Good evening Ladies and Gentlemen:

 

 

Here are the following closes for gold and silver today:

 

 

Gold:  $1184.80 up $15.70 (comex closing time)

Silver: $16.87 up 77  cents (comex closing time)

 

 

In the access market 5:15 pm

 

 

Gold $1183.50

Silver: $16.76

 

 

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 0 notices for nil oz .

 

 

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 243.75 tonnes for a loss of 59 tonnes over that period. Lately the removals  have been rising!

 

 

In silver, the open interest fell by 2175 contracts, due to short covering, as yesterday’s silver price was up by 58 cents. The total silver OI continues to remain extremely high with today’s reading at 176,948 contracts. The front month of March fell by 3 contracts to 571 contracts. We are still close to multi year high in the total OI complex despite a record low price. This dichotomy has been happening now for quite a while and defies logic. There is no doubt that the silver situation is scaring our bankers to no end.

 

 

We had  0 notices served upon for nil oz.

 

 

In gold we had a huge rise in OI as gold was up by $17.70 yesterday. The total comex gold OI rests tonight at 436,331 for a gain of 5994 contracts. Today, surprisingly we again had 0 notices served upon for nil oz.

 

 

Today, we had no changes  at the GLD/ inventory at  the  GLD/Inventory rests at 749.77  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, Today we had some short covering in the silver comex with the silver OI falling by 2175 contracts.  Gold OI again rises by close to 6000 contracts.  Both gold and silver rose nicely today but silver was the standout.

The big news is the continual removal of  gold from the comex. From the start of the month 12 tonnes of gold has been removed from the customer side.

 

The COT report shows the commercials buying gold  (and covering shortfalls) in massive quantities.  It’s net short position is only 54,000 contracts.  It looks like the specs are going to be buried.

In silver, no so.  Whoever is the long on silver seems to have everything under control and this is bothering our bankers greatly.

 

(report by Harvey)

2, Bloomberg comes out with figures that suggest that Greece is still short by 3.7 billion euros for the end of the month financing.  Even if they obtain the 1.9 billion euros that Greece is owed, they are still short.

 

(Bloomberg/zero hedge)

3.On Wednesday, the big news  was the dovish report from the FOMC/gold and commodities rose with the Euro and just about all currencies rising against the dollar. Today we saw a repeat action in the currencies following yesterday’s reversal.

(zero hedge)

 

4. Koos Jansen reports another huge 51 tonnes of gold demanded by China  (SGE removals)  To date: 508 tonnes of gold.

 

5.  Rig counts continue to plunge yet production is still elevated as shale firms in the USA desperately need the revenue to feed the interest owed on bonds issued.

 

(courtesy Dave Kranzler/zero hedge)

 

 

6.More countries are leaving the USA fold, by joining the new Chinese development bank.  Today, Switzerland and Japan are joining.

(zero hedge)

 

7.  Finally, we have a report showing global earnings falling faster than Lehman.

 

(courtesy zero hedge)

 

 

 

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 5994 contracts from 430,337 up to 436,331 as gold was up by $17.70 yesterday (at the comex close). We are now in the contract month of March which saw it’s OI fell to 111 for a loss of 14 contracts. We had 0 notices filed upon yesterday so we  lost 14 gold contracts or additional 1400 oz will not stand for delivery in this delivery month of March. The next big active delivery month is April and here the OI rose by 686 contracts up to 203,231. We have less than two weeks before first day notice for the April gold contract month. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 72,040.  (Where on earth are the high frequency boys?). The confirmed volume on yesterday ( which includes the volume during regular business hours + access market sales the previous day) was fair at 175,115 contracts. Today we had 0 notices filed for nil oz.

 

 

And now for the wild silver comex results.  Silver OI fell by 2,175 contracts from 179,123 down to 176,948 despite the fact that silver was up by 58 cents with respect yesterday’s trading and equally astonishing that the volume yesterday was extremely light. We therefore had some short covering. We are now in the active contract month of March and here the OI fell by 3 contracts falling to 571. We had 3 contracts served upon yesterday. Thus we neither lost nor gained any silver contracts standing in this March delivery month. The estimated volume today was simply awful at 19,256 contracts  (just comex sales during regular business hours.  The confirmed volume yesterday (regular plus access market) came in at 44,921 contracts which is good in volume. We had 0 notices filed for nil oz today.

 

 

March initial standings

March 20.2015

 

 

Gold	Ounces
Withdrawals from Dealers Inventory in oz	nil
Withdrawals from Customer Inventory in oz	67,368.132  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)	111 contracts (12,500 oz)
Total monthly oz gold served (contracts) so far this month	8 contracts(800 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	626,388.9 oz

Today, we had 0 dealer transaction

 

total Dealer withdrawals: nil oz

 

we had 0 dealer deposit

 

 

total dealer deposit: nil oz

 

 

we had 1 customer withdrawals

i) Out of Scotia:  67,368.132 oz

 

 

total customer withdrawal: 67,368.132 oz

 

 

we had 0 customer deposits:

 

 

We had 0 adjustment

 

 

 

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 (8) x 100 oz  or  800 oz , to which we add the difference between the open interest for the front month of March (111) 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 (8) x 100 oz  or ounces + {OI for the front month (111) – the number of  notices served upon today (0) x 100 oz} =  11,900 oz or  .3701 tonnes

 

we lost 1400 additional ounces that will not stand for delivery in this March contract month.

 

Total dealer inventory: 658,537.414 oz or 20.48 tonnes

Total gold inventory (dealer and customer) = 7.836 million oz. (243.75) tonnes)

Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 59.0 tonnes have been net transferred out. However I believe that the gold that enters the gold comex is not real.  I cannot see continual additions of strictly kilobars.

 

 

end

 

 

 

And now for silver

 

 

 

March silver initial standings

March 20 2015:

 

 

Silver	Ounces
Withdrawals from Dealers Inventory	nil oz
Withdrawals from Customer Inventory	1,550,429.424 oz (Scotia, HSBC)
Deposits to the Dealer Inventory	nil
Deposits to the Customer Inventory	9173.26 oz (CNT)
No of oz served (contracts)	0 contracts  (15,000 oz)
No of oz to be served (notices)	571 contracts (2,855,000)
Total monthly oz silver served (contracts)	2004 contracts (10,020,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal  of silver from the Customer inventory this month	6,349,204.2 oz

Today, we had 0 deposit into the dealer account:

 

 

total dealer deposit: nil   oz

 

 

we had 0 dealer withdrawal:

total dealer withdrawal: nil oz

 

 

We had 0 customer deposits:

 

 

total customer deposit: nil oz

 

 

We had 2 customer withdrawals:

 

i) Out of HSBC:  1,515,142.034 oz

ii) Out of Scotia; 35,287.39 oz

 

total withdrawals;  1,550,429.424 oz

 

 

we had 0 adjustment

 

 

Total dealer inventory: 70.021 million oz

Total of all silver inventory (dealer and customer) 174.874 million oz

.

The total number of notices filed today is represented by 3 contracts for 15,000 oz. To calculate the number of silver ounces that will stand for delivery in March, we take the total number of notices filed for the month so far at (2004) x 5,000 oz    = 10,020,000 oz to which we add the difference between the open interest for the front month of March (571) and the number of notices served upon today (0) x 5000 oz  equals the number of ounces standing.

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

2004 (notices served so far) + { OI for front month of March(571) -number of notices served upon today (0} x 5000 oz =  12,875,000 oz standing for the March contract month.

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

 

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

 

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

 

 

end

 

 

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

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

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

i) demand from paper gold shareholders

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

vs no sellers of GLD paper.

