April 10/India imports a massive 125 tonnes of gold in March/no changes in GLD or SLV/GE buying back 50 billion USA stock and getting rid of GE capital/Greece receives another 1.2 billion euros of ELA as depositors continue to remove money from the banking system/

Good evening Ladies and Gentlemen:

 

 

Here are the following closes for gold and silver today:

 

 

Gold:  $1204.60 up $11.00 (comex closing time)

Silver: $16.37 up 20 cents (comex closing time)

 

In the access market 5:15 pm

Gold $1207.80

Silver: $16.49

 

 

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

 

 

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

 

At the gold comex today,  we surprisingly had a poor delivery day, registering nil notices served for 0 oz.  Silver comex filed with  0 notices for nil oz .

 

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 242.40 tonnes for a loss of 61 tonnes over that period. Lately the removals  have been rising!

 

end

 

In silver, the open interest fell by 305 contracts despite the fact that Wednesday’s silver price was down by 28 cents. The total silver OI continues to remain extremely high with today’s reading at 171,410 contracts. The front April month has an OI of 170 contracts for a loss of 15 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 total comex gold OI rests tonight at 390,946 for a loss of only 108 contracts despite the fact that gold was down by a considerable $9.50 on Thursday. We had 0 notices served upon for nil oz.

 

 

Today, we had no changes in gold inventory at the GLD/  Gold Inventory rests at 736.04  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 fall by a tiny 305 contracts despite the big 38 cent fall in price on Thursday.  The OI for gold fell by only 108 down to 390,946 contracts despite  the fact the price of gold fell considerably on Thursday to the tune of $9.50.

(report Harvey/)

2.Greece pays the iMF yesterday.  Today, it was announced that the ECB increased its ELA to Greece by 1.2 billion euros up to 73.2 billion euros.  Greece also released documents referencing the forced loan of Greece to Germany which basically bankrupted the nation. There was widespread famine due to the fact that food was hoarded away from the Greeks.  It lead to over 300,000 deaths

(courtesy Reuters/Zero hedge)

3.  Negative interest rates are good for gold.

(Mark O’Byrne)

4. GE is buying back 50 billion USA dollars worth of stock and also getting rid of GE capital, its former engine for growth.

5. Gold gets a huge boost today from India which reported a massive 125 tonnes of imports of gold into its country in March.

(courtesy GATA/Reuters)

6. COT report  which shows in gold that the bankers have dug in again.

In silver, they are having their problems

(Harvey)

 

we have these and other stories for you tonight

 

 

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

Here are today’s comex results:

 

The total gold comex open interest fell by 108 contracts from 391,054 down to 390,946 despite the fact that gold was down by $9.50 on Thursday (at the comex close).  We are now in the active delivery month of April and here the OI fell by 269 contracts down to 2,462. We had 10 contracts filed upon on Thursday so we lost another 269 contracts or 26,900 oz will not stand for delivery in April. The next non active delivery month is May and here the OI rose by 36 contracts up to 457.  The next big active delivery contract month is June and here the OI fell by 246 contracts down to 263,692. 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 76,545  (Where on earth are the high frequency boys?). The confirmed volume on Thursday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 116,229 contracts. Today we had 0 notices filed for 0 oz.

And now for the wild silver comex results.  Silver OI fell by a tiny 305 contracts from 171,715 down to 171,410  despite the fact that silver was down by 28 cents, with respect to Thursday’s trading . We are now in the non active delivery month of April and here the OI fell to 170 for a loss of 15 contracts.  We had 114 notices filed yesterday so we gained a huge 99 contracts or an additional 495,000 silver ounces will stand in this delivery month of April. The next big active delivery month is May and here the OI fell by 3,759 contracts down to 84,914 . The estimated volume today was poor at 26,056 contracts  (just comex sales during regular business hours. The confirmed volume yesterday  (regular plus access market) came in at 62,275 contracts which is excellent in volume. We had 0 notices filed for nil oz today.

 

 

April initial standings

April 10.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz  nil
Withdrawals from Customer Inventory in oz 56,172.741 oz (Scotia)
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz nil
No of oz served (contracts) today 0 contracts (nil oz)
No of oz to be served (notices)   2462 contracts(246,200) oz
Total monthly oz gold served (contracts) so far this month 686 contracts(68,600 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   oz

Total accumulative withdrawal of gold from the Customer inventory this month

  219,944.8 oz

Today, we had 0 dealer transaction

total Dealer withdrawals: nil oz

 

 

we had 0 dealer deposits

 

total dealer deposit: nil oz

 

we had 1 customer withdrawal

 

i) Out of Scotia:  56,172.741 oz

total customer withdrawal: 56,172.741 oz

 

we had 0 customer deposit:

 

total customer deposit: nil oz

 

We had 1 adjustment

Out of the Scotia vault:

64,654.979 oz leaves the dealer vault and heads to the customer vault of Scotia.

Today, 0 notices was issued from JPMorgan dealer account and 10 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account

To calculate the total number of gold ounces standing for the March contract month, we take the total number of notices filed so far for the month (686) x 100 oz  or  68,600 oz , to which we add the difference between the open interest for the front month of April (2462) and the number of notices served upon today (0) x 100 oz equals the number of ounces standing.

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

No of notices served so far (686) x 100 oz  or ounces + {OI for the front month (2462) – the number of  notices served upon today (0) x 100 oz which equals 314,800 oz or 9.79 tonnes of gold.

 

we lost 259 contracts or 25,900 oz of gold that will not stand for delivery in April

 

 

 

 

Total dealer inventory: 567,333.085 or 17.646 tonnes

Total gold inventory (dealer and customer) = 7,793,472.603  oz. (242.40) tonnes)

 

Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 61 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 10 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 2,198,179.88 oz (CNT,HSBC)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory 893,037.576 (JPM)
No of oz served (contracts) 0 contracts  (nil oz)
No of oz to be served (notices) 170 contracts(850,000 oz)
Total monthly oz silver served (contracts) 315 contracts (1,575,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  548,169.5 oz
Total accumulative withdrawal  of silver from the Customer inventory this month  6,730,092.6oz

Today, we had 0 deposits

Today, we had 0 deposits into the dealer account:

 

total dealer deposit: nil   oz

 

we had 0 dealer withdrawals:

 

total dealer withdrawal: nil oz

 

We had 1 customer deposits:

i) Into JPM<:  893,037.576 oz

 

total customer deposits:  893,037.576  oz

*this is the third day in a row that we had a huge deposit  silver arrive at JPMorgan customer side.

 

We had 2 customer withdrawals:

 

 

ii) Out of HSBC:  1,008,763.408 oz

iii) Out of CNT: 1,189,416.08 oz

 

total withdrawals;  2,198,179.88 oz

 

we had 0 adjustments:

 

 

Total dealer inventory: 63.235 million oz

Total of all silver inventory (dealer and customer) 175.068 million oz

.

The total number of notices filed today is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in April, we take the total number of notices filed for the month so far at (315) x 5,000 oz    = 1,575,000 oz to which we add the difference between the open interest for the front month of April (170) 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:

315 (notices served so far) + { OI for front month of April(170) -number of notices served upon today (0} x 5000 oz =  2,425,000 oz standing for the April contract month.

we gained a huge 495,000 additional silver ounces standing 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 10/we had no change in inventory at the GLD/Inventory at 736.04 tonnes

April 9.2015 we have a huge addition of 2.98 tonnes of gold inventory/GLD inventory tonight stands at 736.04 tonnes

April 8.2015:no changes in the GLD/Inventory 733.06 tonnes

 

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

 

April 10/2015 /  we had no changes in  gold  inventory at the GLD/Inventory stands at 736.04 tonnes

The registered vaults at the GLD will eventually become a crime scene as real physical gold departs for eastern shores leaving behind paper obligations to the remaining shareholders. There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat (same banks).

GLD : 736.04 tonnes.

 

end

 

And now for silver (SLV):

April 10/ no changes in silver inventory at the SLV/Inventory rests at 321.839 million oz

April 9/2015 no changes in inventory at the SLV/Inventory rests at 321.839 million oz/

April 8.2015: no changes in inventory at the SLV/Inventory rests tonight at 321.839 million oz

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

 

 

April 10/2015 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  7.9% percent to NAV in usa funds and Negative 7.9% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.4%

Percentage of fund in silver:38.2%

cash .4%

( April 10/2015)

Sprott data: will update later tonight

 

Sprott gold fund finally rising in NAV

2. Sprott silver fund (PSLV): Premium to NAV falls to + 1.30%!!!!! NAV (April 10/2015)

3. Sprott gold fund (PHYS): premium to NAV falls -.30% to NAV(April 10/2015

Note: Sprott silver trust back  into positive territory at +1.44%.

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

Central fund of Canada’s is still in jail.

 

 

end

 

At 3:30 pm we received the COT report

Let’s head over to the gold COT:

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
183,130 82,373 39,159 133,199 241,488 355,488 363,020
Change from Prior Reporting Period
10,312 -10,426 1,587 -10,998 16,176 901 7,337
Traders
148 81 72 49 50 229 176
 
Small Speculators  
Long Short Open Interest  
35,083 27,551 390,571  
2,085 -4,351 2,986  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, April 07, 2015

the report:

wow!!!

Our large specs:

Those large specs that have been long in gold saw the light and added 10,312 contracts to their long side.

Those large specs that have been short in gold also saw the light and covered a huge 10,426 contracts from their short side.

 

Our commercials  (get a load of this)_

 

Those commercials that have been long in gold pitched a huge 10,998 contracts from their long side.

Those commercials that have been short in gold added a monstrous 16,172 contracts to their short side.

 

Our small specs;

Those small specs that have been long in gold added 2085 contracts to their long side.

Those small specs that have been short in gold covered a whopping 4351 contracts from their short side.

