April 1/Greek FinMin contemplates using Bitcoin if thrown out/Poor numbers coming out of Japan including bad Tanken mfg index/Poor USA ISM manufacturing report/Poor private ADP employment report/California to initiate cuts to water to the state as drought continues/

Good evening Ladies and Gentlemen:



Here are the following closes for gold and silver today:



Gold:  $1208.65 up $25.55 (comex closing time)

Silver: $17.04 up 46 cents (comex closing time)


In the access market 5:15 pm


Gold $1203.80

Silver: $16.97


Gold and silver had a good day as finally they were released from the shackles of month end options expiry on comex, LBMA and OTC contracts.


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,  we surprisingly had a poor delivery day, registering only 1 notices served for 100 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 249.165 tonnes for a loss of 54 tonnes over that period. Lately the removals  have been rising!





In silver, the open interest fell by only 152 contracts,  even though Tuesday’s silver price was down by 8 cents. The total silver OI continues to remain extremely high with today’s reading at 170,105 contracts. The front April month has an OI of 130 contracts for a gain of 20 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 again have a continuing collapse of OI as we enter the next active delivery month of April . The total comex gold OI rests tonight at 387,585 for another loss of 296 contracts. With June gold almost equal to April gold in price, it just does not make sense why so many would liquidate their positions.  As options expired on the OTC market, gold and silver were allowed to rise. We had 1 notice served upon for 100 oz.



Today, we had no changes in gold inventory   at the GLD/  Gold Inventory rests at 737.24  tonnes

In silver, /SLV  we had another huge withdrawal of 1.918 million oz of   silver inventory  / the SLV/Inventory, at 321.975 million oz


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


1, Today we again had some short covering again in the silver comex complex with the silver OI falling by only 152 contracts despite the continued whacks on it.  Gold OI fell again by 296 contracts. The huge rise in gold/silver after options expiry on the OTC will no doubt see increases in OI tomorrow.

(report Harvey/zero hedge)

2. Greece will likely default in two weeks.  Today its FinMin after talks did not go over too well, told his parliamentarians that they could use Bitcoins instead of Euros/Drachma.

(zero hedge)

3.Japan delivers many huge misses including the big Tanken manufacturing index/the Nikkei falters badly by 172.15 points or .9%

(zero hedge)


4. Yemeni rebels are in a town bordering the Bab al Mandeb strait.  Saudi Arabia is reading to invade.

(zero hedge)

5. Huge explosion in the oil patch as state owned Mexican Pemex Oil platform explodes

(zero hedge)

6. The private ADP report was released today and employment sank

(courtesy ADP)

7. ISM manufacturing also faltered


8. The Atlanta Fed lowered it’s estimate on first quarter GDP to 0.00%

from .2%


(Atlanta Fed/zero hedge)

9. For the first time in its history, California orders water cuts as the drought continues.


(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 fell by another 296 contracts from  387,881 down to 387,585 as gold was down by $1.70 yesterday (at the comex close). As I mentioned above, the complete collapse of OI as we enter an active delivery month makes no sense.The fact that we have a middle eastern war, troubles in Ukraine and in Greece and then to have a complete collapse in OI is beyond comprehension. We are off contract month of March.  We are now in the  active delivery month of April and here the OI fell by 1926 contracts down to 5,422. The next non active delivery month is May and here the OI rose by 44 contracts up to 542.  The next big active delivery contract month is June and here the OI rose by 900 up to 262,620.  June is the second biggest delivery month on the comex gold calender. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 72,411  (Where on earth are the high frequency boys?). The confirmed volume yesterday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 126,173 contracts. Today we had 1 notices filed for 100 oz which is most unusual for a second day delivery notice.

And now for the wild silver comex results.  Silver OI fell by only 152 contracts from 170,257 down to 170,105 despite the fact that silver was down by 8 cents, with respect to Tuesday’s trading . It certainly seems that we have some resolute longs who refuse to part with their silver contracts. We are off  the active contract month of March.  We are now in the non active delivery month of April and here the OI rose to 130 for a gain of 20 contracts.  we had 0 notices filed yesterday so we gained 20 contracts or an additional 100,000 oz of silver will stand for delivery in April.  The next big active delivery month is May and here the OI dropped by 1417 contracts down to 99,117. The estimated volume today was poor at 15,508 contracts  (just comex sales during regular business hours.  The confirmed volume yesterday  (regular plus access market) came in at 42,880 contracts which is good in volume. We had 0 notices filed for nil oz today.



April initial standings

April 1.2015



Withdrawals from Dealers Inventory in oz  nil
Withdrawals from Customer Inventory in oz  32.15 oz (Brinks)1 kilobar
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz nil
No of oz served (contracts) today 1 contracts (100 oz)
No of oz to be served (notices)  5421 contracts(542,100) oz
Total monthly oz gold served (contracts) so far this month 4 contracts(400 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   oz

Total accumulative withdrawal of gold from the Customer inventory this month

  2443.40 oz

Today, we had 0 dealer transaction

total Dealer withdrawals: nil oz



we had 0 dealer deposit

total dealer deposit: nil



And the farce on kilobars continues!!



we had 1 customer withdrawals

i) Out of Brinks: 32.15 oz (1 kilobar)


total customer withdrawal: 32.15 oz  (1 kilobar)



we had 0 customer deposit:



total customer deposit: nil oz


We had 1 adjustment


from Delaware vault:


197.991 oz was removed from the customer and this landed into the dealer account of Delaware;



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 1 contract 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 (4) x 100 oz  or  400 oz , to which we add the difference between the open interest for the front month of April (5422) and the number of notices served upon today (1) x 100 oz equals the number of ounces standing.

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

No of notices served so far (4) x 100 oz  or ounces + {OI for the front month (5422) – the number of  notices served upon today (1) x 100 oz which equals 542,100 oz or 16.87 tonnes of gold.


we lost 1926 contracts or 192,600 oz of gold that will not stand for delivery in April





Total dealer inventory: 659,031.595 oz or 20.498 tonnes

Total gold inventory (dealer and customer) = 8,010,640.894  oz. (249.16) tonnes)


Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 54.0 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.






And now for silver

April silver initial standings

April 1 2015:



Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory nil oz
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory nil
No of oz served (contracts) 0 contracts  (nil oz)
No of oz to be served (notices) 130 contracts(650,000 oz)
Total monthly oz silver served (contracts) 0 contracts (nil oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal  of silver from the Customer inventory this month  429,177.29 oz

Today, we had 0 deposits 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 deposits:  nil  oz



We had 0 customer withdrawals:


total withdrawals;  nil oz



we had 1 adjustments:


Out of Delaware:

277,219.376 oz was adjusted out of the dealer at HSBC into the customer account of Delaware



Total dealer inventory: 70.292 million oz

Total of all silver inventory (dealer and customer) 176.650 million oz


The total number of notices filed today is represented by 0 contracts for nil 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 (0) x 5,000 oz    = 0 oz to which we add the difference between the open interest for the front month of April (130) 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 April contract month:



0 (notices served so far) + { OI for front month of April(130) -number of notices served upon today (0} x 5000 oz =  650,000 oz standing for the April contract month.



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

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






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:



April 1/2015/ no changes in gold inventory at the GLD/Inventory at 737.24 tonnes


march 31.2015/ no changes in gold inventory at the GLD/Inventory at 737.24 tonnes


March 30/no changes in gold inventory at the GLD/Inventory at 737.24 tonnes.


March 27/no changes in gold inventory at the GLD/Inventory at 737.24 tonnes


March 26 we had another huge withdrawal of 5.97 tonnes of gold.  This gold is heading straight to the vaults of Shanghai, China/GLD inventory 737.24 tonnes

March 25.2015 we had a withdrawal of 1.19 tonnes of gold from the GLD/Inventory at 743.21 tonnes

March 24/ no changes in gold inventory at the GLD/Inventory 744.40 tonnes

March 23/we had a huge withdrawal of 5.37 tonnes of gold from the GLD vaults/Inventory 744.40 tonnes

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




April 1/2015 /  we had no changes in  gold/Inventory at 737.24 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 : 737.24 tonnes.






And now for silver (SLV): April 1.2015: we had a huge withdrawal of 1.913 million oz of silver from the SLV vaults/Inventory 321.975 million oz



March 31.2015: no changes in inventory at the SLV/Inventory at 323.88 million oz


March 30.2015: no changes in inventory at the SLV/inventory at 323.888 million oz.