 

And now the Gold inventory at the GLD:

 

march 20/we had no changes in  inventory at the GLD/Inventory at 749.77 tonnes

 

March 19/we had no changes in inventory at the GLD/Inventory 749.77 tonnes

 

 

March 18/ we had a withdrawal of .9 tonnes of gold from the GLD/Inventory at 749.77 tonnes

 

March 17.2015: no change in gold inventory at the GLD/Inventory 750.67 tonnes

 

March 16/no change in gold inventory at the GLD/Inventory 750.67 tonnes

 

 

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 20/2015 /  we had no changes at GLD/Inventory at 749.77 tonnes

inventory: 749.77 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 : 749.77 tonnes.

 

 

end

 

 

 

 

And now for silver (SLV):

 

March 20/ no changes in silver inventory/327.332 million oz

 

March 19/ no change in silver inventory/327.332 million oz

 

March 18/ no change in silver inventory/327.332 million oz

 

March 17/ no change in silver inventory/327.332 million oz

 

March 16/no change in silver inventory/327.332 million oz

 

 

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 20/2015 no change in    silver inventory at the SLV/ SLV inventory rests tonight at 327.332 million oz

 

 

end

 

 

 

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

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

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

Not available tonight

1. Central Fund of Canada: traded at Negative  6.3% percent to NAV in usa funds and Negative 6.5% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.4%

Percentage of fund in silver:38.1%

cash .5%

( March 20/2015)

 

 

Sprott gold fund finally rising in NAV

2. Sprott silver fund (PSLV): Premium to NAV falls to + 0.96%!!!!! NAV (March 20/2015)

3. Sprott gold fund (PHYS): premium to NAV rises to -.13% to NAV(March 20  /2015)

Note: Sprott silver trust back  into positive territory at +0.96%.

Sprott physical gold trust is back into negative territory at -.13%

Central fund of Canada’s is still in jail.

 

 

end

 

At 3:30 pm we get our COT report which gives position levels of our major players.

 

Due to the big rebound in gold, these numbers are extremely important if accurately supplied by the CME:

 

 

 

 

Gold COT Report – Futures
Large Speculators			Commercial		Total
Long	Short	Spreading	Long	Short	Long	Short
162,268	109,175	46,560	180,464	236,954	389,292	392,689
Change from Prior Reporting Period
-9,553	19,246	3,303	25,886	-6,966	19,636	15,583
Traders
131	96	79	56	55	227	198
	Small Speculators
	Long	Short	Open Interest
	40,446	37,049	429,738
	-816	3,237	18,820
	non reportable positions		Change from the previous reporting period
COT Gold Report – Positions as of				Tuesday, March 17, 2015

Our large speculators; (it looks like are specs have been burnt again)

 

Those large specs that have been long in gold pitched a huge 9553 contracts from their long side and they are not happy campers tonight

 

Those large specs that have been short in gold added a monstrous 19,246 contracts to their short side and they are sitting shiva tonight.

 

Our commercials;

 

Those commercials that have been long in gold added a monstrous 25,886 contracts to their long side

 

Those commercials that have been short in gold covered 6966 contracts from their short side

 

Small specs;

Those small specs that have been long in gold covered a smallish 237 contracts from their long side

Those small specs that have been short in gold added another 3818 contracts to their short side.

 

conclusion:

I strongly believe that the 3 1/2 yr whacking of gold is over.

 

The commercials are only net short by 56,490 contracts. I am sure that Turd Ferguson will report on this and explain why the game is over. You will see a massive short squeeze on our long speculators.

 

and now for silver:

 

(let’s see if silver follows in gold’s footsteps)

 

 

Silver COT Report: Futures
Large Speculator			Commercial
Long	Short	Spreading	Long	Short
61,649	37,238	23,631	72,202	102,412
3,683	5,244	142	6,349	3,296
Traders
86	49	43	42	44
Small Speculators		Open Interest		Total
Long	Short	178,524		Long	Short
21,042	15,243			157,482	163,281
-775	717	9,399		10,174	8,682
non reportable positions		Positions as of:		148	122
		Tuesday, March 17, 2015		©

 

Our large specs:

 

Those large specs that have been long in silver added another 3683 contracts to their long side (in total contrast to gold)

Those large specs that have been short in silver added another 5244 contracts to their short side

 

Our commercials:

 

Those commercials that have been long in silver added another 6349

contracts to their long side.

Those commercials that have been short in silver added( ???) another 3296 contracts to their short side.

 

Small specs;

Those small specs that have been long in silver pitched 775 contracts to their long side

 

Those small specs that have been short in silver added another 717 contracts to their short side.

 

Conclusions:  our bankers are having real trouble in silver. It seems that they are going to destroy the specs in gold but they are not having their way in silver.

 

end.

 

 

 

 

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

 

 

Gold and silver trading early this morning

 

 

(courtesy Mark O’Byrne)

 

Gold Downside $850/oz; Upside Jump to $2,000/oz on ‘Grexit’

end

 

A terrific report today from Alasdair Macleod as he talks about the short positions on gold and silver on the comex

 

(courtesy Alasdair Macleod)

 

 

 

And now for the important paper stories for today:

 

 

Early Friday morning trading from Europe/Asia

 

 

1. Stocks generally higher on major Chinese bourses (only India’s Sensex and Hang Seng lower)/yen falls to 121.07

1b Chinese yuan vs USA dollar/yuan falls to 6.2062

2 Nikkei up 83.66 or 0.43%

3. Europe stocks all in the green/USA dollar index down to 98.91/Euro rises to 1.0695

3b Japan 10 year bond yield .33% (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 121.07/

3c Nikkei still above 19,000

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

3e WTI  44.95  Brent 53.78

3f Gold up/Yen 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 up for both WTI and down for 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 22.83%/Greek stocks up by a huge 2.75%today/ still expect continual bank runs on Greek banks.

3j  Greek 10 year bond yield:  11.99% (up  by 70 basis point in yield)

Greece needs to pay 2 billion euros by today.

 

3k Gold at 1172.00 dollars/silver $16.19

3l USA vs Russian rouble;  (Russian rouble down  1/3 rouble/dollar in value) 60.35 with the lower brent price

3m oil into the 44 dollar handle for WTI and 53 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/ the British pound is suffering

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  Greece must submit new reforms quickly (see zero hedge story below)

3t Bloomberg calculates Greece’s shortfall in March at 3.5 billion euros.

(see zero hedge story below)

 

 

4.  USA 10 year treasury bond at 1.96% early this morning. Thirty year rate well below 3% at 2.52%/yield curve flatten/foreshadowing recession.

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

 

Calm Ahead Of Today’s Quad-Witching Which May Lead To Vol Surge

 

Quad-witching days are volatile on normal days, so in an environment of virtually zero liquidity, in which the market careens from one extreme to another simply based on whether the Fed utters one single word, in which volatility across asset classes is soaring, and in which it is all about igniting algo momentum, today’s quadruple withicng should be memorable, which is good since there is virtually no macro data today to speak of.

 

As Nanex reminds us, during last year’s quad witching on March 21, 2014, at 15:45:00, a new record was set for most trades in 1 second in NMS stocks (NYSE, NY-ARCA, NY-MKT and Nasdaq listed stocks and ETFs – approximately 8,000 symbols). The 3rd and 4th most active seconds were also set, at 15:50:00 and 15:55:00 respectively. The 2nd most active second was set at 10:00:00 on September 1, 2011. Today may surpass it.

If quad witching proves to be a dud, then there is always Europe’s partial solar eclipse to fall back on: an eclipse which may strain and test Europe’s conventional electricity backup grid as suddenly a substantial portion of Europe’s alternative electricity generator grid is about to go, pardon the pun, dark.

In the final trading session of the week, European equities trade in positive territory with the latest developments regarding the ongoing Greek/Eurogroup negotiations relatively upbeat thus far.