Conclusions:

If the commercials are wrong in their conviction the game will be over.

and now for our silver COT:

 

 

Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
63,241 21,160 21,733 64,592 115,030
-2,185 -1,154 -235 1,367 1,944
Traders
84 38 45 38 50
Small Speculators Open Interest Total
Long Short 169,700 Long Short
20,134 11,777 149,566 157,923
648 -960 -405 -1,053 555
non reportable positions Positions as of: 143 119
Tuesday, April 07, 2015   © SilverSeek.com

Looks like our bankers are having trouble covering their shortfall

 

Our large specs:

 

Those large specs that have been long in silver pitched 2185 contracts from their long side.

Those large specs that have been short in silver covered 1154 contracts from their short side.

Our commercials;

 

Those commercials that have been long in silver ADDED 1367 contracts to their long side.

Those commercials that have been short in silver added another 1944 contracts to their short side.

 

Our small specs;

 

Those small specs that have been long in silver added 648 contracts to their long side.

Those small specs that have been short in silver covered 960 contracts to their short side.

 

end

 

 

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

 

Gold and silver trading early this morning

 

(courtesy Goldcore/Mark O’Byrne)

Positives For Gold – Negative and Rising Interest Rates

Negative Interest Rates and Rising Interest Rates Positive For Gold
– HSBC suggests negative rates may drive customers out of digital and into holding paper cash
– ZIRP and NIRP very positive for gold
– Rising U.S. rates not negative for gold due to emergence of China, India, Middle East and EMs
– When rates do rise will be positive for gold
– Costly in terms of wealth preservation and returns not to have an allocation to gold
Gold “going higher” and “a big buy here”
– Gold up 3.1% in euros and 2.2% in pounds this week

One of the persistent arguments against owning gold by many financial advisers and brokers is that it “does nothing” and it incurs storage costs. Unlike cash, which earns interest, gold is a non yielding asset. The second is that gold will perform badly when interest rates rise. Both arguments are demonstrably misguided.

goldcore_chart1_10-04-15

In today’s world of ZIRP and NIRP – zero percent interest rate policies and negative interest rate policies – and actual negative interest rates in a growing number of countries internationally – the old rationale that favours holding cash over gold is increasingly defunct.

Base rates in the industrialised nations have been near zero since the financial crisis of 2008. Frequently throughout this period the rate of inflation has been higher than this implying a loss in spending power over time for each unit or currency.

This factor, coupled with the many risks which were left unresolved or have been exacerbated in the wake of the last financial crisis – which we consistently cover here – provides a strong incentive to hold gold in favour of cash.

These risks include
– massive unpayable debt leading to currency debasement and a likely international monetary crisis
– increasing geopolitical tensions between NATO nations and Russia and in the Middle East
– risks of cyber terrorism and cyber warfare to the massive, unwieldy digital banking and financial system
– risk of confiscation of bank deposits in event of bank failures – the developing bail-in regime

In the past few months the central banks of Sweden, Denmark and Switzerland have entered into the uncharted waters of negative interest rates.

Interest rates look set to go lower in the short term, prior to going higher in the long term.

An interesting research note from HSBC this week suggests that QE would have little impact on these smaller, open economies to spur inflation and – in the case of Switzerland and Denmark – direct intervention into FX markets have led to further difficulties.

It was in this context that Sweden’s Riksbank pushed the repo rate into negative territory. HSBC suggest that the Riksbank experiment will “act as a barometer for central banks around the world trying to tackle low inflation or deflation.”

If and when QE in the major currency blocks fails to achieve its stated objectives it is not unlikely that central banks who – as HSBC points out – must be seen to be doing something, will follow suit even if no demonstrable effects are seen in Sweden et al.

goldcore_chart2_10-04-15

How domestic banks react to negative rates remains to be seen. To date, they have taken no action because the Riksbank has given no indication of how long the policy will be in place.

HSBC points out that if the banks continue to have to absorb the costs, it will impair their ability to lend causing further deflationary pressure. On the other hand, if they pass the costs onto their customers they may decide to pull their cash out of the banks causing a liquidity crisis and bank runs.

Central banks around the world continue to hold and accumulate more gold. Central banks are the largest buyers of gold today which is not surprising given the debt levels in the U.S., UK, Japan and indeed much of the EU today.

This shows that monetary authorities, the entities who actually print and digitally create paper and electronic cash today still regard gold as having a very important function.

It is also important to note that contrary to received wisdom by many market participants today, gold should perform well in a rising interest rate environment.

Gold should increase even if U.S. interest rates rise as rising interest rates will be bearish for the risk assets – equities and bonds. Gold has a proven long term negative correlation with equities and bonds.

This was clearly seen in the 1970s (see chart) when interest rates and gold rose very sharply during the decade and stocks and bonds has a torrid time. Gold becomes vulnerable towards the end of an interest rate tightening cycle as was seen in 1980 when real interest rates are meaningfully positive – nominal interest rates are 2 or 3 per cent above the rate of inflation.

Nominal interest rates more than doubled in the course of the 1970s to over 20%. At the same time, gold prices rose 24 times – from $35 to over $850 per ounce (see chart above and below).

Indeed the period of most aggressive interest rate increases were from 1977 to 1980 when interest rates rose from 4% to over 20% and this corresponded with the period of gold’s greatest gains – from below $200 to over $800 per ounce.

goldcore_chart3_10-04-15

Also of importance is the fact that due to the emergence of China as the world’s leading gold buyer and other emerging markets (India, the Middle East, Turkey etc) now accounting for more than 70% of gold demand yearly, higher U.S. interest rates will have less influence on gold prices than is commonly expected.

Besides the example of the 1970s, another example of gold performing well in terms of rising interest rates is in the period between October 2003 and October 2006, when gold posted a cumulative return of almost 60 per cent when U.S. real interest rates jumped from -1 percent to 3 percent, the report showed.

During periods of rising U.S. interest rates, gold’s relative low volatility also makes it a valuable asset in a properly diversified investment portfolio.

Both stocks and bonds are likely to deliver lower than average returns in the coming years and there is indeed a real risk of material corrections and even crashes in stock and bond markets.

In this increasingly mad monetary world, a world which looks likely to be seen in most western countries, gold will serve its function as a secure store of value and also as a hedge against a currency crisis. ZIRP and NIRP are positives for gold as will be rising interest rates when eventually they come.

Not owning gold in the unprecedented interest rate environment of today is imprudent in the extreme. It will be costly both in terms of returns but also in terms of wealth preservation.

It is not regarded as such now but it would appear to be only a matter of time before the penny drops about the inherent risks of not having an allocation to gold today.

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,201.90, EUR 1,133.49 and GBP 820.58 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,196.00, EUR 1,113.33  and GBP 808.49 per ounce.

For the week, gold is headed for a slightly higher close in dollars and strong gains in euros, pounds and other currencies (see charts).

Gold fell 0.67 percent or $8.10 and closed at $1,195.10 an ounce yesterday, while silver slipped 1.94 percent or $0.32 closing at $16.20 an ounce.

Gold in US Dollars - 5 Days

Gold prices in Singapore reached $1,194.10 an ounce near the end of day trading, after reaching a low yesterday of $1,192.30 per ounce. Gold in London suddenly surged above the key $1,200 level on no breaking news this morning. It was likely a combination of traders going long before the weekend and a short ­covering rally after recent weakness.

Gold regained ground despite a strengthening US dollar. The U.S. dollar is hovering at a three week high against other currencies.

Gold Technical Levels

The metal has an immediate resistance at 1205.78 (5­DMA) and 1210 levels. Meanwhile, support stands at 1195 (20­DMA) levels below which doors could open for 1193.41 (50­DMA) levels.

Gold in Euros - 5 Days

The U.S. Fed minutes released this week were as obtuse and unclear as ever and as usual investors are left scratching their heads as to when U.S. interest rates will be raised for the first time in many years. The economic data from the U.S. economy is so mixed that its still a guessing game.

As we said yesterday, the Fed talks a good hawkish talk but has yet to walk the hawkish walk. The Fed knows that markets and a fragile, debt laden U.S. economy will struggle with even a small rise in interest rates. Hence all the talk and the very little action. As one Twitter correspondent said the Fed cannot “do anything but kabuki and pray the market doesn’t catch wind of no bullets left to fire.”

Gold in British Pounds - 5 Days

The monetary gun is shot and they are out of ammo with little options should we have a new recession or a new financial crisis – both of which seem increasingly likely.

Comex U.S. gold for June delivery remained unchanged at $1,193.90 an ounce. Chinese demand has waned a bit as premiums for physical gold at the Shanghai Gold Exchange were $1-$2 an ounce over the global spot benchmark today.

Gold in late European trading is up 0.64 percent or $1,202.14. Silver is $16.51 or up 1.98 percent and platinum is at $1,166.18 or up 0.95 percent.

Gold is up 3.1 per cent in euro terms this week and 2.2 per cent in sterling terms.

Astute investors continue to dollar, pound and euro cost average into an allocation to gold.

Gartman: Gold Going Higher – CNBC

Gold A Big Buy Here: Trader – CNBC

 

end

 

Your big story of the day:  India imports a whopping 125 tonnes in March.  If this continues they will import over 1500 tonnes per year. The Chinese imports over 2400 tonnes and together these two giants bring in over 3900 tonnes per year.  The world produces ex China ex Russia 2200 tonnes.  I would also like to point out that the Chinese figures exclude sovereign purchases.  (the figures are only for Chinese citizens)

( courtesy GATA)

Gold Jumps After India Reveals Import Surge

Gold prices jumped overnight on initial rumors and again in the last hour as Indian officials note that March Gold imports surged to 125 tons (more than double last March’s 60 tons). As Reuters reports, Gold imports in the fiscal year 2014/15 ended March 31 jumped to 900 tonnes, up 36% from a year ago.