March 27. we had a huge withdrawal of 1.439 million oz leave the SLV/Inventory rests this weekend at 323.888 million oz

March 26.2015; no change in silver inventory/SLV inventory 325.323 million oz

March 25.2015:no change in silver inventory/SLV inventory 325.323 million oz

March 24.2015/ we had another withdrawal of 835,000 oz of silver from the SLV/Inventory rests tonight at 325.323 million oz

March 23./we had a huge withdrawal of 1.174 million oz of silver from the SLV vaults/Inventory 326.158 million oz

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




April 1/2015 we had a huge withdrawal of 1.913 million oz of silver inventory at the SLV/inventory rests at 321.975 million oz






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

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

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

1. Central Fund of Canada: traded at Negative  7.0% percent to NAV in usa funds and Negative 7.1% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.2%

Percentage of fund in silver:38.4%

cash .4%


( April 1/2015)


Sprott gold fund finally rising in NAV

2. Sprott silver fund (PSLV): Premium to NAV falls to + 0.27%!!!!! NAV (April 1/2015)

3. Sprott gold fund (PHYS): premium to NAV rises -.37% to NAV(April 1/2015

Note: Sprott silver trust back  into positive territory at +0.27%.

Sprott physical gold trust is back into negative territory at -.37%

Central fund of Canada’s is still in jail.







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


Gold and silver trading early this morning


(courtesy Goldcore/Mark O’Byrne)


Gold Flat In Quarter In Dollars But 11% and 5% Higher In Euro and Pounds

  • Gold flat in quarter in dollars but 11% and 5% higher in euro and sterling
  • Gold essentially flat with fall of just $2 or 0.0017% in dollar terms
  • Euro was the worst performing major currency in Q1 
  • Gold one of strongest currencies after silver, dollar and Swiss franc
  • Silver surges 6.5% in dollars and 19% and 12% in euros and pounds
  • Oil and most commodities declined on economic concerns
  • U.S. stocks eked out minor gains to new record highs and look toppy 
  • Gold performance impressive given strength of dollar and equities, oil collapse and negative sentiment


Gold was essentially flat with a fall of just $2 or 0.0017% in dollar terms in the quarter. While gold was essentially flat in the quarter in dollar terms, it is important to note that gold was 11% and 5% higher in euro and sterling terms – building on the respective 13% and 6% gold price gain seen in 2014.

Silver surged and was third strongest market relative to other major markets globally – including currencies, financial assets, stocks and commodities – rising 6.4% in dollar terms and 19% and 12% in euro and pounds.

Gold in US Dollars – Q1, 2015 (Thomson Reuters)

The euro fell 11.2% relative to the basket of assets following the ECB’s foray into the uncharted territory of the ‘QE Bazooka’ and uncertainty over the future of Greece in the Euro zone and over the future of the euro itself.

While the euro experienced sharp decline, gold priced in euros rose substantially from around €978 to over €1100 per ounce.

Other poorly performing currencies include the Canadian dollar (-8.3%), Australian dollar (-6.0%), British pound (-4.6%), New Zealand dollar (-3.5%). The Japanese yen was flat with a 0.1% fall.

Gold performed its traditional role as hedge against currency depreciation over the period with all currencies which performed poorly seeing gold price gains. It is important to note that gold buyers buy gold in local currencies and have exposure in and to local currencies. Therefore it is important for non-U.S. investors to focus on gold in local currency terms.

Gold in Euro – Q1, 2015 (Thomson Reuters)

Gold priced in Canadian dollars was also up considerably – from around $1375 to $1500 per ounce.

In Australian dollars gold rose from around $1450 to just over $1550. In British pounds gold was up from around £760 to slightly below £800 per ounce.

The New Zealand dollar saw a slight increase over the same period from roughly $1540 to around $1590  per ounce.

The strongest performing assets were generally those which have been the beneficiaries of ultra loose monetary policies by the Fed, BOE, ECB and the BOJ. The Nikkei 225 was up 10% and the DAX by 23% (see chart below).

The Nikkei 225, the DAX and the U.S. dollar were the strongest performing markets followed by silver and a mix of U.S. stocks and bonds and the Swiss franc.

Gold in British Pounds – Q1, 2015 (Thomson Reuters)

Platinum fell 5.5% and palladium 7.9% in the first quarter.

Commodities, and energy and agricultural commodities in particular, fared poorly. Rice, orange juice, wheat, oats, sugar, coffee and lean hogs all had sharp declines ranging from -8.7% to -27%.

Crude oil and natural gas fell 15.9% and 8.6% while copper and lumber fell -1.8% and -19.4% respectively, further demonstrating developing weakness in the global economy.

Certain commodities performed well – generally ones which have seen losses in recent months. Cotton, feeder cattle and heating oil saw gains.

Stocks and bonds were higher with the S&P, Dow, Russell 2000, Nasdaq 100, 30 year bonds and 10 year notes were up between 4% and 0.2%.

It is testament to gold and silver’s inherent strength that they have outperformed many paper assets, even assets which have been positively targeted by the Fed and other central banks and boosted by loose monetary policy – such as major stock indices and bond markets.

The very marginal decline of gold priced in dollars has led to some more negative comment about gold’s “quarterly fall.” This is contributing to poor and indeed negative sentiment towards gold in western markets. This is bullish from a contrarian perspective and suggests we have bottomed or are close to bottoming.


Much analysis focuses on gold solely in dollar terms and discusses gold with the continuing assumption of a recovery and global economic growth. Recent data calls this into question and suggests that the recovery in the real economy is meager at best.

The resilience of gold in the first quarter against the backdrop of a strong dollar, record highs in stock markets, the collapse of oil and gas prices and negative sentiment towards the precious metal is encouraging.

The assets that performed well in Q1 were, by and large, those that are bloated with monetary stimulus – primarily stocks and bonds. These bubbles are increasingly vulnerable and will likely burst – the question is when rather than if. Then, gold’s financial insurance attributes will again protect those who have diversified into it.

7 Key Gold Must Haves



Today’s AM fix was USD 1,181.25, EUR 1,099.50 and GBP 800.36 per ounce.
Yesterday’s AM fix was USD 1,179.25, EUR 1,098.84 and GBP 797.95 per ounce.

Gold in USD – 1 Day

Gold dropped 0.11 percent or $1.30 and closed at $1,184.20 an ounce yesterday, while silver lost 0.36 percent or $0.06, closing at $16.65 an ounce. Overnight in Singapore, gold prices again fell marginally to touch a low of $1,181 per ounce prior to small gains in London this morning.

Gold closed very marginally lower in dollar terms yesterday and for the quarter. This is somewhat negative from a technical and sentiment perspective, however strong fundamentals and robust global demand are likely to support.

Did Wall Street players “paint the tape” and ensure a lower quarterly close to keep animal spirits in the gold market muted and encourage momentum traders to go short? We cannot tell but it would be somewhat naive to completely discount that possibility given the shenanigans banks have been found guilty of in recent months and years.

It is important to remember that no matter what manipulation may take place in futures markets, Asian and global physical demand including central bank demand will dictate the price of gold in the long term. Patience will reward those who retain an allocation to physical gold in the coming years.

Updates and Award Winning Research Here





This is novel:  The Icelandic Government is planning to have only its central banks create money, not ordinary banks:


(courtesy the Telegraph/GATA)


Iceland looks at ending boom and bust with radical money plan


From Agence France-Presse
via The Telegraph, London
Tuesday, March 31, 2015


Iceland’s government is considering a revolutionary monetary proposal — removing the power of commercial banks to create money and handing it to the central bank.

The proposal, which would be a turnaround in the history of modern finance, was part of a report written by a lawmaker from the ruling centrist Progress Party, Frosti Sigurjonsson, entitled “A Better Monetary System for Iceland.”

“The findings will be an important contribution to the upcoming discussion, here and elsewhere, on money creation and monetary policy,” Prime Minister Sigmundur David Gunnlaugsson said.

The report, commissioned by the premier, is aimed at putting an end to a monetary system in place through a slew of financial crises, including the latest one in 2008.

According to a study by four central bankers, the country has had “over 20 instances of financial crises of different types” since 1875, with “six serious multiple financial crisis episodes occurring every 15 years on average.”

Mr Sigurjonsson said the problem each time arose from ballooning credit during a strong economic cycle.

He argued that the central bank was unable to contain the credit boom, allowing inflation to rise and sparking exaggerated risk-taking and speculation, the threat of bank collapse, and costly state interventions.

In Iceland, as in other modern market economies, the central bank controls the creation of banknotes and coins but not the creation of all money, which occurs as soon as a commercial bank offers a line of credit.

The central bank can only try to influence the money supply with its monetary policy tools.

Under the so-called Sovereign Money proposal, the country’s central bank would become the only creator of money.

“Crucially, the power to create money is kept separate from the power to decide how that new money is used,” Mr Sigurjonsson wrote in the proposal.

“As with the state budget, the parliament will debate the government’s proposal for allocation of new money,” he wrote.

Banks would continue to manage accounts and payments, and would serve as intermediaries between savers and lenders.

Mr Sigurjonsson, a businessman and economist, was one of the masterminds behind Iceland’s household debt relief programme launched in May 2014 and aimed at helping the many Icelanders whose finances were strangled by inflation-indexed mortgages signed before the 2008 financial crisis.

The small Nordic country was hit hard as the crash of US investment bank Lehman Brothers caused the collapse of its three largest banks.

Iceland then became the first western European nation in 25 years to appeal to the International Monetary Fund to save its battered economy.