Yesterday it was reported that following emergency talks with German and French leaders, Greece agreed to submit a reform list in coming days, with Greek PM Tsipras saying that Greece will not have to take recessionary measures. This has subsequently bolstered sentiment so far with accompanying comments from various European premier’s conveying that progress is being made. There was an article run in German tabloid Bild saying that Schaeuble expects a Greek exit from the EUR, however, the market isn’t paying these uncited reports much credence with German Chancellor Merkel in favour of keeping the troubled nation in the currency union.

 

 

Here is DB’s take on last night’s Greek events:

 

 

Over in Greece meanwhile, following their meeting at the EU summit, we heard from various European leaders shortly after urging more progress from the Greek side to speed up the work around reform measures. The EU’s Juncker, Tusk and Dijsselbloem issued a joint statement following the meeting saying that there is a commitment to speed up the work and that Greece is expected to present full reform measures within days. German Chancellor Merkel was noted as saying that she was disappointed by progress so far and that the next list will be ‘full’ on details. French PM Hollande reiterated the need to speed up progress and said that pressure was put on Tsipras to act urgently. Greece’s Tsipras was seemingly upbeat meanwhile, saying that all sides were in agreement to restore financing to Greece and that talks are back on track after the process had been somewhat derailed. The push for progress is unsurprising in the face of a deteriorating liquidity position for Greece. Yesterday Greek press Ekathimerini reported that bank deposit outflows were estimated at around €350-400m on Wednesday following the chatter around potential capital controls. The outflows were the most in a single day since February 20th.

Elsewhere, with newsflow particularly light fixed income markets trade relatively unchanged with a lack of upcoming tier 1 US/Eurozone data points.

Nikkei 225 (+0.4%), Hang Seng (-0.1%) and Shanghai Comp (+1.4%) all swung between losses and gains, with the latter on course to post its biggest weekly gain in 3-months. Heading into the European open, the Shanghai Comp gained over 1% in around 30-mins led by brokerages following a surge in trading volumes, which follows a technical break-out above the 3600 level (yesterday’s highs) after an earlier failed attempt. JGBs trade up 9 ticks with outperformance observed in the long-end amid decent two-way flows in the 10yr and longer zone, ahead of the quarterly redemption of JGBs.

FX markets have also traded in a relatively tentative manner with the USD-index for once taking a breather. As such, price action has been dictated more by large option expiries with USD 1bln at 1.0700 for EUR/USD and USD 3.7bln due to roll-off in USD/JPY at 121.00. Elsewhere, AUD has managed to hold onto its gains in the wake of less-dovish than expected comments from RBA Governor Stevens who failed to jawbone the currency and added he does not think the current rate level is holding back economic development. Looking ahead, CAD will be a focus given the Canadian CPI report due at 1230GMT/0830CDT.

In commodity markets, both Brent and WTI crude futures trade modestly lower with WTI on track for its fifth weekly decline, after falling for a 7th time in 8 days yesterday. As a reminder the WTI April’15 Futures contract is set to expire at today’s NYMEX pit close. In other news, the CME cut their NYMEX Natural Gas margins by 22% to 2,750 per contract. In precious metals markets, spot gold and silver trade relatively flat alongside the USD-index. Copper saw muted overnight trade with the metal holding on to the 3% gain seen in the prior session, as output remains halted in Freeport-McMoRan’s Grasberg copper mine which is among the largest in the world

In summary: European shares little changed with basic resources and food & beverage sectors underperforming and construction, autos outperforming. EU leaders tell Greece to submit a more concrete reform plan. U.K. Feb. budget deficit below estimates. Holcim, Lafarge revise merger terms. The Swedish and Dutch markets are the worst-performing larger bourses, the German the best. The euro is stronger against the dollar. Greek, Spanish 10yr bond yields fall; French yields decline. Commodities decline, with Brent crude, WTI crude underperforming and nickel outperforming.

Market Wrap

• S&P 500 futures up 0.2% to 2086.5
• Stoxx 600 down 0% to 400.7
• US 10Yr yield down 0bps to 1.97%
• German 10Yr yield up 0bps to 0.19%
• MSCI Asia Pacific down 0% to 146.7
• Gold spot down 0.1% to $1170.5/oz
• Eurostoxx 50 +0.2%, FTSE 100 +0%, CAC 40 +0.1%, DAX +0.5%, IBEX +0.4%, FTSEMIB +0.3%, SMI +0.2%
• Asian stocks little changed with the Shanghai Composite outperforming and the Sensex underperforming.
• MSCI Asia Pacific down 0% to 146.7; Nikkei 225 up 0.4%, Hang Seng down 0.4%, Kospi down 0%, Shanghai Composite up 1%, ASX up 0.4%, Sensex down 0.7%
• 3 out of 10 sectors rise with financials, consumer outperforming and telcos, materials underperforming
• Euro up 0.18% to $1.0679
• Dollar Index down 0.23% to 99.03
• Italian 10Yr yield down 3bps to 1.22%
• Spanish 10Yr yield down 5bps to 1.21%
• French 10Yr yield down 1bps to 0.44%
• S&P GSCI Index down 0.3% to 390.7
• Brent Futures down 0.8% to $54/bbl, WTI Futures down 0.7% to $43.7/bbl
• LME 3m Copper up 0.7% to $5896.5/MT
• LME 3m Nickel up 1.7% to $14010/MT
• Wheat futures up 0.5% to 514.8 USd/bu

 

Bulletin Headline Summary from RanSquawk and Bloomberg

 

 

• European equities trade higher as progress appears to have been made between Greece and their Eurogroup counterparts
• USD-index is holding steady with price action magnetised by large option expiries
• Looking ahead, today sees the release of Canadian CPI, comments from Fed’s Evans and Lockhart and quadruple witching for US equities
• Treasuries steady, head for second consecutive weekly gain after Fed lowered forecasts for fed funds target, GDP and inflation.
• China’s securities regulator urged investors to consider risks from the nation’s surging stock market after the benchmark index jumped to levels last seen before the global financial crisis in 2008
• BOJ’s Kuroda says he really doesn’t see any sort of currency war; policy actions by Fed, BOJ and ECB taken to achieve price stability, not to depreciate currencies
• A BOJ policy board member present at Feb. meeting said it was “very unlikely that the year-on-year rate of increase in the CPI would reach 2% in a stable manner within a short period of time,” according to meeting minutes
• With Greece’s coffers emptying and payments looming, Tsipras’s government is coming ever closer to a financial day of reckoning; cash shortfall projected to hit EU3.5b in March, according to Bloomberg calculations
• Greece must submit a more concrete reform plan so that bailout talks can speed up, EU leaders said after nearly four hours of talks with Tsipras
• German FinMin Schaeuble “is internally anticipating the Greeks are going to leave the euro” Bild newspaper reports without saying where it got the information
• Britain had its smallest budget deficit for any February since 2008 as the late arrival of self-assessed tax filings boosted government revenue
• Sovereign 10Y yields mixed. Asian, European stocks gain, U.S. equity-index futures rise. Crude lower, gold little changed, copper rises

US Event Calendar

• No scheduled releases

Central Banks

• 10:20am: Fed’s Lockhart speaks in Athens, Ga.
• 11:30am: Fed’s Evans speaks in Washington

 

DB’s Jim Reid Concludes the overnight summary

 

 

The weak dollar, strong commodity and strong US equity reversal trade that emanated from the FOMC seems to have lasted as long as the eclipse will do today. We remarked yesterday how the Euro had seen its second biggest daily range on Wednesday, well yesterday it mostly traded back down towards pre-FOMC levels and some 3.5% off the intra-day highs from the previous session. Other immediate post-FOMC trades also reversed to some degree yesterday. The S&P 500 closed -0.49% and has now failed to hold more than one day of gains through March so far. Energy (-1.69%) and Materials (-1.75%) were the significant laggards yesterday as WTI (-1.57%) and Brent (-2.65%) dived back below $44/bbl and $55/bbl respectively. US Treasuries also gave up some of the previous day’s gains as 10y benchmark yields climbed 4.9bps to close at 1.969%. In terms of Fed Funds rates, the Dec15 (+4bps), Dec16 (+5bps) and Dec17 (+5bps) contracts all rose too.