Gold prices jumped as the news broke overnight… (and BBG headlines hit this morning)

BullionStar’s Koos Jansen had recently noted the lifting of ‘capital controls’ on Gold and despite the increasing efforts of the government to enable ‘monetization’ of gold…

Because of a “current account deficit” the Indian government decided in March 2012 to raise to import duty on gold from 2 % to 4 %, in June 2013 from 4 % to 8% and in August 2013 from 8 % to 10 %. Additionally, in August 2013 the 80/20 rule was implemented, which was eventually withdrawn in December 2014.

The restrictions the Indian Government implemented on gold trade spawned new life to smuggling cartels with all due consequences. Official Import fell drastically, wiping out any revenues the government collected from the import of the yellow metal. In May 2013 Indian gross gold import accounted for 168 tonnes, by September 2013 a multi year low was reached at 15 tonnes. Premiums in India, over London spot prices, skyrocketed to a staggering 25 %.

Indian gold Premiums march 2015

For a close look at recent import data let’s start with January; India officially gross imported a meager 39 tonnes, though up 9 % year on year. In February gross import accounted for 50 tonnes, up 57 % y/y. Then, the real surprise came this month; as said previously preliminary data (derived from daily numbers at Infodrive) suggests gross import accounts for 130 tonnes (March 2 – 21). When India’s Directorate General of Commercial Intelligence & Statistics will publish official data somewhere around April 13, we know the exact imported tonnage for March.

India Gold trade 3-2015

Perhaps surging import is caused by a falling price since the beginning of the year combined with the relaxation of import restrictions. Remarkably, premiums are staying close to 12 % (including the 10 % import duty), sourcing the metal is no problem.

Indian Gold and Silver prices

From daily trade data we can see a lot of gold from Ghana going directly to India. Could it be there is some conflict gold coming from Ghana?

Screen Shot 2015-03-24 at 2.33.56 PM

Monetizing Gold

A new scheme the India government is looking at to obstruct gold import is through monetizing gold, comparable to the Turkish system (read this post for the Turkish Reserve Option Mechanism). The World Gold Council’s managing director in India, Somasundaram PR, stated:

Will they allow banks to hold a part of their reserves in gold because of this deposit monetization? It is one of the recommendations. You need to give huge incentives to the banks to operate this deposit monetization.

In short, the Indian people would be able to make a gold deposit at a commercial bank, which technically is always a loan to the bank. Subsequently this bank can use the gold to meet its reserve requirements at the central bank – in this case the Reserve Bank Of India (RBI). The deposits would accrue interest (in Turkey denominated in gold), however, like every bank deposit, the gold can vanish if the bank becomes insolvent. The universal rule is; no risk, no return.

Furthermore, if the gold deposit scheme will be implemented, to the likes of the World Gold Council, I wonder how the RBI will treat the gold held as reserve requirement. The Turkish central bank (CBRT) counts these reserves as official gold reserves, which is double counting.

Turkish Official Gold Reserves

Increases in Turkish official gold reserves are not caused by CBRT purchases on the open market, but a reflection of the amount of gold held as reserve requirement by banks at the CBRT.

The World Gold Council has released two reports on gold monetization, (i) Why India Needs A Gold Policy, (ii) Turkey: gold in action. Both reports combined count nearly 90 pages, but not once are the risks of lending gold to a bank disclosed. Whereas most people own gold to explicitly avoid these banking risks.

Another plan from the Indian Government to prevent the circulation of “black money” is to require people doing gold purchases above 100,000 rupees, to show a so-called permanent account number (PAN), which is used to prevent tax evasion. This would be disastrous for the Indian jewelry industry as 80 % of the industry’s business comes from rural customers, who don’t have a PAN. Hence, Indian jewelers have threatened to go on strike against this plan.

*  *  *

For now, the demand is clearly there… despite it being a barbarous relic of only traditional value…

 

end

 

You will find this interesting.

(courtesy GATA/Reuters)

\

India’s rich temples may open gold vaults for Prime Minister Modi

Section:

By Meenakshi Sharma and Krishna N. Das
Reuters
Thursday, April 9, 2015

The two-century-old Shree Siddhivinayak temple in Mumbai devoted to the Hindu elephant-headed god Ganesha bristles with closed-circuit cameras and is guarded by 65 security officers.

It is one of India’s richest temples, having amassed 158 kilograms of gold offerings, worth some $67 million, and its heavily guarded vaults are strictly off limits.

India is the world’s biggest consumer of gold and its ancient temples have collected billions of dollars in jewelry, bars and coins over the centuries — all hidden securely in vaults, some ancient and some modern.

A few years ago a treasure of gold worth an estimated $20 billion was discovered in secret subterranean vaults in the Sree Padmanabha Swamy temple in Kerala state.

Now Prime Minister Narendra Modi wants to get his hands on this temple gold, estimated at about 3,000 tonnes, more than two thirds of the gold held in the U.S bullion depository at Fort Knox, Kentucky, to help tackle India’s chronic trade imbalance. Modi’s government is planning to launch a scheme in May that would encourage temples to deposit their gold with banks in return for interest payments.

The government would melt the gold and loan it to jewelers to meet an insatiable appetite for gold and reduce economically-crippling gold imports, which accounted for 28 percent of India’s trade deficit in the year ending March 2013.

India’s annual gold imports of 800 to 1,000 tonnes could be cut by a quarter if temples decided to participate in the scheme, say government and industry sources.

… For the remainder of the report:

http://www.reuters.com/article/2015/04/09/us-india-gold-temples-idUSKBN0…

 

end

 

(courtesy GATA/Tocqueville gold letter)

Tocqueville’s strategy letter: Gold is as contrarian as it was in 1999

Section:

8:30a ET Friday, April 10, 2015

Dear Friend of GATA and Gold:

Gold is again as out of favor as it was in 1999 when its bear market reversed into a bull market, Tocqueville Asset Management’s John Hathaway writes in the firm’s first-quarter gold strategy letter. Hathaway argues that gold looks like a good hedge against overvalued financial markets and a collapse in confidence in central banking. But while his report acknowledges “financial repression” by central banks in regard to interest rates, it does not acknowledge more “financial repression” in regard to gold, even as interest rates can’t be suppressed by market intervention without similar suppression of gold prices. That would leave gold investors waiting, as ever, for fundamentals to assert themselves. They probably shouldn’t hold their breath for that. Hathaway’s report is posted at the Tocqueville Internet site here:

http://tocqueville.com/insights/tocqueville-gold-strategy-investor-lette…

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

end

 

I would never believe this:

(courtesy Business Insider)

 

The $20,000 gold Apple Watch Edition sold out in China in less than an hour

The Apple Watch Edition.

The Apple Watch Edition has already sold out in China — and it took less than an hour for the most luxurious gold version of the device, which reportedly costs ¥126,800 ($US20,000) to get completely snapped up.

Today, Apple put the Apple Watch Sport, Apple Watch, and Edition up for pre-order in the US, UK, Australia, Canada, France, Germany, Hong Kong, Japan, and China. Customers can now try on and buy the watches, but the company sayspeople won’t get them until weeks later in the UK — elsewhere, it could be longer. Relatively few will actually walk out of shops wearing their new accessory.

Just hours into sales in China, there’s zero chance of grabbing an Apple Watch Edition, the most exclusive version. Author Ben Thompson tweeted that he’s checked every store there and at every one the device is listed as out of stock. The tweet was first spotted by Cult of Mac. Many people who lined up thousands to spend on the product, at least for now, will be bitterly disappointed.

As Cult of Mac points out, sales are expected to be big in the world’s most populous country, which is known for its love of gadgetry and luxury items. But it appears, despite mixed reviews, that every country where the Apple Watch is available will be quick to snap the gadgets up. In the US,shipping times were pushed back from the original April 24 availability date to 4-6 weeks within the first 10 minutes.

Two reporters from Business Insider UK have appointments for Watch purchases this morning, so stay tuned on this page for updates.

 

end

 

Early Friday morning trading from Europe/Asia

 

1. Stocks higher on major Chinese bourses as bubblemania is the name of the game in Shanghai and Hong Kong  /Japan lower /yen rises to 120.36

1b Chinese yuan vs USA dollar/yuan  weakens to 6.2088

2 Nikkei down by 30.09  or 0.15%

3. Europe stocks all in the green/USA dollar index up to 99.56/Euro falls to 1.0586

3b Japan 10 year bond yield .34% (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 120.36/

3c Nikkei still  above 19,000

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

3e WTI  50.59  Brent 56.77

3f Gold up/Yen up

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

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt.  Fifty percent of Japanese budget financed with debt.

3h  Oil up  for 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 20.46%/Greek stocks up by 1.06% today/ still expect continual bank runs on Greek banks.

3j  Greek 10 year bond yield:  11.25% (par in basis point in yield)

3k Gold at 1204 dollars/silver $16.55

3l USA vs Russian rouble;  (Russian rouble up 1/2  rouble/dollar in value) 51.50 , despite the lower brent oil price/the rouble is the best acting currency this year!!

3m oil into the 50 dollar handle for WTI and 56 handle for Brent/Saudi Arabia increases production to drive out competition.

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  The ECB increased the ELA to Greece by a large 1.2 billion euros.  The new maximum is 73.2 billion euros.  The ELA is used to replace depositors fleeing the Greek banking system.  The bank runs are increasing exponentially.

Greece repaid the IMF yesterday.  There will be nothing left April 24..

(see article below/zero hedge)

3t Deutsche bank to pay 1.5 billion euro fine for rigging Libor rates. Higher than expected.

4.  USA 10 year treasury bond at 1.95% early this morning. Thirty year rate well below 3% at 2.59%/yield curve flatten/foreshadowing recession.