Its GDP fell by 5.1 percent in 2009 and 3.1 percent in 2010 before it started rising again.

* * *



Turd Ferguson has come to the conclusion that Paul Mylcreest is correct in that there is a direct correlation between the Nikkei and the shorting of gold:


(courtesy Turd Ferguson/TFMetals/GATA)


TF Metals Report: It’s all about that yen


2a SAKT, Tuesday, April 1, 2015

Dear Friend of GATA and Gold:

The TF Metals Report’s Turd Ferguson today provides more evidence in support of London-based market analyst Paul Mylchreest’s December study —


— concluding that gold was yoked in an algorithmic short/long trade with the Japanese stock index, only Ferguson sees it as a trade with the Japanese yen.

Ferguson writes: “If you’re baffled why ‘fundamentals don’t seem to matter,’ it’s because the fundamentals don’t matter. There are very few human traders of size left and the computers control everything. In this environment, arcane notions such as supply/demand and company fundamentals are insignificant. The primary drivers to these ‘markets’ are changes to the USD/JPY.”

Ferguson’s commentary is headlined “It’s All About that Yen” and it’s posted at the TF Metals Report here:


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






The following commentary from Bill Holter is an extremely important piece as he discusses the 3 main problem areas that can blow up the entire financial scene right now:


(courtesy Bill Holter/Miles Franklin)


The Greatest Show on Earth!
 It is pretty much a given that we are living the end times of a three ring financial circus.  If you doubt this, only a small amount of research on your part will confirm this.  The odds in my opinion are quite high we will witness some sort of military confrontation as usually occurs when business deals go bad.  The three leading acts today are Greece, Ukraine and special guest under the Big Top is Austria.  We don’t want to slight the tensions in the Middle East but that is already in the military stage, today let’s look more closely at the financial stage.

  Greece has already begun raiding public pensions to run even day to day operations.  The current estimate is they will run out of cash before the end of April.  It is no wonder they are having high level meetings with Moscow and will meet with Mr. Putin this coming Monday.  It has been said they are not looking for a handout.  This may be so but they will certainly be talking about running a pipeline through their country.  As I have said all along, broke is broke, they simply cannot make payment on what they have already borrowed from the West.
  The West, led by Germany may be able to restructure terms or even offer the Greeks more current cash.  Any deal made will not solve anything as whatever Greece accepts (if they do) will also need to be paid back.  Paying one credit card off with another one does not lower your balance, on the contrary, the total balance rises and this is the problem.  Greece as recently as 2010 was the shining star of Europe, just as a bank rated AAA on a Friday afternoon is bankrupt on Monday morning, so went Greece.
  What is being missed here is Greek debt is held widely by German and French banks …and by the ECB itself.  When Greece does finally default, these already undercapitalized banks will capsize, but this is only part of it.  Just as happened back in 2008, there may be 10 times the amount of CDS (insurance) written versus their debt, now we are talking $3.5 trillion.  Do you know of any entity on the planet that could make good on this policy?
  Before finishing on Greece, James Turk did an interview yesterday with King World news where he theorizes there will shortly be a “crossover” of debt owed the ECB and Greek banking deposits.  The banks have bled down to 130 billion euros while the ECB holds nearly 100 billion worth of Greek debt.  James believes a “bail in” of Greek banks will occur before the bank balances are too small to cover the debt.  http://kingworldnews.com/ecb-to-steal-greek-bank-deposits-as-greece-to-default-within-two-weeks-sending-shockwaves-around-the-world/ .  I believe this “crossover” has already happened.  I say this because many of the deposits are small.  I just don’t believe there are enough large deposits left to steal in order to cover the debt owed the ECB.  Can they really bail in small deposits of widows or retirees without a massive proletariat revolt?  I can envision small depositors of all ages out in the streets with pitchforks hunting down anyone who even looks like a banker!
  Another financial tent which will fold is Ukraine.  The situation here is less cut and dry than Greece because Russia is involved.  A little refresher for you, Russia lent Ukraine $3 billion+ at the end of 2013.  They did this to try to help stabilize the country, within two months “their guy” was out and “our guy” was in.  Ukraine has payments due on debt in June and they do not have the funds (nor their gold as this has already been pilfered).   This debt held by Russia comes due at the end of this year and because it was written under “English law”, any restructuring must be approved by Russia.  The odds of Russia allowing a restructuring are virtually zero because they know any extra funds will be used to restart Ukraine’s assault on the Russian population of the east.  The risk of a default by Ukraine has risen greatly.  Just as with Greece, it is not only so much about the amount of debt itself, it’s about how much CDS “insurance” has been written.  Just as Greece is just another link in the derivatives chain, so too is Ukraine.  Any default will involve $1 trillion plus when derivatives are taken into account, are there a spare trillion or more (or even multiples of this) for any of these links should they break?
  It is much more complicated than this but Russia will not aid the West at their own expense.  Please understand this, it is not about the money for Russia, the entire episode is about leverage, both financial and political.  You can add the leverage gained of debt problems to the fact Russia is a huge supplier of gas to Europe, who do you think Europe will side with when push comes to shove?
  Under the Big Top but receiving the least amount of attention or press coverage is Austria and their banking problems.  It seems the collapse of Hypo-Alpe Adria bank is reaching the next level, it was only a matter of time.  Pfandbriefbank Oesterich AG is the next potential casualty http://www.zerohedge.com/news/2015-03-27/black-swan-2-next-critical-chapter-austrian-banking-system-story .  They have a 600 million euro payment in June (lots of June deadlines?) but won’t be able to make this without invoking “guarantees”.  One of these guarantees comes from the state of Carinthia itself, already unwilling and they say unable to perform.  This is not even a large number, but, it affects the whole system in a domino effect where bank A owes bank B who owes bank C and down the line.
  You should look at this as an illustration of just how thin the margins really are, a 600 million euro shortfall can have such a large impact?  The fear is if Hypo doesn’t pay, Pfandbriefbank will not be able to either.  What is really interesting is the 2 year debt of Pfandbriefbank is trading at around 95 cents, down nearly 15% since just last week.  The debt market is already smelling this one out!  Also please keep in mind that Austria was supposed to be one of the “strong” European countries (rated AAA) and Hypo was highly rated right up until their announcement of impairment, what other overnight surprises might we see?
  To refresh your memory, Austrian bank problems were triggered when Switzerland broke their peg with the euro.  Many real estate loans were taken out in Swiss francs because the interest rate was so low.  Once the franc revalued higher, many of these loans were greater in value than the underlying real estate itself through no fault of the borrower other than to have borrowed in francs.  Obviously another area where the revaluation has done damage is to the bank’s balance sheets.  The lenders are now effectively short francs while those whom have sold derivative insurance against a lower euro or higher franc are now sitting on huge losses.  Trust me when I use the term “chain reaction” because this is already in motion!
  This “three ring circus” as I have dubbed it is by no means all there is, it does however have a finite time frame.  Greece and Ukraine owe monies before the end of June.  Pfandbriefbank also has a payment due in June.  Will any of these payments actually get done?  None of them?  I’d like to point out the obvious here, in neither of these three situations does the ability to pay exist without “help” from another source.  How long will these “sources” be available and what happens when they are no longer?  To this point it has been a hell of a show, it is best not to stay to watch the final act!   Regards,  Bill Holter




And now for the important paper stories for today:





Early Wednesday morning trading from Europe/Asia


1. Stocks generally higher on major Chinese bourses  /Japan and Australia lower/yen falls to 120.08

1b Chinese yuan vs USA dollar/yuan slightly strengthens to 6.1985

2 Nikkei down by 172.15 or 0.90%

3. Europe stocks in the green/USA dollar index up to 98.35/Euro rises to 1.0760

3b Japan 10 year bond yield .38% (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 120.08/ bad Tanken index as their economy falters.(see below)

3c Nikkei still barely above 19,000

3d USA/Yen rate now just above the 120 barrier this morning

3e WTI  47.27  Brent 55.09

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 down for WTI and down for Brent this morning despite the fact a proxy civil war continues in Yemen

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

Except Greece which sees its 2 year rate  rises to 22.53%/Greek stocks down by .60% today/ still expect continual bank runs on Greek banks.

3j  Greek 10 year bond yield:  11.53% (up by 40 basis point in yield)

3k Gold at 1185.00 dollars/silver $16.57

3l USA vs Russian rouble;  (Russian rouble down  1/4 rouble/dollar in value) 57.98 , rising even with the lower brent oil price

3m oil into the 47 dollar handle for WTI and 55 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 Eurogroup reject Greece’s bid for more euros of bailout funds as proposal is to vague. The ECB increases ELA by 1.5 billion euros up to 71.3 billion euros.  This money is used to replace fleeing depositors.


4.  USA 10 year treasury bond at 1.91% early this morning. Thirty year rate well below 3% at 2.51%/yield curve flatten/foreshadowing recession.