US Data yesterday exhibited a similar trend to what we’ve seen recently, with employment firm but softness seen elsewhere. Initial jobless claims (291k vs. 293k expected) modestly beat expectations and came in more or less in line with the previous reading (290k). The March Philadelphia Business Fed outlook reading was 2pts below consensus at 5 and the lowest since February last year. The prices component of the print was particular weak at -6.4 which was the lowest reading since September 2010. Elsewhere, the conference board’s leading index was in line at +0.2% mom. There was Fedspeak chatter also yesterday, with Chicago Fed President Evans saying in a research paper – which was written pre FOMC – that ‘the biggest risk we face today is prematurely engineering restrictive monetary conditions’ and that ‘it therefore seems prudent to refrain from raising rates until we are highly certain that the economy has achieved a sustained period of strong growth and inflation is on a clear trajectory to return to target’.

A further comment from us on the Fed having had a day to think about it. Perhaps another way of looking at things might be to say that if you had all of the data at your disposal except where Fed Funds had been over the last 7-8 years what would you expect the next rate move to be? Up or down? Virtually all previous post war rate hiking cycles have started with nominal GDP considerably above the 3.5-4.5% range we’ve been stuck in over the last 4-5 years. Also the dollar is strong and at decade plus highs with many other countries engaging in beggar-thy-neighbour policies. Meanwhile overall debt levels remain close to all time highs even with some de-leveraging post-crisis and inflation has consistently low-balled over the same period with expectations of a summer ahead of headline deflation. Employment is the brightest spot but wages are subdued. So if you were told rates were now say 3% or 5% with this combination would you say the next move might be up or down?? All other things being equal I’d say down. So the main justifications to raise rates are either that the forecasts for growth and inflation are bullish with a high confidence level or that you want to wean markets off incredible levels of stimulus. Both are very valid reasons but risky given the poor forecasts seen in recent years and given how addicted markets are to central bank (and particularly Fed) liquidity built up over a couple of decades. Maybe some food for thought.

Yesterday was also a busy day on the central bank front globally. Norway was the first to surprise the market, going against the trend of most central banks this year and choosing instead not to cut rates from 1.25%, after 18 out of 19 economists on Bloomberg had expected the Norges Bank to ease. Governor Olsen did however keep the door open to a potential cut in the near term. In Switzerland meanwhile, the SNB attracted some interest after President Jordan noted that inflation is unlikely to return to positive territory until 2017 – which would mark around 5 years of deflation for the nation. Jordan also didn’t rule out further moves in the currency markets, having been quoted on Reuters as saying that ‘overall, the Swiss Franc is significantly overvalued and should continued to weaken over time’ before going on to say that ‘the SNB will therefore remain active in the foreign exchange market, as necessary’.

Closer to home yesterday, there was some slightly dovish chatter out of the Bank of England where Chief Economist Haldane noted that risks to inflation are ‘skewed to the downside’ and that ‘even without any asymmetry in risks to the inflation outlook, a case can be made for policy easing today’ (Bloomberg). Despite Haldane still saying that ‘the chances of a rate rise or cut or broadly evenly balanced’, the comments were in contrast to the Governor Carney’s view who said that it would be ‘foolish’ to cut rates.

With the exception of the DAX (-0.20%), most major European bourses were higher yesterday with the Stoxx 600 (+0.55%), CAC (+0.07%), FTSE MIB (+1.06%) and IBEX (+0.37%) all higher. It was a firmer day for sovereign bonds too in the eurozone. 10y Bunds fell another basis point to a new fresh record low at 0.185% while yields in the periphery were some 2-5bps tighter.

There was little in the way of macro data yesterday, however we did get the latest TLTRO data from the ECB. Take-up was higher than expected with banks taking on €97.8bn of loans (versus expectations of €30-40bn) with Italian banks in particular taking up around 30% of overall allotment. Although the ECB made the latest allotment more attractive by removing a 10bp premium over the main interest (which was applied to the first two allotments), the higher than expected take up is a positive for bank lending given that the amount banks can borrow is linked to their net lending.

Over in Greece meanwhile, following their meeting at the EU summit, we heard from various European leaders shortly after urging more progress from the Greek side to speed up the work around reform measures. The EU’s Juncker, Tusk and Dijsselbloem issued a joint statement following the meeting saying that there is a commitment to speed up the work and that Greece is expected to present full reform measures within days. German Chancellor Merkel was noted as saying that she was disappointed by progress so far and that the next list will be ‘full’ on details. French PM Hollande reiterated the need to speed up progress and said that pressure was put on Tsipras to act urgently. Greece’s Tsipras was seemingly upbeat meanwhile, saying that all sides were in agreement to restore financing to Greece and that talks are back on track after the process had been somewhat derailed. The push for progress is unsurprising in the face of a deteriorating liquidity position for Greece. Yesterday Greek press Ekathimerini reported that bank deposit outflows were estimated at around €350-400m on Wednesday following the chatter around potential capital controls. The outflows were the most in a single day since February 20th.

Rounding up the news in Europe, it was interesting see that Ireland yesterday issued 6-month T-Bills at a negative yield (-0.01%) for the first time on record. Clearly depressed yields across the Euro-area generally are playing a large part, but it’s amazing to think how far the country has come given it wasn’t all that long ago that the nation needed a bailout and the banking sector was in crisis.

Looking at the early trading this morning in Asia, it’s largely mixed across the region with markets trading with little obvious direction. The Nikkei (+0.11%), Shanghai Comp (+0.16%) and ASX (+0.41%) are all higher while the Hang Seng (-0.28%) and Kospi (-0.33%) are lower. The Dollar, as measured by the broader DXY (-0.36%) is weaker as we go to print and credit markets are more or less unchanged.

It’s a fairly quiet day data-wise in Europe this morning with just German PPI, Euro-area trade data and UK public finance data to look out for. The calendar takes a breather in the US too with no releases due, but the Fed’s Evans and Lockhart are due to speak on monetary policy which could be worth keeping an eye on. Talking of eyes, make sure you don’t stare at the sun too hard today! Enjoy the eclipse if you’re in the relevant parts of Europe.

 

end

 

According to Bloomberg, Greece still has over 3.7 billion euros of liabilities still owing in March.  Even if they are given the 1.9 billion of profits on Greek bonds promised they are still short:

 

 

 

 

 

(courtesy zero hedge)

 

German DAX Surges Over 12,000 On Greek Optimism, But The Money Has Run Out

Moments ago, the German DAX roared gingerly back over 12,000 dragging US equity futures alongside it, with the catalyst cited as the somewhat optimistic tone following the three hours of talks held late last night to try to break an impasse that risks sending Athens stumbling of the euro zone. As a result, a smiling if only through his teeth, Tsipras said Greece was “moving swiftly to meet creditors’ demands for a detailed economic reform plan” and assured euro zone leaders his leftist-led coalition would speed up work to avert bankruptcy.

Still, nothing that happened last night actually unlocks any new money. Reuters reports that “while a joint statement by the EU institutions spoke of a “spirit of mutual trust” and Tsipras said he left feeling more optimistic, German Chancellor Angela Merkel stressed no money would be released before Athens implements budget measures and other reforms that it has so far been reluctant to accept.“

 

 

The risk of a continued standoff, exactly a month after Greece secured a last-gasp four-month extension of an EU/IMF bailout, was highlighted by different descriptions by Tsipras and Merkel about what reforms Athens would need to launch.

 

“It is clear that Greece is not obliged to implement recessionary measures,” the 40-year-old leftist premier told reporters, referring to previously agreed reforms.“Greece will submit its own structural reforms, which it will implement.”

