April 7.2015/Huge withdrawal of gold (heading to Shanghat (credit card debt)in the USA grinds to a halt as i)/no changes in SLV/Revolving debthe consumer is maxed out/Auto loans and student loans continue to skyrocket/ECB will have trouble making its quota of bonds purchased/Russia offers cash loans to Greece and in return wants Greek assets/

Good evening Ladies and Gentlemen:

 

 

Here are the following closes for gold and silver today:

 

 

Gold:  $1210.60 down $8.00 (comex closing time)

Silver: $16.82 down 27 cents (comex closing time)

 

In the access market 5:15 pm

 

Gold $1214.50

Silver: $16.96

 

 

 

Gold/silver trading:  see kitco charts on the right side of the commentary.

 

I wrote the following yesterday.  The boys did not disappoint me:

“Expect the banker crooks to attack gold/silver tomorrow as they hate to see two advances in precious metals on consecutive day and we are very close to upper resistance  (for gold at $1224 and silver at $17.40)”

 

Following is a brief outline on gold and silver comex figures for today:

 

At the gold comex today,  we surprisingly had a poor delivery day, registering 2 notices served for 200 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 244.16 tonnes for a loss of 59 tonnes over that period. Lately the removals  have been rising!

 

 

end

 

In silver, the open interest rose by a large 2011 contracts, as Monday’s silver price was up by 41 cents. The total silver OI continues to remain extremely high with today’s reading at 170,226 contracts. The front April month has an OI of 185 contracts for a gain of 6 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 the collapse of OI stops. The total comex gold OI rests tonight at 389,950 for a gain of 7,672 contracts as  gold was up $17.10 on Monday.  We had 2 notices served upon for 200 oz.

 

 

Today, we had a huge withdrawal in gold inventory at the GLD to the tune of 4.18 tonnes/  Gold Inventory rests at 733.06  tonnes

 

In silver, / the SLV/Inventory /we have no changes and thus the inventory tonight is 321.839 million oz

 

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

 

1. Today we had the open interest in silver rise appreciably with the 41 cent rise in price on Monday.  The OI for gold rose by a huge 7,672 contracts as the price of gold rose on Monday to the tune of $17.10.

(report Harvey/)

2. Credit card loans in the USA by consumers have fallen off the cliff as consumers are maxed out.  However non revolving credit like student loans and car loans financed by Uncle Sam rose exponentially

 

(zero hedge)

 

3. Foreigners own Spanish debt equal to 50.5% of the total.  This is an accident waiting to happen.

 

4. Reports that Russia has offered cash loans and lower gas prices to Greece in return for Greek assets.

(zero hedge/UKTelegraph)

5. Ted Butler’s letter to the CFTC

(Ted Butler)

6. Fed Governor Kocherlakota states that QE4 theoretically warranted.

(zero hedge)

7. Important commentary tonight from Bill Holter

(Bill Holter)

 

we have these and other stories for you tonight

 

 

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

Here are today’s comex results:

 

The total gold comex open interest rose by a whopping 7,672 contracts from 382,278 up to 389,950 as gold was up by $17.10 on Monday (at the comex close).  We are now in the active delivery month of April and here the OI fell by 97 contracts down to 2,990. We had 3 contracts filed upon on Monday so we lost another 94 contracts or 9,400 oz will not stand for delivery in April. The next non active delivery month is May and here the OI fell by 46 contracts down to 644.  The next big active delivery contract month is June and here the OI rose by 4,740 contracts up to 264,177. June is the second biggest delivery month on the comex gold calendar. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 52,181  (Where on earth are the high frequency boys?). The confirmed volume on Monday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 115,456 contracts. Today we had 2 notices filed for 200 oz.

And now for the wild silver comex results.  Silver OI rose by 2011 contracts from 168,215 up to 170,226 as silver was up by 41 cents, with respect to Monday’s trading . We are now in the non active delivery month of April and here the OI rose to 185 for a gain of 6 contracts.  We had 0 notices filed on Monday so we  gained 6 silver contracts or an additional 30,000 ounces will stand for delivery in April. The next big active delivery month is May and here the OI rose by 343 contracts up to 94,528. The estimated volume today was poor at 17,563 contracts  (just comex sales during regular business hours. The confirmed volume yesterday  (regular plus access market) came in at 41,283 contracts which is good in volume. We had 0 notices filed for nil oz today.

 

 

April initial standings

April 7.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz  nil
Withdrawals from Customer Inventory in oz  nil oz
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz nil
No of oz served (contracts) today 2 contracts (200 oz)
No of oz to be served (notices)   2988 contracts(298,800) oz
Total monthly oz gold served (contracts) so far this month 676 contracts(67,600 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   oz

Total accumulative withdrawal of gold from the Customer inventory this month

  163,579.2 oz

Today, we had 0 dealer transaction

total Dealer withdrawals: nil oz

 

 

we had 0 dealer deposits

 

total dealer deposit: nil oz

 

we had 0 customer withdrawals

total customer withdrawal: nil

 

we had 0 customer deposit:

 

total customer deposit: nil oz

 

We had 0 adjustments

 

 

Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 2 contract of which 1 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 (676) x 100 oz  or  67,600 oz , to which we add the difference between the open interest for the front month of April (2990) and the number of notices served upon today (2) 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 (676) x 100 oz  or ounces + {OI for the front month (2990) – the number of  notices served upon today (2) x 100 oz which equals 366,400 oz or 11. tonnes of gold.

 

we lost 94 contracts or 9400 oz of gold that will not stand for delivery in April

 

 

 

 

Total dealer inventory: 647,270.900 or 20.13 tonnes

Total gold inventory (dealer and customer) = 7,849,806.094  oz. (244.16) 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

 

April silver initial standings

April 7 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 200,620.74 oz (Delaware,Brinks)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory 600,499.95 oz (Scotia)
No of oz served (contracts) 0 contracts  (nil oz)
No of oz to be served (notices) 185 contracts(925,000 oz)
Total monthly oz silver served (contracts) 1 contracts (5,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal  of silver from the Customer inventory this month  586,230.1 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 1 customer deposits:

i) Into Scotia:  600,499.95 oz

total customer deposits:  600,499.95  oz

 

We had 2 customer withdrawals:

 

i) Out of Delaware:  1046.40 oz

ii) Out of Brinks:  199,574.34 oz

 

total withdrawals;  200,620.74 oz

 

we had 0 adjustments:

 

 

 

Total dealer inventory: 63.192 million oz

Total of all silver inventory (dealer and customer) 176.687 million oz

.

The total number of notices filed today is represented by 0 contract for nil oz. To calculate the number of silver ounces that will stand for delivery in April, we take the total number of notices filed for the month so far at (1) x 5,000 oz    = 5,000 oz to which we add the difference between the open interest for the front month of April (185) 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:

1 (notices served so far) + { OI for front month of April(185) -number of notices served upon today (0} x 5000 oz =  930,000 oz standing for the April contract month.

we gained another 6 contracts or an additional 30,000 oz will stand for delivery in this April 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:

 

April 7. we had another withdrawal of 4.18 tonnes of gold at the GLD/Inventory rests at 733.06 tonnes

April 6. no changes in gold inventory at the GLD/Inventory at 737.24 tonnes

April 2/no changes in gold inventory at the GLD/Inventory at 737.24 tonnes

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

 

April 7/2015 /  we had a huge withdrawal of 4.18 tonnes of   gold at the GLD/Inventory at 733.06 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 : 733.06 tonnes.

 

end

 

And now for silver (SLV):

April 7.2015: no changes in inventory at the SLV/Inventory rests tonight at 321.839 million oz

April 6. we had a small withdrawal of 136,000 oz/inventory tonight rests at 321.839 million oz

April 2/2015: no changes in inventory/SLV inventory rests this weekend at 321.975 million oz

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

 

April 7/2015 we had no changes  in inventory at the SLV/ inventory rests at 321.839 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)

1. Central Fund of Canada: traded at Negative  8.0% percent to NAV in usa funds and Negative 7.8% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.0%

Percentage of fund in silver:38.6%

cash .4%

( April 7/2015)

Sprott gold fund finally rising in NAV

2. Sprott silver fund (PSLV): Premium to NAV rises to + 1.13%!!!!! NAV (April 7/2015)

3. Sprott gold fund (PHYS): premium to NAV rises -.30% to NAV(April 7/2015

Note: Sprott silver trust back  into positive territory at +1.13%.

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

Central fund of Canada’s is still in jail.

 

end

 

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

 

Gold and silver trading early this morning

 

(courtesy Goldcore/Mark O’Byrne)

 

 

‘Chaos’ If UK Leaves EU‏ – Blair Warns of BREXIT

– Ex-Prime Minister warns uncertainty would hit UK economy and cause ‘chaos’
– ‘BREXIT’ would cause the “most intense period of instability” since WW2
– Seeks to portray Tory policy as disingenuous and cynically putting economy at risk
– Uncertainty caused would have negative consequences for British economy and sterling

goldcore_chart1_7-04-15
Tony Blair has entered into the British election campaign debate in support of David Miliband on the issue of what he regards as the Tories reckless attitude to Europe and the potential ‘BREXIT’.

Blair will address his former constituents in County Durham today strongly urging them to support Miliband, who he praised for his “real leadership on the EU” while portraying David Cameron’s EU policy as disingenuous and reckless.

“There is, in my view, a complete under-estimation of the short-term pain of negotiating exit. There would be a raft of different treaties, association agreements and partnerships to be disentangled and re-negotiated. There would be significant business uncertainty in the run-up to a vote but, should the vote go the way of exit, then there would be the most intense period of business anxiety, reconsideration of options and instability since the war”,

Blair will say in the well flagged speech which has been trumpeted in the pro-Labour UK Guardian and of Miliband he will say, “he is own man with his own convictions and determined to follow them, even when they go against the tide”. On the other hand he accuses Cameron of not even believing in a necessity for Britain to exit the EU.

“The oddest thing of all about David Cameron’s position [is the] Prime Minister doesn’t really believe we should leave Europe; not even the Europe as it is today,” he will add, according to London’s Independent.

“This was a concession to party, a manoeuvre to access some of the UKIP vote, a sop to the rampant anti-Europe feeling of parts of the media.”