 

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

 

 

(courtesy zero hedge/Jim Reid Deutsche bank)

 

Asia Superbubble Unstoppable: Hong Kong Up 10% In Past Week; Soaring Dollar Pushes Euro Back Under 1.06

Overnight market news was once again driven by the Asian superbubble, where as expected, the Hang Seng (+1.22%) soared once more and is now up 9.5% for the week, following news the Hong Kong Exchanges and Clearing Ltd (HKEx) expects it will “substantially increase” quotas for the stock connect program between Hong Kong and Shanghai, HKEx Chief Executive Charles Li said on Friday. The exchange could boost the current quotas, which cap how much mainland investors can buy Hong Kong stocks and vice versa under the trading link, by more than 20 or 30 percent, Li said at a media briefing in Hong Kong. Li did not give a precise date for when the quotas would be raised, but one thing is clear: everyone in China, and Hong Kong, must be all in stocks if the Chinese housing bubble can not be reflated. The Shanghai Comp closed higher by almost 2.0% following better than expected Chinese inflation data, while HK stocks continued their recent rally to closer higher by 9.5% for the week.

Hong Kong Volume turnover on the Index was ~120% above the 30-day average with Shanghai – Hong Kong stocks premium falling to around 24% vs. 35% last month. Shanghai Comp (+1.95%) broke back above 4,000 lifted by Chinese PPI and CPI data. Despite remaining in negative territory, PPI halted its 36 consecutive Y/Y declines (-4.6% vs. Exp. -4.8%, Prev. -4.8%), while CPI was unchanged vs. last month’s 3-month high (Y/Y 1.4% vs. Exp. 1.3%, Prev. 1.4%). To some this was evidence the PBOC will stop leaking stories of more imminent easing. To others this was merely confirmation that China’s deflation isn’t going anywhere and it is the PBOC’s sworn duty to make the China stock bubble even greater.

In Europe, it was more of the same, with bond yields continuing to slide across the board, while equities trade higher in a continuation of the trend seen yesterday in the US while European newsflow is otherwise relatively quiet. On a sector specific basis, pharma names outperform, led by Shire after a positive drug update, while UK homebuilders were also lifted by a slew of positive broker moves by Jefferies. In fixed income markets, Bunds have been edged higher in early trade with some attributing the move to the ECB buying in the secondary market in a similar vein to the first half of yesterday’s session which saw June’15 Bunds print a contract high. In contrast, Gilts are underperforming as they pare yesterday’s gains and with demand from foreign investors said to be dampened by election concerns, as noted by the Telegraph’s Ambrose Evans-Pritchard.

In the US, S&P futures are doing their now daily thing, flatlining before bursting higher some time before the open on yet another HFT stop hunt. The only question is when. Everyone is already positioned appropriately to capture the surge with ES calls.

In FX markets, once again the USD is providing a bulk of the action with the USD-index once again trading higher. More specifically, today has seen a continuation of the recent trend with gains supported by EUR weakness inspired by lingering concerns over Greece’s liquidity issues, which has subsequently seen EUR/USD drift towards the 1.0600 level. Some analysts are also attributing USD strength to Wednesday’s FOMC minutes which still left the possibility of a June hike on the cards. Furthermore, GBP continues to be weighed on by political uncertainty amid the prospect of a hung UK parliament.

In the commodity complex, WTI and Brent crude futures saw a relatively tentative start to the session before both products were eventually weighed on by the aforementioned USD strength amid a lack of pertinent energy-related commentary. In precious metals markets, both spot gold and silver spiked to fresh session highs amid no fundamental news, while from a technical perspective, gold broke back above the USD 1,200 level. Elsewhere, Chinese iron ore futures tumbled around 4% overnight to touch a fresh record low, which looks set to print a fourth consecutive weekly decline as sentiment in China’s steel sector remains weak.

In summary: European shares rise with the health care and financial services sectors outperforming and basic resources, construction underperforming. The Stoxx 600 is heading for its best week since January. The German and Dutch markets are the best-performing larger bourses, Swedish the worst. The euro is weaker against the dollar. Japanese 10yr bond yields fall; U.K. yields increase. Commodities little changed, with WTI crude, Brent crude underperforming and nickel outperforming. U.S. monthly budget statement, import price index, due later.

Market Wrap

  • S&P 500 futures down 0.1% to 2084.4
  • Stoxx 600 up 0.5% to 411.1
  • US 10Yr yield little changed at 1.96%
  • German 10Yr yield little changed at 0.16%
  • MSCI Asia Pacific up 0.3% to 152.3
  • Gold spot up 0.7% to $1202.6/oz
  • Eurostoxx 50 +0.4%, FTSE 100 +0.3%, CAC 40 +0.2%, DAX +1%, IBEX little changed, FTSEMIB +0.2%, SMI +0.5%
  • MSCI Asia Pacific up 0.3% to 152.3; Nikkei 225 down 0.2%, Hang Seng up 1.2%, Kospi up 1.4%, Shanghai Composite up 1.9%, ASX up 0.6%, Sensex up 0%
  • 7 out of 10 sectors rise with energy, financials outperforming and health care, materials underperforming
  • Euro down 0.52% to $1.0604
  • Dollar Index up 0.21% to 99.36
  • Italian 10Yr yield down 3bps to 1.28%
  • Spanish 10Yr yield down 2bps to 1.22%
  • French 10Yr yield down 1bps to 0.44%
  • S&P GSCI Index up 0.1% to 406.6
  • Brent Futures down 0.3% to $56.4/bbl, WTI Futures down 0.8% to $50.4/bbl
  • LME 3m Copper up 0.9% to $6050/MT
  • LME 3m Nickel up 2% to $12770/MT
  • Wheat futures down 0.1% to 517 USd/bu

Bulletin Headline Summary from Bloomberg and RanSquawk

  • European stocks trade higher with the DAX extending on record highs, following on from the positive US and Asia close
  • USD continues to climb higher, weighing on EUR and GBP, with the latter subject to further political uncertainty
  • Looking ahead, today sees the release of the Canadian employment report and potential comments from Fed’s Kocherlakota
  • Treasuries steady, heading for weekly decline after 3Y/10Y/30Y auction cycle, better than forecast jobless claims, $20b investment-grade issuance.
  • Japanese stocks rose for a second week, with the Nikkei 225 Stock Average briefly trading above 20,000 on Friday for the first time in 15 years
  • QE may be helping Europe achieve its economic targets, but it’s also undermining the long-term viability of the euro by tarnishing its allure as a global reserve currency
  • Fed’s Daniel Tarullo is quizzing Wall Street after big lenders and asset managers said clearinghouses pose their own threats, said three people with knowledge of the discussions who weren’t authorized to speak publicly
  • Deutsche Bank is set to pay more than $1.5b in fines as global regulators wrap up a probe into Libor manipulation, according to a person familiar with the matter
  • U.K. industrial production gained 0.1% in Feb., less than forecast, as an increase in manufacturing output was offset by a drop in oil and gas
  • U.S. states have a little more than half the reserves they’d stashed away before the 18-month recession that ended in June 2009, according to a Pew report last month, making them even more vulnerable to another fiscal shock
  • Democratic senators backing a bill that would give Congress  authority to review an Iran nuclear deal are caught between the White House and the pro-Israel lobby as they assert their prerogative to vet foreign policy
  • Iranian Supreme Leader Ayatollah Ali Khamenei refrained from endorsing a framework nuclear deal agreed with world powers and said all sanctions must be lifted once a final accord is reached
  • The State Department has recommended that Obama remove Cuba from the list of state sponsors of terrorism, according to an aide on the Senate Foreign Relations Committee
  • Sovereign bond yields mostly lower. Asian stocks mostly higher. European equities and U.S. equity-index futures gain. Crude oil lower, copper and gold higher

 

DB’s Jim Reid completes the overnight event recap

 

It’s an early start today with the latest Chinese inflation numbers. Despite still being relatively subdued, the numbers are slightly better than expected with the March CPI (+1.4% yoy vs. +1.3% expected) and PPI (-4.6% yoy vs. -4.8% expected). With the inflation number in particular still well below the PBOC target, further stimulus measures appear likely however. Equity markets in China have reacted as such with the Shanghai Comp (+1.40%) and CSI 300 (+1.18%) both higher. The Hang Seng (+0.38%) appears to be taking more of a breather following strong gains in the last two days while the Nikkei is +0.05%. Asian credit markets are around 2bps tighter meanwhile.

European equities had another good day yesterday as the Stoxx 600 recorded a fresh record all-time high. The Stoxx 600 and DAX closed +1.11% and +1.08% respectively and again left the S&P 500 (+0.45%) behind even though there was a late rally in the US due to a bounce in Oil. A lot of people are suggesting that our big trade of the year – namely European over US equities – is becoming consensus. Whilst it’s true it’s more mainstream than it was at the back end of last year it could be that the trade continues to work for an extended period given that QE has only just started in Europe. The speed of the out-performance might depend on the dovish/hawkishness of the Fed though. A dovish Fed may sharply slow down the magnitude of the move.

Back to yesterday’s US session, a late 3% rally in oil markets helped push energy stocks (1.53%) higher yesterday, leading US equities to close more or less at their highs for the day. Both WTI (+0.73%) and Brent (+1.84%) did actually pare back some of those gains post market close though. Comments from Iran President Rouhani saying that the nation will only agree to the nuclear accord if all economic sanctions are lifted from the start, appeared to attract some attention. Iran Supreme Leader Khamenei then appeared to back up the earlier comments from the President, saying that ‘all sanctions should be removed when the deal is signed’. A State Department spokesman for the US had earlier noted that sanctions would be suspended in a phased manner once they had verifications that Iran had met specific commitments. With geopolitical risk clearly still at play, Reuters is reporting that negotiators from Iran, the US, Germany, France and the UK will resume talks in a bid for a final deal in the coming days.

The weakness in US Treasuries this week continued overnight as 5y (+5.1bps), 10y (+5.5bps) and 30y (+6.9bps) yields all widened. The 10y yield is in fact now 12bps off the lows post payrolls last Friday. A weak 30y US auction appeared to contribute to some of the weakness in the bond space with the bid-to-cover ratio of 2.18 well down on the 2.46 average over the past ten sales. The Dollar continued its strong week however with the DXY closing +1.24%. Data offered little in the way of surprises as initial jobless claims printed at 281k (vs. 283k expected) – taking the four-week moving average to 282k and the lowest since June 2000. Elsewhere, wholesale inventories for February were a touch above market at +0.3% mom (vs. +0.2% expected).