 

But Merkel, facing mounting resistance in Europe’s richest state to continued lending to keep an erratic partner in the common currency area, insisted that only the full completion of already approved measures would satisfy the creditors.

 

“The reference point is the agreement of Feb. 20,” she said. “We have not changed one iota. You may have heard some of this before. But then not much has happened in the last few weeks.”

So once again, the market looks forward, this time to Monday when Tsipras will make a much anticipated visit to Merkel in Berlin, and where EU officials said that if Greece did come up with a convincing plan to get its debts under control, “euro zone finance ministers could meet soon to release at least some funds to help it meet pressing commitments in the coming weeks.”

 

 

In Athens on Friday, government spokesman Gabriel Sakellaridis said: “Once the reforms are submitted, and in a detailed manner, to the Euro Group when that happens … then the funding will be unlocked towards the Greek economy.”

In other words, “this time the Greek promises of reformsare different” at least as far as the algos are concerned, even if we have all seen the same song and dance countless times before:

But just to sweeten the pot and make sure those OTM calls the “unnamed official” had on the Dax lead to generous profits, moments ago Bloomberg also noted, the following:

• EUROGROUP COULD MEET AS EARLY AS MARCH 27 ON GREECE: OFFICIAL
• EUROGROUP COULD GIVE GREECE EU1.9B SMP PROFITS: OFFICIAL
• EUROGROUP COULD APPROVE GREEK AID PAYMENT IF MEASURES APPROVED

Which is of course ironic because earlier today Greece was said to have made the latest €350MM payment to the IMF, so what the Troika continues to do is merely agree to lend money to Greece so that Greece can repay the Troika almost immediately.

And meanwhile, the hole gets deeper and deeper, and here is the actual math from Bloomberg:

 

 

With Greece’s coffers emptying and payments looming, Prime Minister Alexis Tsipras’s government is coming ever closer to a financial day of reckoning.

 

While Tsipras may have bought some time after yesterday’s European Union summit in Brussels, he still isn’t saying what’s left in the bank and acknowledges Greece is facing “liquidity pressure.” The country’s cash shortfall is projected to hit 3.5 billion euros ($3.7 billion) in March, according to Bloomberg calculations based on 2015 budget figures.

Even assuming a €1.9 billion payment is made to Greece on the condition that Greece proposes and implements, and this means sending in the “hated” Troika to supervise, Greece will still have nearly a €2 billion shortfall all else equal.

In other words, the Dax may be soaring on Greek optimism, but the money has run out, and for Greece, so has time.

At this point the only thing remaining is admitting it.

 

 

 

end

 

A candid editorial written by Yanis Varoufakis:

 

(courtesy Yanis Varoufakis/zero hedge)

 

 

 

 

 Varoufakis Explains How The Video Of His Middle Finger Is “Turning Proud Nations Against Each Other”

Last weekend, we pointed out that while completely irrelevant if Varoufakis had “stuck Germany the finger” in whatever context, that the German media would have a field day with it. Little did we know the firestorm that the German press would unleash, and how obssessed Germany would become with the topic of the Greek finmin’s middle finger (which he claimed was faked, and promptly a German spoof emerged that alleged that the video was indeed fake… before that spoof itself was said to be fake too!).

The problem with this latest fiasco is that it took attention away from the key issues: not just the Greek insolvency, but – at the core – how the European Union is only such when it suits the interests of the majority, bringing Greece once again to the edge of expulsion from Europe.

However, Varoufakis’ middle finger was useful in one specific way: to rip away the facade of solidarity and freidnship in Europe, and reveal just how ugly the undelrying truth is, and to hint just how much uglier it will become once the money runs out not only for Greece, but for everyone else, or as Varoufakis himself who in a blog post today summarized his “middle finger” best when he said that it “has sparked off a kerfuffle reflecting the manner in which the 2008 banking crisis began to undermine Europe’s badly designed monetary union, turning proud nations against each other.“

Sadly for Europe, which faces an ever uglier face every time it looks in the mirrer, he is right.

* * *

From Yannis Varoufakis:

Of Greeks and Germans: Re-imagining our shared future

Any sensible person can see how a certain video[1] has become part of something beyond a gesture. It has sparked off a kerfuffle reflecting the manner in which the 2008 banking crisis began to undermine Europe’s badly designed monetary union, turning proud nations against each other.

When, in early 2010, the Greek state lost its capacity to service its debts to French, German and Greek banks, I campaigned against the Greek government’s quest for an enormous new loan from Europe’s taxpayers. Why?

I opposed the 2010 and 2012 ‘bailout’ loans from German and other European taxpayers because:

• the new loans represented not a bailout for Greece but a cynical transfer of losses from the books of the private banks to the weak shoulders of the weakest of Greek citizens. (How many of Europe’s taxpayers, who footed these loans, know that more than 90% of the €240 billion borrowed by Greece went to financial institutions, not to the Greek state or its citizens?)
• it was obvious that, at a time Greece could not repay its existing loans, the austerity conditions for giving Greece the new loans would crush Greek nominal incomes, making our debt even less sustainable
• the ‘bailout’ burden would, sooner or later, weigh down German and other European taxpayers once the weaker Greeks buckled under their mountainous debts (as moneyed Greeks had already shifted their deposits to Frankfurt, London etc.)
• misleading peoples and Parliaments by presenting a bank bailout as an act of ‘solidarity to Greece’ would turn Germans against Greeks, Greeks against Germans and, eventually, Europe against itself.

In 2010 Greece owed not one euro to German taxpayers. We had no right to borrow from them, or from other European taxpayers, while our public debt was unsustainable. Period!

That was my ‘controversial’ point in 2010: In 2010, Greece should have borrowed not one euro before entering into debt restructuring procedures and partially defaulting to its private sector creditors.

Well before the May 2010 ‘bailout’, I urged European citizens to tell their governments not to even think of transferring private losses to them.

To no avail, of course. That transfer was effected soon after[2] with the largest taxpayer-backed loan in economic history given to the Greek state on austerity conditions that have caused Greeks to lose a quarter of their income, making it impossible to repay private and public debts, and causing a hideous humanitarian crisis.

That was then, in 2010. What should we do now, in 2015, that Greece remains in crisis and our people, the Greeks and the Germans, have, regrettably but also predictably, descended into a mutual ‘blame game’?

First, we should work towards ending the toxic ‘blame game’ and the moralising finger-pointing which benefit only the enemies of Europe.

Secondly, we need to focus on our joint interest: On how to grow and to reform Greece rapidly, so that the Greek state can best repay debts it should never have taken on while looking after its citizens as a modern European state ought to do.

In practical terms, the 20^th February Eurogroup agreement offers an excellent opportunity to move forward. Let us implement it immediately, as our leaders have urged in yesterday’s informal Brussels meeting.

Looking ahead, and beyond current tensions, our joint task is to re-design Europe so that Germans and Greeks, along with all Europeans, can re-imagine our monetary union as a realm of shared prosperity.

—————————–

[1] Whose showing derailed an otherwise constructive discussion on German television.
[2] First in May 2010 (€110 billion) and then again in the Spring of 2012 (another €130 billion).

end

 

David Stockman has it right on the Greek situation;

 

(courtesy David Stockman/Stockman’s corner)

C’mon Angela, Let Them Greexit

by David Stockman • March 19, 2015

With each passing day it becomes more obvious that Europe is heading for an epochal financial conflagration. So buy-the-dip if you must, but don’t believe for a minute that the US has decoupled.  When the euro and EU eventually implode it will rattle the bones of every gambler and algo left in the casinos anywhere on the planet.

Yes, the school yard name calling and roughhousing now going on in Europe makes it appear that behind the sturm und drang there is some negotiations happening. But the truth is there is nothing to negotiate. Greece is so completely and terminally bankrupt that there is no solution other than default and greexit.