He makes fair comment on the uncertainty that would stem from a Tory victory and the prospect of a referendum campaign and potential British exit.

“Think of the chaos produced by the possibility, never mind the reality, of Britain quitting Europe,” he will say. “Jobs that are secure suddenly insecure; investment decisions postponed or cancelled; a pall of unpredictability hanging over the British economy.”

He disagrees with Cameron’s contention that he will receive various concessions from Europe prior to the proposed 2017 referendum.

“The rest of Europe will be vigorous in ensuring Britain gets no special treatment. This will be a horrible process. Don’t be in any doubt about that …” he will say, according to the left leaning Guardian.

He will add, “If I was leading a business dependent on access to the single market or, more important, employed in such a business, then the issue of Europe and the risks of this would be a big decider in my vote.”

BREXIT poses risks to free trade and indeed the free movement of people, goods and services. An example of this is the return to borders.

Indeed, a physical border between the Republic of Ireland and Northern Ireland will be re-imposed if the UK decides to leave the EU, a director of the British Irish Chamber of Commerce warned last week.

Such uncertainty would not be good for the vulnerable UK economy at this time due to it’s massive and unsustainable levels of total debt. While all the focus is on the government or national debt which is currently 81.58% of GDP, total debt levels including private debt – are much, much higher and have fallen little since the debt crisis in 2008.

Together, families and non-financial firms’ debt is still over 200 per cent of GDP and is merely back to levels last seen in mid-2007, a time when leverage was already utterly out of control. Current debt levels remain much higher than they were a decade ago (170 per cent of GDP) and even just 15 years ago at the turn of the millennium when they were 128 per cent of GDP.

goldcore_chart4_7-04-15

These massive debt levels are serviceable providing the UK economy continues to grow and interest rates remain near all time record lows at 0%. However, even a slight uptick in interest rates could pressurise the debt laden UK economy. Interest rates are set to rise – the question is when not if.

Unless the next government becomes serious about tackling private and public debt, the next crisis, when it eventually comes, will be devastating and on a scale far worse than the first financial crisis.

goldcore_bloomberg_chart1_09-03-15

Regardless of the long-term rights or wrongs of Cameron’s proposed EU referendum, in the short term it may indeed cause problems for UK businesses – particularly exporters and the financial sector – and debt-mired workers. Potential mortgage defaults would have a knock on effect on the banking system and the property bubble in Southern England.

A recession at this time would likely lead to another round of QE – the only policy open to central banks – and a consequent depreciation of the pound. Gold tends to come into its own as financial insurance in an environment of uncertainty and an allocation to physical gold is advisable to offset and hedge the potential risks posed to the UK economy by a ‘BREXIT.’

Click here in order to read GoldCore Insight –
Currency Wars: Bye Bye Petrodollar – Buy, Buy Gold

 

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,201.50, EUR 1,110.91 and GBP 811.11 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,208.50 , EUR 1,113.82 and GBP 813.63 per ounce.

Gold climbed 1.2 percent or $14.40 and closed at $1,215.70 an ounce yesterday, while silver gained 1.55 percent or $0.26 closing at $17.00 an ounce.

goldcore_chart3_7-04-15

Gold in Singapore was mostly unchanged at $1,213.11 an ounce near the end of day trading. Yesterday, the yellow metal reached a high of $1,224.10 per ounce its highest since February 17th. 

The gold price in Europe in late morning trading was $1,208.33 off 0.52 percent. Silver was $16.78 or down 1.06 percent and platinum was $1,165.88 or down 0.31 percent.

The U.S. non farm payrolls figure on Friday rose by only 126,000 jobs in March well below the forecast of 247,000. This downward surprise sent the U.S. dollar falling and saw safe haven flows into gold and silver.

Gold in GBP - 6 Months (Thomson Reuters)

Negative economic data out of the U.S. raises the likelihood the U.S. Federal Reserve may not be able to raise rates this year. As we have warned for some time, the U.S. economic recovery is weak at best. Rising interest rates will lead to a new recession and hence the Fed’s growing Catch 22.

New York Fed President William Dudley said over the weekend that the timing of the U.S. rate hike, which would be the first in nearly a decade, is unclear and policymakers must watch that the U.S. economy’s surprising recent weakness does not signal a more substantial slowdown. It does and it will.

Shanghai Gold Exchange (SGE) premiums are just under one dollar per ounce over the global benchmarks. This suggests demand in China has fallen from the very high levels seen in the first weeks of 2015 and over Chinese New Year.

However, the SGE gold withdrawals show very high levels of demand. In week 12 (for the period from March 23 to  March 27) they were a robust 46 tonnes. Total withdrawals so far in 2015 are at 607 tonnes, up more than 8 per cent from 2014 and up 32 per cent from 2013.

The world’s largest gold ETF, SPDR Gold Shares, saw its first outflows of the month on Monday, of 1.8 tonnes. Its holdings are currently 735.447 tonnes, up around 25 tonnes from the start of the year.

 

end

 

James Turk offers his view as to what will happen with respect to the upcoming Greek default:

 

(courtesy James Turk/Kingworldnews)

 

ECB scheming to change Greek government coalition, Turk tells KWN

Section:

6:54a ET Tuesday, April 7, 2015

Dear Friend of GATA and Gold:

The European Central Bank isn’t just planning to confiscate deposits in Greek banks to secure repayment of unpayable loans to that country, GoldMoney founder and GATA consultant James Turk tells King World News. He adds that the bank is also scheming to change Greece’s governing coalition to make it more pliable by the ECB. An excerpt from Turk’s interview is posted at the KWN blog here:

http://kingworldnews.com/man-who-first-predicted-greek-bank-deposits-wou…

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

 

end

 

(courtesy Chris Powell/GATA/New York Sun)

 

Gold market manipulation cited in discussion of Sun editor’s ‘The Floating Kilogram’

Section:

1:35p ET Monday, April 6, 2015

Dear Friend of GATA and Gold:

Manipulation of the gold market by the Federal Reserve is a major subject of an interview with New York Sun editor Seth Lipsky about his new book, “The Floating Kilogram,” a collection of essays about the U.S. monetary system. The interview is conducted by radio journalist Dawn Bennett and it’s posted at the Sun’s Internet site here:

http://www.nysun.com/national/the-floating-kilogram-the-editor-of-the-su…

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

 

 

 

end

 

(courtesy Chris Powell/GATA)

LBMA admits gold market can’t be transparent with central banks in it

Section:

12:32p ET Monday, April 6, 2015

Dear Friend of GATA and Gold:

Central bank involvement may prevent the London gold market from ever becoming really transparent, the chief executive of the London Bullion Market Association has told a Bank of England study group.

The LBMA chief executive, Ruth Crowell, made the assertion in a long statement dated January 30 and sent to the bank’s “Fair and Effective Market Review” committee, which is studying regulation of the currency and commodity markets. The LBMA statement was found on the bank’s Internet site by gold researcher and GATA consultant Ronan Manly.

While Crowell wrote that the LBMA welcomes more transparency in the London gold market, particularly through “post-trade reporting,” she also praised gold lending by central banks for providing “liqudity” to the market, asserting that “it is vital that the role of the liquidity provider is not diminished but in fact strengthened to make sure the markets remain fair and effective.”

The Bank of England’s review of the gold market, the LBMA statement said, “should prioritize liquidity, as greater liquidity results in markets which are less easily manipulated, and consequently regulators should afford market participants the tools with which to foster liquidity.”

But if the foremost providers of “liquidity” are central banks, their provision of “liquidity” is likely the leading mechanism of market manipulation, as central banks have not just access to effectively infinite financial resources but also the powerful motive to manipulate the markets in which their currencies and bonds trade.

Thus the LBMA has made the same bogus and self-serving claim that was made by futures exchange operator CME Group in January in support of the volume trading discounts CME Group gives to central banks for secretly trading the U.S. futures markets it operates — the claim that secret trading by central banks deters market manipulation rather than constitutes it:

http://www.gata.org/node/14385

http://www.gata.org/node/14818

The LBMA statement acknowledges that “the role of the central banks in the bullion market may preclude ‘total’ transparency, at least at public level.” It adds that “transparency could be increased via post-trade anonymized [emphasis added] statistical analysis of nominal volumes, provided by the clearing banks.”

That is, it’s OK with the LBMA if its members know what their client central banks are doing in the gold market, but not OK if mere ordinary traders and citizensknow.

Thus the LBMA’s position is identical to the position of central banks as described in the secret March 1999 report of the International Monetary Fund, which recounted central bank objections to the IMF staff’s proposal for greater transparency in the reporting of IMF-member central bank gold reserves.

The IMF staff wanted central banks to distinguish in public reports their gold loans and swaps from the gold reserves held in central bank vaults. The central banks surveyed by the IMF staff responded with horror, complaining that clarity about their gold loans and swaps would impair their surreptitious interventions in the gold and currency markets:

http://www.gata.org/node/12016

With Crowell’s statement the LBMA has proclaimed itself the enthusiastic agent of surreptitious intervention in the gold market by client central banks. This is something else that mainstream financial news organizations will have to strive to overlook.

The LBMA’s statement is posted, at least for the time being, at the Bank of England’s Internet site here —

http://www.bankofengland.co.uk/markets/Documents/femr/lbma.pdf

— and for safety’s safe at GATA’s Internet site here:

http://gata.org/files/LBMALetterToBankOfEngland-01-30-2015.pdf

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

 

end

 

(courtesy Ted Butler)

An Unavoidable Comparison

Theodore Butler

|

April 7, 2015 – 9:05am

A rare event occurred this past week; the CFTC charged a major food company, Kraft, Inc., with price manipulation in the wheat market. You can count on one or two hands the number of times the federal commodities regulator has charged anyone with price manipulation in its 40 year history.http://www.cftc.gov/PressRoom/PressReleases/pr7150-15

For what it’s worth, the agency’s case looks convincingly laid out and seems to contain all the elements of proving price manipulation, including intent and the ability to control prices. That said, the Commission has a very poor record of prevailing in the manipulation cases it has brought.