News that Greece repaid its €450m IMF loan – as largely expected since the weekend – helped support the better tone in European markets. Headlines that the ELA cap for Greek banks was once again raised as well as comments from finance minister Varoufakis saying that the government is looking at restarting the privatization process of public assets also probably helped. Interestingly, Greek press Ekathimerini is reporting that during the Euro Working Group meeting on Wednesday, technical staff gave Greece a six working days deadline to present its reform proposals while the Greek side continues to suggest that the government expects to run out of cash by April 24th. The ECB Governing Council meeting next Wednesday should attract attention with time now ticking down.

Bond markets were a bit more mixed in Europe as peripheral yields softened while 10y Bunds (-0.3bps) extended its record lows to 0.157%. With the Dollar extending its gains meanwhile, the Euro continued to weaken (-1.13%) taking the currency to $1.066. Elsewhere, Gilts were little moved as the BoE – as expected – kept the benchmark interest on hold at 0.5%. Despite data being on the more positive side, subdued inflation in the near term will likely keep the BoE on hold for now. With one eye also on the upcoming election, the FT is reporting that the latest opinion polls are showing Labour edging slighting ahead of the Conservatives, although the numbers read for a close call with no majority likely. The report shows the Populus/Hanover election outcome (which uses the latest polling data) as Labour edging ahead with 278 seats and the Conservatives falling to 270 seats.

Wrapping up yesterday’s data, German industrial production showed a small +0.2% mom gain in February (vs. +0.1% expected) however the strong January +0.6% result was revised down to -0.4%. Finally business sentiment in France ticked up one point in March to 97 (below consensus of 98).

In terms of the day ahead, focus in Europe this morning will be on the industrial and manufacturing production readings out of France, UK and Spain in particular. It’s fairly quiet in the US this afternoon meanwhile with the import price index and the monthly budget statement the highlights. The Fed’s Lacker and Kocherlakota are also due to speak.

 

end

 

The ECB increases Greece’ ELA by 1.2 billion euros up to 73.2 billion euros as the more citizens remove euros from the Greek banking system and sending this money out of the country.

(courtesy Reuters)

 

 

ECB Boosts Greece’s ELA Amount By 1.2 Billion Euros

The European Central Bank increased the emergency liquidity assistance (ELA) amount, concerning how much Greek banks can withdraw from the nation’s central bank.

The amount was raised to 1.2 billion euros, according to an unnamed source to Reuters today. The individual stated, “Greece got the increase it had asked for,” who wished to remain anonymous.

The ELA monetary boost now stands at 73.2 billion euros. The ECB increased the cap on an incremental basis, so that Athens will be pressured to come to an agreement with the nation’s global creditors.

(Source: Reuters)

 

end

 

This is not going away:

(courtesy zero hedge)

 

Greece Releases Graphic Footage From Nazi Occupation, Ups WWII Reparations Pressure

Having demanded EUR 278.7 billion from Germany for WWII reparations, which was quickly eschewed by Germany, Greece has decided to up the ante. As KeepTalkingGreece reports, Greek Defense Ministry has published a video with rare footage from the occupation of Greece by the Nazis during the World War II. Among others, the footage shows children suffering from malnutrition and emaciated adults, victims of the Great Famine during the Nazi occupation. The video is designed to provide context for the huge claim and the video voice-over states that the Enforced Loan by the Nazis was to blame for the mass starvation of estimated 300,000 people in Athens alone.

As KeepTalkingGreece reports, the video states:

“The agreement of 14. March 1942 foresaw that Greece paid to its occupiers 1.5 billion drachmas per month, a total of 3.5 billion USD, according to the Dollar value of 1938. The current value of the enforced loan is 54 billion euro without the interest. The agreement had to be implemented retrospectively as of 1.1. 1942.

The agreement was signed by Germany and Italy and Greece was notified later.

Two agreement modifications were added on 2. December 1942, with the effect that Germany had to start repaying the loan by April 1943.

Germany paid back two installments only.

In the Peace Paris Treaties (1947) Greece claimed 14 billion USD in war reparations, but the allies reduced the Greek claim down to 7.1 billion USD.”

Video: from the Archive of the Greek War Museum(Deputy Defense Minister Kostas Isychos had recently announced that ministry was in possession of the s-called Wehrmacht- Archive, an archive of 400,000 records of the German occupation,  was currently in the process of digitization. therefore, I am not sure if the filmed material is from the Wehrmacht Archive.)

According to the video “Greece lost 13% of its population during the WWII. One part was lost in the battlefield, but the largest part due to Famine and the Nazis’ atrocities.”

Nazis Greece Famine1

The Great Famine, the period of mass starvation during the occupation of Greece by the powers of Axis – the fascist Italy and the Nazi Germany – hit especially the urban areas and some islands. The Great Famine was initiated by a large scale plunder by the Axis forces and as soon as the German army entered Athens 0n 27. April 1941. The Nazis confiscated fuel and all means of transportation, including fishing boats, preventing any transfer of food and other supplies and seized strategic industries. They proceeded with the wholesale and food looting , unemployment and hyperinflation skyrocketed, the black market flourished. The price of bread was increased 89-fold from April 1941 to June 1942.

Nazis Greece Famine

During the winter of 1941-1942, the food supplies system had collapsed, the famine was in its peak and mortality exploded.

According to the records of the German army the mortality rate only in Athens reached 300 deaths per day during December 1941, while the estimates of the Red Cross were much higher, at 400 deaths while in some days the death toll reached 1,000.

Next to Famine, the atrocities committees by the Nazi occupiers against the locals ended up in the “murdering of residents in 89 cities and villages, they burned down more than 1,700 villages and killed many of their residents,” so the Defense Ministry video.

The Defense Ministry concludes its narration noting that “Italy paid its share in WWII reparations but Germany did not.”

Last year, Greece concluded a large scale investigation about its claim on WWII reparations to be paid by Germany. The new Greek government made the issue one of its top priorities. Deputy Finance Minister Dimitris Mardas declared the Greek claim was 278.7 billion euro.

Germany vehemently rejects the Greek claims even thought without legally convincing arguments.

Greece is expected to bring up the issue again and again with whatever tools it has in its hands. Until it decides to solve the issue in the courts.

*  *  *

For the Germans, it appears this topic is not going away anytime soon

 

end

Simon Black comments on two unbelievable financial transactions this week:

1. Switzerland introducing a 10 year bond issue with a negative yield.

2. Mexico issuing a 100 year bond denominating in Euros.

Who in the right mind would buy these?

(courtesy Simon Black/Sovereign Man)

 

When You Think The Financial World Can’t Get Any Crazier… This Happens

Submitted by Simon Black of Sovereign Man

When you think the financial world can’t get any crazier… this happens

The world has truly gone mad.

We’ve become accustomed somewhat in the last several years to historical anomalies such as zero percent interest rates, Quantitative Easing, competitive currency devaluation, etc. by governments and central banks the world over.

It’s almost become the new norm.

But then there’s always something that happens that shocks us all over again.

And just like with any other addiction, the infusion of ridiculous and unsustainable policies has to be that much more potent to have any effect.

Two such developments have just taken place in the financial world.

First, Switzerland became the first to issue 10-year government bonds with a negative yield.

Let that sink in for a moment.

Especially in the last year we’ve seen governments issue short-term debt with negative interest rates. But now the Swiss government is the first that will actually profit from its long-term 10-year debt.

It’s insane.

Just like in a bad infomercial—“But wait, there’s more!”

The government of Mexico just sold 100-year bonds denominated in EUROS. Also the first ever of its kind.

A few years ago, Mexico sold its first 100-year bond—that one was denominated in US dollars. Later, they sold another century-bond in British pounds.

You can just imagine the figures at the Mexican central bank’s meeting going: “Well, that went great. I wouldn’t have believed we could ever get away with that… Hey, what if we tried to do it in euros next time, haha?”

So they did. They took advantage of the European Central Bank’s unprecedented stimulus and issued a 100-year bond in a currency that most likely won’t even be around in the next decade.

Who’s dumb enough to buy this stuff—10-year debt at negative yields and 100-year debt in a doomed currency?

Institutional investors, of course—large pension funds and the like. You might look at news like that and think, well, that’s crazy, I’d never do that. But the fact is, it’s being done with YOUR MONEY.

Just like Winston Churchill commented that it’s false to characterize the fighting at places like the Somme, Verdun etc. in WWI as battles, when they were actually more like prolonged sieges, what’s happening in the financial world today is similar.

Currency wars is a term that’s been used frequently in recent years to describe what the world’s central banks and governments are doing.

In fact, this isn’t a currency war at all—it’s much more like a currency siege.

And when you think it can’t get any worse, it does.

Just like in WWI when nobody expected the amount of destruction and misery that happened. Heavy artillery barrages. U-boats. Tanks. Poison gas… It just kept getting worse and worse.

The financial world today is the same. Billion dollar stimulus packages. Quantitative Easing 1, 2, 3… Negative interest rates. Negative long-term debt yields. Cash withdrawal and transaction controls. Higher taxes. Capital controls…

It doesn’t stop. And it’s even getting worse.

Who are the losers now? Just like in WWI, they’re the guys in the trenches. They’re not the politicians making these decisions—the losers are the rest of us.

This isn’t a siege of one nation against the other. The siege is against us.

