning an asset and suppressing its value for ever. From 2002 there evolved a geopolitical argument: both China and Russia having initially wanted to embrace American and Western European capitalism no longer sought to do so, seeing us as soft enemies instead. The Chinese public were then encouraged even by public service advertising to buy gold, helping to denude the west of her remaining bullion stocks and to provide market liquidity in China.

What is truly amazing is the western economic and political establishment have dismissed the importance of gold and ignored all the warning signals. They do not seem to realise the power they have given China and Russia to create financial chaos by simply hiking the gold price. If they do, which seems to be only a matter of time, then London’s fractional reserve system of unallocated gold accounts would simply collapse, leaving Shanghai as the only major physical market.

Therefore the failure of the London bullion market to see strategically beyond its short-term interests has opened the door to China’s powerful state-owned banking monopoly to control the gold bullion market. This is probably the final link in China’s long-standing gold strategy, and through it a planned domination of the global economy in partnership with Russia and the other SCO nations.





(courtesy Chris Powell)


Gold market sentiment matters no more than technical analysis does


2:05p ICT Friday, March 13, 2015

Dear Friend of GATA and Gold:

Some gold market analysts are noting that sentiment in the sector has probably never been worse. They construe this as an indicator of a bottom in the metal’s price and the price of gold mining shares. But in a market as manipulated as the gold market, sentiment has no more meaning than technical analysis does.

Really, who cares about what is being thought by ordinary investors, who may be able to deploy a few billion dollars in the gold market, when central banks haveinfinite money to deploy and acknowledge that they are trading the gold market nearly every day? And central banks are not trading just the metal itself but also futures, options, and derivatives, by which they can leverage their trading to infinity.

For documentation of this, see:

In the face of the infinite money deployed against them, the sentiment of gold market investors could be entirely positive or negative and it wouldn’t mean anything. In the gold market right now the only sentiment that matters is that of the biggest traders, central banks.

These days no gold market analysis is worth anything unless it starts with questions like the following or is underlain by premises arising from these questions:

— Are central banks active in the gold market or not?

— If central banks are active in the gold market, is it just for fun — say, to run contests among their foreign exchange desks to see which one can cheat the most ordinary investors — or is it for policy objectives?

— If central banks are active in the gold market for policy objectives, are these objectives those that have been documented in government archives for decades — to limit the price of the monetary metal and to push it out of the international financial system so that central banks may accrue more power? Or are there other objectives as well, like the objective suggested by the economists and fund managers Paul Brodsky, Lee Quaintance, and James Rickards, who argue more or less that gold price suppression by central banks lately is meant to redistribute gold away from Western central banks and investors to Eastern central banks needing to hedge their grotesque U.S. dollar-based foreign exchange surpluses against devaluation of the dollar?

In these circumstances, if central banks are determined enough they could use their infinite leverage to drive the price of gold on the futures markets down to zero. Their intervention is limited only by the metal they are prepared to lose, just as their intervention during the operation of the London Gold Pool was limited only by the draining of central bank gold reserves to critical levels in March 1968.

Recent attempts by some central banks to repatriate their gold from the Federal Reserve Bank of New York support suspicion that the price-suppression scheme, engineered largely the U.S. government, has begun expropriating foreign custodial gold for suppression purposes, buying the scheme a lot more time than some gold market analysts thought it ever could have.

And if, as seems generally agreed, any default on the gold contract at the New York Commodities Exchange can be resolved with cash settlement at the price prevailing before no gold was offered for sale and the price skyrocketed, should the price-suppressing central banks care much about a default? For the risk of default in Comex gold would be not really the risk of losing metal but rather the risk of losing the primary mechanism of price suppression, the exchange itself, which might be replaced by confiscation or the outlawing of private possession of gold.

While it may be hard to imagine, the U.S. government claims to be fully authorized by law not just to rig the gold market and all markets in secret —…

— but also to strip anyone of any asset, not just assets in the monetary metals, upon a presidential proclamation of emergency:

That is, the outcome of the current round of gold price suppression may not be anything like the outcome of the collapse of the London Gold Pool, an advance toward freer markets, but rather more of what even some central bankers call “financial repression.”

But at least then gold price suppression would be undertaken so openly that even mainstream financial news organizations would have to mention it — that is, if news organizations were allowed to continue operating at all.

That’s why the only gold market analysis that may be worth anything anymore is analysis of the struggle between totalitarianism and liberty. No Internet site of financial data offers a chart for that.

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






And now for the important paper stories for today:



Early Friday morning trading from Europe/Asia



1. Stocks generally higher on major Chinese bourses (India and Australia lower)/yen falls to 121.51

1b Chinese yuan vs USA dollar/yuan strengthens to 6.2592

2 Nikkei up 263.14 or 1.39%

3. Europe stocks  bleeding red/USA dollar index down to 99.69/Euro falls to 1.0571

3b Japane 10 year bond yield .41% (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 121.51/

3c Nikkei still above 19,000

3d USA/Yen rate now above 121 barrier this morning

3e WTI  46.15  Brent 56.43

3f Gold up/Yen slightly down

3gJapan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion.  Japan’s GDP equals 5 trillion usa.

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.

3h  Oil down for both WTI and Brent this morning.

3i European bond buying continues to push yields lower on all fronts in the EMU

Except Greece which sees its 2 year rate rise to 19.05%/Greek stocks down again by 1.09% today/expect continual bank runs on Greek banks.

3j  Greek 10 year bond yield:  10.83% (down slightly by 5 basis points in yield)

3k Gold at 1160.00 dollars/silver $15.66

3l USA vs Russian rouble;  (Russian rouble par rouble/dollar in value) 60.60

3m oil into the 46 dollar handle for WTI and 56 handle for Brent

3n Higher foreign deposits out of China sees hugh risk of outflows and a currency depreciation.  This scan spell financial disaster for the rest of the world/China may be forced to do QE!!

30  SNB (Swiss National Bank) still intervening again in the markets driving down the SF

3p Britain’s serious fraud squad investigating the Bank of England

3r the 7 year German bund still is  in negative territory/no doubt the ECB will have trouble meeting its quota of purchases and thus European QE will be a total failure.

3s We now have our 24th nation lowering interest rates as we now have a global margin call on all USA borrowings. (see below)

4.  USA 10 year treasury bond at 2.12% early this morning. Thirty year rate well below 3% at 2.70/yield curve flatten/foreshadowing recession.

5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.



Euro Resumes Slide After Goldman Cuts Forecast, Expects Parity In 6 Months; Futures Flat


Closing out another whirlwind week, which has seen the biggest S&P 500 intraday plunge and surge in months, futures are taking a breath (if not so much the Nikkei which closed over 19,000 for the first time since 2000 – one wonders how many direct equity interventions it took the BOJ to achieve that artificial “price discovery”). In lieu of any notable macro news, the most significant update hit less than an hour ago when Goldman piled on the EUR pressure, when it released a note in which it further revised down its EURUSD forecast.

Here is the key section from Goldman’s Robin Brooks:

In the month following the ECB’s QE announcement on January 22, EUR/$ went sideways as markets looked for a new catalyst. At the time, in an FX Views entitled “The End of the Beginning”, we argued that the downward trend in EUR/$ is powerful for several reasons. In particular, we flagged building portfolio outflows by Euro area residents as a driver of EUR/$ lower and since then have written repeatedly (see here, for example) on the normalization in US monetary policy – the fading role of forward guidance – as another catalyst. We see the latest downdraft in EUR/$ as a reflection of both forces and update our forecast to 1.02, 1.00 and 0.95 in 3, 6 and 12 months (from 1.12, 1.10 and 1.08 previously), as well as 0.85 and 0.80 at end-2016 and end-2017 (from 1.00 and 0.90), respectively. We therefore expect more downside in the near term, with the expected removal of “patient” at next week’s FOMC a key catalyst. In the longer term, we continue to believe that EUR/$ will significantly undershoot our GSDEER measure of fair value (around 1.20), reflecting diverging growth and monetary policy outlooks.



Following the note the EURUSD once again dipped below 1.06 and is once again approaching the overnight lows of 1.0565, however, keep in mind it is the 1.05 level and just below it that is most critical support: its breach and opens a gap down as far as 0.84.

The other key story over the past week has been European bond yields, which have crashed. Today, however, the ECB appears to be late with its bond-buying and as a result there is some redness on the morning update. Considering the ECB still has over $1 trillion in purhcases for the duration of the program (even not assuming an open-end) and a scarcity of sellers, expect this redness to turn quite green soon enough.

Looking at equities, Asian stock rose after taking the lead from a positive Wall Street close where the S&P 500 (+1.3%) saw its biggest gain in over a month, as expectations for a Fed rate hike were pushed back following a poor US retail sales report. Consequently, the Nikkei 225 (+1.4%) gained for a 3rd day and is on course to finish above 19,000 for the first time in almost 15yrs. Hang Seng (+0.1%) and Shanghai Comp (+0.7%) are also traded in the black, with the latter heading for its highest close since 2009, led by further outperformance across financial stocks. JGBs tumbled led by the long-end prompting some curve steepening, after the BoJ skipped operations in the over 10yr zone in today’s JPY 1.05trl JGB purchase operation and strong Japanese stocks.

European equities currently trade in positive territory, albeit modestly so with things particularly quiet for the session so far. Bunds trade relatively unchanged with German paper initially subject to a bout of profit-taking from the substantial gains seen earlier in the week, although Bunds have since pulled away from their worst levels in what has been an otherwise directionless session so far for fixed income markets. With things this quiet it is likely that European participants will chose to await the US PPI and Univ. of Michigan releases and see if US participants look to extend the gains seen on Wall Street yesterday.

In FX markets, despite pulling off its best levels the USD-index has once again been the main driving force for currencies with both EUR and GBP weighed on by the greenback. But as has been the case across other asset classes, things remain relatively subdued. One source of focus will be the Russian rate decision with the central bank expected to cut rates by 100bps to 14.0% in an attempt to help reduce the burden of higher rates on its domestic banking sector.

In metals markets, Copper extended on its gains during Asia hours with prices printing fresh month-to-date highs, while Dalian iron ore futures also gained by just under 1%, underpinned by yesterday’s stronger than expected lending data from the world’s largest purchaser China. Elsewhere, both Brent and WTI crude futures have failed to gain any noteworthy direction with prices set for their longest streak of weekly declines for around 2 months amid ongoing supply increases.

In Summary: European shares rise with the retail and autos sectors outperforming and oil & gas, food & beverage underperforming. Euro is weaker against the dollar. Nikkei closes above 19,000 for first time since April 2000. Record U.S. crude inventories may renew price falls, curb output, IEA says. U.K. house data shows price rises slowing. Spanish and Swedish markets are the best-performing larger bourses, U.K. the worst. Japanese 10yr bond yields rise; German yields increase. Commodities decline, with natural gas, soybeans underperforming and nickel outperforming. U.S. Michigan confidence, PPI due later.