One thing telling about the case was that a large commercial trading entity who was supposedly using the futures market for strictly hedging purposes was accused of engaging in a variety of market schemes for strictly speculative gains. So much for the widespread argument that commercial traders are always “only hedging” and how I should cut them a break. As you know, I have long held that the commercials, at least on the COMEX, are just speculators gaming other speculators and little legitimate hedging occurs. Certainly, that’s what the CFTC alleged in its complaint against Kraft.http://www.cftc.gov/ucm/groups/public/@lrenforcementactions/documents/legalpleading/enfkraftcomplaint040115.pdf

Quoting from the CFTC’s press release –

Aitan Goelman, the CFTC’s Director of Enforcement, stated: “This case goes to the core of the CFTC’s mission: protecting market participants and the public from manipulation and abusive practices that undermine the integrity of the derivatives markets. A market participant who is not happy with cash prices available to it may not resort to manipulative trading strategies in an attempt to artificially lower that price.”

Yes, Director Goelman is correct; the core of the agency’s mission is to protect public market participants from manipulation and abusive trade practices that undermine the integrity of derivatives markets. And no, a market participant not happy with cash prices may not artificially lower those prices to secure physical supplies. Wait a minute – isn’t that exactly what I’ve alleged JPMorgan has done and is doing in silver, namely, shorting on the COMEX in order to scoop up physical silver at bargain basement prices? Haven’t I been writing this two times a week for a very long time? (In the interest of full disclosure, I have sent Director Goelman every article I’ve written since he has been the agency’s enforcement director).

In fact, I’ve based my allegations about what JPMorgan has done in silver primarily on the agency’s own public data and that from the exchange (COMEX) and other public sources. The CFTC’s case against Kraft is derived from private trading records and internal emails. Further, there is a bit of complexity in the agency’s case against Kraft, in that the company’s trading strategy involved buying futures contracts in order to impact the basis (the price differential between futures and cash grain prices) and lower the cash price. With JPMorgan, there is no complexity as this crooked bank has used futures market short sales to depress the price of silver in order to buy physical silver at artificially cheap prices.

Importantly, the Commission’s case against Kraft most likely came as a result of a complaint from a disgruntled insider who was damaged by Kraft’s futures market activity and not as a result of widespread complaints or damage to the public. To my knowledge, this was not a case publicly discussed prior to the charges being filed. Compare that to silver, where many thousands of market participants and observers have petitioned the agency for years about the manipulation by JPMorgan and where investors and silver producers have been and are being damaged by artificially depressed silver prices.

The unmistakable conclusion is that this agency is bought and paid for or otherwise not acting in the public’s best interest. For a federal agency, I don’t think there is a more serious allegation.

So the real question is why the selective prosecution of the law? Why is the CFTC going after Kraft on a complicated case with an alleged payoff that looks like chump change (around $5 million total profit to Kraft), when public data indicate JPMorgan shorts the silver market whenever prices rise to cap and drive prices lower in order to profit on those short sales and accumulate silver at unfairly low prices; with JPM’s cumulative illicit take running into the hundreds of millions if not billions of dollars?

I can see the agency going after Kraft, but I can’t see any legitimate reason for it not to go after JPMorgan for the far more egregious silver activities the bank is involved in. Worse, why won’t the agency explain why the public data doesn’t point to JPMorgan doing what I allege the bank is doing? Can the Commission refute that JPMorgan has been the big concentrated short seller in COMEX silver futures since acquiring Bear Stearns in early 2008 and has been accumulating physical silver while remaining short COMEX futures for the past four years? That’s the key, no one – not the CFTC, not JPMorgan, not the CME – can offer a reasonable explanation for JPM’s control and manipulation of the silver market and what has transpired these past seven years.

Beyond the shadow of any doubt, the CFTC knows what price manipulation is; otherwise it never would or could have charged Kraft. So how can the agency see it with Kraft in wheat and not with JPMorgan in silver? Why is JPMorgan above the law? I think it’s because the bank was given a “get out of jail card” for agreeing to take over Bear Stearns and its massive short positions in silver and gold in 2008 at the US Government’s request. Since then, JPMorgan has exploited the arrangement in suppressing the price of silver and accumulating physical silver under fair market value.

The problem with selective enforcement of the law is that it undermines and makes a mockery of the whole system. It is a betrayal of the highest order. Yes, I’m fairly sure that the free pass to JPMorgan to allow it to continue the silver manipulation was given by Treasury and Federal Reserve officials to preserve market order and was considered to be to the public’s benefit. But look at what it has morphed into seven years later – a market more distorted than ever before and in which JPMorgan has amassed the largest hoard of silver in history.

I would remind you that the Enforcement Division (before Goleman arrived) even took five years to supposedly formally investigate JPMorgan’s concentrated short position in silver and ended that investigation without ever addressing the issues. Shame on all involved at the time, most particularly the two who knew better, former chairman Gensler and Commissioner Chilton. Now the shame has been passed to those currently in charge. It is my understanding that all senior officials at the agency swear an oath of office to uphold the law. Clearly, the law is not being upheld in silver or with JPMorgan. I don’t know how the senior officials of the agency can live with themselves considering their extreme dereliction of duty to the law and their betrayal to the citizens of this country.

I know these are very strong accusations and I do not make them lightly. And to be fair, I would be happy to amend them if any reasonable explanation were forthcoming, although that is unlikely. There are many problems for the world and for the US and the ongoing silver manipulation may not rank high in most minds. However, anytime basic law is perverted it diminishes us all. And such a perversion is self-evident in silver.

I know that if someone accused me of doing something seriously wrong and the accusations were unfounded, I would respond forthwith, as I’m sure would anyone. I’m accusing the CFTC and, specifically, Enforcement Director Goelman and his staff of dereliction of duty and the selective application of the law that all swore to uphold. To my mind, the refusal to apply commodity law evenly and protect the public is almost treasonous in nature. Of course, should a cogent alternative explanation be issued by the Commission or the Enforcement Director explaining the role of JPMorgan in the silver market in legitimate terms, I will retract my statement and offer a public apology.

This is a serious matter – open and unqualified allegations of market manipulation by the nation’s most important banking institution and the failure of the regulators to deal with that manipulation or explain why the allegations are unfounded. Since the silver manipulation has become so clear (with the recent COT reports and JPM’s continued physical accumulation), I can’t help but feel we are close to the critical point where the enough outsiders recognize the scam JPMorgan has been running and the regulators’ illegal cover up of that scam. I know without a doubt that silver is artificially depressed in price by JPMorgan and other collusive commercial traders on the COMEX and as this story is discovered a wave of physical buying must occur.

Silver (and gold) investors and producers are being damaged by the continued price fixing on the COMEX. Because the evidence of manipulation is increasingly obvious it is appropriate to demand that the regulators treat silver and gold in the same manner as they regulate other markets. Or explain why they shouldn’t.

If you agree that there is something fundamentally wrong with the Enforcement Division’s double standard in the Kraft wheat case versus the JPMorgan silver case, please take the time to contact Director Goelman. Ask him to charge JPMorgan with manipulation or at least for him to explain how it could be OK for the bank to accept physical delivery on the maximum number of COMEX silver contracts while holding a massive net short position in silver futures. Not how it could be done – how it could be OK.

agoelman@cftc.gov

Ted Butler

April 7, 2015

end

 

 

Dave Kranzler comments on the above commentary written by Chris Powell

 

(courtesy Dave Kranzler IRD)

LBMA CEO Admits The Gold Market Is Rigged By Central Banks

GATA has produced a stunning disclosure by the LBMA CEO, Ruth Crowell:

Central bank involvement may prevent the London gold market from ever becoming really transparent, the chief executive of the London Bullion Market Association has told a Bank of England study group.  –  GATA.org link

The disclosure was posted on the LBMA’s website. In fact, here is the direct statement from Ms. Crowell, taken in context and directly from the text:

However, it is worth noting, that the role of the central banks in the bullion market may preclude ‘total’transparencyFair And Effective Market Review

When I first read the GATA report, I was not surprised.  But I am quite stunned by the LBMA CEO’s admissions after reading through the actual LBMA disclosure, posted on the Bank of England’s website (link above).

Ms. Crowell directly acknowledges that Central  Banks use “tools” such as gold leasing, gold loans and gold swaps  in order to “manage” gold market liquidity.  This is nothing but Orwell-speak for “manipulate the gold market as an essential ingredient to manipulate all currencies and markets.”

In fact, it is highly probable that the Federal Reserve hired Enron’s former chief lobbyist, Linda Robinson, and has spent a small fortune in order to fight the move by Congress to audit the Fed specifically to avoid revealing the extent to which the Fed has used U.S. Treasury gold bars (i.e. Taxpayer gold) in order execute the manipulation of the gold market in conjunction with the Bank of England and the ECB.

In this regard, GATA got ahold of a confidential IMF report which specifically advised Central Banks to hide gold loans and swaps which are used for market manipulation:  GATA link.

The truth is that the gold market may be the most manipulated market in history.   Governments and Central Banks based on fiat paper currencies which can be freely printed have no choice but to manipulate the world’s oldest true currency.   At some point the particular law of economics/nature known as “prisoner’s dilemma” will grip those who are manipulating the gold market.   One of the guilty parties will “blink” and the scheme will fall apart.

I would actually suggest, based on China’s enormous accumulation of physical gold – documented and undocumented – over the last 20 years, that China has blinked and we are drawing near an end to the criminal-based western financial system.

 

(courtesy Bill Holter)

 

Triggers.

 

The big story regarding the Asian Infrastructure Investment Bank was the application by the Israelis.  This came just prior to the deadline and of course at the displeasure once again to Washington.  Britain was the early defector followed by Germany, France and Italy.  Eyebrows were raised when Saudi Arabia made their announcement but I believe what was truly missed was the application by Taiwan.