 

end

This is truly unbelievable:  we have a siege within a siege and  it is difficult to tell whose side everybody is on:

 

(courtesy zero hedge)

ISIS Is Just Miles Away From Assad’s Presidential Palace In Damascus

Don’t look now but ISIS fighters are just a few short miles away from Bashar al-Assad’s Presidential Palace in Syria after taking control of the Yarmouk refugee camp in Damascus where some 18,000 are trapped in what the UN calls a “beyond inhumane” situation. The camp, which has been under siege by the Assad regime for years came under attack by ISIS earlier this month who reports indicate may be working alongside al-Qaeda’s Syrian arm al-Nusra in what would be a break with recent precedent. Some Palestinian factions — who, alongside the Free Syria Army are battling ISIS for control of the camp — have reportedly agreed to acquiesce to an operation by the Assad regime which has offered to provide arms to the Palestinians if it means helping them expel ISIS from the area, although, as the BBC reports, the main Palestinian militia fighting ISIS, Aknaf Beit al-Maqdis (who pledge allegiance to Hamas and are also battling al-Nusra in Yarmouk) have agreed to no such thing. Meanwhile, the Assad government is allegedly using “indiscriminate” barrel bombing in an effort that’s ostensibly designed to weaken ISIS forces.

So summing that up, ISIS, possibly in conjunction with al-Qaeda, have taken control of a strategic refugee camp in Damascus, which was previously under siege by Assad and previously controlled by Hamas-linked militiamen who are not keen on cooperating with Assad, who is offering to arm the Palestinians while simultaneously bombing everyone. As Al Jazeera notes, this is a “siege within a siege”:

For the last remaining Palestinian residents of Yarmouk outside Damascus, this week’s takeover by the Islamic State in Iraq and the Levant is a “siege within a siege.”

For almost two years, the regime of President Bashar al-Assad has been suffocating rebel-held Yarmouk, a Palestinian refugee settlement turned residential neighborhood just 10 minutes from the heart of Damascus.

Water has been cut off, available only when aid groups sneak it in, and medical supplies and food are scarce. Yarmouk, once known as the capital of the Palestinian diaspora, has shrunk from a prewar population of 180,000 to just 18,000, with about 200 people starving to death since the regime blockade began in 2013, the United Nations says.

The camp’s plight worsened on April 1, when ISIL fighters surged into Yarmouk from their nearby stronghold of Hajr al-Aswad and swiftly overpowered its Palestinian defenders, Aknaf Beit Al-Maqdis, a Hamas-aligned militia. As of Thursday, ISIL had taken over 70 percent of the camp, assisted, sources said, by elements of Jabhat Al-Nusra (the Nusra Front) — Al-Qaeda’s franchise in Syria and, normally, ISIL’s chief rival.

About 2,000 people managed to escape since ISIL infiltrated, but the rest “are now trapped in a siege within a siege,” said Salim Salamah, a Yarmouk native who left in 2012 and now heads the Palestinian League for Human Rights in Syria from Sweden.

Sources on the ground describe a terrifying scene. Farouq al-Rifai, an activist from Yarmouk who said he spoke from an “adjacent neighborhood” but is in contact with many in the camp, said that pitched street battles have broken out and that sniper fire from roofs has killed fighters and civilians alike. The last remaining relief workers in the camp have been forced to flee after several were killed and others were kidnapped by ISIL.

Meanwhile, regime warplanes add to the chaos by dropping barrel bombs “all over the camp — north, south, east and west,” Salamah said. People are running out of food, but “they can’t leave their houses to find it because they don’t know where clashes on the ground will take place.”

Though the situation on the ground is murky, with conflicting reports that Palestinian factions in the camp have conspired with the invasion, the broad consensus is that Yarmouk has fallen casualty to a turf war between ISIL and an array of disjointed rebel factions active in the area. 

BBC has more on the “coalition” between the Assad regime and Yarmouk’s Palestinian factions:

It is unclear whether all Palestinian factions in the camp have agreed to Syrian government intervention.

Anti-government Palestinian militiamen and some Free Syrian Army fighters have been leading the fight against IS.

“The operation will be conducted in cooperation between the Palestinian groups in Syria and the Syrian government through a joint operation centre,” Palestine Liberation Organisation (PLO) official Ahmed Majdalani – who is heading a Palestinian delegation in Damascus – told the BBC.

Who exactly will do what in the operation, and how the plan will work, is far from clear, the BBC’s Jim Muir reports from Beirut.

The Aknaf, the main Palestinian force fighting the militants, was not involved in the agreement – it has been cooperating with Syrian rebels battling both government forces and Islamic State, our correspondent reports.

In the midst of it all, ISIS is doing what ISIS does: executing prisoners and posing Twitter pictures in various places around their newly-captured territory. Here’s The Independent:

Reports emerged yesterday of Isis militants beheading captives after taking over a large proportion of the camp. Mr Abdurrahman said two men were beheaded after the clashes broke out on Wednesday and five others were shot dead by militants.

He said the beheaded men appeared to have been aged between 25 and 35, but he did not know the ages of the other men. These reports could not be independently confirmed.

Needless to say, this represents an absolutely horrific situation for the nearly 20,000 civilians that are trapped in the warzone, stuck between ISIS, al-Qaeda, Hamas, and Assad who are all, in one way or another fighting each other. Perhaps UN Secretary-General Ban Ki-moon put it best when called the camp “the deepest circle of hell.”

*  *  *

The world is also now waking up to the very real possibility that ISIS may move to topple the Assad regime and take control of Damascus, which we imagine would, in short order, be paraded out as the reason why a Syrian invasion has moved from the realm of the “possible,” to the “probable,” to the “necessary” and if there’s anything that would rally public support around such a move it’s the notion that the group which has been portrayed in the media as the greatest threat to human decency since the Third Reich has now gone from controlling a state they made up to an actual state which borders other, Western-friendly actual states in the region. And once the black flag-waving bogeymen (who at that juncture may begin to realize that they were nothing more than an unfortunate side-effect of failed foreign policy and had been shuffled around like pawns on a chessboard only to be promptly removed from the game once they served their purpose) are driven from the capital by some farce of a “coalition,” they’ll be replaced with someone more sensible who will likely be far less Putin-friendly than his predecessor and who will undoubtedly understand the utility of piping Qatari natural gas underneath his country all the way to end customers in Europe and it will be at exactly that point that we will say again that “conspiracy theory” has become “conspiracy fact,” right down to the last detail.

 end
Oil related stories
This 26 billion dollars is just the start.  Wait until more derivatives kick in!
(courtesy zero hedge)

Wall Street’s Biggest Banks May Have To Make Good On $26 Billion In Oil Hedges

 

Selling billions of dollars worth of insurance on things that turn out to, on occasion, exhibit extraordinary volatility can be a dangerous thing — just ask AIG which was sucked dry by collateral calls from a certain vampire squid when the M2M value of the MBS the company so foolishly insured cratered in 2008 and Goldman came banging on the door for its money. And while the value of the price hedges (i.e. insurance contracts) the US banking sector has sold to the country’s now beleaguered shale drillers may not be large enough to present an imminent systemic risk, as Bloomberg notes, “$26 billion is still $26 billion”:

For U.S. shale drillers, the crash in oil prices came with a $26 billion safety net. That’s how much they stand to get paid on insurance they bought to protect themselves against a bear market — as long as prices stay low…

The fair value of hedges held by 57 U.S. companies in the Bloomberg Intelligence North America Independent Explorers and Producers index rose to $26 billion as of Dec. 31, a fivefold increase from the end of September, according to data compiled by Bloomberg.

Though it’s difficult to determine who will ultimately lose money on the trades and how much, a handful of drillers do reveal the names of their counterparties, offering a glimpse of how the risk of falling oil prices moved through the financial system.

More than a dozen energy companies say they buy hedges from their lenders, including JPMorgan, Wells Fargo, Citigroup and Bank of America…

At the end of 2014, JPMorgan had about $671.5 million worth of derivatives exposure to five energy companies,including Pioneer Natural Resources Co., Concho

Resources Inc., PDC Energy Inc. and Antero Resources Corp., according to company records. That’s the amount JPMorgan would have owed if the contracts were settled Dec. 31, not including any offsetting trades the bank made.

It’s a similar story for Wells Fargo, which was on the hook for $460.9 million worth of oil and natural gas derivatives for companies including Carrizo Oil & Gas Inc., Pioneer, Antero, Concho and PDC, according to regulatory filings.

Of course, as Bloomberg goes on to point out, these are the same banks which helped to finance the shale bonanza in the first place and as we recently saw with Standard Chartered, collapsing crude prices can spell trouble if you’re in the commodities loans business.

Those who sold the price hedges now have to make good. At the top of the list are the same Wall Street banks that financed the biggest energy boom in U.S. history, including JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co.

That list is particularly interesting because as the following graphic shows, these banks are the first, second, third, and sixth largest bookrunners for leveraged oil & gas loans over the past three years:

Here’s The Telegraph with more…

A lengthy period of cheap crude is likely to trigger widespread defaults and many oil and gas loans are now changing hands for well below their face value as investors fear they will not get their money back.

Banks will offload many of the loans and hedge their losses, and some will have stricter lending standards for high-yield loans than others.

Losses will also depend on how long the oil price stays low, so it is unclear precisely how exposed the banks are to the energy industry’s woes…

Chirantan Barua, an analyst at Bernstein Research, has estimated that the combined losses of Barclays, RBS, HSBC and Standard Chartered from falling oil prices could amount to $3.4bn.

“Someone is feeling the pain,” said Mr Barua. “When you see [this much] high-yield issuance in a sector that has been levering up across the supply chain, any shocks in the underlying business will have risk ripples across the financial system…”

According to Dealogic’s data, RBS has arranged $14.3bn of leveraged oil and gas loans in the past four years, making it the biggest UK player in the high-yield space.

This compares to $10.5bn for Barclays and $4.7bn for HSBC, but is far less than the biggest Wall Street players. Wells Fargo and JP Morgan have both been bookrunners on almost $100bn since the start of 2011.

…and a bit more color from NY Times:

Two of the banks that may be the hardest hit by lower investment-banking fees are among the biggest. Wells Fargo derived about 15 percent of its investment banking fee revenue last year from the oil and gas industry, while at Citigroup, the business accounted for roughly 12 percent, according to the data provider Dealogic…

And Wall Street firms that financed energy deals may now have trouble offloading some of the debt, as they had originally planned.