Market Wrap

  • S&P 500 futures up 0.1% to 2059.1
  • Stoxx 600 up 0.1% to 395.9
  • US 10Yr yield up 2bps to 2.14%
  • German 10Yr yield up 1bps to 0.26%
  • MSCI Asia Pacific up 0.1% to 143.9
  • Gold spot up 0.2% to $1156.4/oz
  • Eurostoxx 50 +0.1%, FTSE 100 +0.1%, CAC 40 +0.1%, DAX +0.2%, IBEX +0.4%, FTSEMIB +0.1%, SMI +0.3%
  • MSCI Asia Pacific up 0.1% to 143.9, Nikkei 225 up 1.4%, Hang Seng up 0.1%, Kospi up 0.8%, Shanghai Composite up 0.7%, ASX down 0.6%, Sensex down 1.3%
  • Euro down 0.27% to $1.0606
  • Dollar Index down 0.01% to 99.42
  • Italian 10Yr yield up 2bps to 1.15%
  • Spanish 10Yr yield up 2bps to 1.17%
  • French 10Yr yield little changed at 0.5%
  • S&P GSCI Index down 0.2% to 402.6
  • Brent Futures down 0.4% to $56.9/bbl, WTI Futures down 0.3% to $46.9/bbl
  • LME 3m Copper up 0.2% to $5853.5/MT
  • LME 3m Nickel up 1.1% to $14055/MT
  • Wheat futures little changed at 507 USd/bu

Bulletin Headine Summary from Bloomberg and RanSquawk

  • Equities trade in minor positive territory with no real pertinent macro newsflow so far
  • The USD-index once again trades higher, subsequently placing some modest weight on EUR/USD and GBP/USD
  • Looking ahead, today sees the release of US PPI, Univ. of Michigan Confidence and the Canadian jobs report
  • Treasuries head for weekly gain after strong demand at 3Y, 10Y auctions and weaker than forecast retail sales undermined case for Fed to begin raising rates in June.
  • Over $60b of investment-grade bond have priced this week, second consecutive week to top $50b; $6.5b high-yield priced, with Valeant’s $10b equivalent in four parts (three USD, one EUR tranche) to price today
  • Greece’s war of words with Germany deepened as Greece renewed demands for war reparations and formally complained about Finance Minister Wolfgang Schaeuble, who suggested on Tuesday that Greek FinMin Varoufakis needed to look more closely at an agreement Greece signed in February
  • Russia’s central bank lowered its key rate in line with most economist forecasts, as stabilizing inflation clears the path to boosting an economy buckling under low oil prices and sanctions over Ukraine
  • Governor Lars Rohde says Denmark’s central bank hasn’t had to intervene in currency markets since the end of February as a speculative attack against the krone dies away
  • PBOC Governor Zhou Xiaochuan, speaking at a rare press conference, said that credit funds in stocks is good for economy: “There’s a view that credit funds shouldn’t enter the stock market, arguing that funds in stocks won’t support real economic growth — I personally don’t agree with this view”
  • Sovereign 10Y yields higher. Asian, European stocks mostly lower, U.S. equity-index futures gain. Crude lower, gold higher, copper little changed


DB’s Jim Reid completes the overnight event recap



Welcome to the second successive Friday 13th, I’ve no idea the last time this happened, but obviously it’s the previous Friday February 13th that wasn’t a leap year. Ahead of this the market had a shock yesterday as Bund yields actually went up and scaled the dizzy heights of 0.25% (4bps higher) although as we’ll see below the peripheral rally continued at high speed in the morning to fully reverse by cob. I think it says a lot about the emotion quality of my readers that this week I’ve had well over a thousand congratulatory messages following my announcement on Tuesday but when I asked yesterday as to whether anyone had any strong conviction about the direction of bunds over the next 3-6 months I had 8 replies out of 29,500 official subscribers. The majority of these (ok about 6) felt that bund yields were vulnerable over that period and the market bordering on crazy. A couple felt that while they might be crazy long-term they saw no reason why the rally couldn’t continue given the supply demand dynamics. So maybe not the largest sample in the world but the lack of responses probably reflects the difficulty of the question.

If you’re looking for some justification for the seeming madness, DB rates strategist Abhishek Singhania highlighted that whilst in recent days Eurozone GDP weighted 10Y real yields have declined sharply to ~ -75bps, this is not out of line with the recent post-crisis experience in the US. Across the Atlantic they went to as low as -115bp and remained in the below -50bps range for a year and a half from 2012 to mid 2013. Also in the aftermath of the global financial crisis until the end of Fed QE (i.e. from 2009 onwards until Oct-14), Eurozone real yields have averaged 100bps over US real yields, well above the pre-crisis average. Given this Abhishek concluded that whilst real yields in the Eurozone are declining rapidly and the spread to US is below the pre-crisis average, if the policy objective is seen to be to undo the potential negative effects of having had very high real yields relative to the US over the past few years it remains hard to call a reversal in aggregate Eurozone yields anytime soon unless there is an increase in inflation expectations in the Eurozone. Whilst you can debate quite how normal US yields and (so comps against them too) have been over the past few years it certainly suggests that perhaps European rates markets at the moment are reflecting the ECB finally joining in the global policy/currency war/financial repression battle that it has been losing for half a decade. Anyway all food for thought and as we said yesterday we’d rather own spread product than Bunds at these levels.

Overall the QE trade took a breather yesterday with the euro strengthening +0.5% vs the dollar, the 10yr bund rising 4bps as already discussed and European equity markets flat-to-down. Spain and Italian 10 year bonds saw a whirlwind day with the former breaking through 1% for the first time in the morning before closing flat for the day at 1.14% and the latter hitting 1.03% before moving back to 1.13%, also flat. The notable outperformers yesterday despite some mixed economic data (more later) were US assets with the S&P500 up 1.3% and back in positive territory for the year with CDX IG and HY tightening 1bps and 6bps respectively.

The disappointing US retail sales number(-0.6% vs +0.3% expected) dictated the day’s moves as markets re-evaluated the probabilities of an early Fed hike. Interestingly the Atlanta Fed’s GDPNow forecast which we highlighted earlier in the week, ticked down to 0.6% from 1.2% for Q1. It’s a weekly update. Weather is taking much of the blame and continues to make analysis tricky but if it’s tough for the market, it’s also tough for the Fed too. We won’t get clean data for a few months. Complicating matters further we also had another outperforming labour market number as the initial jobless claims came in better than expected (289k vs 305k). We also saw the Q4 US household change in net worth which rose by an impressive $1517.4bn.

If all that isn’t confusing enough, DB’s Jerome Saragoussi commented yesterday that whilst updating his US CPI forecasts his current estimates now show US headline inflation at -0.43% in June with energy prices and the dollar not helping. On top of this Jerome added that not only will headline look bad in June but the outlook for core CPI remains bleak through 2016 given the strengthening of the dollar and the lagged impact on core goods inflation via the channel of import prices. Rate hikes in a month where we look set to have fairly large negative CPI and possibly a deteriorating outlook for core inflation for at least a year ahead would be, optically at least, an interesting sell. A few months ago it would have been inconceivable to think the Fed would raise rates when inflation was negative.

In terms of data/news flow yesterday, in Europe French February CPI came in slightly above expectation at +0.7% MoM whilst the Spanish read was in-line at +0.1% MoM. We had eurozone January IP which came in notably below expectation at -0.1% MoM. In the UK, Bank of England governor Mark Carney made some dovish comments surrounding the, “risk that the combination of persistently low global inflation and the strength of sterling could weigh on prices here for some time.” On a theme we’ve touched on a lot this week, he made some interesting comments on the risk of possible currency strength in the current global macro environment: “In an environment of low rates everywhere, even a bank rate of half a percent might look high-yielding… and the fear of a bad outcome abroad could trigger safe-haven capital flows into the U.K. that push the value of sterling higher, making exporting more challenging, with knock-on implications for wages and prices here.” (Bloomberg News). The UK 10Y ended the day 8bps lower and EURGBP rose +0.8%. Elsewhere the war of words between Greece and Germany took another turn yesterday with news that earlier in the week the Greek ambassador in Berlin made an official protest apparently over comments made by Finance Minister Wolfgang Schaeuble and his tone (Reuters). In perhaps more meaningful news the ECB increased the maximum ELA available to Greek banks by €600m according to people familiar with the matter (Bloomberg News).

While much of the attention this week has been on eurozone government bond markets, looking at fund flows the demand for HY credit in Europe also remains impressive. The past week has seen a 9th consecutive week of inflows into Western Europe HY funds with the latest number in excess of +$1bn, setting another new record for inflows (in notional terms) and pushing YTD cumulative net flows above +$5bn. The continued inflows in Europe are in contrast to what we have seen in the US over the past week with North American HY funds seeing more than $2bn of outflows, the first week of outflows since mid-January. YTD we have still seen more than $8bn of net inflows.

Overnight we have had the final read of Japanese January IP which came in slightly weaker than previously at +3.7% MoM however the market seems to be looking past this with Asian equities up notable as we type. The Nikkei is up +1.7%, the Shanghai composite is up +0.4% and the MSCI APEX 50 up +0.6%. Credit is also performing with iTraxx Asia IG 1.5bps tighter.

Looking to the day ahead we have a relatively quiet day in Europe whilst over in the US we have February PPI (expected to rise to +0.3% MoM) and UoM sentiment expected in at 95.5.








We have one good advice to give Mr Tsipras and Mr Varoufakis:


saddle your horse and head over to Russia and then China:


(courtesy zero hedge)





Europe Has A Modest Proposal For Greece: “Don’t Pay Wages For One Or Two Months”



The Greek liquidity, pardon “cash flow” problems are so bad, not only Zero Hedge, but also Bloomberg has launched a daily maturity tracker of how much money Greece has to pay either to the IMF or to prefund T-Bill rollovers. This is what Bloomberg blasted out earlier today:

Greece is preparing for another week of hurdles that ends with a ~EU2b repayment on March 20. Most economists say that it will be difficult for Greece to get past end of March without fresh EU funds. Here’s a timeline of the most important events scheduled this week:

  • Monday, March 16: Greece to repay about EU577m in IMF loans
  • Wednesday, March 18: Greece’s debt agency PDMA to sell 13- week treasury bills

Which explains why as we reported yesterday, Greece passed a law to plunder pension funds, one which would allow the government to fully invest reserves of pension funds and other public entities kept in Bank of Greece deposit accounts in Greek sovereign notes.

None of this is news: that Greece will run out of cash absent another check from the Troika, pardon Instituions, pardon creditors, is clear. The only question is what happens after, if Europe indeed leaves Greece hanging.

Today, the Greek media is ablaze with just what Europe’s proposed solution to this issue may be. As Protothema andCapital report, the Troika proposed that Athens halt the payment of salaries and pensions for one to two months. This, according to Europe, would promptly tackle the problem of liquidity and find a solution to Greek problem of how to pay back bailout loan tranches to creditors when suffering from liquidity problems.

As Keep Talking Greece reports, the creditors’ proposal was revealed by Varoufakis’ aide Elena Panarity at an event of the Deree College on Thursday and was confirmed by Finance Ministry officials on Friday.

“When we say that we have liquidity problems, they tells us to make no payment of salaries and pensions for one or two months,” Panariti said as quoted by Greek media.

The creditors made this proposal at the side talks the Brussels Group meeting in Brussels on Tuesday.

Panariti did not reveal which one of Greece’s creditors ECB, IMF and EU made this proposal. She is part of the Greek team negotiating with creditors the reforms that Athens has to fulfill in the next months.


In seems that the proposal was made to Finance Minister Yanis Varoufakis who rejected it right away, describing it as “shameful”.

Shameful indeed, but the question remains: where does Greece, which tax revenues continue to suffer, find the cash it needs to fund upcoming payments not just to the IMF but all other creditors?

So to summarize, once again, the peculiar debt payment dynamics in Greece: first the “anti-austerity”, “ultra-leftist” government is about to use what little Greek pensions are left, and now – if the Troika has its way – will stop paying government salaries for a month or so, so that Greece can find enough funds to pay the IMF, which then can promptly use the same funds to pay the US muppet government in Kiev which is just as broke as Greece, and needs to pay Gazprom yesterday to keep gas deliveries coming, with Gazprom promptly remitting the funds into Putin’s personal money vault.

Rinse repeat.

Meanwhile, Greece, where apathy just hit unseen levels, will end up so poor it can’t even afford to conduct the next elections in which, as many have warned, none other than the neo-nazi party may finally take power.

From Greek newspaper Ekathimerini: another rise in the ELA by 600 million to 69.4 billion euros.  (they must have run dry of money)

Ekathimerini noted: “that the ECB agreed to another rise in the emergency cash available to Greek banks after it raised the ELA limit by €600M to €69.4B. It said that at the same time the state is hoping to draw €2B from the cash reserves of various state entities. It highlighted that according to sources, the two developments are linked, with the rise in ELA taking the available cushion to local lenders to €3.5B as the rest has already been drawn on. It pointed out that state entity deposits held at commercials banks add up to €3-3.5B and if they decide to invest these reserves in state debt then banks would see a loss of liquidity, which the ELA cushion should cover.”