  If you are old enough to remember, Taiwan was “recognized China” in the eyes of the U.S..  Mainland China was “Red” China and not officially recognized by the U.S., the application by Taiwan slipped by with little to no comment.  I believe Taiwan’s application holds great significance because it means the “elder families” are on board and have given their approval.  This is truly big news yet not even spoken of in the West?  As I understand it, the application must now be approved, a potential sticking point is the name “Taiwan”, this will be very interesting to watch!
  Why is the AIIB such a big deal?  There are several reasons but I believe the biggest is because it is a very public piece to the bigger picture.  Not only has the bank attracted the Asian countries one would expect, it has attracted many Western countries and even those closest to the U.S..  Going one step further, ALL of these applications came against U.S. lobbying and were followed by public rebukes from Washington.  This was the first instance where the world collectively (including long time U.S. allies) has expressly denied Washington’s wishes.
  The AIIB is only one piece to the puzzle.  Another is the clearing system set to directly compete with SWIFT.   Yet another is the BRICS bank, and let’s not forget the Shanghai physical metals exchange set to go live shortly.  Can you see the picture these pieces are putting together?  China, Russia and the rest of the world could see what is coming but they have not been ready for it…yet.  Each one of these pieces amounts to preparation for what is to come.  When I say “preparation”, much of it has been put into place to buffer the East (and rest of the world) from the financial collapse of the West.
  The clearing system for instance will allow and aid trade to continue between nations should the Western financial system close because of insolvencies or bankruptcies.  Call it contingency planning and they know what the contingencies are.  Another way to look at these plans is to see the U.S. becoming isolated.  The U.S. has been trying to isolate Russia and cut them off from liquidity and trade, China (and Russia) have been isolating the U.S. little by little with each new deal signed but have not pulled any triggers along the way.
  Until now and until these preparations were made, the East could not afford for the West to fall because they would have been taken down with it.  Now, the East has alternatives.  There are clearing alternatives, financial ones, new trade deals and routes, and of course even currency alternatives being made ready.  The U.S. has relied on the dollar being THE only alternative for the world to clear trade, this monopoly is ending.  What I am trying to explain is this, there are now very few preparations left unattended.
  When the U.S. originally began pushing economic and financial sanctions on Russia, I immediately was confused.  I was confused because in my mind, Russia had the ability to destroy the U.S..  They had all sorts of options, they could sell their Treasury securities and dollars and simply blow up either the gold or silver markets.  They could have defaulted on their debts or gone hot in Syria, there were many possibilities but none ever pursued.  Don’t get me wrong, Russia would have suffered greatly, but, the U.S. has been wobbly
enough for a direct effort to have tipped the scales.  Again, because they were not ready, no trigger was ever pulled and I believe we have been “carried” like an aging prize fighter, “they” being the Russians and the Chinese.
  One last preparation has been longer term, the accumulation of gold.  You must ask yourself “why” Russia and China have been accumulating so much gold?  The answer is twofold, they understand gold to be money but more importantly they know “where” their purchases were coming from.  This preparation involved not only amassing “money” but also bleeding the West of their money (gold).
  It is truly scary to see all of the pieces that have been put into place because they are all locked and loaded.  Nearly all of the future plans and programs are now in place.  The only one we are awaiting is for the Shanghai precious metals exchange to go live which should be very soon.  This exchange can either be a trigger or a barometer.  Should China decide to revalue and reset the system, they can easily do this by marking gold up using their physical exchange.  You can deny this if you will but it is the reality.  COMEX and LBMA do not have the inventories to compete with or supply Eastern demand, China will eventually set price whether you want to believe it or not.
  This needs a little explanation and can be defined in one word, “arbitrage”.  Should China decide on a markup phase (they will) for gold, all they need to do is bid their own physical price higher.  Should COMEX or LBMA lag behind this move, traders will then have the incentive to purchase Western “paper” and simply demand physical delivery.  The delivered gold (while it lasts) will then be sold at the higher price in China and thus a profit for the trader.  This is Mother Nature at her finest and China could not be accused of “busting” the Western exchanges purposely because the arbitragers would be doing the dirty work.  To put the game in perspective, COMEX registered gold inventory amounts to about 3 days worth of Chinese imports, these shelves are nearly bare in the grand scheme!
  They do not even have to act in a direct fashion other than to announce how much gold they have accumulated.  China undoubtedly has already accumulated more than 10,000 tons and probably more like the 20-25,000 tons Alisdair McLeod believes.  Were China to announce they hold 10,000 tons of gold, what do you believe the market’s reaction will be?  The price of gold will explode on any announcement such as this because the math and common sense behind it.  The world (West) will be slapped in the face that China “believes” in gold.  The speculation of a gold backed yuan will run rampant AND the natural question of “where did all this gold come from?” will be asked.  As I have mentioned several times before, another tactic could be China simply “bidding” for any and all gold at a specified price using their dollar hoard to effectively “set” the new price.  This avenue will only be travelled once it becomes apparent that Western vaults have been emptied.
  My point is this, the number of potential triggers is staggering and they don’t even necessarily need to be pulled …but they can now be pulled with less recoil than there would have been previously.  The fiat Ponzi scheme will fail on its own and without any help, however, “triggers” can now be pulled because there are alternatives and contingency plans to continue trade, operations, finance and business in general to the exclusion of dollars and specifically the U.S..  Think of it as a giant wall being erected around the United States and the West to contain or limit the damage that spills forth.  The final bricks to this wall are being put in place!  Regards,  Bill Holter
end

 

Early Tuesday morning trading from Europe/Asia

 

1. Stocks all higher on major Chinese bourses  /Japan higher /yen falls to 119.91

1b Chinese yuan vs USA dollar/yuan dramatically weakens to 6.198

2 Nikkei up by 242.56  or 1.25%

3. Europe stocks up/USA dollar index up to 97.52/Euro falls to 1.0864

3b Japan 10 year bond yield .36% (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.91/

3c Nikkei still barely above 19,000

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

3e WTI  51.63  Brent 57.71

3f Gold down/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

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

Except Greece which sees its 2 year rate slightly falls to 22.31%/Greek stocks up by .36% today/ still expect continual bank runs on Greek banks.

3j  Greek 10 year bond yield:  11.94% (down by 15 basis point in yield)

3k Gold at 1211.00 dollars/silver $16.86

3l USA vs Russian rouble;  (Russian rouble up 1/4  rouble/dollar in value) 55.18 , despite the lower brent oil price

3m oil into the 51 dollar handle for WTI and 57 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 .7 billion euros up to 72.0 billion euros.  This money is used to replace fleeing depositors.

Greece agrees to repay the IMF on April 9.2015.  There will be nothing left after that.

3t

4.  USA 10 year treasury bond at 1.90% early this morning. Thirty year rate well below 3% at 2.55%/yield curve flatten/foreshadowing recession.

 

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

 

 

(courtesy zero hedge/Jim Reid Deutsche bank)

 

Back From Holiday, European Stocks Celebrate Atrocious US Jobs Data, Jump Over 1%

Yesterday it was only the US that got the full benefit of the market-wide stop hunt that sent the US market soaring on its biggest opening ramp in 2015 following the worst payroll data since 2013, because Europe was closed for Easter Monday. Which means today it was Europe’s turn to celebrate atrocious US data (yes, yes, snow – because somehow tremendous January and February jobs data was not impacted by snow), and in the first European trading session of the week, equities have started off on the front-foot, with the Stoxx 600 up well over 1% at last check.

Europe has followed suit from the US paring the declines on Friday when they returned to market yesterday, with Asian equities also trading higher overnight, with the Nikkei 225 (+1.25%) further bolstered by the weaker JPY. Furthermore, positive sentiment from Europe has also stemmed from weekend reports that Greece will make its upcoming payment to the IMF on Thursday, which has subsequently lifted the ASE (+1.7%) while the GR/GE spread (-18bps) is the tightest in Europe. On a sector specific basis for Europe, energy names have led the way higher given the sharp gains seen yesterday in WTI and Brent crude futures yesterday. Elsewhere, postal names across Europe have been supported by FedEx’s takeover bid of TNT (+30.5%).

Fixed income markets trade in a relatively rangebound manner with the exception of Gilts which are currently underperforming ahead of GBP 4bln in 5y Gilt supply tomorrow (21K long gilt future equiv.) and also trail European core paper which is supported by net positive supply this week due to EUR 19bln in redemption payments. Looking ahead, focus for fixed income markets could later be swayed by the USD 24bln 3yr note auction.

In FX markets, the USD-index has continued its pullback from Friday’s nonfarm payrolls lows, which has subsequently weighed on its major counterparts, sending EUR/USD back below 1.0900 where there is a USD 2.1bln option expiry due to roll off at the 10am (1500BST) NY Cut. Elsewhere, AUD has managed to hold onto its RBA-inspired gains after the RBA stood pat on its policy rate as expected by consensus despite the market pricing in a cut, prompting an aggressive relief rally. Furthermore, participants shrugged off dovish commentary from RBA’s policy statement as the central bank hinted at further easing and AUD weakening in the period ahead. GBP failed to benefit from the better than expected services PMI (58.9 vs Exp. 57.0) after being weighed on by the USD.

In the commodity complex, WTI and Brent crude futures trade lower amid profit taking after finishing yesterday’s session up 6.1%, ahead of today’s API crude oil inventory report. In terms of downside for today, price action has also been swayed by reports that Iran has visited China in an attempt to increase oil sales to the area, a note from Goldman Sachs which suggested the bank does not see much upside for its USD 40bbl 3-month forecast and the stronger USD. In precious metals markets, spot gold and spot silver have been weighed on by the resurgent USD, while industrial metals rose overnight seeing nickel rebound

In summary: European shares rise with the oil & gas and utilities sectors outperforming and autos, insurance underperforming. The Dutch and French markets are the best-performing larger bourses, Swiss the worst. The euro is weaker against the dollar. Japanese 10yr bond yields rise; German yields decline. Commodities decline, with nickel, WTI crude underperforming and natural gas outperforming. U.S. consumer credit, IBD/TIPP economic optimism, JOLT job openings due later.