Morgan Stanley, for instance, led a group of banks that made $850 million of loans to Vine Oil and Gas, an affiliate of Blackstone, aprivate equity firm. Morgan Stanley is still trying to sell the debt, according to a person briefed on the transaction.

Similarly,Goldman Sachs and UBS led a $220 million loan last year to the private equity firm Apollo Global Management to buy Express Energy Services. Not all the debt has been sold to other investors, according to people briefed on the transaction.

A precipitous drop in oil prices can quickly turn loans that once seemed safe and conservatively underwritten into risky assets.

The collateral underpinning many energy loans, for example, is oil that was valued at $80 a barrel at the time the loans were made. As oil has dropped well below that price in recent months, the value of the banks’ collateral has sunk.

*  *  *

So it certainly looks like a lot is riding on the degree to which large US banks have been successful at offloading their exposure to the sector (which, thanks to falling crude prices and mounting bankruptcies is likely getting more difficult by the week) and on how well they have been able to hedge the hedges they sold to shale drillers. Any way you slice it, it’s difficult to see how this turns out particularly well, for if Barclays, RBS, HSBC, and Standard Chartered may be facing a combined $3.4 billion in losses and they represent a small portion of the market compared to Wall Street’s largest firms, and if these same US banks are facing $26 billion in exposure on hedges they sold, well, “someone is feeling the pain,” as the Bernstein analyst told The Telegraph. As for the likelihood that most of the risk has been transferred to outside investors or otherwise hedged, we’ll leave you with the following quote from an analyst who spoke to Bloomberg on the matter:

“The banks always tell us that they try to lay off the risk [but] I know from history and practice that it’s great in concept, but it’s hard to do in reality.”

 

end
Total rig count declines continue on its fastest decline yet:
(courtesy zero hedge)

Total Rig Count Decline Fastest Since 1986 As Weekly Rig Count Drop Re-Accelerates

 

With crude production and inventories hitting record highs this week, it is likely no surprise that rig counts continued to decline – falling 40 to 988 total rigs  (and down 42 to 760 oil rigs). This is the 18th week in a row of total rig count declines – equal to the record series from 2008/9. At 48.5%, this is the biggest 18-week decline since 1986.

  • *U.S. TOTAL RIG COUNT DOWN 40 TO 988 , BAKER HUGHES SAYS
  • *U.S. OIL RIG COUNT DOWN 42 TO 760, BAKER HUGHES SAYS
  • Notably Arkansas and Kansas saw rig counts increase (8 to 9 and 12 to 13 respectively)

The weekly pace of decline has accelerated…

 

This is the biggest 18-week plunge since 1986…

 

And Production re-accelerates (US and Saudi oil production record high, Iraq and Libya also boosted production in March) even as rig count collapses…

 

And Crude’s initial response…Nothing

 

 

Charts: Bloomberg

end

 

Your more important currency crosses early Friday morning:

 

 

 

 

Euro/USA 1.0586 down .0081

USA/JAPAN YEN 120.36 down .192

GBP/USA 1.4608 down .0106

USA/CAN 1.2632 up .0053

This morning in Europe, the Euro collapsed again by 86 basis points, trading now well below the 1.06  level at 1.0586; 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.

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 up again in Japan by 19 basis points and trading just above the 120 level to 120.32 yen to the dollar.

The pound was well down this morning as it now trades well below the 1.47 level at 1.4608  (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 well down by 53 basis points at 1.2632 to the dollar despite the  higher oil price this morning.

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: Friday morning : down 30.06  points or 0.15%

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

2/ Asian bourses mostly in the green … Chinese bourses: Hang Sang in the green (massive bubble forming) ,Shanghai in the green  (massive bubble ready to burst),  Australia  in the green: /Nikkei (Japan) red/India’s Sensex in the red/

Gold very early morning trading: $1204.00

silver:$16.55

 

 

Early Friday morning USA 10 year bond yield: 1.95% !!!  down 1  in basis points from Thursday night/

USA dollar index early Friday morning: 99.56 up 58 cents from Thursday’s close. (Resistance will be at a DXY of 100)

 

 

 

This ends the early morning numbers, Friday morning

 

 

 

And now for your closing numbers for Friday:

 

 

Closing Portuguese 10 year bond yield: 1.61% down 3 in basis points from Thursday

 

Closing Japanese 10 year bond yield: .35% !!! down 2 in basis points from Thursday

 

Your closing Spanish 10 year government bond,  Friday, down 1 in basis points in yield from Thursday night.

 

Spanish 10 year bond yield: 1.23% !!!!!!

 

Your Friday closing Italian 10 year bond yield: 1.27% down 3 in basis points from Thursday:

 

trading 4 basis points higher than  Spain.

 

 

IMPORTANT CURRENCY CLOSES FOR TODAY

 

 

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

 

Euro/USA: 1.0596 down .0072  ( Euro down 72 basis points)

USA/Japan: 120.23 down .324  ( yen up 33 basis points)

Great Britain/USA: 1.4632 down .0082   (Pound down 82 basis points)

USA/Canada: 1.2583 up .0008 (Can dollar down 8 basis points)

 

The euro collapsed again during the afternoon, and adding further losses from yesterday. It settled down 72 basis points to 1.0596. The yen was up 33 basis points points and closing well above the 120 cross at 120.23. The British pound lost a lot more ground, 82 basis points, closing at 1.4632. The Canadian dollar  closed at 1.2583 to the USA dollar, down 8 basis points even though oil was up today.

As explained above, the short dollar carry trade is being unwound, the yen carry trade , the Nikkei/gold carry trade, and finally the long dollar/short Swiss franc carry trade are all being unwound and these reversals are  causing massive derivative losses. And as such these massive derivative losses is the powder keg that will destroy the entire financial system. The losses on the oil front and huge losses on the USA dollar will no doubt produce many dead bodies.

 

 

end

 

 

Your closing 10 yr USA bond yield: 1.95% down 1 in basis points from Thursday

 

Your closing USA dollar index:

99.40 up 43 cents on the day.

 

 

European and Dow Jones stock index closes:

 

 

 

England FTSE up 74.41 or 1.06%

Paris CAC  up 31.51 or 0.60%

German Dax up 208.29 or 1.71%

Spain’s Ibex up 14.70 or 0.13%

Italian FTSE-MIB up 73.35 or 0.31%

 

 

The Dow:up 98.92 or 0.55%

Nasdaq; up 21.41 or 0.43%

 

 

OIL: WTI 51.64 !!!!!!!

Brent: 57.91!!!!

 

 

Closing USA/Russian rouble cross: 53.47 down  1 1/2 rouble per dollar despite  the higher oil price.

 

 

 

end

 

 

 

And now your important USA stories:

 

 

NYSE trading for today.

 

Dollar Soars By Most In 43 Months; Stocks, Oil Surge In Week After Worst Payrolls Since 2013

 

 

Dismal jobs data – who cares… Worst earnings season in six years – who cares… continued missed expectations in macro data – who cares… GDP expectations at cycle lows – who cares… corporate leverage at record highs –who cares…

From Friday’s post-payrolls low close… stocks exploded-er… Nasdaq up 3.5%!

Of course todasy was all abot AAPL and GE… but look at the v-shaped recovery in stocks after the openiong dump…

From Thursday’s cash close… Nasdaq is the big winner and Small Caps the small winner…

Leaving stocks all in the green for April – even Trannies…

But Trannies still down 4% on the year…

Treasury yields rose 8-15bps on the week (long-end outperforming in significant bear flattener)…

Credit ‘disagreed’ with stock exuberance today…

The US Dollar was up around 3% on the week – its best week Since September 2011…

With EUR losing over 3.5% against the dollar on the week…

Dollar strength did not weigh directly on commodities (apart from Silver – which was monkey-hammered most in 3 months)

The reason, of course, is that the worse the data the better for stocks (moar lower for longer)…

However the dollar surge means that conditions everywhere else are also deteriorating… (world 2015 GDP growth expectations are the lowest ever)

Charts: Bloomberg

 

end

 

The following is another huge story as GE announces that it is getting rid of GE capital and then buying 50 billion USA of its shares back.

GE capital cannot buy anything of interest and this is why they are liquidating:

(courtesy zero hedge)

GE Announces One Of Largest Buybacks In History, Will Repuchase $50 Bn In Shares After Selling Most Of GE Capital

As we showed previously, the main reason stocks soared in February after the worst January in years, is thatcompanies announced a record $100 billion in stock buybacks in the month even as both earnings and the US economy continued to sharply deteriorate .

Moments ago, General Electric showed why April is much more likley to be a rerun of February than January or March when it announceed that it would go ahead and repurchase half of the total record stock buybacks announced in February, or some $50 billion in what may be the largest stock buyback announcement in history!

How will GE fund this massive distribution to its shareholders, of which the most concentrated one will once again be the biggest winners? Simple: by dumping the division that nearly caused its insolvency during the financial crisis, the hedge fund known as GE Capital. As part of the just announced mega transaction, GE announced an agreement to sell the bulk of the assets of GE Capital Real Estate to funds managed by Blackstone. Wells Fargo will acquire a portion of the performing loans at closing.

The Company also has letters of intent with other buyers for an additional $4 billion of commercial real estate assets. In total, these transactions are valued at approximately $26.5 billion.

Following what is essentially a spin off, GE expects that by 2018 more than 90 percent of its earnings will be generated by its industrial businesses, up from 58% in 2014. Or, as someone put it, GE will be far less General and almost entirely Electric.

What is odd is that as the chart below shows, GE shareholders were not lacking in the buyback back department:

But now it has truly taken balance sheet engineering to the next level as the company will no doubt be forced to lever up massively as it loses a main source of cash flow if it wants to preserve its shareholder friendly status. In fact, it wouldn’t be surprising if GE suddenly became an acquisition target before it loads up its balance sheet with billions in junk bonds.