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



(courtesy zero hedge/Jim Reid Deutsche bank)


Whiplash Session Sees Furious Buying Of Futures To Defend 50-DMA As New Quarter Begins

It has been another whiplash, rollercoaster, illiquid session which saw US equity futures tumble early overnight driven by a bout of USDJPY and Nikkei selling, only to regain all losses as European, and BIS, traders walked in, and promptly BTFD. In fact at last check, it was as if all the fireworks that took place just a few short hours ago and sent the ES as low as 2037, and below what has become the key support level, the 50-DMA…

… never happened.

So here is what happened: overnight Asian stocks mostly fell with the exception of Chinese bourses, following a negative Wall Street close which saw the DJIA post its first quarterly decline for 2yrs. Nikkei 225 led the rout after breaking below 19,000, following a disappointing BoJ Tankan survey, with saw capex expectation at the lowest since Q1’ 2013. This prompted a sharp technical-led slump across US index futures which saw both the S&P 500 (-0.8%) and DJIA (-0.8%) E-mini futures break below their 50 DMAs. Hang Seng and Shanghai Comp rose, the latter posting yet another fresh 7yr high underpinned by higher than expected Chinese Official/HSBC Mfg. PMIs.

On the first trading day of the month and quarter European indices trade higher, supported by a series of better than expected PMI releases, window dressing heading into the new quarter and a recovery after yesterday’s close lower. Core Europe has now caught up with the UK after early outperformance in the FTSE 100 as the index was supported by positive single stock news and core Europe underperformed the UK due to lingering concerns surrounding Greece. Notably, Eurostoxx trade at the highest level since 2008. The markets will now be looking for any details that emerge from a working group call between the Eurogroup and Greece after an official said yesterday that he hopes for deal at the 1500 call although creditors have said there will be no deal at hand and there will be no negotiating.

Alongside any indication of progressive in Greek talks, markets now turn their attention to the release of several pieces of tier 1 US data with ADP, Manufacturing PMI, ISM Manufacturing and DoEs all due. Focus will be on the employment sub-component of these data points ahead of US NonFarm Payrolls due on Easter Friday. Attention will also be paid to any details on Iranian nuclear talks after a German Delegation source said this morning that Iranian talks have led to no deal as of yet, however if all parties show willingness to compromise, an agreement could be reached soon. Furthermore, heading into the North American crossover, Iran’s Deputy foreign minister Araghchi says he hopes a deal will be reached by tonight.

In-line with gains in stocks USD/JPY has seen a bid, reversing overnight JPY gains which was attributed to safe-haven flows following a sharp-sell off across both Asian stocks and US index futures. Recent upside in the pair has led to a break back above 120.00 and this means that current prices sit close to large expiries due to roll off at tomorrow’s 10am NY cut including ~2.6bln at the handle. Despite this morning’s USD strength there has been little movement in commodities markets this morning, another factor which has provide the FTSE with room for upside.

WTI crude futures fell overnight after last week’s API crude oil inventories showed a larger than previous build in oil stockpiles (+5.2mln vs. Prev. +4.8mln). Recent USD strength has also led to fresh lows heading into the US crossover and ahead of today’s DOE inventories which are expected to show a build of 4.2mln. In the metals markets, Iron ore printed a fresh 10- year lows as problems of overcapacity continue to plague the market, and although gold and silver trade lower, they trade above yesterday’s lowest levels.

In summary: European equities advance, reversing earlier losses. Banking, construction, ealth stocks lead gains. JPMorgan says mkts too pessimistic on Greece. Danish, French stocks outperform in Europe. Gold rises, while U.S. equity index futures, oil decline. Talks on Iranian nuclear deal continue. Mortgage applications, manufacturing PMI, construction spending, ISM manufacturing, vehicle sales data due later.

Market Wrap

  • S&P 500 futures down 0.0%
  • Stoxx 600 up 0.4% to 398.7
  • US 10Yr yield up 1bps to 1.92%
  • German 10Yr yield up 1bps to 0.19%
  • MSCI Asia Pacific down 0.3% to 145.8
  • Gold spot up 0.2% to $1185.8/oz
  • Eurostoxx 50 +0.4%, FTSE 100 +0.5%, CAC 40 +0.6%, DAX +0.4%, IBEX +0.5%, FTSEMIB +0.5%, SMI +0.4%
  • Asian stocks fall with Shanghai Shenzhen CSI 300 outperforming and the Nikkei underperforming.
  • MSCI Asia Pacific down 0.3% to 145.8
  • Nikkei 225 down 0.9%, Hang Seng up 0.7%, Kospi down 0.6%, Shanghai Composite up 1.7%, ASX down 0.5%, Sensex up 0.5%
  • Simon Withdraws $16.8b Offer for Macerich After Rejection
  • Sony Sells Half Stake in Olympus to JPMorgan Securities
  • Alibaba Logistics Ally ZTO Express Sees Possible IPO in 2017
  • Chinese Group in Talks on Debt Funding for Philips Deal
  • Euro up 0.12% to $1.0744
  • Dollar Index up 0.01% to 98.37
  • Italian 10Yr yield up 2bps to 1.27%
  • Spanish 10Yr yield down 2bps to 1.19%
  • French 10Yr yield up 1bps to 0.49%
  • S&P GSCI Index down 0.1% to 396.4
  • Brent Futures down 0.2% to $55/bbl, WTI Futures down 0.7% to $47.3/bbl
  • LME 3m Copper up 0.2% to $6051/MT
  • LME 3m Nickel up 0.8% to $12500/MT
  • Wheat futures up 1% to 516.8 USd/bu

Bulletin Headline Summary

  • Better than expected Eurozone PMIs and window-dressing support a bid in European equities and support USD/JPY which breaks back above 120.00
  • Markets will now be looking for any details that emerge from a working group call between the Eurogroup and Greece at 1500 local time although creditors said there will be no deal at hand and there will be no negotiating
  • Treasury yields higher overnight as U.K. manufacturing grew at its fastest pace since last summer and negotiations with Iran over its nuclear program reach “consensus on major points.”
  • U.K. manufacturing grew at the fastest in eight months in March, reinforcing the health of the recovery as politicians clash over economic management before the general election
  • Iran and world powers pressed ahead with talks to draft the outline of an agreement to end the 12-year standoff over the country’s nuclear program, with diplomats saying more work needs to be done before any announcement
  • A Chinese manufacturing gauge rebounded in March, suggesting stimulus efforts have started to bolster factories in the world’s second-largest economy
  • Signs of inexperienced investors’ growing influence on China’s $6.5t stock market have already shown up in the outperformance of China’s equivalent of penny stocks and a jump in share-price volatility to the highest level in five years.
  • European Central Bank policy makers will consider extending their lifeline to Greek banks on Wednesday after the country’s lenders lost deposits for a sixth month
  • Yemen’s Houthis seized an army base overlooking a key shipping lane in the Red Sea, while Saudi Arabia said its bombing campaign has contained the rebel advance toward the port of Aden
  • Sovereign 10Y yields mixed, Greece 10Y mostly steady at 11.34%. Asian stocks mixed, with Nikkei lower. European stocks rise, U.S. equity-index futures increase. Crude, gold and copper fall


DB’s Jim Reid starts us off on the new quarter



We kick off in China this morning where the early morning PMI indicators are out. Sentiment is a touch better after the official March PMI improved 0.2pts to 50.1 (vs. 49.7 expected). At the same time the final March HSBC manufacturing reading was revised up to 49.6, from 49.2 previously in the flash print. Despite the better than expected numbers, our China economist Zhiwei Zhang doesn’t see this data as reflecting signs of economic recovery, reiterating that growth still faces headwinds from the property slowdown and the fiscal slide. Over in Japan meanwhile, the Tankan survey was largely disappointing with the Q1 large manufacturing index reading unchanged at 12 (vs. 14 expected) and the small manufacturing index reading of 1 down versus the previous reading and expectations of 4.

In terms of market reaction, bourses in China have bounced on the numbers with the Shanghai Comp  (+1.39%) and CSI 300 (+1.57%) both higher. It’s a different story in Japan however where the Nikkei (-0.71%) and Topix (-0.77%) have fallen. Elsewhere bourses are mixed. The Hang Seng (+0.66%) is higher while the Kospi (-0.64%) and ASX (-0.54%) are both trading softer. The latter suffering from weakness in commodity producers in particular after another fall for iron ore to a fresh ten year low. In terms of markets yesterday, US equities gave up a decent bulk of Monday’s gain to close lower and end the quarter on a more downbeat tone. The S&P 500 (-0.88%) and Dow (-1.11%) both closed more or less at their lows for the session following some mixed macro data and a decline in oil markets. Yesterday’s moves just about kept the S&P 500 in positive territory (+0.44%) YTD, however the move in the Dow means the index is now in negative territory (-0.26%) in 2015 so far. The Dollar extended its strong start to the week meanwhile, with the broader DXY +0.39%. The generally weaker sentiment supported a bid for US Treasuries, with the benchmark 10y yield closing 2.4bps lower at 1.923%. As mentioned oil played its part yesterday as energy stocks (-0.92%) declined following falls in WTI (-2.22%) and Brent (-2.10%) for their third consecutive day of losses after the mini-rally post the Middle East conflict headlines last week. In reality however, losses were fairly broad based across sectors, with all components closing in the red.