Bulletin Headline Summary from Bloomberg and RanSquawk

  • European equities trade higher alongside the pullback in equities seen yesterday and gains overnight during Asia-Pacific trade
  • USD-index also continues to pullback from its post-NFP lows, subsequently weighing on its major counterparts while AUD outperforms after the RBA stood pat on rates
  • Looking ahead, today’s session seen an absence of tier 1 US data, with Fed’s Kocherlakota due on the speaker slate at 1350BST.
  • Treasuries slightly weaker on short-end before today’s auction of $24b 3Y notes, WI yield 0.85%; last auction sold at 1.104%.
  • Australia’s central bank said for a second month it could ease policy at future meetings after keeping interest rates unchanged at a record low as the economy grapples with tumbling commodity prices
  • U.K. services growth accelerated to a seven-month high in March as the broader economy gained momentum in the first three months of 2015
  • The Bank of England is pushing U.K. banks to have plans in place in case the Greek debt crisis escalates or the country leaves the euro area
  • Russia’s central bank will abstain from a program of quantitative easing and instead rely on interest rates to boost the recession-bound economy if  inflation risks continue to abate, Governor Elvira Nabiullina said
  • Russia said only direct talks with Ukrainian authorities may change its refusal to join debt restructuring negotiations
  • No official contacts have taken place with Ukraine’s inance Ministry about renegotiating $3b of Eurobond debt, Russian Deputy FM Sergey Storchak said
  • Oil fell after the biggest rally in two months as investors weighed forecasts for rising U.S. crude supplies against signs that Saudi Arabia is betting on an improvement in demand
  • Whether it’s Rahm Emanuel or Jesus “Chuy” Garcia, the victor in Chicago’s mayoral runoff will face the unenviable task of reversing a fiscal decline that’s left the city’s credit rating on the cusp of junk
  • Asian and European equities rise. U.S. equity-index futures mixed. Crude and gold lower, copper rises

 

Market Wrap

  • S&P 500 futures little changed at 2072.3
  • Stoxx 600 up 1.1% to 402.3
  • Euro down 0.68% to $1.0848
  • Dollar Index up 0.91% to 97.65
  • US 10Yr yield up 1bps to 1.9%
  • German 10Yr yield down 1bps to 0.18%
  • MSCI Asia Pacific up 0.2% to 149.1
  • Gold spot down 0.6% to $1207.9/oz
  • Eurostoxx 50 +1%, FTSE 100 +1.2%, CAC 40 +1.2%, DAX +1%, IBEX +0.8%, FTSEMIB +1%, SMI +0.9%
  • Asian stocks rise with the Shanghai Composite outperforming and the Sensex underperforming.
  • MSCI Asia Pacific up 0.2% to 149.1; Nikkei 225 up 1.3%, Hang Seng closed, Kospi up 0%, Shanghai Composite up 2.5%, ASX up 0.5%, Sensex down 0.6%
  • 5 out of 10 sectors rise with materials, energy outperforming and consumer, utilities underperforming
  • Italian 10Yr yield down 5bps to 1.25%
  • Spanish 10Yr yield down 4bps to 1.18%
  • French 10Yr yield down 2bps to 0.46%
  • S&P GSCI Index down 0.7% to 410.2
  • Brent Futures down 1.3% to $57.4/bbl, WTI Futures down 1.5% to $51.4/bbl
  • LME 3m Copper up 0.7% to $6021.5/MT
  • LME 3m Nickel down 2.3% to $12725/MT
  • Wheat futures down 0.9% to 523 USd/bu

DB’s Jim Reid is also back from holiday with his first “Early Morning Reid” summary since the nonfarm payrolls bomb

 

Although Friday’s weak payroll number is now some 87 hours and a lot of chocolate behind us, the shadow of it will likely dictate trading this week with Greece, the start of Q1 US earnings and China’s monthly data dump on Friday competing for attention as the week progresses. With regards to the weak payroll print, one doesn’t want to overstate the importance of one number but it certainly does help our long standing view that the Fed will struggle to raise rates in 2015. At the back end of last year this view was not really taken that seriously but it’s now not beyond the realms of possibility. In fact a month or so ago we discussed how if you were looking from scratch at the US economy without any pre-conceptions or knowledge of any Fed speak you might conclude that the next move might be an easing from the US central bank. I wonder what the probability is now of the next move being looser policy? Still very low of course and although this is nowhere near current market thinking, the strong US session yesterday (S&P 500 +0.66%) and rebound from the immediate post payroll lows in the futures contracts on Friday surely partly reflects market appreciation that the Fed might be on hold for longer.

A rally in oil markets also helped yesterday’s stronger showing in risk assets, while some dovish chatter out of the Fed’s Dudley attracted headlines. Specifically, the NY Fed President said that ‘the timing of normalization will be data dependent and remains uncertain because the future evolution of the economy cannot be fully anticipated’. He also discussed how the path of any rate rises will likely be ‘shallow’ (Reuters). Dudley did however say that recent weaker economic data – including the March employment report – was likely to reflect temporary factors to a significant degree, but that the Fed will need to ‘determine whether the softness in the March labor market report foreshadows a more substantial slowing in the labour market than I currently anticipate’. Meanwhile, in comments post-market close, the Fed’s Lockhart narrowed his preferred time frame for liftoff to July-September, saying that June may come too soon. Lockhart also backed up the earlier comments from Dudley by saying that the weaker data in Q1 is likely temporary and that ‘ups and downs’ in job data are unsurprising.

As mentioned it was a better day for equities with the initial 0.5% fall in the S&P 500 on the back of Friday’s data lasting for all of 15 minutes as markets quickly reversed. Despite broad based gains, oil was clearly supportive as energy stocks (+1.77%) led the reversal. WTI (+6.11%) and Brent (+5.77%) rallied on the back of Saudi Arabia raising prices for crude shipments into Asia. Credit markets closed firmer also as CDX IG finished 2bps tighter. With the better sentiment generally, Treasuries meanwhile gave up most of Friday’s gains as the benchmark 10y yield finished 5.6bps higher at 1.895%, having closed at 1.911% pre-payrolls on Thursday before rallying into 1.839% post the print on Friday. A late bounce in the Dollar wasn’t enough to offset Friday’s weakness however, with the +0.24% return for the DXY halting three previous negative sessions including a -0.9% day on Friday.

Elsewhere in the US yesterday, data was generally supportive. The final March reading for the services PMI was revised up 0.6pts to 59.2, putting it at the highest level since August last year. Meanwhile, the ISM non-manufacturing reading for last month was as expected at 56.5.

Moving on, with markets closed in Europe yesterday the focus continues to be on Greece headlines. Over the weekend, Greek finance minister Varoufakis and the IMF’s Lagarde met for informal talks. As well as the (generally unsurprising) conciliatory headlines in the joint statement following the meeting, Varoufakis pledged to meet this week’s upcoming €440m IMF payment on Thursday, easing earlier concerns that the government was to prioritize wages and pension payments over the repayment. Lagarde also confirmed that talks are due to restart with Greece and the Brussels Group this week. DB’s George Saravelos noted last week that talks remain slow and ultimately the path forward has still not changed materially from a month ago. The issue around the content of the staff level agreement, with the agreement on fiscal targets and the budget gap in particular, is proving to be a sticking point. George notes that the binding constraint to the completion of the negotiation process remains the government’s deteriorating cash position.

As well as the IMF payment on Thursday, Greece is due to auction €1.4bn of T-Bills on Wednesday to pay off a maturity next week. With over half of the T-Bill owned by foreign investors, who may be unwilling to roll, pressure will be on domestic funding to ensure the maturity is fully repaid. George maintains his expectation on the ultimate outcome of the crisis being the same as outlined a few weeks ago, this being a roughly equally probability ascribed to: (i) an agreement that would likely require a change in parliamentary coalition/MP support to pass through Greek parliament, (ii) a referendum on the agreement that would be reluctantly backed by the government but ultimately be supported by most political parties, or (iii) a breakdown in talks due to a lack of progress. For now, all eyes on Wednesday’s T-Bill auction and Eurogroup Working Group meeting.

As well Greek headlines and China data this week, Q1 earnings season will likely provide some near term direction to markets with Alcoa due to unofficially kick things off on Wednesday. Last week we highlighted that profits for S&P 500 companies are expected to decline 5.8% in the first quarter, with a weakness in energy stocks and a strong Dollar likely being the themes. In fact, data shows us that profits are expected to decline for the first three quarters of this year. History tells us that for periods of nine months or more of earnings declines, a bear market was the end result in 82% of cases over the past eight decades.

Elsewhere, geopolitical news continues to bubble away in the background. Thursday evening saw an announcement that a ‘framework’ had been agreed upon in the Iran nuclear talks. Drastic cuts in its nuclear program were agreed in return for a gradual lifting in sanctions. However Israel strategic affairs minister Steinitz criticized the deal, saying that the accord makes ‘irresponsible concessions’. Steinitz also commented that the deal didn’t do enough to make Israel comfortable and called for changes to be made to the agreement including ceasing all nuclear R&D activity and a full removal of uranium stockpiles. US President Obama has since dismissed Israel’s comments, quoted in the NY Times yesterday saying that the deal is a ‘once in a lifetime opportunity to see whether or not we can at least take the nuclear issues off the table’.

The crisis in Yemen continues also. Over the weekend we heard that Saudi Arabia had asked Pakistan to contribute soldiers to help with the military campaign with Pakistan’s defense minister quoted on Bloomberg saying that their parliament is debating the request. In the meantime, Bloomberg is also reporting that the rebel-Houthi movement is prepared to resume talks to resolve the crisis, should the Saudi-led coalition stop airstrikes. The same article also notes however that the rebels will not accept the Kingdom-backed deposed President to return to power.

Taking a look at the early morning trading in Asia, equity markets are appearing to follow the US lead as we go to print. Indeed, the Nikkei (+1.26%), Shanghai Comp (+1.80%) and ASX (+0.34%) are all higher. The Aussie Dollar is +1.23% versus the US Dollar after the RBA decided to keep rates on hold at 2.25%. The Central Bank did however hint that it would keep an easing bias for the remainder of the year. Credit markets in Asia are generally 1-1.5pts firmer this morning also.