To insist that Greece service the entirely of its staggering $350 billion of debt, as does Germany and the troika apparatchiks, is to advocate the extinguishment of democracy in Greece and its reduction to a colonial mandate of Brussels; and in the process, to eliminate any semblance of economic life among the debt serfs who would inhabit it.

Its just math. Sooner or later interest rates must normalize. For a country with Greece’s profligate fiscal history, there is no possibility that the interest carry cost on a public debt load equal to 175% of GDP could be any less than 6-7% in the absence of EU guarantees.That means that the Greek state’s annual interest bill would approach 10% of GDP before paying down a single dime of principal.

You can’t govern a democracy when one-quarter of revenues are preempted for debt service. That’s especially the case given the  sprawling expanse of the Greek state and the vast dependency of its population on public jobs, pensions and other welfare state entitlements. Indeed, for all the protestations about “austerity” Greece spending ratio to GDP just keeps getting worse.

So what Greece’s fiscal equation amounts to is a deathly political food fight over upwards of 60% of GDP which must be funded with nearly an equivalent tax claim on current income—–since Greece has no credit in any known financial market absent EMU advances and guarantees. Throw in the diversion of a substantial share of the punishing taxes needed to finance the current commitments of the Greek state to lenders and coupon clippers and you have a non-starter.

But try to manage that impossible equation by the writ of remote bureaucrats and non-Greek politicians and you get the clowns of Syriza now, and an uprising in the streets eventually. So the entire predicate of the current so-called negotiations—–that Greece can fashion, enact and adhere to a fiscal plan that actually adds up and that is acceptable to the “institutions”—–is sheer madness; its recipe for an unending gong show which would pale what has gone before into insignificance.

So why do the Brussels bureaucrats and the German politicians insist? At the end of the day, its not really the fact that Germany is on the hook for upwards of $70 billion of guarantees and bilateral loans. Paying up would undoubtedly elicit a political firestorm in Germany, but it would not be a financial calamity. Even a 100% loss would amount to less than 2% of GDP.

No, the reason that Germany persists notwithstanding the outright political calumny being directed its way by its Greek supplicants is that its leader, Angela Merkel, an otherwise sober, conservative and upright politician, believes that Europe will stand or fall on the euro. As she said yesterday in laying the ground work for an eventual new round of kick the can with Tsipras,

“If the euro fails, Europe fails,” Merkel told German lawmakers in Berlin Thursday. “The eyes of the world are looking at how we deal with problems and crises in individual countries of the euro zone. The euro is more than a currency.”

What a historic tragedy. The Euro and the ECB is not the health and future of Europe; it is a massive financial calamity waiting to happen. The fact is, the Bundesbanks’s sound money standard has now been irrevocably stolen and perverted by the socialist politicians and self-perpetuating apparatchiks of Brussels.

There could be no more powerful evidence for that proposition than the antics of the foolish pretender who now runs the ECB. The last thing that Europe’s profligate welfare state governments need is negative interest rates and a massive monetization of their gargantuan public debts. Yet Draghi apparently believes that by destroying what remains of price discovery in Europe’s financial markets and by eliminating the only real incentive for fiscal sobriety that remains—–the fear of soaring interest rates on the public debt—-he is leading Europe toward economic recovery.  In fact, he is leading Europe down a path of sheer monetary and financial madness.

This baleful scenario, of course, is the last thing Merkel would want, as well, if she had a clue about monetary policy and central banking. But the euro has apparently become a magic totem in her mind and that of the German leadership. So Germany stumbles forward pushing the entire project toward an eventual financial and political crash landing.

There is really nothing to stop the blind momentum—-not in France or the other financial cripples of the EMU which remain fiscally viable only due to the money printing campaign of the ECB. So unless Angela Merkel comes to her senses, the true crisis will go unrecognized and unattended.

To wit, the real threat to the peace and prosperity of Europe is not the middling harm that would result from sending the Greeks packing—-back to their Drachma and the massive task of reconstituting their international credit and fiscal self-governance.

No, the enemy of Europe is actually the euro itself. It’s not “more than a currency”; it’s the pernicious emission of a central bank that has fallen prey the statist and Keynesian illusion that nations can print their way to prosperity. Worse still, that this can be accomplished among a bickering confederation of welfare states with declining populations, shrinking work forces, punitive levels of taxation and state intervention and debts which are already at the breaking point.

C’mon Angela. Let the greexit happen. That’s the least of Europe’s problems.

 

 

end

 

 

USA citizens must be tickled pink with this:

(courtesy zero hedge)

US Taxpayers To Fund Ukraine Bailout With Bond Guarantee

Last week we reported that as part of the latest “check kiting” bailout scheme, Greek pensioners (and now utility companies) are being raided by the Greek government so that it can repay its debts to the IMF, which in turn would go ahead and fund a part of the recently approved $17.5 billion bailout of Ukraine, which then would have the money to pay its debts to Russia… and the IMF. And, as we also noted, “The only question is how long will it take the current puppet government to syphon off enough funds into various illegal ventures and offshore accounts before the IMF has to step back in a la Greece with bailout #2.”

Turns out the answer is about a week, because as Reutersreported earlier today, CCC-rated Ukraine is preparing to issue more debt, debt with a Aa+/AAA rating because it will come with the explicit guarantee of the United States of America.

From Reuters:

 

 

The Republic of Ukraine has sent out a request for proposals (RFP) to banks for a new US government-guaranteed bond, according to three sources.

 

This is the second time the US government has thrown its financial backing behind a Ukrainian international bond issue.

 

In May 2014, the US guaranteed a US$1bn Ukrainian bond maturing in 2019 through the US Agency for International development.

 

That bond was given a credit rating in line with the US sovereign at Aaa by Moody’s, AA+ by Standard & Poor’s and AAA by Fitch. This is a far cry from Ukraine’s credit rating, which stands at Caa3, CCC and CC with the same three agencies.

 

The RFP comes just over a week after Ukraine agreed a new four-year US$17.5bn bailout facility with the International Monetary Fund.

 

As part of the IMF agreement several institutions – including the European Union, World Bank and US – have agreed to provide around US$7.5bn between them, according to analyst estimates, to the war torn country.

 

It is not clear whether the US-backed bond forms part of the US contribution.

One other place that also issued bonds with a US guarantee was Egypt. And everyone knows just how the US-inspired coup to put the Muslim Brotherhood in power turned out.

In other words, after raiding Greek pensions with the IMF’s blessing, the Kiev puppet government is now going after the “full faith and credit” of the US… backed by its taxpayers.

In yet other words, the latest Ukraine “bailout” is courtesy of you, dear US taxpaying reader.

end

 

 

This is a biggy!!!  Japan, the key ally of the USA is considering joining the Chinese led development bank:

(courtesy zero hedge)

 

 

US “Isolated” As Key Ally Japan Considers Joining China-Led Bank

Well, that escalated quickly.

Just a week ago it appeared Washington had managed (for the time being at least) to convince the US’ closest allies to refrain from joining the Asian Infrastructure Investment Bank, a sinocentric institution aimed at promoting development across Asia that is meant to rival the US/Japanese-led ADB and begin a seismic shift away from the world’s traditionally US-dominated institutions such as the World Bank and the IMF. Then, much to the chagrin of Washington, the UK joined as a founding member calling it an “unrivaled opportunity.” 

As we and many other observers correctly noted at the time, the move by Britain could well embolden other countries who had expressed an interest initially but been deterred by pressure from Washington to reconsider their bids for membership. In (very) short order, everyone from Germany to Australia to Luxembourg was suddenly ready to cast their lot with the Chinese despite US warnings that the bank won’t adopt the proper operational standards. As we said yesterday, the world is now wise to the fact that US criticism of the new venture is very likely nothing more than an attempt by The White House to undermine Chinese regional ambition: 

 

 

…and that means in short order Australia and South Korea will likely be on board and at that point, the stigma the US has created around membership will have completely disappeared (if it hasn’t already), opening the door for other US “allies” to join despite the bank’s alleged “low” standards.