The data flow in the US was largely mixed yesterday. Following the steep decline in the February Chicago PMI reading, there was only a modest bounce back last month with the 46.3 print still the second lowest since 2009 (behind February) and also well below expectations of 51.7. The reading may well put some pressure on today’s ISM manufacturing reading. On a brighter note, the March consumer confidence print rose 2.5pts to 101.3 (vs. 96.4 expected) – the reading only a touch behind the 8-year highs seen in January. Elsewhere, the ISM Milwaukee (53.25 vs. 51.50 expected) was ahead of consensus while the S&P/Case Shiller house price index disappointed modestly (4.56% yoy vs. 4.60% expected).

Elsewhere, the Richmond Fed’s Lacker reiterated his hawkish view on Fed tightening, highlighting a strong case for a June liftoff unless data between now and then disappoints versus expectations. Like his colleagues, Lacker also noted that the pace of any subsequent move post-liftoff will be determined by data. Comments from the Kansas City Fed’s George (non-voter) somewhat mirrored Lacker’s. The Fed official said that ’it’s time’ to talk about a rate hike and that she is ‘not bothered’ by temporarily low inflation given that she expects prices to rise back towards the Fed’s target level of 2% over time.

Back to markets, it was a similar story closer to home yesterday, as equity markets declined and bond yields tightened although data was generally supportive. The Stoxx 600 (-0.64%), DAX (-0.99%) and CAC (-0.98%) all finished lower while 10y Bunds closed 2.5bps tighter and at a fresh record low of 0.180%. Peripheral bonds extended their strong start to the week, with 10y yields in Spain (-5.9bps), Italy (-7.0bps) and Portugal (-7.7bps) all lower. With one eye on Greece meanwhile, the Euro softened again and closed 0.94% weaker versus the Dollar. In terms of the data, yesterday’s Euro-area CPI estimate, as expected rose to -0.1% yoy (from -0.3%). The core was a touch softer however with the advanced reading revised down one-tenth of a percent to +0.6% yoy. The unemployment rate for the Euro-area declined to 11.3% in February (from 11.4%). In Germany data was supportive. Retail sales (+3.6% yoy vs. +3.4% expected) and unemployment (6.4% vs. 6.5% expected) extended the recent strong run of macro indicators. French consumer spending was positive too, with the 3.0% yoy print well ahead of the 2.6% expected. Finally in the UK the final Q4 GDP print was revised up to +0.6% qoq from +0.5% last month. This helped push the annualized rate up to +3.0% yoy (from +2.7%).

There was little to report in terms of progress in Greece yesterday. The Greek press (Ekathimerini) is reporting that talks between the government and Greece’s creditors may continue next week while technical teams will stay in Athens to continue to collect data. In the mean time, German Chancellor Merkel and French PM Hollande yesterday re-emphasized the time pressure for the Greek government at a joint cabinet meeting. A separate Bloomberg article has suggested that Euro-area finance officials will hold a call today to discuss the current situation and the conditions to which an aid release may be granted. According to the article, the call will take place at 3pm CET.

Meanwhile, the nuclear accord talks in Iran continue with the deadline extended to today. There have been some signs of a potential positive outcome however. Bloomberg has reported Russian diplomat Lavroz as saying that ‘ministers have reached basic agreement on all the main aspects’ while Iranian diplomat Zarif has said that ‘the solution to most of the issues has been clarified’ and ‘we can finalize the work and start the process of drafting’. On the topic, the BBC has reported that officials have said that there were plans to issue a ‘framework understanding’ which would be enough for all parties to continue negotiations in a new phase aimed at achieving a successful conclusion by June 30th. It’s likely that the finer details take longer to conclude, but an initial draft framework agreement should provide some short term relief.

We’ve got a busy calendar to look forward to today with the final March manufacturing readings due for the Euro-area as well as regionally in Germany and France. We’ll also get second readings for the UK and peripheral nations. In the US this afternoon, focus will also be on the manufacturing PMI while we also see the ISM manufacturing and prices paid readings for March. Construction spending is released too while the March reading for the ADP employment change will be of much focus ahead of Friday’s payrolls. Fedspeak wise we’ve got Williams and Lockhart due to speak.






I originally thought that this was an April fools report but it is not.  It is for real.

It may work using bitcoins as long as foreign income is greater than purchases of foreign goods.


(courtesy zero hedge)


Greek FinMin: “Greece Will Adopt the Bitcoin If Eurogroup Doesn’t Give Us A Deal”



Via GreekReporter,


While Greece’s lenders are pushing the Greek government to accept their terms in order to allocate funds so the country will not go bankrupt, Greek Finance Minister Yanis Varoufakis seems to have another ace up his sleeve. The second top thinker in the world according to prospect magazine surprised even his closest aids at a secret meeting when he said “We ‘ve had enough, we ‘ll run on Bitcoin.”

Sources very closed to Greece’s minister of finance told Greek Reporter that today Yanis Varoufakis held a top secret meeting with high-ranking finance ministry officials to prepare them in case negotiations at the upcoming Eurogroup fail. The anonymous source noted that everybody in the room was staring at each other when Varoufakis – also a prominent blogger – said “We ‘ll go to Bitcoin, we will be ahead of all the world economies and although it may be painful in the beginning, Greece’s economy will thrive in the long term.”

The Greek Finance Minister went on to explain what is the cryptocurrency and how it will be implemented into Greeks’ day to day life by using a special mini computerized card with a chip. All citizens will carry the card as an electronic wallet. The card will be distributed for free to all Greek citizens via the local tax offices but it will also be available for purchase at the country’s entry points for 45 euros, or 0,20 Bitcoin each. The sale of the card to tourists is expected to be another form of revenue for cash-strapped Greece.

“This is the smartest move to beat corruption and tax evasion, all transactions will be recorded to the Greek Ministry of Finance new secure and dedicated Bitcoin servers and we ‘ll be able to track transanctions at any given moment,” said Varoufakis defending his decision.

Many officials objected saying that Greece doesn’t have the knowhow to start such a global movement but the Greek Finance Minister said that he does what the Ancient Greeks would do in his position – and that is: be the future!

“As Greeks we are innovators, look at our history,” exclaimed Varoufakis who added “The first computer was used in Greece, the mechanism of Antikythira, nobody knew what we were starting then.”

“The future starts in Greece and we will be the first country to use the currency of the future, a currency that doesn’t allow third parties to tell us what to do or how to live, this is the Greek thing to do,” said the Greek minister.

Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part while it can be used for transactions worldwide.

Earlier in the day German Finance Minister Wolfgang Schaeuble had made statements putting down once again Greece’s negotiation efforts and this might have been the reason his Greek counterpart held this important meeting today.

“This is the way to be ahead, they want us to back up and they say we don’t have a clue on what we do, but this is the solution for Greece’s future,” said Varoufakis according to the same high-ranking finance ministry official who was present at the meeting.

Alexis Tsipras, the country’s prime minister who is younger but not as digitally advanced as Varoufakis, was reluctant in the beginning. Tsipras realized the advantages of such a move during a special session the Greek Finance minister held for the Greek Prime Minister at Maximos Mansion during the weekend. The session was also attended by other leftist government members who needed to be prepared and lead the way in using the Bitcoin when and if Greece switches.

According to a source close to the Greek Prime Minster the Finance Ministry is planning to hold free special seminars for all Greek citizens on how to use the Bitcoin. As of today a forum on the Bitcoin and its use has been set up in Greek here.  It is expected that the Greek Economy will be running on Euro and Bitcoin simultaneously at least for one year until all citizens get familiar with the use of the digital currency.

The next crucial Eurogroup for Greece’s future should be held in the next two weeks.

*  *  *

Full explanation of Varoufakis’ new deal here…





Already Greece is stating that they may pay the April 9th payment to the IMF.  Here is what it will mean:


(courtesy zero hedge)



Greece Hints At Default, Russian Pivot:”Will Not Respect IMF Deadline” – What Happens Next



The hints are growing louder that the Troika-Greece standoff will not end well for either side. Spiegel is reporting that Greek Interior Minister Nikos Voutzis has stated:

“If no money is flowing to 9 April, we will first determine the salaries, pensions pay here in Greece and then ask our partners abroad to achieve consensus and understanding that we will pay 450 million euros to the IMF not on time,”

In other words…


And adds:

As of June or July, Russia and China are “complementary to an agreement with the European partners” fixed part of a new Greek “Plan A are” as Voutzis calls him.


This plan close “with a debt reduction, the end of the austerity measures and a new agreement with a growth clause”.


“We want Russia is helping us rebuild the Greek economy. Both trade agreements as well as through the purchase of government bonds in the primary bond market. ”


The fact that Russia buys government bonds directly from the Greek State to the country’s creditworthiness rise, credit spreads and spreads will automatically fall. Specifically, it should also go state-wide Russian investment projects, especially in the field of energy and transport.

*  *  *


*  *  *

Open Europe explains the consequences of not paying back The IMF…

It seems likely that Greece can make payments covering pensions and wages for public sector workers in March, but beyond today the picture is far less certain. Even if Greece manages the 9 April payment, it has to roll over €1.4bn of short-term debt (T-bills) on 14 April and a further €1bn on 17 April – a much tougher proposition given the recent ECB decision to legally limit the amount of T-bills that Greek banks can hold. This means they won’t be able to increase their share of the debt to cover for foreign owners who are unlikely to roll it over. 

150401_Open_Europe_graph_Greek_Debt_Repayments itemprop=

So what happens if Greece does not pay the IMF? How serious would this be? 

Are countries often late in paying the IMF?

While it is well known that no country has defaulted on the IMF in its 70-year history, it is less well known that there have been a number of late payments. Furthermore, as the chart below shows, there continue to be a sizeable amount of arrears with the IMF outstanding (the chart is in Special Drawing Rights, 1 SDR = $1.38 currently). 

150401_Open_Europe_graph_Money_owed_to_IMF itemprop=

That said, the large majority of these arrears are made up of countries such as Sudan, Zimbabwe and Somalia – not Greece. Furthermore, the total amounts are far below what would amass if Greece stopped making regular payments to the IMF – its total payments this year to the IMF are €9.7bn. 

IMF internal reaction

The first step would be the IMF reaction. As detailed in the IMF’s ‘Strategy on Overdue Financial Obligations’, there would actually be little action until 1 month has passed. Before then, the Fund would continue to push the state for prompt payment. After a month, the IMF’s Managing Director Christine Lagarde notifies the IMF Board that an obligation is overdue.  This is the point where the country is officially considered to be overdue on the payment, in the sense that this is where the knock-on effects would kick in. 

Potential knock-on effects

The real problem may not actually be the IMF reaction – given its presence as senior creditor it is confident of getting paid back in full at some point – but the knock on effects of not making good on payments to the IMF. 

IMF stops cooperating with Greece – One of the biggest problems for Greece is that it is still working with the Fund and relies on its sign off (as part of the ‘institutions’) to get its current review completed and therefore funding released. The response of the fund on the ground will therefore be important. Of course, the fund finds itself in a bit of a circular position. It is unlikely to get paid if it does not approve Greece’s review, but how can it approve the review if it is not getting paid? 

Gap with creditors grows, reputation harmed – Linked to the above, given that not paying the IMF is usually a course of action reserved only for war torn countries or those on the fringes of the international system, not to mention severly underdeveloped economies, Greece could see its reputation severely dented. Furthermore, it is possible that Greece’s creditors will see that Greece has decided to pay wages and pensions first rather than meet its commitments to them. Whether or not this is a fair assessment, this could drive further animosity between the two sides. 

Market funding becomes even harder – At this point in time this might be largely irrelevant given that Greece is locked out of the markets for the foreseeable future in any case, but not paying the IMF would likely be the final nail in the coffin, ending hopes of returning to the markets soon even if some agreement is found with Eurozone partners. Usually, the move would also be expected to raise the cost of short term debt, but given that these go almost entirely to Greek banks who have little choice but to buy them the impact could be limited. 

Possible default on Eurozone loans – Greece’s Master Financial Assistance Facility Agreement with the European Financial Stability Facility (EFSF) notes that it could be considered to be in default on the loans from the Eurozone if it 

has overdue charges on outstanding purchases and the Managing Director of the IMF has notified the Executive Board of IMF that such repurchases or such payment of charges have become overdue.

Essentially, after one month, when Lagarde notifies the IMF Board about the overdue payments Greece can be considered in default on its EFSF loans as well. However, this is all carefully worded and qualified – it explicitly says the EFSF is “not obliged to” take such action. In the end, it seems to ultimately depend on the decision of the EFSF. It seems unlikely that it would declare the full loan to be in default. That said, pressure would rise within certain member states and national parliaments for some decisive action. Eurozone partners could also use this to further extract concessions from the Greek government. (The original bilateral Eurozone loans also include similar clauses). 

Potential cross default on private sector bonds – Under the 2012 debt restructuring, the new Greek bonds which investors were given were issued under English law and included both ‘cross default clauses’ (meaning if they are considered to have defaulted on other obligations they also default on these bonds) and ‘co-financing clauses’ (money for repayments is to an extent pooled between the bonds and the EFSF). However, these look to only apply to the EFSF loans rather than the IMF loans. As such, default would have to be triggered on the EFSF as well for these to be activated. It is worth noting that the rating agency Fitch said in a recent statement that arrears to the IMF alone “would not in and of themselves constitute a rating default” but would be “credit negative” and lead to a further downgrade. 

Potential cross default on ECB – The exact terms of the bonds held by the ECB (purchased under its Securities Markets Programme) is less clear since the swap was done in a much more secretive way to ensure the bonds were not captured by the 2012 restructuring. The ECB was issued new bonds under exactly the same terms and maturities. Reports suggest that the bonds remained issued under Greek law. It’s not clear if they include cross default clauses at all and, if they do, whether they would be applicable to bonds issued under English law and/or the loans. 

ECB limits or cuts off ELA – It is uncertain then whether default clauses on any loans or bonds would be triggered. Even if they are not, the ECB may reconsider its provision of Emergency Liquidity Assistance (ELA) to Greek banks and would likely refuse to raise the limit further. As noted before, this is likely because of the huge reliance of Greek banks on the state – which would clearly be struggling for cash. Given that the very public act of not paying the IMF may further increase uncertainty and deposit outflows, the impact of limiting ELA could be exacerbated and cause a serious funding crunch for Greek banks and indirectly the economy and the state. 

Overall, the short term impact of not paying the IMF may not immediately be dire in economic and financial terms, though of course it would involve serious reputational damage and further widen the already mammoth gap between Greece and its creditors. It may take a month before cross default clauses could be triggered and even then it rests with decisions of highly political institutions such as the EFSF. Such decisions would likely be managed to achieve the least controversial ends, but equally could quickly spiral out of control. Less certain is the response of the ECB, which would once again be the key player. 

In the end, it would still not be advisable for the Greek government to test this course of action. We still expect a deal to be found, and largely on Eurozone terms.

*  *  *

The market appears less sure…



Huge misses on all fronts in Japan as the Nikkei falters along with the yen.


(courtesy zero hedge)


Abewrongics: Nikkei/USDJPY Tankin’ After Terrible Tankan

Bad news isn’t even good news anymore in Japan. A sushi-boat-load of data this evening show once again that Abenomics is failing dismally. In no particular order… Large Manufacturing Index MISS (lowest in 9 months), Large Manufacturing Outlook BIG MISS, Large Services Outlook MISS, Small Manufacturing Index MISS, Small Manufacturing Outlook BIG MISS, and drum roll please… Tankan Large Industry Capex Outlook crashes to -1.2% (from +8.7%) – the lowest in 2 years (since Abewrongics was unleashed). The response… USDJPY and Nikkei are dumping…


So much for unleashing animal spirits… Capex outlook plunges…


And bad news is no longer good news in Japan as investors lose faith…



Charts: Bloomberg









Oil related stories:


Turmoil is raging inside Yemen as rebels secure parts of the Bab el Mandeb strait.  Saudi Arabia is prepping for a land invasion:




(courtesy zero hedge)



Yemen On Verge Of “Total Collapse” As Civilian Casualties, Ground Invasion Calls Mount





On Tuesday, we suggested that the entry of Houthi rebels into a military base overlooking the Bab el-Mandeb strait may have made a Saudi ground incursion in Yemen virtually inevitable. The 18-mile wide waterway is a critical oil chokepoint and given the potential for the conflict in Yemen to devolve into an all out proxy war between Iran and Saudi Arabia, the possibility that the strait will fall under Iranian influence via the Houthis is seen as untenable. Meanwhile, the Saudi-led coalition continued bombing raids for a sixth consecutive day and predictably, each side is now blaming the other for civilian casualties. Here’s more via Al Arabiya:

The coalition targeted two Houthi military installations in the city of al-Dhale southwest of Yemen. 


Fighter jets have targeted Houthi militia leaders, surface-to-air missile installations, ammunition storage warehouses belonging to the Houthis as well as to forces allied with former president Ali Abdullah Saleh.


In Aden, the strikes were focused on the rebel-held provincial administration complex in Dar Saad in the north of the city,reported AFP citing a military official.


He said there were “many dead and wounded” among the Houthi Shiite rebels but was unable to give a precise toll.


The headquarters of a renegade army brigade loyal to Saleh was targeted overnight in the north of Aden, as well as the city’s international airport, the military official said.


Militia fighters loyal to President Abdrabbu Mansour Hadi have captured 26 Houthis during the fighting in Aden, one of their leaders said.


In the western port city of Hodeida, four civilians were killed and 10 injured when a dairy was hit in the night, said medical sources.


The circumstances of the bombing were unclear, with some witnesses saying the dairy was hit by a coalition air strike and others blaming pro-Saleh forces.

The mounting civilian death toll has prompted the UN to warn that the country is on the verge of “total collapse,” as the nation which President Obama just months ago cited as a success story in the war on terror rapidly devolves into sectarian violence on the way to “failed state” satus.

Via Al Jazeera:

UN rights chief has said that Yemen is “on the verge of total collapse” as Saudi-led coalition continues to bomb Houthi positions.


“The situation in Yemen is extremely alarming, with dozens of civilians killed over the past four days,” UN High Commissioner for Human Rights Zeid Ra’ad Al Hussein said on Tuesday.


“The country seems to be on the verge of total collapse”.


Aid groups have warned of a humanitarian crisis unfolding with air and sea blockades making it impossible to send desperately needed assistance as casualties mount.


The UN children’s fund said that at least 62 children had been killed and 30 injured during the fighting over the past week…


But the spokesman for the Saudi-led coalition said it does not intend to kill civilians even though the Houthis had moved fighters into villages.


“Collateral damage can happen… but I confirm to you that the coalition takes all care,” said Brigadier General Ahmed Assiri.


On Tuesday, air strikes targeted two Houthi-held camps and Guard soldiers in the southern town of Daleh, a Guard airbase in the southwestern city of Taez and the Houthi stronghold of Dhammar, south of Sanaa.


On the ground, deadly clashes have broken out between the rebels and tribes, militiamen and residents who oppose their power grab, the AFP news agency reported.


Yemeni military officials said Houthi rebels have taken up positions overlooking the strategic Gulf of Aden, raising the risk they could threaten the global shipping route with heavy weapons, the AP news agency reported.

And even as the Saudis claim their is no immediate need to put boots on the ground, rebel and Saudi forces are now exchanging rocket and artillery fire across the border in what Reuters calls “heavy clashes.” We’ll leave you with the following from the Yemeni foreign minister:








Production slowed down a bit this week which seems to give a little boost for oil.  However they forgot about the Iran situation:



(courtesy zero hedge)




Production Cut Sparks Crude Rally As Inventory Rise Reaches Longest Streak On Record




Following last night’s pump’n’dump after API inventories exceeded expectations (5.2mm vs 4.2mm exp.), WTI crude prices have dropped to almost a $46 handle and recovered as chatter of “no deal” from Switzerland picks up. DOE reports a 4.766mm barrel build, greater than expected, for the 12th week in a row – the longest streak since records began in 1982. Crude prices are however surging as production dropped wekk-over-week for only the 2nd time this year…


Inventories hit a new record high and are up 12 weeks in a row – a 33 year record high…


But crude production fell WoW for only the 2nd time this year…


The end result.. a rally for now…


Charts: Bloomberg





Tass reports on the Iranian deal being agreed upon but nobody else reports on it.  The official word is that talks have “paused”


(courtesy zero hedge)





WTI Crude Tops $49.50 After Iran Talks Reportedly “Paused”



Crude oil prices continue to push higher. Following the earlier drop in US crude production this week and PEMEX oil rig fire, we now have more substantive headlines from Switzerland:


Of course, one wonders who really wants a deal now…with over-supply already a problem, any sanctions-lifting would boomerang back to US Shale firms and further destabilize the illusion of recovery in America.




Huge explosion in Mexico’s state owned Pemex oil platform with 4 confirmed dead and hundreds evacuated.  Oil rose on the news:
(courtesy zero hedge)

4 Dead In Pemex Oil Platform Explosion, Hundreds Evacuated


Update: AFP reporting 4 dead in blast.

Update: PEMEX has confirmed the death of 1 employee in the Campeche Bay explosion.

Mexico’s state-owned PEMEX says an oil platform has exploded in Campeche Bay. 300 workers have been evacuated and the company says 8 boats are attempting to bring the blaze under control.

Here’s the company’s statement posted on Twitter (via Google translate):

We’re taking fire that was raised today at dawn in the Abkatun Permanent platform Campeche.. Nearly 300 workers have been evicted platform. To meet the emergency, it has 8 firefighting boats.


*  *  *

And as for crude:


Your more important currency crosses early Wednesday morning:





Euro/USA 1.0760 up .0020

USA/JAPAN YEN 120.08 up .092

GBP/USA 1.4780 down .0051

USA/CAN 1.2676 down .0011

This morning in Europe, the Euro stopped on its downward movement,

temporarily rising by 20 basis points, trading now well below the 1.08  level at 1.0760; Europe is still reacting to deflation, announcements of massive stimulation, a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, and a possible default of Greece and the Ukraine.

In Japan Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31. The yen continues to trade in yoyo fashion as this morning it settled down again in Japan by 9 basis points and trading just above the 120 level to 120.08 yen to the dollar.

The pound was well down this morning as it now trades below the 1.48 level at 1.4780  (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 up by 11 basis points at 1.2676 to the dollar even with a lower 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 rise in the dollar against all paper currencies

2, the Nikkei average vs gold carry trade (still ongoing)

3. Short Swiss franc/long assets (European housing/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 at debt saturation already) 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: Wednesday morning : down 172.15  points or 0.90%

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

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

Gold very early morning trading: $1184.00




Early Wednesday morning USA 10 year bond yield: 1.91% !!! down 2  in basis points from Tuesday night/

USA dollar index early Wednesday morning: 98.35 down 3 cents from Tuesday’s close. (Resistance will be at a DXY of 100)




This ends the early morning numbers, Wednesday morning




And now for your closing numbers for Wednesday:



Closing Portuguese 10 year bond yield: 1.70% up 1 in basis points from Tuesday


Closing Japanese 10 year bond yield: .39% !!! down 2 in basis points from Tuesday


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

Spanish 10 year bond yield: 1.21% !!!!!!


Your Wednesday closing Italian 10 year bond yield: 1.28% up 4 in basis points from Tuesday:

trading 7 basis points higher than  Spain.






Closing currency crosses for Wednesday night/USA dollar index/USA 10 yr bond: 4 pm

Euro/USA: 1.0761 up .0021  (up 21 basis points)

USA/Japan: 119.73 down .250  ( yen up 25 basis points)

Great Britain/USA: 1.4818 down .0013   (Pound down 13 basis points)

USA/Canada: 1.2624 down .0062 (Can dollar up 62 basis points)


The euro rose during the night and stayed constant throughout the afternoon. It settled up 21 basis points to 1.0761. The yen was up 25 basis points points and closing just below the 120 cross at 119.73. The British pound lost some  ground, 13 basis points, closing at 1.4818. The Canadian dollar was on a roller coaster ride today against the dollar. It closed at 1.2624 to the USA dollar, up 62 basis points as oil has a huge gain today.

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: 1.86% down 7 in basis points from Tuesday (very ominous)


Your closing USA dollar index:

98.22 down 16 cents   on the day.



European and Dow Jones stock index closes:




England FTSE  up 36.46 points or 0.54%

Paris CAC up 28.58 or 0.57%

German Dax up 35.21 or 0.29%

Spain’s Ibex up 48.70 or 0.42%

Italian FTSE-MIB up 201.87 or 0.87%



The Dow:down 77.94 or 0.44%

Nasdaq; down 28.54 or 0.58%



OIL: WTI 49.60 !!!!!!!

Brent: 56.78!!!!



Closing USA/Russian rouble cross: 55.57 up 1/2 rouble per dollar on the day with the higher oil price .








And now your important USA stories:



First New York trading today:


Stock Bull-Bear Battle Baffled By Belligerent Burst In Black Gold



Overnight dip-buyers (algos) ran us all the way back to unch before retail stepped in and bought it all back from them and this…


Flash-Crash… Rescue bid… Retail fish…


The machines were very busy as VWAP was all that mattered… Off The Lows…


From last Friday’s close… it’s been quite wild ride in futures…


Which doesn’t look quite as crazy in cash indices… Small Caps remain relative outperformers… Dow was saved from worse picture by Goldman’s dominance which added 25 points to The Dow on its own


Year-to-Date, S&P was rescued at the very last second to close +0.04% YTD!!!! UNRIGGED


The momo stuff is losing steam… but “off the lows” is the new “killing it”

Biotech dead-cat-bounce dead-cat-bounce is dead again…


Go Pro No Mo…


Go Daddy IPO Opens at $26.15… and closes…



*  *  *

Treasury yields tumbled…


The Dollar dropped modestly with buying in Asia/Europe session once again and selling in US session..


And Commodities soared…


Led by a triple whammy for Crude… Production cut, PEMEX rig fire, and “no deal” with Iran… best day in 2 months (then faded after NYMEX Close)

And gold was well bid north of $1200…


Charts: Bloomberg

Bonus Chart: Climbing The Wall Of Absolutely No Worries…



Another confirmation that the USA economy is in a free fall!