Despite the holiday shortened week and usual post payrolls data vacuum in the US, there’s still plenty for us to look forward to this week. We kick off in Europe this morning with the final March services and composite PMI indicators for the Euro-area as well as regionally in Germany and France. Preliminary readings are also scheduled in the periphery and the UK. Over in the US this afternoon we’ve got more employment data due in JOLTS job openings while consumer credit and the IBD/TIPP economic optimism readings are expected. Wednesday starts in Japan where the BoJ meeting and trade data for February will be worth keeping an eye on. In the European timezone, German factory orders, French trade data and Euro-area retail sales are the highlights. There is little due in terms of data in the US however the highlight will of course be the release of the FOMC minutes from the March 17th/18th meeting. However will they be seen as out of date post-payrolls. Moving on, Thursday again starts with more central bank focus with the BoE meeting due as well as the UK’s trade data. German trade data, along with industrial production will also be due up while in France we get the business sentiment reading. Over in the US on Thursday the highlights are wholesale inventories and initial jobless claims. Approaching the end of the week, Friday’s highlights in the Asia timezone will be on the monthly China data dump which includes CPI, PPI and money supply data. In Europe meanwhile, industrial and manufacturing production for the UK and France will be the main highlights. It’s a light end to the week in the US with just the import price index and monthly budget statement due. Fedspeak wise we’ve also got Kocherlakota and Lacker due to comment over the week. Of course, Greece will likely continue to generate headlines with the IMF payment due and talks with European officials ongoing. Wednesday also see’s the start of Q1 earnings season with Alcoa unofficially kicking off the process. So plenty for us to keep an eye on.

 

end

 

Early this morning, we receive this news with respect to the meeting of the Greek Prime Minister Tsipras and Putin:

(courtesy zero hedge)

Russia To Offer Greece New Loans, Gas Price Discount

While Greece spent Easter weekend (not the Greek orthodox Easter that is) assuring the IMF (the “institution”, not the critical third member of the Troika that shall not be named) that the €450 million payment due to Christine Lagarde’s organization will be made despite Greece officially (rather than just unofficially) running out of money and being forced to prioritize repaying its creditors over paying wages and pensions, its Prime Minister is currently evaluating what the Plan B will be when he visits Vladimir Putin one day ahead of the double Greek deadlines of IMF payment and cash running out.

As FT reports, “when Alexis Tsipras visits Vladimir Putin’s Kremlin on Wednesday there is a chance the Greek premier’s eastern manoeuvre will immediately bear fruit: kiwis, peaches and strawberries to be precise. Athens is hopeful that Moscow will lift a retaliatory ban on Greek soft fruits to demonstrate the abiding strength of Russo-Greek relations, just as both leaders feel a diplomatic chill with Europe over the Ukraine crisis and Athens’ bailout saga respectively.

Of course, every Greek request for a concession “quid” will be met with a proportional Russian quo, and it is this that worries European diplomats – namely will the Putin-Tsipras gladhanding amount to something more significant than fruit trade. “The big fear, in the words of one suspicious senior official, is a “Trojan horse” plot, where Russia extends billions in rescue loans in exchange for a Greek veto on sanctions — a move that would kill western unity over Ukraine.”

No such shock is expected this week. But as Athens nears the brink of insolvency there is growing alarm that Mr Tsipras’s radical left government might turn to Moscow in desperation. It would set off the biggest panic over Greece’s strategic alignment since the 1947 US Marshall Plan, initiated to save the country from communist fighters that Mr Tsipras’ Syriza party lionise to this day.

Others are hoping that Tsipras visit is merely a, well,Trojan horse strawman, meant to instill fear in Europe that Russia can spread its tentacles to a country which is still a member of the Eurozone, and is merely a “ploy in bailout talks with Germany and the eurozone. In spite of historic cultural ties and Syriza’s Soviet romanticism, analysts think Greece is too tied to the west – through EU and Nato membership – and too deep in debt for sanctions-damaged Russia to buy it off as a reliable ally.”

“The Greeks are using Russia as a way to piss off Berlin, to frighten them. Tsipras wants to show he has other options,” said Theocharis Grigoriadis, a Greece-Russia relations expert at the Free University of Berlin.

 

“But he has no intention of making Greece a Russian satellite. The Russians know that. The Germans know that. It is pure theatre, a Greek game, and I’m afraid it looks like a poodle trying to scare a lion.”

And that is 100% wrong, because every decision has a bid and an ask. And all it would take for Russia to expand its “satellite” nations by one more is to offer enough promises and gifts to a nation that has been on the verge of social and economic collapse of the past 5 years.

Such as a discount to all important energy prices and, even better, a replacement loan – one which comes with less “austere” conditions than anything Greece could get out of Europe. Which, according to Russian Kommersant as reported by Reuters, is precisely the carrot that Russia will dangle before the Greek PM. From Reuters:

Russia may offer Greece a discount on gas deliveries and new loans when Greek Prime Minister Alexis Tsipras visits Moscow this week, the Kommersant business daily reported on Tuesday, citing one source in the Russian government.

 

A Kremlin spokesman said last week that Russian President Vladimir Putin and Tsipras planned to discuss economic ties and EU sanctions on Moscow when they meet for talks, which Kommersant said would take place on Thursday.

 

“We are ready to consider the issue of a gas price discount for Greece,” the newspaper said quoting an unnamed Russian government source.

 

Russia’s state-controlled producer Gazprom declined to comment. The Energy Ministry also declined to comment.

 

The source said that in exchange for the discount and some unspecified loans, Russia would want access to Greek assets. The source did not name any specific assets.

 

In recent weeks, the gas price charged by Gazprom has fallen, tracking lower oil prices. Gazprom said it wanted to acquire DEPA in 2013 but dropped its bid after failing to receive enough guarantees over DEPA’s financial position.

So that is the Russian offer. The all important question remains: what will Russia request in return for these key concessions and will Greece be willing to accept it. Then again, running out of cash may just be impetus Greece needs to open up negotiating avenues which until recently it had said it would never cross as long as it is part of the Eurozone.

end
GATA and the London Telegraph comment on the above story
:
(London Telegraph/GATA)

Russia ready to offer Greeks cash in return for assets

Section:

By Tom Parfitt and Mehreen Khan
The Telegraph, London
Tuesday, April 7, 2015

Russia could offer debt-ridden Greece controversial loans and discounts on supplies of natural gas in exchange for the country’s “assets,” according to reports in Moscow.

Alexis Tsipras, Greece’s prime minister, is due to arrive in the city today and will meet Vladimir Putin, Russia’s president, on Wednesday.

Athens’ overtures to Moscow have raised fears the Leftist government is pivoting east in search of alternatives sources of finance as it bids to avoid bankruptcy. Ahead of his visit, Mr Tsipras condemned economic sanctions on Moscow as “a road to nowhere.”

Greece’s dalliance with the Kremlin has also attracted criticism for potentially undermining the EU’s united front against Russia’s military intervention in Ukraine. …

… For the remainder of the report:

http://www.telegraph.co.uk/finance/economics/11519651/Russia-ready-to-of..

 

end

 

As the European authorities try to undermine the legitimacy of the government in Greece, the Greek Defence Minister and leader of the coalition partnership states the following:

(Keep talking Greece)

 

The Greek Counter-Ultimatum To Europe: “We Cannot Keep ISIS Out If You Keep Bullying Us”

By Keep Talking Greece

Greek Defense Minister: We Cannot Keep ISIS Out If EU Keeps Bullying Us

For a second time within a couple of weeks, Greek Defense Minister and leader of coalition government junior partner Independent Greeks, Panos Kammenos warned that if the European Union keeps undermining the coalition government and the country exit or is forced to exit the Euro “waves of migrants: will stream from Turkey to Europe and among them there would be ISIS “radicals.”

Speaking to THE TIMES, Kammenos said:

“The gross meddling into [Greek] domestic affairs isn’t just unheard for European standards, it’s unethical and it’s dangerous. If Greece goes, then a lot more than financial stability and the euro is at stake.”

If Greece is expelled or forced out of the eurozone, waves of immigrants without papers, including radical elements, will stream from Turkey and head towards the heart of the West,” Kammenos told The Times.

German government coalition partners, the European Parliament President Martin Schulz and “European anonymous sources” have repeatedly and even blatantly expressed the wish that Prime Minister Alexis Tsipras gets rid of nationalist Kammenos and make a coalition with austerity-friendly To Potami and/or even PASOK.

Panos Kammenos described these statements and efforts as “bullying” committed by Brussels and Berlin in order to force Greece into “a full and complete economic surrender.”

“Europe must realize that maintaining Greece stable, the West front against the Islamic State (ISIS) is safe. But ifexpelled or forced out of the eurozone, waves of immigrants without papers, including radical elements will stream from Turkey, heading towards the heart of the West. If these waves of immigrants increase, then thethreat of incoming extremist elements will grow not forGreece but for the whole of the West. “ (The Times viaNewsit.gr)

It is not the first time, Kammenos makes similar warnings. Short before another “crucial” Eurogroup meeting, beginning of March, he warned Berlin to “flood Europe with migrants”, potentially including Syrian jihadists, if Europe fails to find a solution to the Greek debt crisis.

“If Europe leaves us in the crisis, we will flood it with migrants, and even worse for Berlin if in that wave of millions of economic migrants there will be some jihadis of the Islamic State too,” according to the Italian newspaper La Repubblica.

He went on explaining that: “If they [the Eurogroup] strike us, we will strike them. We will give to migrants from everywhere the documents they need to travel in the Schengen area, so that the human wave could go straight to Berlin.”

end
As we have pointed out to you on several occasions the ECB will have to cut short its purchases of treasuries  due to scarcity and also the fact that necessary collateral disappears.
(courtesy zero hedge)

Why ECB’s March Purchase Of €11 Billion In German Treasurys Will Be A Problem

 

As was largely expected, in the first monthly report of ECB Q€ purchases in which the European central bankreported a total of €47.4 billion in purchases, the one country with the largest proportional allottment was Germany, whose €11.1 billion in bond purchases represented a 23.4% of the total monthly purchase. This is somewhat less than the mandated capital key allottment to Germany, which as a reminder, is at 26%, however the remaining balance is where the €5.7 billion in supernational purchases came in.

 

Also disclosed was the duration of purchases, with the ECB revealing the weighted average remaining maturity by purchase bucket, with Spain at the top at 11.7 years, Germany in the middle with 8.12 and Slovenia at the low end with just 6.3 years left in the average CUSIP until maturity.