Russia again cuts its interest rate from 15% down to 14% despite lower oil prices.  However this time the rouble rises a bit and trading around the 60 roubles/dollar mark. The world is beginning to see confidence in the Russian economy something which is annoying Obama:


(courtesy zero hedge)




Russia Cuts Interest Rate From 15% To 14%, Ruble Rises



Following the dramatic December surge in Russian interest rates when the Bank of Russia scrambled to preserve confidence in the then-plummeting currency and sent the interest rate to a whopping 17%, now that the oil price crash has stabilized it has been walking down this dramatic move, and after reducing rates by 2% on January 30 to 15%, moments ago the Bank of Russia once again cut rates this time by the expected 100 bps to 14%. The bank also said that more rate cuts are in the pipeline.

According to the WSJ, “Friday’s move is another sign of confidence from Russian authorities that the worst of the economic turmoil caused by Western sanctions and the plunge in the oil price could soon be over. But economists said it represents a risky bet that Russia’s still-fragile financial system could soon be on the mend.”

The ruble firmed to 61.3 versus the dollar after the rate cut from levels of around 61.5 a dollar before the announcement.


As well as its key rate, the central bank cut its deposit rate to 13%, while the repo rate went down to 15% on the back of long-awaited slowdown in inflation.

All of the above means it is time to update the list of 24 central bank easings/rate cuts less than three months in 2015:


Uzbekistan’s central bank cuts its refinancing rate to 9 percent from 10 percent.

2. Jan. 7/Feb. 4 ROMANIA

Romania’s central bank cuts its key interest rate by a total of 50 basis points, taking it to a new record low of 2.25 percent. Most analysts polled by Reuters had expected the latest cut.


The Swiss National Bank stuns markets by scrapping the franc’s three-year-old exchange rate cap to the euro, leading to an unprecedented surge in the currency. This de facto tightening, however, is in part offset by a cut in the interest rate on certain sight deposit account balances by 0.5 percentage points to -0.75 percent.

4. Jan. 15 EGYPT

Egypt’s central bank makes a surprise 50 basis point cut in its main interest rates, reducing the overnight deposit and lending rates to 8.75 and 9.75 percent, respectively.

5. Jan. 16 PERU

Peru’s central bank surprises the market with a cut in its benchmark interest rate to 3.25 percent from 3.5 percent after the country posts its worst monthly economic expansion since 2009.

6. Jan. 20 TURKEY

Turkey’s central bank lowers its main interest rate, but draws heavy criticism from government ministers who say the 50 basis point cut, five months before a parliamentary election, is not enough to support growth.

7. Jan. 21 CANADA

The Bank of Canada shocks markets by cutting interest rates to 0.75 percent from 1 percent, where it had been since September 2010, ending the longest period of unchanged rates in Canada since 1950.


The ECB launches a government bond-buying programme which will pump over a trillion euros into a sagging economy starting in March and running through to September next year, and perhaps beyond.

9. Jan. 24 PAKISTAN

Pakistan’s central bank cuts its key discount rate to 8.5 percent from 9.5 percent, citing lower inflationary pressure due to falling global oil prices. Central Bank Governor Ashraf Wathra says the new rate will be in place for two months, until the next central bank meeting to discuss further policy.

10. Jan. 28 SINGAPORE

The Monetary Authority of Singapore unexpectedly eases policy, saying in an unscheduled policy statement that it will reduce the slope of its policy band for the Singapore dollar because the inflation outlook has “shifted significantly” since its last review in October 2014.

11. Jan. 28 ALBANIA
Albania’s central bank cuts its benchmark interest rate to a record low 2 percent. This follows three rate cuts last year, the most recent in November.

12. Jan. 30 RUSSIA
Russia’s central bank unexpectedly cuts its one-week minimum auction repo rate by two percentage points to 15 percent, a little over a month after raising it by 6.5 points to 17 percent, as fears of recession mount following the fall in global oil prices and Western sanctions over the Ukraine crisis.

13. Feb. 3 AUSTRALIA
The Reserve Bank of Australia cuts its cash rate to an all-time low of 2.25 percent, seeking to spur a sluggish economy while keeping downward pressure on the local dollar.

14. Jan. 19/22/29/Feb. 5 DENMARK
The Danish central bank cuts interest rates a remarkable four times in less than three weeks, and intervenes regularly in the currency market to keep the crown within the narrow range of its peg to the euro.

15. Feb. 13 SWEDEN
Sweden’s central bank cut its key repo rate to -0.1 percent from zero where it had been since October, and said it would buy 10 billion Swedish crowns worth of bonds

16. February 17, INDONESIA
Indonesia’s central bank unexpectedly cut its main interest rate for the first time in three years

17. February 18, BOTSWANA
The Bank of Botswana reduced its benchmark interest rate for the first time in more than a year to help support the economy as inflation pressures ease.
The rate was cut by 1 percentage point to 6.5 percent, the first adjustment since Oct. 2013, the central bank said in an e-mailed statement on Wednesday.

18. February 23, ISRAEL

The Bank of Israel reduced its interest rate by 0.15 percentage points, to 0.10 percent in order to stimulate a return of the inflation rate to within the price stability target of 1–3 percent a year over the next twelve months, and to support growth while maintaining financial stability.

19. Feb. 4/28 CHINA

China’s central bank makes a system-wide cut to bank reserve requirements — its first in more than two years — to unleash a flood of liquidity to fight off economic slowdown and looming deflation. On Feb. 28, the People’s Bank of China cut its interest rate by 25 bps, when it lowered its one-year lending rate to 5.35% from 5.6% and its one-year deposit rate to 2.5% from 2.75%. It also said it would raise the maximum interest rate on bank deposits to 130% of the benchmark rate from 120%. On February 28 China’s Central Bank lowered by a quarter percentage point both the benchmark one-year loan rate, to 5.35%, and the one-year deposit rate, to 2.5%. “Deflationary risk and the property market slowdown are two main reasons for the rate cut this time.”

20. Jan. 15, March 3, INDIA

The Reserve Bank of India surprises markets with a 25 basis point cut in rates to 7.75 percent and signals it could lower them further, amid signs of cooling inflation and growth struggling to recover from its weakest levels since the 1980s. Then on March 3, it followed through on its promise and indeed cut rates one more time, this time to 7.50%

21. March 4, POLAND

The Monetary Policy Council lowered its benchmark seven-day reference rate by 50 basis points to 1.5 percent, matching the prediction of 11 of 36 economists in a Bloomberg survey. Twenty-three analysts forecast a 25 basis-point reduction, while two predicted no change.

22. March 11, THAILAND

The Southeast Asian country — a onetime export powerhouse that’s seen its manufacturing mojo dim somewhat in recent years amid historic flooding and political infighting — lowered its main rate to 1.75 percent.

23. March 11, SOUTH KOREA

In a surprise move, the Bank of Korea cut its policy rate from 2.00% to a record low 1.75%.

24. March 12, SERBIA

Serbia’s central bank cut its benchmark interest rate for the first time since November to 7.5%, moving to ward off deflation and support economic growth on the back of a new IMF loan deal. The cut – by 50 basis points – was in line with the expectations








Now it is Obama’s turn to attack the UK for its constant accomadation with China!!!!


(courtesy London’s Financial times/Geof Dyer/and special thanks to Robert H for sending this to us)


US attacks UK’s ‘constant accommodation’ with China

Geoff Dyer in Washington and George Parker in London

March 12, 2015 5:25 pm

U.S. President Barack Obama, right, looks on as David Cameron, U.K. prime minister, center, and Tony Abbott, Australia's prime minister, left, listen during a plenary session at the Group of 20 (G-20) summit in Brisbane, Australia, on Saturday, Nov. 15, 2014. Leaders of the world's 20 largest economies including U.S. President Barack Obama and Chinese President Xi Jinping gather in Brisbane this weekend to focus on economic issues. Photographer: Rob Griffith/Pool via Bloomberg *** Local Caption *** Barack Obama; David Cameron; Tony Abbott

The Obama administration accused the UK of a “constant accommodation” of China after Britain decided to join a new China-led financial institution that could rival the World Bank.

The rare rebuke of one of the US’s closest allies came as Britain prepared to announce that it will become a founding member of the $50bn Asian Infrastructure Investment Bank, making it the first country in the G7 group of leading economies to join an institution launched by China last October.

Thursday’s reprimand was a rare breach in the “special relationship” that has been a backbone of western policy for decades. It also underlined US concerns over China’s efforts to establish a new generation of international development banks that could challenge Washington-based global institutions. The US has been lobbying other allies not to join the AIIB.

Relations between Washington and David Cameron’s government have become strained, with senior US officials criticising Britain over falling defence spending, which could soon go below the NATO target of 2 per cent of gross domestic product.

A senior US administration official told the Financial Times that the British decision was taken after “virtually no consultation with the US” and at a time when the G7 had been discussing how to approach the new bank.

“We are wary about a trend toward constantaccommodation of China, which is not the best way to engage a rising power,” the US official said.

British officials were publicly restrained in criticising China over its handling of Hong Kong’s pro-democracy protests while Mr Cameron has made it clear he has no further plans to meet the Dalai Lama, Tibet’s spiritual leader — after a 2012 meeting that prompted a furious response from Beijing.

While Beijing has long been suspicious about US influence over the World Bank and International Monetary Fund, China also believes that the US and Japan have too much control over the Manila-based Asian Development Bank. In addition to the AIIB, China is the driving force behind last year’s creation of a Brics development bank and is promoting a $40bn Silk Road Fund to finance economic integration with Central Asia.

The UK Treasury denied that Britain had acted out of the blue, saying there had been “at least a month of extensive consultation” at a G7 level, including with Jack Lew, US Treasury secretary. The Obama administration has said it is not opposed to the AIIB but US officials fear it could become an instrument of Chinese foreign policy if Beijing ends up having veto power over the bank’s decisions.

George Osborne, UK chancellor of the exchequer, was unrepentant, arguing that Britain should be in at the start of the new bank, ensuring that it operates in a transparent way. He believes it fills an important gap in providing finance for infrastructure for Asia.

“Joining the AIIB at the founding stage will create an unrivalled opportunity for the UK and Asia to invest and grow together,” Mr Osborne said. He expects other western countries, which have been making positive noises privately about the new bank, to become involved.

Beijing launched the AIIB in October with the backing of 20 other countries but Japan, South Korea and Australia —US allies in the region — did not become founding members. There has been a strong debate within the Australian cabinet about whether to join, after US pressure to stay on the sidelines.

Mr Osborne’s decision reflects London’s desire to pursue commercial relations with China aggressively, even at the expense of antagonising Washington. A decision by the major economies to join now would give up leverage they might have over the AIIB as it was being set up, the US official said. “Large economies can have more influence by staying on the outside and trying to shape the standards it adopts than by getting on the inside at a time when they can have no confidence that China will not retain veto powers.”

When Mr Osborne visited Beijing in 2013 he said he wanted to “change Britain’s attitude to China”. The chancellor hailed the British government’ssovereign renminbi bond issue in October, the first by a western government. The UK has been keen to establish the City of London as a platform for overseas business in the Chinese currency as it starts to play a bigger role in the global economy.

The House of Commons foreign affairs committee said last week the British government should press China harder to introduce political reforms in Hong Kong. The committee also said it was “profoundly disappointed” at the “mild” response of the government when MPs were prevented from visiting Hong Kong in November during the protests.

Q&A: The Asia Infrastructure Investment Bank

The AIIB — what is it?
The Asia Infrastructure Investment Bank is one of four institutions created or proposed by Beijing in what some see as an attempt to create a Sino-centric financial system to rival western dominated institutions set up after the second world war. The other institutions are: the New Development Bank, better known as the Brics bank, and a contingent reserve arrangement, seen as alternatives to the World Bank and International Monetary Fund; a proposed Development Bank of the Shanghai Co-operation Organisation, a six-country Eurasian political, economic and military grouping dominated by China and Russia.

What is it for?
The AIIB offers an alternative to the Asian Development Bank, which focuses on poverty relief and lacks the firepower to undertake the large-scale infrastructure projects that are the remit of the AIIB.

What’s wrong with that?
In principle, nothing. But the ADB and the AIIB are seen as rival, rather than complementary organisations. The ADB was established in 1966 and now has 67 members including 48 from Asia and the Pacific. But it is seen by many in the region as overly dominated by Japan and the US, which are by far its biggest shareholders with holdings of 15.7 per cent and 15.6 per cent respectively, compared with China’s 5.5 per cent. The AIIB was founded last year with 21 members. Notably absent were the US, Japan, Australia and South Korea. The US, it is said, lobbied countriesnot to join, while China worked hard to get them in.

Does that matter?
Both sides clearly think it does. Proponents of the AIIB criticise the ADB for being overly bureaucratic. The AIIB’s critics say the new lender will play fast and loose with conditionality and other restrictions on the behaviour of borrowers, allowing corruption to flourish. More significant, however, are strategic considerations. The US and China are increasingly engaged in a struggle for regional influence, played out through institutions such as these.





Dave Kranzler and Rob Kirby: who are behind the rigged markets:


(courtesy Dave Kranzler/Rob Kirby)





Shadow of Truth Ep. 10: Rob Kirby – Who’s Behind The Rigged Markets?

The Shadow of Truth hosts Rob Kirby for an incredible discussion about the insidious, omnipresent forces behind what has evolved into continuous, non-stop global financial markets intervention by the Central Banks.  Or is it really the Central Banks?

I think you will find this discussion highly informative, if not highly engaging.  Please pass it along to friends and colleagues – the world needs to see The Truth:

By way of background, it was a renowned and respected macro-economist, Frank Veneroso, who discovered in the mid-1990’s that global demand for gold exceeded the annual global mining supply.  He also discovered that it was western Central Banks that were selling outright and leasing gold from their holdings in order to balance out this supply.

Why?  Because money-printing had started to accelerate, especially by Alan Greenspan’s Fed, in response to a series of increasingly severe economic shocks – like the S&L/junk bond collapse, the Asian debt collapse, Mexico’s peso collapse, Long Term Capital’s collapse, etc.   If the Central Banks had allowed the price of gold to rise in response to growing demand for physical supply, it would have undermined the global fiat currency system and stripped the existing U.S.-centric global power structure.

This is why the Bank of England dumped 400 tonnes of its gold – 50% of its holdings – into the market, right at the bottom, starting in 1999.  This launched the current bull market in gold.  Yes, reader, gold is still in a bull market – it’s currently up 462% from its $250 in 2000/2001.

With that as the backdrop, led by Rob we discuss the connection between the U.S. Treasury and the Fed.  Most people mistakingly believe that it’s the Fed which rigs the markets.  But the Fed is a political creation.  It was ordained by Congress; the Fed Chairman is appointed by the President; and Congress has the power – if it wanted to – to audit the Fed or get rid of the Fed.

It is the Working Group on Financial Markets that is the real “Wizard” behind the curtain.   Using its Exchange Stabilization Fund, the Working Group – in conjunction with the Fed, which does the Working Group’s bidding in the markets – exerts its control in all of the financial markets all of the time.   Collectively the Working Group/Fed is referenced as “The Plunge Protection Team (PPT).”





A great look at the huge household debt in Canada and it is soaring.

Many in Canada is suggesting that financial stability is at risk:


(courtesy Wolf Richter/


Household Debt Soars in Canada, “Stability” at Risk

testosteronepit's picture



Wolf Richter

Debt by Canadian households is a special phenomenon. Statistics Canada reported today that in the fourth quarter, household debt set another breath-taking record.

Earlier this month, even Equifax Canada, which is in the business of facilitating and increasing this indebtedness, had warned about it. The total indebtedness of Canadian households, according to its own measure, had jumped 7.7% from prior year, which had already been at record levels. The biggest culprits were installment and auto loans. Households are powering consumer spending, and thus the overall economy, with ever larger amounts of ultimately unsustainable debt.

A “a cautionary tale,” the report called it.

The rapid decline in oil prices caught many by surprise. And, that’s the point – consumers and business owners need to be more vigilant. When economic change happens, it can happen very quickly and can challenge previously observed stability of key economic and credit indicators.

In other words, as the price of oil collapsed, as housing stumbled, and as layoffs began – the “economic change” that “can happen very quickly” – the “stability” of different aspects of the economy, including household debt, is suddenly at risk. It’s a warning that consumers might buckle under that mountain of debt.

Now Statistics Canada weighed in. In Q4, household borrowing, on a seasonally adjusted basis, jumped by C$22.6 billion from the third quarter. Credit cards and auto loans accounted “for the majority of the overall increase.” Total household debt (consumer credit, mortgage, and non-mortgage loans) rose 1.1% from the prior quarter to C$1.825 trillion, with consumer credit hitting $519 billion and mortgage debt C$1.184 trillion.

And how did that impact households?

For the third consecutive quarter, disposable income increased at a slower rate than household credit market debt. As a result, leverage, as measured by household credit market debt to disposable income, reached a new high of 163.3% in the fourth quarter. In other words, households held roughly $1.63 of credit market debt for every dollar of disposable income in the fourth quarter.

For the moment, there is still one saving grace to this rising mountain of debt: interest rates have been coming down for years. So the debt service ratio, which measures household interest expense as a proportion of disable income, has been declining as a function of interest rates, though it inched up in Q4 to 6.8%

The chart shows how the ratio of debt to disposable income (red line, left scale) has been rising with a few exceptions, while the debt service ratio (blue line, right scale) has followed interest rates up and down:


The ratio of debt to disposable income picked up speed from 2001 on. It blew through the financial crisis even as US households were whittling down their debt by deleveraging and defaulting. Canadian households didn’t even stop to breathe. They kept spending and piled on debt at an astounding rate. Their incomes rose also, but not nearly enough. It wasn’t until 2011 that the red-hot growth rate started to lose some of its fire, bumping into all sorts of resistance from reality.

With interest rates getting pushed lower year after year, interest expense as a percent of disposable income – the debt to service ratio – has been declining. For the moment, these low interest rates keep the whole thing glued together.

And if interest rates ever rise even by a smidgen? The blue line would do what it started doing in 2006. It would roar higher. With consumer indebtedness at these levels, even a small increase in interest rates will make a big difference in the interest expense consumers would have to fork over.

The Bank of Canada – kicked into panic mode by the collapse of oil prices, the faltering housing market, vulnerable banks, and other nagging issues, including the indebtedness of the consumer, which it pointed out as a risk factor last year – suddenly cut its benchmark interest rate in January. In the past, it communicated such moves in advance. In January, it was a surprise move that shocked the markets.

Today, Rhys Mendes, Deputy Chief of the Bank of Canada’s Economic Analysis Department, told the House of Commons finance committee that the central bank would “not necessarily” be pressured into following the Fed’s rate increases this year. “The bank targets inflation in Canada, and decisions regarding monetary policy in Canada would be based on the outlook for inflation,” he said, presenting the central-bank smokescreen for keeping rates at near zero for other reasons.

The Bank of Canada will have trouble ever raising rates, regardless of the distortion and mayhem near-zero rates are causing. Households can no longer afford higher rates. They have too much debt and not enough income. Higher interest payments would eat into spending on other things. Higher mortgage rates would crash the still magnificent home prices. Consumers would buckle under their burden and default. Not to speak of the already struggling oil companies. And then there are the banks that have lent with utter abandon to all of them.

Years of low interest rates encouraged this dreadful level of leverage. Now it’s an albatross around the neck of the Bank of Canada, and for decades to come. And for the economy, it’s a high-risk burden that could quickly, as Equifax suggested, blow up.

Gravity is already very inconveniently inserting itself into Canada’s incredible housing boom. Read… Housing Construction Skids in Canada, but Crashes in the Oil Patch








Oil related stories


Early this morning:




WTI Plunges To $45 Handle – Lowest Since January


While none of the catalysts are new (IEA warning temporary stabilization amid rising oil glut and increased US production), it appears the February bounce is done asour discussions of storage limitations gains traction among the ETF-driven knife-catchers. April WTI Crude futures have collapsed in the last few days from over $52 to a $45 handle now – the lowest since January and only marginally above cycle lows… As oil cratered so EURUSD slipped and S&P futures fell.

Crude Carnage…


And EURUSD algos hit another trigger point


As Reuters notes,

Oil prices might have stabilized only temporarily because the global oil glut is worsening and U.S. production shows no sign of slowing, the International Energy Agency said on Friday.


“On the face of it, the oil price appears to be stabilizing. What a precarious balance it is, however,” the Paris-based IEA said in its monthly report.


“Behind the façade of stability, the rebalancing triggered by the price collapse has yet to run its course, and it might be overly optimistic to expect it to proceed smoothly.”


“Yet U.S. supply so far shows precious little sign of slowing down. Quite to the contrary, it continues to defy expectations,” the IEA said.

*  *  *

From Europe early this morning:
Italy’s largest oil company ENI:
1. halts buybacks  (now believes stock is heading lower)
2. it still raises production  (to pay overhead)
3. slashes capex  (no need to look for more oil)
and valuations continue to skyrocket in Europe:
(courtesy zero hedge)

“Race To The Bottom” In Oil Continues: ENI (Europe’s “Chevron”) Halts Buyback, Raises Production, Slashes Capex

Oil prices legged lower in the last few minutes as Italy’s largest energy company ENI has made a series of rather major announcements (following Chevron’s decision in January). The company plans to sell EUR8bn in assets, slash capex by 17%, and suspends buybacks. But perhaps most worryingly for the oil-patch, ENI plans to increase production 3.5% each year until 2018 as the race to the bottom in energy markets continues.


The buy-back plan is suspended. It will assess its reactivation when the strategic progress and the market scenario allow.

Full presentation here

It appears the presentation was leaked early, which tumbled the shares and was halted… when it re-opened it was down over 6%…


And crude oil prices also began tyo fall as the production raise was leaked…


As Reuters reports,

Italy’s Eni cut its dividend and suspended a share buyback programme on Friday as part of moves to offset the slump in oil prices and fund growth in its core business of looking for oil and gas.


In the first major business plan of CEO Claudio Descalzi, Italy’s biggest listed company said it would pay a 2015 dividend of 0.8 euros per share compared to the 1.12 euros per share it paid on 2014 results.


The state-controlled oil major said it would cut investments by 17 percent in the 2015-2018 period to around 48 billion euros ($50 billion) and sell assets worth 8 billion euros. At 1437 GMT Eni shares were down more than 6 percent.


The slump in oil prices  since June is testing the ability of listed oil companies to support cash flows and has sparked a rush to cut costs across the sector.


Many big oil firms have announced cuts of 10 to 15 percent to their spending budgets and some have suspended share buybacks or revived dividend payment via company stock, known as scrip shares.


Eni, which is shifting its focus increasingly to upstream exploration and production activity, said it was targeting annual output growth of 3.5 percent, up from the 3 percent growth in its previous 2014-2017 plan.

ENI is currently Italy’s largest industrial company with a market capitalization

The Italian government owns a 30.303% golden share in the company, 3.934% held through the state Treasury and 26.369% held through the Cassa Depositi e Prestiti.


Another 2.012% of the shares are held by People’s Bank of China


And just as European stock valuations were getting absolutely idiotic.



The number of rigs are declining in line with the lower oil price. However production remains high as firms need cash flow.  You can visualize the above statement by looking at what the Italian oil firm ENI  firm did today: (see above story)  they dropped their capex spending, they stopped purchasing of their shares but they still want to increase production.
Also remember that by June all the storage facilities will be exhausted.
(courtesy zero hedge)

Rig Count Drops For 14th Week In A Row, Fastest Rate In 29 Years

For the 14th week in a row, the US rig count fell 67 rigs to 1125, (a 5.6% drop to 41.4%, bigger than March 09’s previous record 14-week decline of 41%). The decline in rigs continues to track the lagged oil price perfectly but has shown absolutely no impact on production levels as firms push for cashflows in a race to the bottom. As one analyst rightly noted, while rig counts continue to drop, companies are high-grading (shifting to more efficient wells), “the real thing that needs to change is U.S. production and that is not happening at the moment.” April WTI Crude tested $45.01 before the data and bounced very modestly on the data.


The 14th weekly drop in a row continues to track the lagged oil price…


For an aggregate XX% plunge (the fastest plunge since 1986)


Rig counts drop but production rises…


*  *  *

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



Charts: Bloomberg






 Lumber:  another good Bellwether:
(courtesy zero hedge)

Lumber and Lumber Liquidators Liquidated

When the chairman of your company comes on CNBC to defend its reputation and the stock drops 11%… perhaps it’s time to reconsider the strategy. Lumber liquidators is plunging lemming-like and Lumber futures are being liquidated at the fastest rate in over a year


Lumber Liquidators liquidated…


And Lumber is having its worst week since early March last year…



Charts: Bloomberg




Early Friday morning trading from Europe/Asia




1. Stocks generally lower on major Chinese bourses/  / the  yen slightly falls  to 121.48

1b Chinese yuan vs USA dollar/ yuan strengthens  to 6.2615
2 Nikkei up 58.14 or 0.31%

3. Europe stocks all up  // USA dollar index up to 99.56/Euro in free fall down to 1.0605

3b Japan 10 year yield .43%/ (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.

3c Nikkei still  above 17,000/

3e The USA/Yen rate now above the 121 barrier this morning/
3fOil: WTI 48.48 Brent: 56.57 /all eyes are focusing on oil prices. This should cause major defaults as derivatives blow up.

3g/ Gold s down /yen slightly down;

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

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

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

3j Oil up 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 19% /Greek stocks down .8%/expect huge bank runs on Greek banks

3l  Greek 10 year bond yield :10.69% (up 60  basis points in yield)

3m Gold at $1158.50 dollars/ Silver: $15.60

3n USA vs Russian rouble:  ( Russian rouble  down 5/8  rouble / dollar in value)  61.86!!!!!!.

3 0  oil  into the 48 dollar handle for WTI and 56 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./China may be forced to do QE!!

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 today/does not look good

4. USA 10 yr treasury bond at 2.13% early this morning. Thirty year rate well below 3%  (2.74%!!!!)/yield curve flattens/foreshadowing recession
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid



Your more important currency crosses early Friday morning:



Eur/USA 1.0571 down  .0055

USA/JAPAN YEN 121.51  up .178

GBP/USA 1.4802  down .0088

USA/CAN 1.2749 up .0049

This morning in Europe, the Euro continued on its spiraling downward movement and reversed by a considerable amount, 55 basis points, trading now just above the 1.05 level at 1.0571; Europe is still reacting to deflation, announcements of massive stimulation and the ramifications of a default at the Austrian Hypo bank, crumbling bourses, and possible defaults of Ukraine and Greece.

In Japan Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen form 70 trillion on Oct 31.  The yen continues to trade in yoyo fashion as this morning it settled down again in Japan by 18 basis points and trading just above the 121 level to 121.51 yen to the dollar.

The pound was well down this morning as it now trades just above the 1.48 level at 1.4802  (very worried about the health of Barclay’s Bank and the FX/precious metals criminal investigation/Dec 12 a new separate criminal investigation on gold, silver and oil manipulation).  The Canadian dollar also reversed course and is trading in a southbound fashion following the interests of oil. It is trading at 1.2749 to the dollar.

We are seeing that the 3 major global carry trades are being unwound.  The BIGGY is the first one:

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the dollar against all paper currencies  (see below)

2. the Nikkei average vs gold carry trade/still ongoing

3. Short Swiss Franc/long assets (European housing), the Nikkei etc.

This has partly blown up (see Hypo bank failure)

These massive carry trades are terribly offside as they are being unwound.  It is causing global deflation (we are a debt saturation) as the world reacts to lack of demand and a scarcity of debt collateral.  Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>

The NIKKEI: Friday morning : up 263.14 points or 1.39%

Trading from Europe and Asia:
1. Europe stocks all bleeding  red

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

Gold very early morning trading: $1155.00



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


USA dollar index early Friday morning: 99.73  up 46 cents from Thursday’s close. (Resistance will be at a DXY of 100)


This ends the early morning numbers, Friday morning



And now for your closing numbers for Friday:




Closing Portuguese 10 year bond yield: 1.56% down 2 in basis points from Thursday (QE kicking in)


Closing Japanese 10 year bond yield: .41% !!! up 2 in basis points from Thursday/


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

Spanish 10 year bond yield: 1.15% !!!!!!


Your Friday closing Italian 10 year bond yield: 1.15% up 2 in basis points from Thursday: (despite QE)

trading par with  Spain.






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



Euro/USA: 1.0483  down .0144

USA/Japan: 121.37 up .044

Great Britain/USA: 1.4737 down .0154

USA/Canada: 1.2798 up .0108


What as day!!

The euro collapsed this afternoon, after cascading southbound all this week. It  was down on the day by 144 basis points finishing the day well below the key resistance level of 1.05  to 1.0483. The yen was slightly down in the afternoon, and it was down by closing to the tune of 4 basis points and closing well above the 120 cross at 121.37. The British pound lost huge ground during the afternoon session and was down on the day closing at 1.4737. The Canadian dollar was well down today in sympathy with the  falling oil price.  It closed at 1.2798 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 and huge losses on the USA dollar will no doubt produce many dead bodies.



Your closing 10 yr USA bond yield: 2.11 par in basis points from Thursday



Your closing USA dollar index:

wow!! it hit 100.30, the first time in quite a while:  up another $1.03 on the day.!!!



European and Dow Jones stock index closes:



England FTSE  down 20.49 points or 0.30%

Paris CAC up 23.13 or 0.46%

German Dax up 102.22 or 0.87%

Spain’s Ibex up 22.00 or 0.20%

Italian FTSE-MIB down 95.42 or 0.42%



The Dow: down 145.91 or 0.82%

Nasdaq; down 21.53 or 0.61%



OIL: WTI 45.12 !!!!!!!

Brent: 56.63!!!!

Closing USA/Russian rouble cross: 62.10 down 1  1/10  roubles per dollar on the day. (due to lower oil prices)






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



Your New York trading for today:



Furious “Plunge Protection” In Final Minutes Fails To Push Stocks Green For 2015


The worst 2-week run of the year for stocks leave Dow, S&P, and Trannies red for 2015…


Yesterday’s dead-cat-bounce died… and then the algos went berserk and ramped us above VWAP into the close… what a total joke.


Don’t think it was the machines – then how did we end perfectly at VWAP!!?


And here is the lever… smash VIX 1 handle lower… (and note VIX higher and stocks lower after the close)


But in the day, small caps outperformed – what a joke!!!!! look at it


On the week,Trannies tested red but bounced, Nasdaq underperformed…


Leaving The Dow, S&P, and Trannies red year-to-date…the panic-buying idiocy into the close was all the machines trying to get S&P green YTD


This was the worst 2-week run for The Dow and S&P since early Decemberbut Small Caps are green for March…


So let’s take a look at the turmoil…

Crude was Carnage’d under $45…


The Euro Baumgartner’d below the crucial 1.05 and could not get back up…


Yields on the week dropped 11-14bps with the long-end erasing all the Jobs-data losses…


The US Dollar saw its biggest week since September 2011…


And biggest 2-weeks since Lehman!!


Commodities performed relatively well in the face of the USD explosion… all apart from Crude…



And finally… because it’s all about fundamentals

Charts: Bloomberg







The big University of Michigan consumer sentiment report tumbles and misses by the most since 2006. Please remember that the consumer is 70% of GDP:


(courtesy zero hedge/U of Michigan Consumer Sentiment Index)




UMich Consumer Sentiment Tumbles, Misses By Most Since 2006; Weather & Poor People Blamed



Despite record high net worth and record high stock markets, the US Consumer is not amused. UMich survey of Consumer Sentiment for March tumbled from 95.4 to 91.2 (against expectations of a rise to 95.5) for the biggest miss since Feb 2006. This was the biggest one-month drop since Oct 2013. Quite unbelievably, the survey director says the drop was driven by a slide in lower-income group sentiment caused by weather!


Biggest miss since 2006… biggest drop since Oct 2013


So why did it fall – given how great stocks are:


The market’s reaction.. not good

And finally, it appears the data was ‘leaked’ 3-4 minutes early as Nanex noted, liquidity disappeared from e-minis at 0956ET.

Charts: Bloomberg





PPI final demand dropped by .6% for the first time on record.

And Obama is crowing on the strength of the economy?


(courtesy zero hedge)





US Producer Prices Tumble Most Since 2009 (And Don’t Blame Oil)


US Producer Price Index (ex food and energy) fell 0.5% MoM in February (against expectations of a 0.1% rise) – the biggest drop on record (since 2009).The great news for Americans is that the drop in overall producer prices was led by a 1.6% fall in food prices. Year-over-Year PPI Final Demand has fallen (-0.6%) for the first time on record.


Biggest MoM drop on record..


As YoY PPI Final Demand dropped for the first time on record…


The Full Breakdown

From the report:

Final demand services: Prices for final demand services fell 0.5 percent in February, the largest decline since the inception of the index in December 2009. Leading the decrease, margins for final demand trade services dropped 1.5 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) The index for final demand transportation and warehousing services also moved down 1.5 percent. In contrast, prices for final demand services less trade, transportation, and warehousing rose 0.3 percent.

Product detail: In February, nearly 30 percent of the decline in the index for final demand services can be traced to margins for fuels and lubricants retailing, which fell 13.4 percent. The indexes for machinery, equipment, parts, and supplies wholesaling; food and alcohol retailing; apparel, jewelry, footwear, and accessories retailing; truck transportation of freight; and wireless telecommunication services also moved lower. Conversely, prices for inpatient care advanced 0.6 percent. The indexes for outpatient care (partial) and for TV, video, and photographic equipment and supplies wholesaling also increased. (See table 4.)

Final demand goods: The index for final demand goods moved down 0.4 percent in February, the eighth consecutive decrease. Over two-thirds of the decline in February can be attributed to prices for final demand foods, which fell 1.6 percent. The index for final demand goods less foods and energy inched down 0.1 percent, and prices for final demand energy were unchanged.

Product detail: About a quarter of the decline in prices for final demand goods can be traced to the index for fresh and dry vegetables, which dropped 17.1 percent. Prices for iron and steel scrap, meats, jet fuel, industrial chemicals, and processed poultry also moved lower. In contrast, the index for gasoline rose 1.5 percent. Prices for light motor trucks and chicken eggs also moved up.

Special grouping, Final demand less foods, energy, and trade: The index for final demand less foods, energy, and trade services was unchanged after falling 0.3 percent in January. For the 12 months ended in February, prices for final demand less foods, energy, and trade services rose 0.7 percent.

*  *  *

And finally, perhaps it’s time to rethink this whole “central banker” thing…


So much for QE helping The Fed meet its mandate… perhaps, as we have noted previously, The Fed is creating deflationary pressures by enabling mal-investment driven over-supply on a vast scale.






We have brought this to your attention on several occasions. Now for the first time a NASA scientist warns that California has one year of water left: rather scary for California



(courtesy zero hedge/Jay Mamiglietti/LA Times)




NASA Scientist Warns “California Has One Year Of Water Left”



Authored by NASA Senior Water Scientist Jay Famiglietti, originally posted Op-Ed at The LA Times,

Given the historic low temperatures and snowfalls that pummeled the eastern U.S. this winter, it might be easy to overlook how devastating California’s winter was as well.

As our “wet” season draws to a close, it is clear that the paltry rain and snowfall have done almost nothing to alleviate epic drought conditions. January was the driest in California since record-keeping began in 1895. Groundwater and snowpack levels are at all-time lows. We’re not just up a creek without a paddle in California, we’re losing the creek too.

Data from NASA satellites show that the total amount of water stored in the Sacramento and San Joaquin river basins — that is, all of the snow, river and reservoir water, water in soils and groundwater combined — was 34 million acre-feet below normal in 2014. That loss is nearly 1.5 times the capacity of Lake Mead, America’s largest reservoir.

Statewide, we’ve been dropping more than 12 million acre-feet of total water yearly since 2011. Roughly two-thirds of these losses are attributable to groundwater pumping for agricultural irrigation in the Central Valley. Farmers have little choice but to pump more groundwater during droughts, especially when their surface water allocations have been slashed 80% to 100%. But these pumping rates are excessive and unsustainable. Wells are running dry. In some areas of the Central Valley, the land is sinking by one foot or more per year.

As difficult as it may be to face, the simple fact is that California is running out of water — and the problem started before our current drought. NASA data reveal that total water storage in California has been in steady decline since at least 2002, when satellite-based monitoring began, although groundwater depletion has been going on since the early 20th century.

Right now the state has only about one year of water supply left in its reservoirs, and our strategic backup supply, groundwater, is rapidly disappearing. California has no contingency plan for a persistent drought like this one (let alone a 20-plus-year mega-drought), except, apparently, staying in emergency mode and praying for rain.

In short, we have no paddle to navigate this crisis.

Several steps need be taken right now.

First, immediate mandatory water rationing should be authorized across all of the state’s water sectors, from domestic and municipal through agricultural and industrial. The Metropolitan Water District of Southern California is already considering water rationing by the summer unless conditions improve. There is no need for the rest of the state to hesitate. The public is ready. A recent Field Poll showed that 94% of Californians surveyed believe that the drought is serious, and that one-third support mandatory rationing.


Second, the implementation of the Sustainable Groundwater Management Act of 2014 should be accelerated. The law requires the formation of numerous, regional groundwater sustainability agencies by 2017. Then each agency must adopt a plan by 2022 and “achieve sustainability” 20 years after that. At that pace, it will be nearly 30 years before we even know what is working. By then, there may be no groundwater left to sustain.


Third, the state needs a task force of thought leaders that starts, right now, brainstorming to lay the groundwork for long-term water management strategies.Although several state task forces have been formed in response to the drought, none is focused on solving the long-term needs of a drought-prone, perennially water-stressed California.

Our state’s water management is complex, but the technology and expertise exist to handle this harrowing future. It will require major changes in policy and infrastructure that could take decades to identify and act upon. Today, not tomorrow, is the time to begin.

Finally, the public must take ownership of this issue. This crisis belongs to all of us — not just to a handful of decision-makers. Water is our most important, commonly owned resource, but the public remains detached from discussions and decisions.

This process works just fine when water is in abundance. In times of crisis, however, we must demand that planning for California’s water security be an honest, transparent and forward-looking process.Most important, we must make sure that there is in fact a plan.

Call me old-fashioned, but I’d like to live in a state that has a paddle so that it might also still have a creek.







This one is good!!


(courtesy zero hedge)



Parasite Turns On Parasite: HFT Sues Other HFTs For “Egregious Manipulation” Of Treasury Securities

There was a time when those who dared to call out the massive Libor manipulation conspiracy (such as what Zero Hedge did with one of its first posts in 2009) for being a massive Libor manipulation conspiracy some 4 years before the “theory” became a fact, were branded as scaremongering, fringe voices, best to be ignored. Then, of course, once the “theory” became “fact” it suddenly was perfectly obvious to everyone in retrospect.

But the bigger question, and what stumped the so-called experts, is how could something so vast, with so many moving pieces, remain a secret for as long as it did.

The answer is extremely simple: everyone who was in on the “secret” was also benefiting from it:from the lowliest Libor rigger to the CEO of Barclays and every other major bank, they all knew what was going on, but also knew that if the information became public knowledge, the jig would be up, and everyone’s benefits would evaporate with some even going to jail (at least in a hypothetical legal system in which bankers actually go to jail). In other words, it was merely a case where everyone’s interest was aligned to maintain the conspiracy cartel as long as possible.

Which brings us to High-Frequency Trading: another vast “conspiracy”, this time involving market rigging and manipulation, which Zero Hedge also called out as early as April 2009, only to be mocked before it became a generally accepted fact that the “algos” manipulate and frontrun virtually any security that is traded on an exchange or over the counter. This culminated with Michael Lewis’ book “Flash Boys”, only unlike the Libor case, there was absolutely no response because unlike Libor, and then FX and then gold rigging, the Federal Reserve’s own activity often depends on its symbiotic collaboration with the HFT community’s upward momentum bias (by way of Citadel, a peculiar close relationship between the NY Fed and Citadel we have discussed in the past). That, and there was also no informant to turn sides with the Feds, and make a case that goes to the very top. At least not yet.

Because the catalyst that cracked the Libor conspiracy was when the members started to make less and less money, until ultimately the formerly golden goose was bled dry. At that point, their incentive to keep their mouths shut became nil, and in some cases negative. From that point on, it was just a matter of time before the regulators had a case against the conspiracy granted to them on a silver platter.

The same is now happening to high frequency trading, because in a market in which volumes are crashing to unprecedented lows, and where there are no longer whale accounts for the HFTs to frontrun, pardon “provide liquidity to”, there is no longer a need for as many HFT firms. And those firms which end up on the losing end of the technological arms race, now that there is not enough profits for everyone to go around, are suddenly incentivized to bust the whole criminal ring wide open. Or in the words of Louis XIV, “After me, the flood.

Which brings us to a the case of HTG Capital Partners, Plaintiff v John Doe(s), defendants, case 15-cv-02129, Northern District of Illinois.

Who is HTG Capital?

Here is the firm’s description from the horse’s mouth,Chris Hehmeyer, its CEO:

HTG is a proprietary trading company that some might call an aggregator of traders and trading groups. We’re members of the exchanges, and we get financing from the banks.


We have a very diverse way of executing trades. We have colocated servers at the exchanges, at the facilities in Chicago, New York and London. We do high-frequency, automated FX trading. We have people that do OTC trades over the phone. We have people still in the trading pit and we have people who make trades with a click of the mouse. We also have people who do everything in between. We execute in a whole variety of ways, depending on the market.


We do very little equity securities. We trade a lot of different futures. In futures, we trade stock indexes, interest rates, commodities, crude oil, gold, silver, copper, cattle, soybeans, corn, sugar and cotton — we trade a lot of different commodities. We don’t trade a lot of futures options, but we certainly trade some, particularly interest rates, crude oil, metals, energy and FX options. So we trade a lot of different products. We even have U.S. government securities — that’s where we arbitrage the futures.

The last is particularly relevant, because the abovementioned lawsuit is precisely one in which the dirty laundry within the HFT cabal finally emerges. The irony: HTG is suing a group of unknown other HFT firms for “egregious manipulation” of US Treasury futures, i.e., spoofing – one of the biggest crimes the HFT syndicate engages in on a daily basis (we will let slide the delightful irony that HTF does not even know who to sue when considering that HTG CEO Hehmeyer has been an outspoken proponent of anonymity in electronic trading and his “public campaign on the issue contributed to the decision by CBOT and CME to suppress identifying information in the clearing process for trades.” Yes, ironic).

What does HTG allege?

From the lawsuit:

This matter involves the egregious manipulation of the U.S. Treasury futures markets trading at the Board of Trade of the City of Chicago (“CBOT”), a designated contract market and a wholly-owned subsidiary of CME Group, Inc. (“CME Group”). Since at least January, 2013, and continuing through at least August, 2014, the Doe Defendant(s) engaged in an illegal form of market manipulation known as “spoofing” in the U.S. Treasury futures markets. The term “spoofing” refers to, among other things, the manipulative practice of entering bid or offer orders with the intent to cancel those orders before execution (these orders are hereinafter referred to as “Deceptive Orders”). Examples of spoofing include entering orders to create the appearance of false market depth or to create artificial price movements upwards or downwards.This practice enabled the Doe Defendants to manipulate the market to their benefit, and to the detriment of HTG and other market participants. This Complaint seeks to recover the financial losses HTG suffered as a result of the Doe Defendant(s)’ illegal activity.

Back to the abovementioned irony vis-a-vis Hehmeyer’s vocal support of HFT anonymity:

Plaintiff does not know the identity of the Doe Defendant(s) because trading on the CME Globex platform is anonymous. For that reason, Plaintiff does not know the precise number of Doe Defendant(s). However, Plaintiff believes (based on the distinctive signature associated with the trading activity) that one party is likely responsible for most of the spoofing at issue in this Complaint. Moreover, allegations as to the Doe Defendants’ entry of orders are made on information and belief as the actual identity of the entity entering the orders is not known to HTG.

Actually it turns out there is no such thing as true HFT anonymity:

CME Group requires all CME Globex operators to identify themselves by the submission of a unique operator identification. Therefore, CBOT and/or CME Group are able to specifically identify the Doe Defendant(s), and Plaintiff will be able to obtain the Doe Defendant(s)’ identities through discovery. Plaintiff will request leave to amend this Complaint upon learning the identity of the Doe Defendant(s).

Actually, we know precisely HTG thinks the Doe Defendent is. Recall that it was back in August of last year when the same HTG accused rival Allston Trading, “of manipulating prices on CME Group Inc.’s exchange” vis spoofing – the same allegation that has resurfaced seven months later in this lawsuit.

Only back then it wasn’t an actual lawsuit, and HTG stopped merely with arbitration: “HTG Capital Partners LLC filed an arbitration case against Allston with CME, saying it detected a pattern of canceled bids and offers meant to mislead other traders into moving prices favorably for Allston, according to the people, who asked not to be identified because the case is private. Exchanges prohibit creating the appearance of false demand and then canceling orders, a practice known as spoofing.

But… that’s ironic, because all those defendants and lobby adherents to high frequency trading swear up and down the NYSE’s brand new laser transmitter that they never, never spoof. After all that is clearly illegal. Well, apparently, they do. And now, thanks to one of the biggest insiders in the HFT industry, it is on the public record. Worse, as this case gets more prominent, and once the discovery trickles in, it is pretty much game over not only for Allston’s spoofing strategy, but at that point the SEC, CFTC, and eve FBI will have no choice bu to finally crack down upon the industry, in a rerun of what happened in the Libor manipulation fiasco when one after another bank were exposed as manipulators of a grand scale.

And since an insider makes the allegations, it will be impossible to sweep them under the rug.

Incidentally, one must wonder just how bad things for HTG must have turned out, if the firm was ready to take this desperate, terminal step. Because after this, the party – as Virtu and BATS know it – is over. Sadly for both Virty and BATS, they never managed to go public in time. And now the party is almost over.

Back to the lawsuit, which goes in exquisite detail as to just how HFTs spoof (yes dear HFT-defending lobby: how you spoof everyone else):

The Doe Defendant(s) accomplished their spoofing activity by submitting Deceptive Orders into the CME Globex platform which they intended to cancel before execution. By submitting Deceptive Orders, the Doe Defendant(s) lured other market participants (like HTG) into selling contracts below, or buying contracts above, what would otherwise be the prevailing market price. These Deceptive Orders created the false appearance of market pressure in a certain direction (to either buy or sell). The Doe Defendant(s) then “flipped” the market by canceling their Deceptive Orders and virtually simultaneously entering an order in the opposite direction at the same price.


In this case, the Doe Defendant(s)’ spoofing is characterized by a unique signature: a well-defined pattern consisting of three phases. In the first phase, the Doe Defendant(s) would enter Deceptive Orders that they intended to cancel before execution (the “build-up” phase). These orders were deceptive because the Doe Defendant(s) intended to cancel the orders before they could be filled; they created the false appearance of market depth, which, in turn, caused unwitting market participants to react by entering buy or sell orders in the same direction as thefalse momentum. In the second phase,the Doe Defendant(s) canceled the Deceptive Orders they had entered during the build-up phase (i.e., the “cancel” phase). In the third phase,virtually simultaneous to the cancels, the Doe Defendant(s) would enter one or more orders in the opposite direction of the Deceptive Orders and at the same price, trading against the remaining available contracts at that price, thereby “flipping” the market(the “flip” phase).


It is this well-defined, three-phased pattern that demonstrates that the Doe Defendant(s)’ entered orders with the intent to cancel those orders before execution. Indeed, the frequency and speed with which the build-up, cancel and flip progression took place eliminates the possibility that this pattern was anything other than orchestrated. The Doe Defendant(s) could not have legitimately changed their mind as to the direction of the market so quickly, so often, and with such precision.

Visually this looks as follows:



It gets worse, because if enough people raise a stench about this HFT spoofing, there will certainly be a major criminal case out of it. Why? Because the security involved is the very lifeblood of the US – Treasurys, which the Doe Defendants “attacked.

Finally, the Doe Defendant(s) three-phased pattern appears to be a coordinated attack across the U.S. Treasury markets. The Doe Defendant(s) often implemented the three-phased pattern in multiple U.S. Treasury products at the same time. All of the above is strong evidence that the Doe Defendant(s) entered orders that they intended to cancel prior to execution.

It gets worse: according to HTG this “attack” is coordinated, wholesale assault on the most vital US security:

HTG has identified thousands of instancesof illegal spoofing in which it was damaged in the CBOT five (5), ten (10) and thirty (30) year U.S. Treasury futures markets during the 2013 and 2014 calendar years. To put this in perspective, if the Doe Defendant(s) had profited by just one “tick” in the three examples shown above, the Doe Defendant(s) would have generated profits of $6,125, $17,718 and $17,906 respectively.

There is much more in the full lawsuit (link), and we encourage readers to go through it as this may well be the landmark case that topples the entire house of manipulated, high frequency cards down.

As for the future of HFTs, we promise not to shed many tears: as readers know, our crusade since 2009 has been to uproot and destroy any and every HFT parasite in existence. And since it became abundantly clear that the regulators are as corrupt and complicit in the crimes of the HFTs as the actual perpetrators, we became resigned that we would have to wait until the next, and truly historic, market crash which the Fed would try to pin on the HFTs, in the process purging the market of its biggest structural cancer.

Now, however, it appears we won’t have even that long to wait: because the parasites are turning on other parasites, and the only thing missing is for the weakest link to spill all they know to the next Michael Lewis, or the next Ferdinand Pecora, in the process finally bringing the hammer of creative destruction upon the vacuum tubes.

We for one, have our popcorn ready.






And to add salt to the injury:


(courtesy Michael Lewis/Vanity Fair/zero hedge)


Flash Boys’ Michael Lewis Warns “The Problem’s Not Just HFT, The Problem Is The Entire System”



As HFT shops begin to turn on each other, it seems appropriate to reflect on the impact that Michael Lewis’ Flash Boys book had on exposing the ugly truth that many have been discussing for years in US (and international) equity (and non-equity) markets. As Lewis concludes,after explaining the attacks he has suffered from the HFT industry, “If I didn’t do more to distinguish ‘good’ H.F.T. from ‘bad’ H.F.T., it was because I saw, early on, that there was no practical way for me or anyone else… to do it. …  The big banks and the exchanges [have] been paid to compromise investors’ interests while pretending to guard those interests. I was surprised more people weren’t angry with them.”


Authored by Michael Lewis, originally posted at Vanity Fair,

When I sat down to write Flash Boys, in 2013, I didn’t intend to see just how angry I could make the richest people on Wall Street. I was far more interested in the characters and the situation in which they found themselves. Led by an obscure 35-year-old trader at the Royal Bank of Canada named Brad Katsuyama, they were all well-regarded professionals in the U.S. stock market. The situation was that they no longer understood that market. And their ignorance was forgivable. It would have been difficult to find anyone, circa 2009, able to give you an honest account of the inner workings of the American stock market—by then fully automated, spectacularly fragmented, and complicated beyond belief by possibly well-intentioned regulators and less well-intentioned insiders. That the American stock market had become a mystery struck me as interesting. How does that happen? And who benefits?

By the time I met my characters they’d already spent several years trying to answer those questions. In the end they figured out that the complexity, though it may have arisen innocently enough, served the interest of financial intermediaries rather than the investors and corporations the market is meant to serve. It had enabled a massive amount of predatory trading and had institutionalized a systemic and totally unnecessary unfairness in the market and, in the bargain, rendered it less stable and more prone to flash crashes and outages and other unhappy events. Having understood the problems, Katsuyama and his colleagues had set out not to exploit them but to repair them. That, too, I thought was interesting: some people on Wall Street wanted to fix something, even if it meant less money for Wall Street, and for them personally.

Of course, by trying to fix the stock market they also threatened the profits of the people who were busy exploiting its willful inefficiencies. Here is where it became inevitable that Flash Boys would seriously piss off a few important people: anyone in an established industry who stands up and says “The way things are being done here is totally insane; here is why it is insane; and here is a better way to do them” is bound to incur the wrath of established insiders, who now stand accused of creating the insanity. The closest thing in my writing life to the response of Wall Street to Brad Katsuyama was the response of Major League Baseball to Billy Beane afterMoneyball was published, in 2003, and it became clear that Beane had made his industry look foolish. But theMoneyball story put in jeopardy only the jobs and prestige of the baseball establishment. The Flash Boys story put in jeopardy billions of dollars of Wall Street profits and a way of financial life.

Two weeks before the book’s publication, Eric Schneiderman, the New York attorney general, announced an investigation into the relationship between high-frequency traders, who trade with computer algorithms at nearly light speed, and the 60 or so public and private stock exchanges in the United States. In the days after Flash Boys came out, the Justice Department announced its own investigation, and it was reported that the F.B.I. had another. The S.E.C., responsible in the first place for the market rules, known as Reg NMS, that led to the mess, remained fairly quiet, though its enforcement director let it be known that the commission was investigating exactly what unseemly advantages high-frequency traders were getting for their money when they paid retail brokers like Schwab and TD Ameritrade for the right to execute the stock-market orders of small investors. (Good question!) The initial explosion was soon followed by a steady fallout of fines and lawsuits and complaints, which, I assume, has really only just begun. The Financial Industry Regulatory Authority announced it had opened 170 cases into “abusive algorithms,” and also filed a complaint against a brokerage firm called Wedbush Securities for allowing its high-frequency-trading customers from January 2008 through August 2013 “to flood U.S. exchanges with thousands of potentially manipulative wash trades and other potentially manipulative trades, including manipulative layering and spoofing.” (In a “wash trade,” a trader acts as both buyer and seller of a stock, to create the illusion of volume. “Layering” and “spoofing” are off-market orders designed to trick the rest of the market into thinking there are buyers or sellers of a stock waiting in the wings, in an attempt to nudge the stock price one way or the other.) In 2009, Wedbush traded on average 13 percent of all shares on NASDAQ. The S.E.C. eventually fined the firm for the violations, and Wedbush admitted wrongdoing. The S.E.C. also fined a high-frequency-trading firm called Athena Capital Research for using “a sophisticated algorithm” by which “Athena manipulated the closing prices of thousands of NASDAQ-listed stocks over a six-month period” (an offense which, if committed by human beings on a trading floor instead of by computers in a data center, would have gotten those human beings banned from the industry, at the very least).

On it went. The well-named BATS group, the second-largest stock-exchange operator in the U.S., with more than 20 percent of the total market, paid a fine to settle another S.E.C. charge, that two of its exchanges had created order types (i.e., instructions that accompany a stock-market order) for high-frequency traders without informing ordinary investors. The S.E.C. charged the Swiss bank UBS with creating illegal, secret order types for high-frequency traders so they might more easily exploit investors inside the UBS dark pool—the private stock market run by UBS. Schneiderman filed an even more shocking lawsuit against Barclays, charging the bank with lying to investors about the presence of high-frequency traders in its dark pool, to make it easier for the high-frequency traders to have the pleasure of trading against the investors. Somewhere in the middle of it all a lawyer—oddly, named Michael Lewis—who had devised the successful legal strategy for going after Big Tobacco, helped file a class-action suit on behalf of investors against the 13 public U.S. stock exchanges, accusing them of, among other things, cheating ordinary investors by selling special access to high-frequency traders. One big bank, Bank of America, shuttered its high-frequency-trading operation, and two others, Citigroup and Wells Fargo, closed their dark pools. Norway’s sovereign-wealth fund, the world’s largest, announced that it would do what it needed to avoid high-frequency traders. One enterprising U.S. brokerage firm, Interactive Brokers, announced that, unlike its competitors, it did not sell retail stock-market orders to high-frequency traders, and even installed a button that enabled investors to route their orders directly to IEX, a new alternative stock exchange opened in October 2013 by Brad Katsuyama and his team, which uses technology to block predatory high-frequency traders from getting the millisecond advantages they need.

One fund manager calculated that trading on U.S. stock exchanges other than IEX amounted to a $240 million tax a year on his fund. © Simon Belcher/Alamy. 

On October 15, 2014, in a related development, there was a flash crash in the market for U.S. Treasury bonds. All of a sudden the structure of the U.S. stock market, which had been aped by other markets, seemed to implicate more than just the market for U.S. stocks.

In the past 11 months, the U.S. stock market has been as chaotic as a Cambodian construction site. At times the noise has sounded like preparations for the demolition of a hazardous building. At other times it has sounded like a desperate bid by a slumlord to gussy the place up to distract inspectors. In any case, the slumlords seem to realize that doing nothing is no longer an option: too many people are too upset. Brad Katsuyama explained to the world what he and his team had learned about the inner workings of the stock market. The nation of investors was appalled—a poll of institutional investors in late April 2014, conducted by the brokerage firm ConvergEx, discovered that 70 percent of them thought that the U.S. stock market was unfair and 51 percent considered high-frequency trading “harmful” or “very harmful.” And the complaining investors were the big guys, the mutual funds and pension funds and hedge funds you might think could defend themselves in the market. One can only imagine how the little guy felt. The authorities evidently saw the need to leap into action, or to appear to.The narrow slice of the financial sector that makes money off the situation that Flash Boys describes felt the need to shape the public perception of it. It took them a while to figure out how to do this well.On the book’s publication day, for instance, an analyst inside a big bank circulated an idiotic memo to clients that claimed I had “an undisclosed stake in IEX.” (I’ve never had a stake in IEX.) Then came an unfortunate episode on CNBC, during which Brad Katsuyama was verbally assaulted by the president of the BATS exchange, who wanted the audience to believe that Katsuyama had dug up dirt on the other stock exchanges simply to promote his own, and that he should feel ashamed. He hollered and ranted and waved and in general made such an unusual public display of his inner life that half of Wall Street came to a halt, transfixed. I was told by a CNBC producer that it was the most watched segment in the channel’s history, and while I have no idea if that’s true, or how anyone would even know, it might as well be. A boss on the Goldman Sachs trading floor told me the place stopped dead to watch it. An older guy next to him pointed to the TV screen and asked, “So the angry guy, is it true we own a piece of his exchange?” (Goldman Sachs indeed owned a piece of the BATS exchange.) “And the little guy, we don’t own a piece of his exchange?” (Goldman Sachs does not own a piece of IEX.) The old guy thought about it a minute, then said, “We’re fucked.”

Thinking, Fast and Slow

That feeling was eventually shared by the BATS president. His defining moment came when Katsuyama asked him a simple question: Did BATS sell a faster picture of the stock market to high-frequency traders while using a slower picture to price the trades of investors? That is, did it allow high-frequency traders, who knew current market prices, to trade unfairly against investors at old prices? The BATS president said it didn’t, which surprised me. On the other hand, he didn’t look happy to have been asked. Two days later it was clear why: it wasn’t true. The New York attorney general had called the BATS exchange to let them know it was a problem when its president went on TV and got it wrong about this very important aspect of its business. BATS issued a correction and, four months later, parted ways with its president.From that moment, no one who makes his living off the dysfunction in the U.S. stock market has wanted any part of a public discussion with Brad Katsuyama. Invited in June 2014 to testify at a U.S. Senate hearing on high-frequency trading, Katsuyama was surprised to find a complete absence of high-frequency traders. (CNBC’s Eamon Javers reported that the Senate subcommittee had invited a number of them to testify, and all had declined.) Instead they held their own roundtable discussion in Washington, led by a New Jersey congressman, Scott Garrett, to which Brad Katsuyama was not invited. For the past 11 months, that’s been the pattern: the industry has spent time and money creating a smoke machine about the contents of Flash Boys but is unwilling to take on directly the people who supplied those contents.
On the other hand, it took only a few weeks for a consortium of high-frequency traders to marshal an army of lobbyists and publicists to make their case for them. These condottieri set about erecting lines of defense for their patrons. Here was the first: the only people who suffer from high-frequency traders are even richer hedge-fund managers, when their large stock-market orders are detected and front-run. It has nothing to do with ordinary Americans.Which is such a weird thing to say that you have to wonder what is going through the mind of anyone who says it. It’s true that among the early financial backers of Katsuyama’s IEX were three of the world’s most famous hedge-fund managers—Bill Ackman, David Einhorn, and Daniel Loeb—who understood that their stock-market orders were being detected and front-run by high-frequency traders. But rich hedge-fund managers aren’t the only investors who submit large orders to the stock market that can be detected and front-run by high-frequency traders. Mutual funds and pension funds and university endowments also submit large stock-market orders, and these, too, can be detected and front-run by high-frequency traders. The vast majority of American middle-class savings are managed by such institutions.The effect of the existing system on these savings is not trivial. In early 2015, one of America’s largest fund managers sought to quantify the benefits to investors of trading on IEX instead of one of the other U.S. markets. It detected a very clear pattern: on IEX, stocks tended to trade at the “arrival price”—that is, the price at which the stock was quoted when their order arrived in the market. If they wanted to buy 20,000 shares of Microsoft, and Microsoft was offered at $40 a share, they bought at $40 a share. When they sent the same orders to other markets, the price of Microsoft moved against them. This so-called slippage amounted to nearly a third of 1 percent. In 2014, this giant money manager bought and sold roughly $80 billion in U.S. stocks. The teachers and firefighters and other middle-class investors whose pensions it managed were collectively paying a tax of roughly $240 million a year for the benefit of interacting with high-frequency traders in unfair markets.Anyone who still doubts the existence of the Invisible Scalp might avail himself of the excellent research of the market-data company Nanex and its founder, Eric Hunsader. In a paper published in July 2014, Hunsader was able to show what exactly happens when an ordinary professional investor submits an order to buy an ordinary common stock. All the investor saw was that he bought just a fraction of the stock on offer before its price rose. Hunsader was able to show that high-frequency traders pulled their offer of some shares and jumped in front of the investor to buy others and thus caused the share price to rise.The rigging of the stock market cannot be dismissed as a dispute between rich hedge-fund guys and clever techies. It’s not even the case that the little guy trading in underpants in his basement is immune to its costs. In January 2015 the S.E.C. fined UBS for creating order types inside its dark pool that enabled high-frequency traders to exploit ordinary investors, without bothering to inform any of the non-high-frequency traders whose orders came to the dark pool. The UBS dark pool happens to be, famously, a place to which the stock-market orders of lots of small investors get routed. The stock-market orders placed through Charles Schwab, for instance. When I place an order to buy or sell shares through Schwab, that order is sold by Schwab to UBS. Inside the UBS dark pool, my order can be traded against, legally, at the “official” best price in the market. A high-frequency trader with access to the UBS dark pool will know when the official best price differs from the actual market price, as it often does. Put another way: the S.E.C.’s action revealed that the UBS dark pool had gone to unusual lengths to enable high-frequency traders to buy or sell stock from me at something other than the current market price. This clearly does not work to my advantage. Like every other small investor, I would prefer not to be handing some other trader a right to trade against me at a price worse than the current market price. But my misfortune explains why UBS is willing to pay Charles Schwab to allow UBS to trade against my order.

The Best of Times, the Worst of Times

As time passed, the defenses erected by the high-frequency-trading lobby improved. The next was: the author of Flash Boys fails to understand that investors have never had it better, thanks to computers and the high-frequency traders who know how to use them. This line has been picked up and repeated by stock-exchange executives, paid high-frequency-trading spokespeople, and even journalists. It’s not even half true, but perhaps half of it is half true. The cost of trading stocks has fallen a great deal in the last 20 years. These savings were fully realized by 2005 and were enabled less by high-frequency market-making than by the Internet, the subsequent competition among online brokers, the decimalization of stock prices, and the removal of expensive human intermediaries from the stock market. The story Flash Boys tells really doesn’t open until 2007. And since late 2007, as a study published in early 2014 by the investment-research broker ITG has neatly shown, the cost to investors of trading in the U.S. stock market has, if anything, risen—possibly by a lot.Finally there came a more nuanced line of defense. For obvious reasons, it was expressed more often privately than publicly. It went something like this: O.K., we admit some of this bad stuff goes on, but not every high-frequency trader does it. And the author fails to distinguish between “good” H.F.T. and “bad” H.F.T. He further misidentifies H.F.T. as the villain, when the real villains are the banks and the exchanges that enable—nay, encourage—H.F.T. to prey on investors.There’s some actual truth in this, though the charges seem to me directed less at the book I wrote than at the public response to it. The public response surprised me: the attention became focused almost entirely on high-frequency trading, when—as I thought I had made clear—the problem wasn’t just high-frequency trading. The problem was the entire system. Some high-frequency traders were guilty of not caring a great deal about the social consequences of their trading—but perhaps it’s too much to expect Wall Street traders to worry about the social consequences of their actions. From his seat onstage beside Warren Buffett at the 2014 Berkshire Hathaway investors’ conference, vice-chairman Charlie Munger said that high-frequency trading was “the functional equivalent of letting a lot of rats into a granary” and that it did “the rest of the civilization no good at all.” I honestly don’t feel that strongly about high-frequency trading. The big banks and the exchanges have a clear responsibility to protect investors—to handle investor stock-market orders in the best possible way, and to create a fair marketplace. Instead, they’ve been paid to compromise investors’ interests while pretending to guard those interests. I was surprised more people weren’t angry with them.If I didn’t do more to distinguish “good” H.F.T. from “bad” H.F.T., it was because I saw, early on, that there was no practical way for me or anyone else without subpoena power to do it. In order for someone to be able to evaluate the strategies of individual high-frequency traders, the firms need to reveal the contents of their algorithms. They don’t do this. They cannot be charmed or cajoled into doing this. Indeed, they sue, and seek to jail, their own former employees who dare to take lines of computer code with them on their way out the door.

Rookie Season

In the months after the publication of Moneyball, I got used to reading quotes from baseball insiders saying that the author of the book couldn’t possibly know what he was talking about, as he was not a “baseball expert.” In the 11 months since the publication of Flash Boys, I’ve read lots of quotes from people associated with the H.F.T. lobby saying the author is not a “market-structure expert.” Guilty as charged! Back in 2012, I stumbled upon Katsuyama and his team of people, who knew more about how the stock market actually worked than anyone then being paid to serve as a public expert on market structure. Most of what I know I learned from them. Of course I checked their understanding of the market. I spoke with high-frequency traders and people inside big banks, and I toured the public exchanges. I spoke to people who had sold retail-order flow and people who had bought it. And in the end it was clear that Brad Katsuyama and his band of brothers were reliable sources—that they had learned a lot of things about the inner workings of the stock market that were unknown to the wider public. The controversy that followed the book’s publication hasn’t been pleasant for them, but it’s been fun for me to see them behave as bravely under fire as they did before the start of the war. It’s been an honor to tell their story.The controversy has come with a price: it has swallowed up the delight an innocent reader might have taken in this little episode in financial history. If this story has a soul, it is in the decisions made by its principal characters to resist the temptation of easy money and to pay special attention to the spirit in which they live their working lives. I didn’t write about them because they were controversial. I wrote about them because they were admirable. That some minority on Wall Street is getting rich by exploiting a screwed-up financial system is no longer news. That is the story of the last financial crisis, and probably the next one, too. What comes as news is that there is now a minority on Wall Street trying to fix the system. Their new stock market is flourishing; their company is profitable; Goldman Sachs remains their biggest single source of volume; they still seem to be on their way to changing the world. All they need is a little help from the silent majority.Read more: Subscribe now for access. The full issue is available March 11 in the digital editions and March 17 on national newsstands.endLet us close with this weekly wrap courtesy of Greg Hunter of USAWatchdog(courtesy Greg Hunter/USAWatchdog)




WNW 181-Ukraine & Middle East Closer to War, Clinton Emails, Economy Sinking


By Greg Hunter’s  Weekly News Wrap-Up 3.13.15)   (Corrected)

The war situation in Ukraine continues to ratchet up.  The U.S. is sending more military hardware to the region and pushing for a fresh round of new sanctions.  The Russians, according to, are hinting at deploying nukes in Crimea, but the Russians have “no plans to do so.”   As the situation heats up, Germany is getting more worried a wider war will break out. NATO General Philip Breedlove said, “What is clear is that right now, it is not getting better. It is getting worse every day.”  Germany doesn’t feel that way, and it is trying to defuse the situation.  It is reported that Berlin thinks NATO is engaging in “dangerous propaganda.”  There is also talk of Europe creating a European army, which is not going over well with many in the EU, and I don’t think the EU is going to go for any more economy killing sanctions.

It is reported that an Iranian General and 10,000 so-called “volunteers” are six miles from the Israeliborder near the disputed Golan Heights.  (I said this wrong in the video.  Golan is between Israel and Syria.)  So far, no real battle has broken out, but the “volunteers” have armored vehicles and do not appear to be leaving.  Meanwhile, forces led by Iran are entering the Iraqi city of Tikrit to drive out ISIS.  The next stop is Mosul.  Looks like Iran is running the show in Iraq and in Syria.  Saudi Arabia leaders are saying that Iraq and Syria are being handed to Iran.  That is probably why Saudi Arabia was the largest buyer of conventional weapons in 2014 followed by India and China.  The U.S. and Russia are some of the largest exporters of conventional weapons—go figure.

47 Republican Senators sent a letter to Iran warning them that any nuclear deal the Senate does not approve of can be cancelled by the next president.  I think this was a big tactical mistake, and they should have sent a letter to the President first.  If he blew them off, and he probably would have, then send a letter to Iran.  Of course, they fear the President will act the way he did when he legalized 5 million illegal immigrants.

Hillary Clinton is in trouble over using her own private email and her own private server while she was Secretary of State.  She gave a press conference on the issue, but that did not go well.  She said it was done out of “convenience,” but many think that is was done to hide what she did as Secretary of State.  This is far from over because investigations are ongoing, and this is just fuel thrown on an already blazing fire.  Democrats can’t be happy.

In the economy, the headline reads “Now Healthy Banks Gush Cash.”  I won’t believe it as long as there are 0% interest rates and the government allows phony accounting, as it has done since 2009.  The economy is tanking.  Just look at retail sales; they have declined for three months in a row.  Greg Mannarino at says keep your eye on the Fed meeting next week.  That meeting will hinge on a single word—“patient.”  Remember, Fed Head Janet Yellen said a while back that the Fed would be “patient” on raising interest rates.  If they drop the word“patient,” Mannarino says “the market will tank.”  If they leave it alone, he thinks the market will vault higher.  We will see.

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


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