Now, it appears the last valuable friend the US has in the bid to keep China from undercutting the ADB is beginning to consider a bid to join up. Here’s more from Reuters: 

 

 

Japan’s foreign minister signaled cautious approval of the institution that the United States has warned against…

 

The opposition to the AIIB began crumbling after Britain said earlier this month that it would join the institution, saying it was in its national interest. France, Germany and Italy swiftly followed suit.

 

Australia now appears close to joining, although no formal decision has been made, and Beijing said Japan and South Korea were also considering the possibility. Asked about the three countries joining the bank, China’s Foreign Ministry said it was “open” to it.

 

“They have all already expressed that they are contemplating the issue at hand,” ministry spokesman Hong Lei told a daily briefing. “We are open to them making the relevant decision.”

 

Japanese Finance Minister Taro Aso said Tokyo could consider joining the China-led bank if it could guarantee a credible mechanism for providing loans.

Make no mistake, they’ll still be plenty of officials in Japan who will stick to the script and fight the proposal, but the fact that the country is openly considering it when relations with China are rocky at best and when Japan is so influential in what is pretty clearly a competing institution speaks volumes about the extent to which US hegemony is waning. For his part, PM Abe is still hanging onto the same tired rhetoric: 

• ABE: AIIB IS DIFFERENT TO IMF, WORLD BANK AND ADB 
• ABE: NEED TO CONSIDER AIIB QUESTION CAREFULLY

As for BoJ Gov. Kuroda, he was apparently too busy buying stocks to comment.

Via Bloomberg: 

 

 

Asian Development Bank and World Bank have accumulated experience in helping Asia improve infrastructure, Bank of Japan Governor Haruhiko Kuroda said Friday, declining to comment on whether Japan should participate in a new China-led lender.

 

Kuroda said he couldn’t respond directly when asked whether Japan should join Asian Infrastructure Investment Bank.

 

 end

 

and now Switzerland:

 

(courtesy Reuters and special thanks to Robert H for sending this to us)

 

 

Switzerland to take part in founding of AIIB bank

Fri Mar 20, 2015 7:26am EDT

 

ZURICH (Reuters) – Switzerland will participate in the establishment of a new international development bank backed by China, along with several other western European countries, the Swiss government said on Friday.

The Alpine nation will become a prospective founding member of the Asian Infrastructure Investment Bank (AIIB), subject to approval by the existing signatories, the government said in a statement.

The AIIB was launched in Beijing last year to support investment in Asia in transport, energy, telecommunications and other infrastructure. It is seen as a rival to the Western-dominated World Bank and a major plank in spreading China’s “soft power”.

(Reporting By Alice Baghdjian; Editing by Hugh Lawson)

 

 

end

 

 

Oil related stories for today:

 

Oil rigs plunging faster than a speeding bullet.  The hope of course is that eventually production slows down to allow the price of oil to rise:

 

(courtesy zero hedge)

 

Rig Count Plunge Continues: Total Rigs Lowest Since March 2011, Fastest Drop Since 1986

 

 

There was good and bad news for those oil bulls (and inversely, bears) in today just released Baker Hughes rig count.

The good news – for the bulls – is that the rig collapse continues, with “only” 1,069 rigs currently operating, down 5.0% from last week’s 1,125, and the lowest since March 2011. The hope (because lately that’s all there is) is that since oil rigs are plunging at an annual pace last seen 1986, that sooner or later production will be mothballed. However, as the blue line in the chart below shows, quite the contrary is happening as plummeting oil rigs simply means even more record production.

 

As for the good news for the bears, the latest weekly drop of 56 indicated the first slow down in the weekly decline, following last week’s 67. If this is the start of a trend, it may well mean that drillers are taking full advantage of gullible BTFD equity and bond investors, and are throwing all they can at the oversupply problem by… supplying even more oil.

If indeed the weekly drop in the rig count next week slows down dramatically, watch out as Cushing overflows, and oil starts to be liquidated en masse as the US runs out of storage capacity in just about 2 months.

* * *

And as a parting reminder, here is Bloomberg to explain the ‘link’ between wells, production, and rigs:

 

 

 

end

The following is why oil will be depressed for quite some time:

(courtesy zero hedge)

Desperate Shale Companies Issue Stock To Stay Afloat

 

The collapse in crude has provided voluminous evidence that investors in fact never, ever learn and the temptation to buy something “cheaply” usually trumps the fact that in many cases, the buyers haven’t the slightest clue as to the multifarious underlying factors that actually dictate prices. This was on full display over the past several months as retail investors rushed into shares of US-listed oil ETFs ahead of the widest contango in four years (Goldman would later confirm that any short-term “stabilization” is likely tied to retail ETF inflows). A further demonstration of this was EXXI’s recent offering of $1.45 billion in 11% 2020 notes —  the deal was upsized. Neither of these “investments” has turned out particularly well and as we noted earlier this week, the EXXI notes promptly fell 10%, while at the aggregate level, Bloomberg notes that shale-related junk bonds have cost bargain shoppers some $7 billion in just two weeks since the start of March. 

Meanwhile, producers are doing whatever they have to do to survive in the face of depressed prices and in addition to floating junk bonds, this means selling shares. Here’s more from Bloomberg: 

 

 

U.S. oil producers are issuing new shares of stock at the fastest pace in more than a decade, looking to investors for a cash lifeline to pay down debt and keep drilling as crude prices continue to sink.

 

Tapping equity markets has become the best option for companies such as Dallas-based RSP Permian Inc., which announced March 17 it’s seeking to raise as much as $232 million by selling additional shares. Calgary-based Encana Corp. and Noble Energy Inc. of Houston also have issued shares in the past two months to reduce debt.

 

That brings funds raised in the first three months of the year to about $8 billion, more than 10 times the total in the same period last year. As the continued slide in oil prices further crimps cash flows, banks are pressuring these companies to shore up their capital and reduce debt to lower servicing costs and provide wiggle room…

 

As recently as December and January, many producers assumed there would be little interest in pouring more money into the sector, and that funding from debt or equity wouldn’t materialize, said Rob Santangelo, co-head of equity capital markets Americas for Credit Suisse Group AG.

 

That began to change in February when prices seemed to stabilize and frozen credit and equity markets opened up. The $8 billion in stock issued in the first three months of 2015 is the highest of any quarter in more than a decade. If the pace continues, sales of new equity would surpass the total of 2008 and 2009 combined, the last time oil prices crashed, according to data compiled by Bloomberg.

 

The surge in equity offerings, even with the dilution of existing shareholders, now is widely considered the lesser of evils versus expensive borrowing or asset sales at reduced prices, said Troy Eckard, whose Eckard Global LLC owns stakes in more than 260 North Dakota shale wells.

That makes sense: why raise capital by issuing something you have to repay when you can just dilute existing shareholders with what may turn out to be worthless equity especially when  investors dying to catch a falling knife will be happy to hand over their money? 

 

 

“Equity does not have to be paid back and requires no disbursements of revenue and net profits,” Eckard said. “It buys into your plan and works for companies that can make it through the downturn in commodity prices.”

 

Investors are coming to the table in the belief they are buying in at the bottom of the market and will reap gains in the long-term as oil prices recover, said Christian O’Neill, an energy analyst at T. Rowe Price International Inc., which owns shares in numerous producers.