 

All of this is largely as expected. In fact the only surprise regarding this data came not from the ECB but from Germany’s budget announcement earlier today, in which we read thatGermany’s public sector posted a total budget surplus in 2014 of 6.4 billion euros ($6.95 billion), helped by strong tax revenues in a recovering economy, compared with a deficit of 7.2 billion the previous year, the Federal Statistics Office said on Tuesday.”

The surplus took into account provisional quarterly results at federal, state and municipal level plus the social security system. The federal government received 2.3 billion euros more than it spent and the 16 states were 1.6 billion euros in the black. The social security system posted a surplus of 3 billion euros.

In other words, not only a balanced budget – which Germany achieved for the first time in half a century last year – but a surplus.

This is also a huge headache for Mario Draghi and his central bank peers for one simple reason: if there is a surplus, there is no need for Germany to issue debt, period. And since the ECB has no choice but to monetize about €11 billion per month in German debt, it means that German net issuance is now solidly negative, just as we warned before.

 

This also means that unless the ECB is willing to deal with a German bond curve that trade at -0.2% (or more negative) from end to end, it will soon have no choice but to taper its QE program, long before its scheduled expiration in the fall of 2016.

Of course, that too will be a bridge which the media will cross when it gets to it, several months from now.

For now, just enjoy today’s Kocherlakota rally and BTFATH.

Oh, and Greece, which should be on the chart above but isn’t because the “apolitical” ECB doesn’t like its government: our condolences.

 

end

 

This is an accident waiting to happen!!

(courtesy zero hedge)

More Than Half Of Spanish Debt Is Held By Foreigners As Bills Sell Below 0% For First Time Ever

There was a time when foreigners couldn’t get enough of Spanish debt, and as shown in the chart below sourced from the Bank of Spain, non-residents, aka International Holders, couldn’t get enough of Spanish paper with their total holdings rising well over half of total debt outstanding as recently as 2010.

Then the first European crisis happened and peripheral bonds cratered, sending Spanish yields to record high yields and bringing international holdings of Spanish debt to the lowest in the 21st century just as Mario Draghi unleashed his “whatever it takes” hollow round bazooka and the non-existent OMT, which marked the top in yields so far.

Since then it has been a non-stop buying frenzy, and after bottoming in the low-30%’s in 2012 and early 2013, foreign holdings of Spanish debt have once again shot straight up until, moment ago, we learned courtesy of the latest Bank of Spain update that as of February, International investors once again hold a majority of Spanish debt, or 50.5% to be precise, in the form of €333.5 billion of the unstripped Spanish government bonds of the total €660.4 billion.

This latest herd scramble, which has certainly pushed foreign holdings of Spanish paper well over 50% in the past month, means that headlines such as this one from Bloomberg:

  • Spain Sells EU0.725 Bln of 6-Month Bills; Yield -0.002%
  • Spain Auctions T-Bills With Yield Below Zero for First Time

Will become far more frequent and spread increasingly to the right of the curve, until the entire cycle restart from the beginning.

Source: Bank of Spain

 

end

 

 

Simon Black offers his take on the UK economy:

 

(courtesy Simon Black/zero hedge)

 

 

Scathing Assessment: “The UK Economy Is A Ticking Time Bomb

Submitted by Simon Black via Sovereign Man blog,

Despite being an otherwise staid, traditional news service,the professional banking division of the Financial Timesrecently released an utterly scathing assessment of the British economy.

It was entitled, “The UK economy is a ticking time bomb,” and the editor didn’t pull any punches in completely shattering the conventional fantasy that ‘all is well’, and that advanced economies can simply print and indebt their way to prosperity.

I’ll quote below, emphasis mine:

“What is the problem? Quite simply, the key numbers are terrible. According to the OECD, after five years of ‘austerity’ the UK’s budget deficit is 5.3%, down from 11.2% in 2009.

“In other words, it has gone from being close to meltdown to a situation that is merely dreadful.

“Since the government is spending more than it earns, it is hardly surprising that it is borrowing more, and that the debt-to-GDP has risen from 68.95% in 2009 to 93.30% in 2013, again according to OECD figures.

“As the UK is currently growing it should really be running a budget surplus, providing it with the means to run deficit financing during the next downturn.

“This is one of the tenets of the Keynesian philosophy that underpins a lot of left-of-centre economic thinking.

“Unfortunately Europe’s political parties of all persuasions have bastardised Keynes’ ideas – running deficits in both good and bad times – so as to render them almost meaningless.

“To make matters worse the UK, again similar to most advanced economies, is an ageing society with pension, welfare and healthcare systems that are wrongly structured and financially unsustainable.”

“We can blame the politicians for failing to be honest with the electorate about the challenges ahead.

Or we could blame the voters who punish at the ballot box any party that tells them anything other than good newsand wants to hear that taxes can be cut, spending raised and the budget balanced all at the same time.”

*   *   *

But apart from that, everything is awesome…

 

end

 

 

Oil related stories

 

 

totally amazing!!

 

(courtesy zero hedge)

Saudi Optimism Trumps Storage Concerns, Sends WTI Crude Surging

A constant stream of hyprocrisy from Fed officials (will print “moar” money if stuff happens), the EIA (storage is getting fuller and fuller, but production will be lower than expected and forecast prices are higher even though lifting Iran sanctions will trim $5-$15 from the price of oil), and Saudi Oil Minister Naimi’s idiocy (increased production, demanding non-OPEC cooperation, butoptimistic on prices recovering in the short-term) has sent crude asymmetrically rocketing higher,  which is now apparently a good thing for US equities and umabiguously gooder for the US consumer (where is Larry Kudlow?)

We assume this is just repricing on the basis that the “deal” was “no deal” and in fact it’s clear that Iran sanctions will likely never be lifted – despite the Chinese already negotiating.

Goldman is less sanguine, and in its note released yesterday notes that “implied” storage across various regions is at or over 80% already, and in the case of PADD 2 (excluding Cushing) has already surpassed 100%!

From Goldman:

Our analysis of EIA data suggests that there remains crude spare storage capacity, in the range of 7-21 mb in PADD2 and 42-99 mb in PADD3. While wider domestic crude differentials and weak WTI timespreads are in our view pricing the incentive to shift crude stocks to the US Gulf Coast and even potentially onto floating storage, the uncertainty on spare capacity is high. As a result, while we view the risk of running out of US crude storage capacity as a low probability event, it cannot be ruled out and would likely have a significant price impact given US producers’ low operating costs.

Implied capacity: We take the maximum observed tank farms and refinery stocks at the PADD level between 2008-10 and let this effective capacity proxy grow at the rate of storage capacity expansion reported in the EIA’s semiannual survey. This method points to much lower storage capacity in PADD2 (particularly ex-Cushing) and PADD3, with combined capacity of 49mb currently. It is worth noting, however, that our calculations do not remove crude by rail, so our results may overestimate utilization.

The only loophole is if Oil is either being “stored” underground now (unrealistic):

A large enough contango and low outright crude oil prices create the incentive to not drill or not complete wells, keeping crude oil in the ground. As we discussed previously, a higher deferral rate could lead to a fast decline in US production, although we remain far from shale shut-in economics near $10-15/bbl.

Or barged:

Although the Jones act specifies that “No merchandise […] shall be transported by water […] between points in the United States […] in any other vessel than a [Jones Act] vessel […]”, this does not prevent crude oil from being loaded on non-Jones Act vessels as long as it is loaded and unloaded at the same dock. This is consistent with Ruling H169017 from the US Customs and Border Protection Agency. Therefore, there is the opportunity of using floating storage for US crude, although loading facilities would be a constraint for larger vessels.

Coastal or inland barges could also be used for storage although: (1) capacity is uncertain6, (2) barge economics are expensive, and (3) coastal barges could face hurdles from regulators to store crude near the coast (ruling H169017 applied for storage off the continental shelf). Nonetheless, a wide WTI contango could create an incentive to store crude instead of barging it to Louisiana. In Exhibit 19, we compare the Houston Light Sweet – Louisiana Light Sweet crude differential, net of an indicative $2.50/bbl barge fee from Corpus Christy to the LOOP (and its long-run average), to  the WTI contango (a reasonable proxy for the contango of light crude in Houston given set pipeline tariffs). This suggests a greater potential return for using a barge to store rather than ship crude to the LOOP since late February, although we reemphasize the potential variability in barge rates. Interestingly, this would contribute to the recently observed LLS backwardation with fewer inflows as inland barges down the Mississippi to St. James could be used too.

Does the math of floating storage work now? Well, after today’s surge probably not, but Goldman thinks it just may… perhaps.

end
After the markets closed, reality enters the picture as crude tumbles with news that the API inventories rose to the largest build in 30 years:
(courtesy zero hedge)

Crude Tumbles After API Reports Largest Inventory Build In 30 Years

Who could have seen that coming? For 2 days, oil has surged on every headline (good or bad) as algo-mania created the 2nd best performance in 4 years.. and thenAPI reports an absolutely massive 12.2 million (almost 4 times larger than the 3.4mm estimate). If this corresponds to the DOE inventory data tomorrow – this is the biggest inventory build since 1985… Crude prices are… not up…

  • *API SAID TO REPORT U.S. CRUDE STOCKPILES UP 12.2M BBL

The result.

So to get this straight… we have the biggest inventory build in 30 years, and the 13th week in a row of inventory bulds (an all-time record) and oil rwtraces $1 of its epic farce $3 gain on the day!

Oh, and the cherry on top: if the EIA confirms the Cushing stockpile increase of 1.2MM tomorrow, the hub is now,according to Goldman estimates, just about 90% full!

end

Your more important currency crosses early Tuesday morning:

 

 

 

 

Euro/USA 1.0864 down .0071

USA/JAPAN YEN 119.91 up .426

GBP/USA 1.4894 up .0006

USA/CAN 1.2474 down .0002

This morning in Europe, the Euro fell dramatically  again by 71 basis points, trading now well below the 1.09  level at 1.0864; 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, a possible default of Greece and the Ukraine and yet rising bourses.

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 43 basis points and trading just below the 120 level to 119.91 yen to the dollar.