From the press release:

GE to Create Simpler, More Valuable Industrial Company by Selling Most GE Capital Assets; Potential to Return More Than $90 Billion to Investors Through 2018 in Dividends, Buyback & Synchrony Exchange

  • High-value industrials to comprise more than 90% of GE earnings by 2018
  • Plans to retain financing “verticals” that relate to GE’s industrial businesses
  • Announces sale of GE Capital Real Estate assets for approximately $26.5 billion
  • Will work with regulators to terminate GE Capital’s SIFI designation
  • GE to take approximately $16 billion after-tax charge in 1Q’15, $12 billion non-cash
  • Industrial businesses remain on track for operating earnings per share of $1.10-$1.20 in 2015, in line with expectations
  • GE expects to get approximately $35 billion in dividends from GE Capital from this plan
  • Board authorizes new buyback program of up to $50 billion

GE today announced that it will create a simpler, more valuable company by reducing the size of its financial businesses through the sale of most GE Capital assets and by focusing on continued investment and growth in its world-class industrial businesses.

GE and its Board of Directors have determined that market conditions are favorable to pursue disposition of most GE Capital assets over the next 24 months except the financing “verticals” that relate to GE’s industrial businesses. Under the plan, the GE Capital businesses that will remain with GE will account for about $90 billion in ending net investments (ENI) excluding liquidity – about $40 billion in the U.S. – with expected returns in excess of their cost of capital.

“This is a major step in our strategy to focus GE around its competitive advantages,” GE Chairman and CEO Jeff Immelt said. “GE today is a premier industrial and technology company with businesses in essential infrastructure industries. These businesses are leaders in technology, the Industrial Internet and advanced manufacturing. They are well-positioned in growth markets and are delivering superior customer outcomes, while achieving higher margins. They will be paired with a smaller GE Capital, whose businesses are aligned with GE’s industrial growth.”

“The successful IPO of GE’s retail finance business, Synchrony Financial, and other recent business exits have demonstrated that our financial services assets can be more valuable to others,” said GE Capital Chairman and CEO Keith Sherin. “GE Capital’s businesses are excellent, and this is a great market for selling financial assets. Our people are world-class. We are confident these businesses will thrive elsewhere.”

As part of the execution of this new plan, GE announced today an agreement to sell the bulk of the assets of GE Capital Real Estate to funds managed by Blackstone. Wells Fargo will acquire a portion of the performing loans at closing. The Company also has letters of intent with other buyers for an additional $4 billion of commercial real estate assets. In total, these transactions are valued at approximately $26.5 billion.

Under the plan, GE expects that by 2018 more than 90 percent of its earnings will be generated by its high-return industrial businesses, up from 58% in 2014.

In 2015, GE’s industrial businesses remain on track for operating earnings per share of $1.10-$1.20, up solid double digits, in line with expectations. “With sustainable growth, investments in competitive advantage, productivity programs and the addition of Alstom, we expect this performance to continue in the future,” Immelt said. “We will focus our efforts on these businesses.”

Immelt added, “We are completing another definitive and important move to reshape GE for the future. GE is a fast-growth, high-tech industrial company, built on the capabilities of the GE Store. The team is executing a detailed plan to boost margins and returns. We are allocating capital to grow the Company and benefit investors. Our best days are ahead.”

Creating Value in GE Capital

GE Capital has been an important part of the history of GE. However, the business model for large, wholesale-funded financial companies has changed, making it increasingly difficult to generate acceptable returns going forward.

GE will retain its “vertical” financing businesses – GE Capital Aviation Services, Energy Financial Services and Healthcare Equipment Finance – that directly relate to its core industrial businesses. The assets targeted for disposition, in addition to Real Estate, are most of the Commercial Lending and Leasing segment, and all Consumer platforms, including all U.S. and international banking assets.

These businesses represent roughly $200 billion in ENI. Since 2008, GE has reduced GE Capital’s ENI from $538 billion to $363 billion at the end of 2014. The separation of Synchrony Financial, which is targeted by the end of 2015, and other recently announced dispositions, account for another $75 billion in ENI reduction (the Synchrony separation is subject to regulatory approval).

There is potential to return more than $90 billion to investors in dividends, buyback and the Synchrony exchange through 2018. The exits of the targeted GE Capital businesses should release approximately $35 billion in dividends to GE (subject to regulatory approval), which, under GE’s base plan, are expected to be allocated to buyback; this is in addition to the impact of the Synchrony exchange and ongoing dividends. The GE Board has authorized a new repurchase program of up to $50 billion in common stock, excluding the Synchrony exchange. GE expects to reduce its share count to 8-8.5 billion by 2018. These actions would still allow room for opportunistic “bolt on” acquisitions in GE’s core markets. GE also said it plans to maintain its dividend at the current level in 2016 and grow it thereafter.

Working with Regulators

GE has discussed this plan, aspects of which are subject to regulatory review and approval, with its regulators and staff of the Financial Stability Oversight Council (FSOC). GE will work closely with these bodies to take the actions necessary to de-designate GE Capital as a Systemically Important Financial Institution (SIFI). “We have a constructive relationship with our regulators and will continue to work with them as we go through this process,” Immelt said.

Financial Details

Approximately $16 billion of after-tax charges are expected to be recorded in the first quarter of 2015 in connection with the plan – of which about $12 billion are non-cash. The charges include taxes on repatriated earnings, asset impairments due to shortened hold periods, and charges on businesses held for sale, including goodwill allocation.

GE expects that the earnings impact of the GE Capital exits will be offset by the buyback over the exit period.

GE will execute this strategy using an efficient approach for exiting non-vertical assets that works for GE and for GE Capital Corporation (GECC) debtholders and GE shareholders. An element of this approach involves a merger of GECC into GE and the creation of a new intermediate holding company for GECC businesses.

GE has amended its income maintenance agreement to guarantee all tradable senior and subordinated debt securities and all commercial paper issued or guaranteed by GECC. The guarantee will replace the current income maintenance covenant. GE will maintain substantial liquidity and capital through the transition and does not expect to issue incremental GE Capital long-term debt for at least five years. Commercial paper will be further reduced to approximately $5 billion by the end of 2015.

“We are proud of the GE Capital team, the outstanding businesses that GE Capital employees have built, and how they have delivered for customers and shareholders over many years,” said Immelt. “The GE Capital team has displayed great resiliency, facing tough cycles and driving strong results.”

J.P. Morgan and Centerview Partners have provided financial advice to GE, and Bank of America provided advisory services. Weil, Gotshal & Manges, Davis Polk, and Sullivan & Cromwell provided legal advice. For the Real Estate deal, Bank of America and Kimberlite Advisors provided financial advice and Hogan Lovells provided legal advice.

end

 

Let us close out this week, with our wrap up courtesy of Greg Hunter of USAWatchdog:

(courtesy greg Hunter)

 

WNW 185-Iran Nuke Deal Falls Apart, Will Fed Raise Interest Rates, Economy Getting Worse

5By Greg Hunter’s USAWatchdog.com(4/10/15)

The deal to curtail Iran’s nuclear program is no deal at all.  How do I know this?  You just have to listen to the leadership in Iran.  The Ayatollah Khamenei has weighed in along with his subordinates, and they have said that the White House and the President are liars.  There is going to be no inspections of their military facilities, and they are not going to stop enriching uranium.  Also, the President said the sanctions would be lifted gradually as the Iranians complied with the deal, and Iran now says they demand sanctions be lifted at the signing of the deal; otherwise, there is NO DEAL.  They had me at “liar.” How do you negotiate a deal when the other side calls you a liar and a devil?  Either John Kerry or President Obama knew they did not have a deal or they are incompetent.  Maybe they are a little of both.  I predict right here and now there will be no deal to curtail Iran’s nuclear program.  Ironically, as the Obama Administration is being called out for lying by the Iranians, the White House twitter account is mocking Israeli Prime Minister Benjamin Netanyahu.  Israel is an ally, and Iran is still on the State Department list of countries that fund terrorism.  I cannot make this stuff up.  The White House is negotiating with Iran, and it will not even address terrorism as part of the Iran nuke deal.  Does that mean Obama is okay with what Iran is doing in the Middle East?

Meanwhile, Congress is getting legislation ready that will require it to have a say in the Iran Nuke deal and also will propose new sanctions if there is no deal.  The President said he would veto any legislation that gets in the way of his deal.  The only question that remains is can Congress get enough Democrats to vote to override a veto.  The chances are good they will because this is just way to important for Congress to sit by and watch the President, who now looks like a fool.  I have to say one thing for the Iranians, they have been very consistent over the past several years I have been reporting on this.  The real wild card here are the Arabs and the Israelis, who are now on the same side against Iran.  This is a powder keg situation, and the fuse is lit.  We just do not know how long it is.

Iran is now reportedly sending warships to the Yemen coast.  Egypt is also sending warships and troops.  Egypt and the rest of the world has much to lose if the Strait of Mandeb is shut down by either war or terror.  If the Mandeb Strait is closed, that means the Suez Canal will not produce revenue to Egypt, and things like oil shipments will stop and be forced to go around Africa to get to Europe.

The economy showed yet another sign that it is in trouble.  Wholesale sales have plunged and are joining the declining factory orders.  The March Fed minutes were released, and the Fed is reportedly split on raising interest rates.  My friend Gregory Mannarino of TradersChoice.net called me and said the Fed has turned into a “circus.”  Mannarino contends the Fed knows that if it raises interest rates, the economy gets killed.  I agree.  It really faces two choices and that is to raise rates now and immediately kill the economy or let it ride, but the result is the same.  Almost everyone I talk to and hear about agree on two facts:  What we are doing with 0% interest rates cannot go on, and we are headed for another financial calamity.  Just this week, the Head of the IMF, Christine Lagarde, warned how 0% rates could cause “asset over-valuation risks.”  Jamie Dimon of Chase is also warning of another crash just this week.  This is making its way into the mainstream vernacular.  Does that mean a crash is getting closer?

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

end

 
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