The problem here (well, besides the whole giant dilution and gullible retail investors thing), is that just as high yield debt issuance works to keep prices depressed by ensuring that producers have to keep producing at a breakneck pace to keep what little cash is still coming in flowing so coupon payments can be made, so too does issuing more and more equity put pressure on prices by keeping insolvent companies solvent: 

 

 

Meanwhile, the same companies that are offering investors double-digit yields may ironically be shooting themselves in the foot (and, as we suggested last month, contributing to disinflation) because as the Bank For International Settlements notes, keeping current on debt payments often means maintaining elevated production because keeping a leverage-driven bubble inflated means doubling and tripling down and this is exacerbated by investors’ willingness to take on risk if it means squeezing out a few basis points of yield versus “safer” debt which, depending on where you look, may actually produce loses thanks to NIRP.

The inevitable result here will be yet more supply, exacerbating the shortage of storage and validatingwhat we said a few weeks back which is that in fairly short order, US on-land storage capacity will be exhausted meaning each incremental barrel will have to be dumped directly onto the market, a scenario which is clearly not conducive to supporting prices.

In the end, this is yet another example of what we discussed here almost a month ago. Namely, that easy money policies have contributed to overbuilding and oversupply and have actually served to perpetuate disinflation in some cases, the commodities markets being one of them.

 

 

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Dave Kranzler comments on the huge problems for the USA shale and shale related bond issuance:

 

(courtesy Dave Kranzler/IRD)

 

 

Oil Bonds Are Blowing A Big Hole In The Bond Market

March 19, 2015Financial Markets, Market Manipulation, U.S. Economyjunk bonds,shale oil, Wall Street fraud

The shale oil industry was a scam by the big private equity funds who took a flier on the shale business because the bond market gave them access to dirt cheap capital thanks to the Fed’s ZIRP.

When the history books are written, the shale oil “boom” will be looked back upon as one of the bigger scams executed beautifully by Wall Street.  Right now several oil shale development companies are in various stages of insolvency or headed toward insolvency. While the bond market in general has become relatively illiquid, the corporate junk bond market is now largely trading in “step function” prices for anything larger than “one-sies and two-sies” ($1 to $ 2 million bond trades).

Every junk bond fund under the sun is completely mismarked and overvalued because the “mark to market” pricing mechanism that has morphed into “mark to quote.”   But I know from talking to contacts on Wall Street that anyone who wants a bid for something more the a very small size of bonds had better be prepared to accept a much lower price than where their position is marked.  Conversely, don’t stick a bid on anything unless you really want to buy it.

Oil Bonds Lose Investors $7 Billion in 10 Days  –  Investors lured back into junk-rated energy bonds by their juicy yields are getting burned. Oil prices have fallen more than 15 percent since March 4 to a six-year low of $42.3, wiping out $7 billion of market value of high-yield debt issued by energy companies.  (LINK).

If true mark to mark were imposed on the junk bond market, that $7 billion loss could easily turn into a $21 billion loss.

Anyone reading this who has investments in high yield bond funds should get out now. The next big event that triggers a big sell-off in the junk market will cut the value of a lot of these junk bond mutual funds down by one-third to a half.   You can exploit the fraudulent bond price-marks in all of these funds by redeeming your investment ahead of the pack.   Pigs are greedy and hogs get slaughtered.  The yield-hog investors are on their way to the meat packing house…

 

 

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The nightmare of the job losses!!

 

And the USA added how many new jobs last month???

 

(courtesy Andrew Topf/Oilprice.com)

 

100,000 Layoffs And Counting: Is This The New Normal?

Submitted by Andrew Topf of Oilprice.com

 

 

This time a year ago, the oil industry’s biggest problem was finding a way to deal with the “retirement tsunami” about to crash down on it as older oilfield workers hung up their cork boots to enjoy freedom-55. Now, with oil prices still in the doldrums, many of those same workers are lucky to be hanging onto their jobs, while others have been booted from the payroll as an ugly wave of layoffs takes hold.

One of the worst-affected areas is the Canadian oil sands, where a higher per-barrel cost of production than conventional sources has oil companies scrambling to cut capital expenditures and in several cases, put long-term projects on ice.

On Thursday one of the region’s big players, Husky Energy, announced that about 1,000 construction workers employed by a contractor at its Sunrise oilsands project, would be issued pink slips. The bad news for the workers came a day after Husky said that it had started to produce from the $3.2 billion, steam-assisted gravity drainage (SAGD) Sunrise operation, which it co-owns with BP.

The layoffs by Husky followed Suncor’s decision in January to cut 1,000 employees and Royal Dutch’s Shell’s announcement that it will shed close to 10 percent of the workforce at its Albian sands project – around 300 workers.

The Canadian Association of Oilwell Drilling Contractors, which closely tracks drilling activity, said in February that up to 23,000 jobs could be lost as the number of rigs fall. Since the price started dropping last September, about 13,000 positions in the Alberta natural resources sector, mostly oil and gas, have been eliminated, according to Statistics Canada.

The bloodletting among the oil majors and their vast web of ancillary services has of course extended to the United States – which appears to be taking far more casualties than Saudi Arabia in the battle for marketshare. In January oilfield services giant Baker Hughes said it will lay off 7,000 employees, about 11 percent of its workforce; that number was rivalled only by its competitor, Schlumberger, which let go 9,000 workers. Shell, Apache, Pemex and Halliburton are among major oil companies to issue recent pink slips to the growing army of unemployed oil workers. In the U.S., the worst pain is, not shockingly, expected to be felt in Houston. Assuming a one-third reduction in oil company capital expenditures this year and 5 percent in 2016, the hydrocarbon capital of the world could lose 75,000 jobs, in a city that has added 100,000 new positions every year since 2011, said a professor at the University of Houston.

The oil jobs nightmare is in fact spreading like a cancer. According to Swift Worldwide Resources, “the number of energy jobs cut globally has climbed well above 100,000 as once-bustling oil hubs in Scotland, Australia and Brazil, among other countries, empty out,” Bloomberg reported recently. Examples include foreign-trained engineers whose promise of employment at LNG plants in Australia have evaporated as projects get delayed; development projects halted in Brazil resulting in the closure of international schools and the relocation of workers; and 8,000 Mexican workers left without paycheques after Petroleos Mexicanos slashed contracts and purchases, Bloomberg said.

Of course, industry defenders say the oil and gas business is boom and bust by nature, and most veteran oilmen have gone through many a cyclical downturn and lived to fight another day. The question of whether or when the oil price will recover and all those laid-off workers are rehired is best left to the prognosticators. In the meantime, there is a danger in oil companies cutting too deep, according to oil and gas industry recruiters. They say firms that lay off too many workers will put pressure on older workers who may opt for early retirement. That could leave companies in the same situation as the 1980s, when an oil downturn meant few businesses hired and new graduates went into other more promising fields, leaving a serious talent gap.

“They will be very careful about reducing staff, because they’ve seen cycles like this before where commodity prices are weak for a certain period time, they lay off employees and they’re not well-positioned to get access to high-quality talent,” said Mike Rowe, vice president of exploration and production research at Tudor Pickering Holt, an energy investment and merchant bank, in a story run by CNBC on how the layoffs could come back to haunt the industry.

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Your more important currency crosses early Friday morning:

 

 

Eur/USA 1.0695 up  .0926

USA/JAPAN YEN 121.07  up .321

GBP/USA 1.4750  down .0010

USA/CAN 1.2692 down .0007

This morning in Europe, the Euro stopped its downward movement, reversing  upwards by a small amount, 26 basis points, trading now just below the 1.07 level at 1.0695; Europe is still reacting to deflation, announcements of massive stimulation,  and the ramifications of a default at the Austrian Hypo bank, 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 32 basis points and trading well above the 120 level to 120.91 yen to the dollar.

The pound was well down this morning as it now trades well below the 1.48 level at 1.4711  (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 is also down by 7 basis points at 1.2692 to the dollar trading in sympathy with the higher oil price.

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>