(courtesy ISM/zero hedge)



ISM Manufacturing Tumbles To 22-Month Lows, Longest Losing Streak Since Lehman



US Manufacturing PMI beat expectations, printing 55.7 up from 55.3 prior to its highest since Oct 2014, once again flying in the face of the collapse in US hard-data-base macro. More in line with the underlying reality, Feb Construction Spending dropped for the 3rd month of the last 4 and March ISM Manufacturing tumbled to 51.5, missing expectations of 52.5, to its lowest since May 2013. Under the covers, it is even uglier with the lowest New Orders since Jan 2014 as US Manufacturing data has missed 5 of the last 7 months and dropped for 5 months in a row – which hasn’t happened since 2008.


Everything is awesome…


Everything is NOT awesome…


The leading New Orders less Inventories indicator hinting that there is much more ISM pain to come: from @Not_Jim_Cramer

Respondents do not sound unequivocally happy…

“Falling energies have helped on the cost side while sales are getting a boost through improvements in consumer disposable income.” (Food, Beverage & Tobacco Products)


“Our business is still strong and on projection. Dollar strength is challenging for our international business.” (Fabricated Metal Products)


“Business is still extremely strong.” (Transportation Equipment)


“Oil prices impacting drilling and project activity. Pursuing cost reductions from suppliers for a wide variety of goods and services.” (Petroleum & Coal Products)


“Business really starting to slow down. Oil pricing is having a major effect on energy markets.” (Computer & Electronic Products)


“Steady Q1 demand but somewhat interrupted by weather.” (Primary Metals)


Operating costs are higher due to increases in healthcare premiums.” (Miscellaneous Manufacturing)


“March business is improving over Jan-Feb, thawing out of this crazy winter.” (Paper Products)


“Dealing with ongoing delivery issues associated with congestion at the U.S. West Coast and Vancouver ports.” (Machinery)


“Congestion at the West Coast ports delaying incoming products.” (Textile Mills)

And New orders crater – even more not awesome-er…



Perhaps the only good news: the unprecedented divergence between Prices “better” and “worse” has finally closed some of its recent record gap.


*  *  *

And finally…


the private ADP employment report misses by the most in almost 4 years.  It’s level of employment is the lowest in over a year:
(courtesy ADP/zero hedge)

ADP Employment Misses By Most In 4 Years, Lowest In 14 Months

After missing expectations in a dismally weak February print, March turned out even worse. Despite Mark Zandi’s reassurances that Feb was a weather-related blip, March ADP employment change was a mere 189k (against expectations of 225k) dropping to its lowest since January 2014. Large business hiring was the worst, adding a mere 19k. Zandi said in Feb that “jobs growth is strong but slowing,” but now it appears weak and accelerating lower. And the now recurring punchline: manufacturing jobs -1,000.



The breakdown:


The worst month in over a year:


The comparison between ADP and BLS:


Job changes by company size:


and by industry:


ADP adds…

“March job gains came in under 200,000 for the first time since January of last year,” said Carlos Rodriguez, president and chief executive officer of ADP. “The decline was centered in the largest companies, those with 1000 or more employees.”


Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth took a step back in March. The fallout from the collapse in oil prices and surge in value of the dollar is hitting the job market. Despite the slowdown, underlying job growth remains strong enough to reduce labor market slack.”


Finally, the always amusing ADP infographic:

<br /><br /><br /><br /><br /><br /><br /><br /><br /><br />
      ADP National Employment Report: Private Sector Employment Increased by 189,000 Jobs in March<br /><br /><br /><br /><br /><br /><br /><br /><br /><br />


The Atlanta fed lowers its GDP estimates for the first quarter to exactly zero from 0.2% as the economy continues to spiral southbound.
(courtesy zero hedge)

It’s Official: Fed Sees 0.0% GDP Growth In The First Quarter

The Atlanta Fed’s GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2015 has been downgraded once again… to 0.0 percent on April 1, down from 2.3 percent on Feb 13th.



Following this morning’s construction spending release from the U.S. Census Bureau, the nowcast for real residential investment growth increased from -1.1 percent to 1.8 percent. This was more than offset by declines in the nowcasts for real nonresidential structures investment growth (-19.3 percent to -22.5 percent) and real state and local government spending growth (0.3 percent to -0.8 percent).


Not Pretty!

Source: GDPNow






We warned you this was coming:


For First Time In History, California Governor Orders Mandatory Water Cuts Amid “Unprecedented, Dangerous Situation”


Amid the “cruelest winter ever,” with the lowest snowpack on record, and with 98.11% of the state currently in drought conditions, California Governor Jerry Brown orders mandatory water cuts in California for the first time in history…

Lowest snowpack on record…



98.11% Drought…


And finally some action…

As ABC reports,

California Gov. Edmund G. Brown Jr. announced a set of mandatory water conservation measures today, as the state continues to struggle with a prolonged drought that has lasted for more than four years.


“Today we are standing on dry grass where there should be five feet of snow,” Brown said in a statement after visiting a manual snow survey in the Sierra Nevadas. “This historic drought demands unprecedented action.”


For the first time in the state’s history, the governor has directed the State Water Resources Control Board to implement mandatory water reductions across California, in an effort to reduce water usage by 25 percent. The measures include replacing 50 million square feet of lawns throughout the state with drought-tolerant landscaping, banning the watering of grass on public street medians, requiring agricultural water users to report their water use to state regulators, and requiring large landscapes such as campuses, golf courses and cemeteries to make significant cuts in water use.


The governor’s announcement comes just afew weeks after NASA’s top water scientist, Jay Famiglietti, declared in a Los Angeles Times op-ed that California only had a year’s-worth of water supply left in its reservoirs.


The last four years have been the driest in California’s recorded history. As of March 24, more than 98 percent of California is suffering from abnormally dry conditions, with 41.1 percent in an exceptional drought, according the U.S. Drought Monitor, which estimates that more than 37 million Californians have been affected by the drought. The state’s snowpack, which is largely responsible for feeding the state’s reservoirs, has been reduced to 8 percent of its historical average, and in some areas in the Central Valley the land is sinking a foot a year because of over-pumping of groundwater for agriculture.


“We are in an unprecedented, very serious situation,” the governor said in his January statement. “At some point, we have to learn to live with nature, we have to get on nature’s side and not abuse the resources that we have.”

*  *  *

And as we noted previously, while all eyes are focused on dry river beds and fields of dust, the maountainous ski resort areas are seing their economies devastated. As Bloomberg reports,

Last year Vail reported a 28 percent drop in skier visits at its California resorts, and the company warned investors that its financial results would be worse than anticipated.



Those numbers reflect what could be a larger contraction of Tahoe’s ski industry. Seasonal and part-time hiring has slid 27 percent over the last three years, according Patrick Tierney, a professor of recreation, parks, and tourism at San Francisco State University, andspending on ski-related services has decreased from $717 million a year to $428 million. An older analysis by the San Francisco Reserve Bank showed that the value of resort-area homes in places like Tahoe can depend heavily on climate; even a 2-degree increase could cut home values by more than 50 percent.

*  *  *

The drought is getting worse… not better.





the real source of demand for GM cars:  the USA government!!


(courtesy zero hedge)





The “Mysterious” Source Of Surging Demand For GM Cars, Revealed



For several years in a row, GM’s favorite deus ex trick to “boost” sales and fool most of the people all of the time, also happened to be the oldest: channel stuffing. As we showed previously, as recently as year ago, GM had some 800,000 vehicles parked on dealer lots.


Eventually, GM got enough questions from outside sources (here and here), to where it was forced to taper its aggressive channel stuffing only to find a second “deus ex” – subprime loans. This lasted for a little over a year before none other than the government itself yanked the subprime bubble from under the car-makers in the second half of 2014, leading companies such as Goldman to admit “subprime was responsible” for the subsequent collapse in auto sales.


So with both channel stuffing and subprime out of the window if only for the time being, GM, whose China sales are falling off a cliff, had to come up with some urgent source of end demand. A source which we would not have been aware of at all had outside pressure not once again forced GM to start breaking down its sales by customer type less than a year ago, in June 2014. Which sadly means that we barely have 10 months of data.

However, the 10 months may be enough: they show that “once a Government Motors, always a Government Motors”, and in just the first quarter of 2015, the average annual increase in sales to Uncle Sam, aka the Government was a whopping 24%, roughly about 100% higher than GM’s headline rate of sales increase!


So what’s next: your friendly postman delivering your mail in a white and blue Escalade?

One wonders: just how much in actual revenue does GM make courtesy of the Obama administration whose actions previously singlehandedly prevented a once bankrupt GM from liquidating, and why are US government workers in an apparent need of brand new GM vehicles every single month?

Finally, if Obama is directly paying GM as an end client, how many billions in “sales” is the Government responsible for with other brand retailers: such as Amazon, IBM and of course, Apple? Because everyone knows that all those DMV workers are in dire need of the latest and greatest taxpayer funded iPhone 6…



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