The pound was slightly up this morning as it now trades just below the 1.49 level at 1.4894  (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 2 basis points at 1.2474 to the dollar despite the 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: Tuesday morning : up 242.56  points or 1.25%

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

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

Gold very early morning trading: $1211.00

silver:$16.86

 

 

Early Tuesday morning USA 10 year bond yield: 1.90% !!! par  in basis points from Monday night/

USA dollar index early Tuesday morning: 97.52 up 45 cents from Monday’s close. (Resistance will be at a DXY of 100)

 

 

 

This ends the early morning numbers, Tuesday morning

 

 

 

And now for your closing numbers for Monday:

 

 

Closing Portuguese 10 year bond yield: 1.63% down 8 in basis points from Monday

 

Closing Japanese 10 year bond yield: .36% !!! up 2 in basis points from Monday

 

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

 

Spanish 10 year bond yield: 1.18% !!!!!!

 

Your Tuesday closing Italian 10 year bond yield: 1.24% down 6 in basis points from Monday:

 

trading 6 basis points higher than  Spain.

 

 

IMPORTANT CURRENCY CLOSES FOR TODAY

 

 

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

Euro/USA: 1.0812 down .0122  (down 122 basis points)

USA/Japan: 120.33 up .838  ( yen down 84 basis points)

Great Britain/USA: 1.4816 down .0072   (Pound down 72 basis points)

USA/Canada: 1.2509 up .0033 (Can dollar down 33 basis points)

 

The euro collapsed again during the afternoon, and adding further losses from yesterday. It settled down 122 basis points to 1.0812. The yen was down 84 basis points points and closing just above the 120 cross at 120.33. The British pound lost some more ground, 72 basis points, closing at 1.4816. The Canadian dollar was on a roller coaster ride again today against the dollar. It closed at 1.2509 to the USA dollar, down 33 basis points even though oil was well up today. it looks like all the currencies are manipulated every second of the day.

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.

 

 

end

 

 

Your closing 10 yr USA bond yield: 1.89% down 1 in basis points from Monday

 

Your closing USA dollar index:

97.95 up 89 cents on the day.

 

 

European and Dow Jones stock index closes:

 

 

 

England FTSE up 128.31 or 1.88%

Paris CAC  up 77.05 or 1.52%

German Dax up 156.13 or 1.30%

Spain’s Ibex up 96.50 or .83%

Italian FTSE-MIB up 387.87 or up 1.71%

 

 

The Dow:down 5.43 or 0.03%

Nasdaq; down 7.08 or 0.14%

 

 

OIL: WTI 53.42 !!!!!!!  (at 5 pm with release of ATI:  53.07)

Brent: 58.72!!!!  (at 5 pm:  58.550

 

 

Closing USA/Russian rouble cross: 55.02 up  1/4 rouble per dollar on the day with the higher oil price .

 

 

 

end

 

 

 

And now your important USA stories:

 

 

First New York trading today:

Market Breaks After Fed-Driven Buying Frenzy Turns Into Selling Scramble

Fed officials, “market” participants, and even oil ministers lost grip of reality once again today… only to get jolted back to reality by JOLTS Hires and Revolving Consumer Credit collapse…

 

On the day, Small Caps dropped as Trannies topped – as it now seems surging oil prices are great for airlines etc… Kocherlakota’s dip-and-rip was destroyed by Consumer Credit’s collapse…

 

From last Thursday’s cash close, Trannies and Small Caps have given up their gains…

 

From the Payrolls-plunge, stocks are still holding on to gains…

 

And as everything fell apart into the close, to complete the farce, this happened.

*  *  *

*  *  *

Treasury yields were mixed on the day (close to close – long-end down 3bps, short-end up 2bps) but tumbled notably in the afternoon…

 

Stocks caught down to yields…

 

The Dollar rallied again.. no up over 1% on the week…

 

 

Despite dollar strength, gold was stable and copper up as silver slid…

 

Oil surged on various headlines that were only imbibed with asymmetrical bullishness by the machines…

 

For the 2nd biggest 2-day surge in over 4 years…

 

Charts: Bloomberg

Average:

0

end

 

 

Just look at what this clown states today:

(courtesy zero hedge)

 

Kocherlakota Goes Bull(ard) Retard, Says “QE4 Theoretically Warranted”

First it was Jim Bullard in October, after US equity markets had fallen almost 10%, dropping the only word that matters to headline scanning algos, i.e., “QE4” and suggesting that asset purchases will make a comeback if the market drop continues. And now, with stocks fractions-of-a-percent off record highs, Minneapolis Fed president Narayana Kocherlakota spouts this idiocy:

  • KOCHERLAKOTA: THERE IS EVEN A THEORETICAL ARGUMENT TO BE MADE FOR MAKING ASSET PURCHASES NOW IF ECONOMY FALTERED

Stocks, rather stunningly, appear to have finally given up responding to this utter farce… and are falling.

  • Kocherlakota Says Debate About Raising Rates Is Drag on Economy (NOTE: not the rate hike itself… but the DEBATE about a rate hike is a “drag”)

Stocks are not loving it.

But oil is…

Artist’s Impression of the new normal…

*  *  *

Somewhere we suspect Rick Santelli just had an aneurism!

UPDATE: hahahahahaha!

end
Dave Kranzler on the true P/E in the USA:
(courtesy Dave Kranzler/IRD)

Bubble, Bubble, Fraud And Trouble – S&P 500 Most Overvalued Ever

(Note:  apologies to Shakespeare for my blog title)

We can certainly see a 2008-like market crash because “the bigger this bubble gets, the bigger the burst…I am looking at a bubble that is almost sure to pop at some time and I don’t know when it’s going to happen, but I know it’s going to happen.  – this quote and the one below sourced from Zerohedge.com

The Fed and the U.S. Treasury (via its Working Group on Financial Markets) – collectively known as the Plunge Protection Team – have created both stock and bond market bubbles of unprecedented magnitude.  I think the only market professionals who refuse to acknowledge this are the highly inappropriate hosts and Wall Street guests that have infested the media like ebola has infested West Africa.

But a constant source of irritation for me is the fact that analysts, and even respected market professionals like Julian Robertson, erroneously reference the current stock market (S&P 500) p/e ratio in comparison to historical points in time.   The latest example is Roberston’s appearance on Fox Business.

Robertson’s commented about the bubbles that have been methodically blown by the PPT:

The thing that worries me the most are the twin bubbles [stocks, bonds] that are developing, certainly the Federal Reserve, the people that run their Treasury operations, are trying to create a bubble in bonds and they are doing it.

In reference to Robertson’s comments, Zerohedge asserts that the current forward GAAP p/e for the S&P 500 is 21x.   No.  It’s not.  In order to make historical comparisons we have to implement comparable accounting measures.   The GAAP accounting used in 1999 is not the same as the one used in 2007 and the GAAP used in 2007 is not the same as the one used currently.

Every change made to GAAP has enabled U.S. corporations – especially the banks – to use highly questionable accounting gimmicks in order to increase GAAP-reported net income and earnings per share.   By now everyone knows about the nefarious non-cash accruals like “mark to market” mark-ups of highly illiquid fixed income holdings which load huge non-cash gains into GAAP-reported net income.   There have been likewise liberalizations of GAAP standards which benefit non-financial companies as well.

These accounting changes are not just ludicrous – they enable outright fraud.  All bubbles/Ponzis are engendered with massive fraud.

Having said that, and without going through the arduous task of translating current S&P 500 earnings into 2007 or 1999 or 1929 equivalents, it is beyond any possible doubt that the current S&P 500 GAAP-reported earnings per share would be significantly lower using historical GAAP standards.    The current “Shiller” S&P 500 p/e ratio is said to be 27.2x.   However, my best guess would be that if 1999 GAAP standards were applied to the current “Shiller” S&P 500 trailing earnings, the current p/e ratio would be well in excess of 50x (vs. just under 45x in 1999).

That being the case, the current stock market has – by far – the highest p/e ratio in history and is therefore – by far – the most over-valued in history.   I just wish highly visible market participants like Julian Robertson or Marc Faber or Peter Schiff would reiterate the facts I just presented.   Because currently EVERYONE who is using the commonly cited comparison metrics is using fraudulent numbers.

 

 

1. credit card or revolving credit

2, non revolving credit e.g. auto loans and student loans.

credit card credit has crashed as the consumer is maxed out but the car loans and student loans courtesy of Uncle Sam rises exponentially.

Also loans from the commercial banks freezes to nothing..

Revolving Debt Crashes Most In Four Years, As Student, Car Loans Go Exponential; Bank Lending Freezes

There was only bad news in the just released Fed consumer credit report for the month of February.

First, the “good credit”, the one that consumer should load up on when they feel comfortable about the future, i.e., credit card, or revolving debt, continued its recent plunge, and in February crashed by $3.7 billion, following January’s $1 billion plunge. This was the worst month for revolving credit since December 2010 and explains perfectly why the consumer has literally gone into hibernation – it has nothing to do with the weather, and everything to do with the unwillingness to “charge” purchases, which in turn is a clear glimpse into how the US consumer sees their financial and economic future.

This plunge, however, was more than offset by a surge in “bad” credit, the type that even Obama wants to do away with, namely non-revolving credit, mostly student and to a lesser extent auto credit. In February, this debt funded almost exclusively by the US government, soared by $19.2 billion, the highest monthly notional since July 2011!

Here is the combined big picture:

And while we will never tire of watching just how exponential this non-revolving credit chart has gotten, here it is again, for any non-frequent readers. Truly a thing of beauty.

But all of the above was largely to be expected: it merely accelerated the unsustainable trends we have grown to love and expect from the centrally-planned economy.

What was by far the worst data, however, was when one drills down into the source of credit. It will surprise nobody to learn that for one more month, the source of debt to the US consumer was Uncle Sam himself. However, what is a big, red flag is the complete collapse in depository institutions lending: the $18.8 billion drop in bank lending was a shock to all, follows the $15.2 billion drop last month, and is the single biggest monthly drop since January 2011.

In other words, banks, which had resumed lending for a few months, have slammed the door shut on all new credit issuance, which means one things: instead of lending, the big banks are back to their old tricks to make money: prop trading the S&P and otherwise manipulating markets as only they can do (ref: see the JPM London Whale).

The good news is that we finally have an answer to a question we posed two weeks ago, namely whether the Fed is still fabricating loan creation data, on its H.8 statement.

end

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: