April 15./Greek finance Minister to visit a sovereign bankruptcy lawyer in New York on Friday/Greek bond yields skyrocket/Athens stock market plummets over 3%/Peripheral bond yields in Europe rise/German bund yields negative out to 8 years/ECB to have difficulty in finding enough bonds/ European Collateral disappears/GLD rises by 1.79 tonne/Big misses in USA industrial production and Empire manufacturing index/Chinese GDP falls to a gain of 7%

Good evening Ladies and Gentlemen:

 

 

Here are the following closes for gold and silver today:

 

 

Gold:  $1201.50 up $8.70 (comex closing time)

Silver: $16.27 up 12 cents (comex closing time)

 

In the access market 5:15 pm

Gold $1202.00

Silver: $16.33

 

 

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 2 notices served for 200 oz.  Silver comex filed with 23 notices for 115,000 oz .

 

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 244.65 tonnes for a loss of 59 tonnes over that period. Lately the removals  have been rising!

 

end

 

In silver, the open interest rose by a whopping 3,152 contracts with Tuesday’s silver price down by 13 cents. The total silver OI continues to remain extremely high with today’s reading at 177,877 contracts as at record highs. The front April month has an OI of 193 contracts for a gain of 18 contracts as somebody was in great need of silver. We are now at 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 23 notices served upon for 115,000 oz.

 

 

In gold,  the total comex gold OI rests tonight at 395,089 for a gain of 2916 contracts with gold down by a considerable $6.50 on Tuesday. We had 2 notices served upon for 200 oz.

 

 

Today, we had a huge addition of 1.79 tonnes of gold inventory at the GLD/  Gold Inventory rests at 736.08  tonnes

 

In silver, /  /we had no change in silver inventory at the SLV/ and thus the inventory tonight is 324.900 million oz

 

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

 

1. Today we had the open interest in silver rise by a huge 3152, contracts despite the fall in price on Tuesday (13 cents).  The OI for gold rose by 2916 contracts up to 395,089 contracts as the price of gold fell by a considerable  $6.50 on yesterday. Turd Ferguson believes that we will have a silver squeeze on the upcoming May contract month

(report Harvey/Turd Ferguson)

 

2.Greece paid the iMF on Thursday.  On Friday, it was announced that the ECB increased its ELA to Greece by 1.2 billion euros up to 73.2 billion euros as more depositors fled.  On Monday, the London’s Financial times has reported that Greece has decided that it will withhold the IMF payment in May and June so it can pay its pensioners. Also the reform package submitted by Greece is totally offside on its pension reform and on privatization. Contagion seems to be spreading as yields widen with the advanced risk of default. Also yesterday the ECB advanced another 800 million euros of ELA as more depositors fled. Today, it was announced that the Greek finance minister will visit a bankruptcy lawyer in the USA.  Greek yields skyrocketed northbound .

London’s financial times/goldcore/zero hedge/Bloomberg.

3.  China’s GDP tumbles to a gain of only 7%/another big miss:

zero hedge

4. Two big misses on data from the USA:

 

i.the NY Empire manufacturing index

ii USA industrial production

(zero hedge)

 

5. Bill Holter delivers a great paper on Chinese gold

(Bill Holter/Miles Franklin)

 

this is very important so you do not want to miss this.

6. German bonds reach negativity in yield out to 8 years.  the 10 year German bund is now only 10 basis points to the positive side.  The ECB s going to have trouble buying the number of bonds it needs for QE

(zero hedge

 

7. Two important commentaries on water shortages in the USA

1. Lake Mead

2. California

(Bloomberg/Greg Hunter/Ellen Brown)

we have these and other stories for you tonight

 

 

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

Here are today’s comex results:

 

The total gold comex open interest rose by 2916 contracts from 392,173 up to 395,089 with gold down by $6.50 yesterday (at the comex close).  We are now in the active delivery month of April and here the OI fell by 250 contracts down to 2,148. We had 1 contract filed upon yesterday so we lost 249 contracts or 24,900 oz will not stand for delivery in April. This phenomenon where the amount of gold ounces standing for an active delivery falls throughout the month is totally unheard of.  You can bet the farm that most of these have been cash settled. The next non active delivery month is May and here the OI rose by 43 contracts up to 549.  The next big active delivery contract month is June and here the OI rose by 2205 contracts up to 265,828. 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 72,691  (Where on earth are the high frequency boys?). The confirmed volume yesterday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 172,452 contracts. Today we had 2 notices filed for 200 oz.

And now for the wild silver comex results.  Silver OI surprisingly rose by a huge 3,152 contracts from 174,725 up to 177,877  despite the fact that silver was down by 13 cents, with respect to Tuesday’s trading. Somebody big is willing to take on JPMorgan.  We are now in the non active delivery month of April and here the OI rose to 190 for a gain of 15 contracts.  We had 5 notices filed on Tuesday so we gained 23 contracts or an additional 115,000  silver ounces will stand in this delivery month of April. The next big active delivery month is May and here the OI fell by only 2236 contracts down to 77,394.  We have 2 weeks before first day notice on Thursday, April 30.2015. The estimated volume today was poor at 21,745 contracts (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in at 59,252 contracts which is excellent in volume. We had 23 notices filed for 115,000 oz today.

 

 

April initial standings

April 15.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz  nil
Withdrawals from Customer Inventory in oz nil
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz nil
No of oz served (contracts) today 2 contracts (200 oz)
No of oz to be served (notices)   2146 contracts(214,600) oz
Total monthly oz gold served (contracts) so far this month 689 contracts(68,900 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   oz

Total accumulative withdrawal of gold from the Customer inventory this month

  219,997.0 oz

Today, we had 0 dealer transaction

total Dealer withdrawals: nil oz

 

we had 0 dealer deposits

 

total dealer deposit: nil oz

we had 0 customer withdrawals

 

total customer withdrawal: nil oz

 

we had 0 customer deposit:

 

total customer deposit: nil oz

 

We had 1 adjustment:

Out of Delaware:

192.90 oz was adjusted out of the customer and this landed into the dealer account at Delaware

 

 

Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 2 contracts of which 1 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account

To calculate the total number of gold ounces standing for the March contract month, we take the total number of notices filed so far for the month (689) x 100 oz  or  68,900 oz , to which we add the difference between the open interest for the front month of April (2198) and the number of notices served upon today (2) x 100 oz equals the number of ounces standing.

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

No of notices served so far (689) x 100 oz  or ounces + {OI for the front month (2148) – the number of  notices served upon today (2) x 100 oz which equal 283,500 oz or 8.18 tonnes of gold.

 

we lost 249 contracts or an additional 24,900 oz will not stand for delivery in this April contract month.

This has been the lowest amount of gold ounces standing in an active month in quite some time.

 

 

 

 

Total dealer inventory: 567,831.90 or 17.66 tonnes

Total gold inventory (dealer and customer) = 7,865,699.514  oz. (244.65) tonnes)

 

Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 59 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 15 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 1,109,691.210 oz (CNT,Scotia)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory 1,073,627.910 oz (JPM)
No of oz served (contracts) 23 contracts  (115,000 oz)
No of oz to be served (notices) 170 contracts(875,000 oz)
Total monthly oz silver served (contracts) 343 contracts (1,715,000 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  10,453,655.5 oz

 

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:

 

ii) Into JPM: 1,073,627.910 oz  *  this is the 5th day out of 6 that JPMorgan has deposited a huge amount of silver in its customer account.  Something is seriously happening behind the scenes.

 

total customer deposits:  1,073,627.910  oz

 

We had 2 customer withdrawals:

 

 

i) Out of CNT: 1,071,746.02 oz

iii) Out of Scotia; 37,945.19 oz

 

total withdrawals;  1,109,691.210 oz

 

we had 0 adjustment:

 

 

Total dealer inventory: 62.972 million oz

Total of all silver inventory (dealer and customer) 173.679 million oz

.

The total number of notices filed today is represented by 23 contracts for 115,000 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 (343) x 5,000 oz    = 1,715,000 oz to which we add the difference between the open interest for the front month of April (193) and the number of notices served upon today (23) x 5000 oz equals the number of ounces standing.

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

343 (notices served so far) + { OI for front month of April193) -number of notices served upon today (23} x 5000 oz =  2,565,000 oz standing for the April contract month.

 

we gained another 115,000 ounces standing in this non active 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 15/ a huge addition of 1.79 tonnes of gold inventory added to the GLD/ Inventory tonight at 736.08 tonnes

April 14/ no change in gold inventory at the GLD/Inventory rests at 734.29 tonnes

April 13.2015: we had a withdrawal of 1.75 tonnes of GLD/Inventory at 734.29 tonnes

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

 

 

April 15/2015 /  we had an addition f 1.79 tonnes of  gold inventory at the GLD/Inventory stands at 736.08 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 : 736.08 tonnes.

 

end

 

And now for silver (SLV):

April 15.2015: no change in silver inventory tonight at the SLV/324.900 million oz is the inventory tonight.

April 14. we had another addition of .67 million oz of silver at the SLV/Inventory rests at 324.900 million oz

April 13.2015: a huge addition of 2.391 million oz of silver at the SLV/Inventory rests at 324.230 million oz

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

 

 

 

April 15/2015 we had nno change  in inventory  at the SLV / inventory rests at 324.900 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 6.8% percent to NAV in usa funds and Negative 7.4% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.6%

Percentage of fund in silver:38.00%

cash .4%

( April 15/2015)

 

 

Sprott gold fund finally rising in NAV

2. Sprott silver fund (PSLV): Premium to NAV falls to + 0.26%!!!!! NAV (April 15/2015)

3. Sprott gold fund (PHYS): premium to NAV falls -.34% to NAV(April 15/2015

Note: Sprott silver trust back  into positive territory at +0.26%.

Sprott physical gold trust is back into negative territory at -.34%

Central fund of Canada’s is still in jail.

 

 

end

 

 

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

 

Gold and silver trading early this morning

 

(courtesy Goldcore/Mark O’Byrne)

 

Martin Armstrong – Gold Bullion To “Max Out At $5,000 Per Ounce”

– Fall 2015 turning point – civil unrest and riots globally says forecaster Armstrong
– Fed have to raise rates – due to pressure from congress and media
– By 2020 the cost of servicing U.S. debt will outpace defence spending
– European banks will collapse and “blood in the streets”
– Higher rates will also devastate emerging markets who have issued dollar-based debt
– Gold to “max out at $5000 per ounce”
– Advocates diversification and holding bullion coins familiar to public such as $20 gold coins
– “Your portfolio has got to include everything … including bullion”

Renowned financial analysts and trends forecaster Martin Armstrong has said that gold will “probably max out at $5,000 per ounce” as “people lose confidence in government” and that we will see riots and unrest globally in the coming months – the fall of this year.

It a very interesting interview with Greg Hunter of the excellentUSAWatchdog.com, Armstrong says :

“Gold rises when people lose confidence in government.  It has nothing to do with inflation.  So, when you start to worry about government is not going to survive or who’s going to win, that’s when gold rises.  Short term, we still have the risk of it going under $1,000 per ounce.  It’s going to flip when everything is right.  It will probably max out at $5,000 per ounce. . . . You are really talking about a major reset coming.  300 years ago, that was the revolutions against monarchy.  Today, it’s going to be revolution against . . . pretend democracy.  We do not have a democracy.”

We would slightly disagree with this as research and the historical record shows that gold is a hedge against inflation – particularly virulent inflation as was seen globally in the stagflation of 1970s and the litany of hyperinflations seen in the last 100 hundred years.

Martin Armstrong was accused of running a $3 billion Ponzi scheme and served  11 years in jail under house arrest, including a possible record seven years for contempt of court in a dispute over gold and antiquities. He is a former financial adviser who was Chairman of an investment firm called Princeton Economics International and he is best known for his economic predictions based on the Economic Confidence Model, which he developed.

Armstrong says you can forget about the U.S. dollar crashing in value.  Armstrong contends, “No, that’s absurd.  The euro is in terrible shape.  The yen is in terrible shape, and honestly, you can’t park money in yuan or Russian rubles yet.  I mean, let’s be realistic here, but eventually– yes.”

He contends that the Fed will be forced to raise interest rates in the coming months which will have serious implications world wide.

Armstrong predictions are based on the theory that everything in the world happens in cycles. We are currently near the end of a major 300-year cycle. The end of the last cycle saw revolution against monarchies. This cycle will end in revolution against corrupt democracies. Indeed, he reckons that government corruption worldwide is now at an extreme.

He warns that “governments are run by lawyers” more concerned with reelection rather than “financial experts” … “thats our biggest problem …”

He suggests that capital inflows to the U.S., particularly from China, will continue to push up the stock markets and real estate in the U.S. This will cause congress and the media to blame the Fed for the bubbles with the consequence that the Fed will raise rates.

He warns of the bubbles in the bond markets:

“… this one looks like it’s going to be in the bond markets….it’s the peak, really, in government and you have interest rates going negative and you can’t have much lower than that. So this appears to be the peak in so far as government is concerned and bond markets are going to be turning down.

I mean, we’re in a lot of trouble with most of these governments. Our models are really showing that by 2020 the amount of interest we pay to roll the debt constantly will exceed the entire defense budget.

In the longer term this is clearly untenable and has obvious ramifications including much higher interest rates in the U.S. and a much weaker dollar.”

He refers to the culmination of previous cycles such as Russia in 1998, the dotcom bubble and the real estate bubble and postulates that this 8.6 year cycle will result in the collapse of the bond markets.

Raising rates will have a particularly devastating impact on emerging markets who have issued dollar based debt with the result that they will end up “like Greece” unable to pay the interest on their debt.

He sees little hope for European banks. The euro which assumes all participating countries are the same is untenable. He says that in Europe, people buying German assets and debt in the expectation of a collapse in the currency and in the hope of redeeming such assets in newly issued Deutsche Marks.

He says that gold may hit $5,000 in the U.S. but has the caveat that $5,000 would not have the spending power that it has today and says a week’s wages may be $5,000/oz.

We believe that this is unlikely. Workers being paid $5,000 a week would mean the U.S. is experiencing hyperinflation. This would likely result in gold rising parabolically to levels over $10,000 per ounce.

He advocates a well-diversified portfolio including precious metals. He adds that that people should include coins that are familiar to the wider public.

Greg Hunters asks Armstrong whether he would be a  “holder or buyer of gold at some point?” 

To which he replies that “your portfolio has got to include everything … including bullion” and says it should be bullion“familiar to the general public.” 


goldcore_chart1_15-04-15

“You have to realise that if you walked into a Starbucks, and you have a silver quarter you know what it is .. is the kid at the counter going to know what it is … he is going to say it is a quarter.”

Presumably alluding to fact that popular “recognisable” gold coins will remain in demand, may be used for payments, trade and barter and will remain liquid in an economic crash.

He warns against gold and silver bars due to the potential risk of counterfeiting and potential trust issues with some bars. He thinks “staying with recognisable gold coins is better” and gives the example of the “$20 gold pieces and things of that nature.”

Armstrong warns that gold could fall to $1,000 per ounce in the very short term, coming months, prior to surging to $5,000 per ounce.

Hunter is a good interviewer and asks the right questions and the interview is a worth a watch.

Find the Safest Ways to Own Gold: Comprehensive Guide to Investing In Gold

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,189.85, EUR 1,123.56 and GBP 808.58 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,191.45, EUR 1,127.95 and GBP 814.33 per ounce.

Gold fell 0.6 percent or $7.20 and closed at $1,192.50 an ounce on yesterday, while silver slipped 0.61 percent or $0.10 closing at $16.20 an ounce.

The March U.S. retail sales figure missed market estimates yesterday, but a strong U.S. dollar seems be keeping gold at bay for the moment.

Gold in USD - 1 Month

Gold in Singapore remained steady at $1,193.42 an ounce near the end of day trading after hitting  $1,183.68 an ounce on Tuesday, its lowest price in two weeks. Comex U.S. gold for June delivery was unchanged at $1,193.50

Holdings of the world’s largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, rose by 1.8 tonnes yesterday, data from the fund showed, only its third daily inflow since mid-February.

China’s economy had its slowest growth in six years growing only 7 percent in the first quarter, which some analysts say may stifle their demand for bullion. However, it could lead to increased safe haven demand particularly if there are falls in Chinese stock and property market.

Premiums on the Shanghai Gold Exchange picked up to $3-$4 an ounce over spot price from a lower range earlier in the week.

As usual Fed committee members are making it difficult to get a clear reading on if and when the Fed may raise interest rates.  Minneapolis Fed President, Narayana Kocherlakota, said raising rates this year, as most Federal Reserve officials expect, would be “inappropriate” because it would delay the return of too-low inflation and the Fed’s 2 percent goal.

The Greek debt sage continues as government representatives and the nation’s creditors continue talks in Athens. Gold should be supported by uncertainty regarding a potential Greek default.

In Europe in late morning trading, gold is trading in euros at €1,124.140 per ounce or up 0.24%. Silver is trading in euros at €15.25 or up 0.39% and platinum is at €1,075.88 or up 0.27%.

In U.S. dollars in Europe in late morning trading, gold is at $1,191.91 or off -0.17%. Silver in U.S. dollars is at $16.17 or off -0.02% and platinum is at $1,151.90 or down -0.06%.

Breaking Gold News and Research Here

 

end

 

This is fascinating!!

(courtesy GATA)

Gold Reserve makes push in Luxembourg to collect Venezuela award

Section:

By Alexandra Ulmer
Reuters
Monday, April 13, 2015

Gold Reserve Inc. has served banks in Luxembourg with the equivalent of writs of garnishment relating to around $700 million in interest payments on Venezuelan bonds and funds, cranking up its push to collect an arbitration award from the South American country.

“These banks were chosen because they are designated as paying agents or transfer agents in listing memoranda relating to various bonds issued by Venezuela and listed on the Luxembourg Stock Exchange,” the Toronto-listed gold mining company said in a statement on Monday.

“So far, the banks have denied holding funds for the account of Venezuela, which appears to contradict the information contained in the listing memoranda. As a result, the company intends to have the issue determined by the appropriate court or judge having jurisdiction in Luxembourg over such matters.”

The fresh push by Gold Reserve Inc. to collect its arbitration award is likely to worry cash-strapped Venezuela, which is struggling to foot hefty bond payments and seeking to delay payment of major arbitration awards. …

… For the remainder of the report:

 

http://www.reuters.com/article/2015/04/14/venezuela-goldreserve-idUSL2N0…

 

end
Craig (Turd Ferguson) believes we are in for a huge silver squeeze in 2 weeks i.e. when silver comes up for delivery in the May contract month
(courtesy Turd Ferguson/TF Metals/GATA)

TF Metals Report: Another silver short squeeze looms

Section:

2:10p ET Wednesday, April 15, 2015

Dear Friend of GATA and Gold:

The TF Metals Report’s Turd Ferguson is expecting a substantial short squeeze in silver futures in about two weeks. His commentary is headlined “Another Silver Short Squeeze Looms” and it’s posted at the TF Metals Report here:

http://www.tfmetalsreport.com/blog/6767/another-silver-short-squeeze-loo…

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

 end
The following is an extremely important discussion presented by Bill Holter.  I urge you to read this very carefully.
(courtesy Bill Holter/Miles Franklin)
China’s gold?
Much speculation abounds regarding China’s gold holdings.  They officially claim 1,054 tons as of April 2009.  We suspected they might “re” announce their holdings again last year at this time as it was five years after their last announcement and China has a habit of “five year plans”.  Alisdair Mcleod believes they have 20,000 tons or more which very well may be the case, I can easily make a case their holdings are far in excess of 10,000 tons just from the data since 2009.  In the words of our newest presidential candidate, “at this point, what difference does it make?”.  We’ll get to this shortly.

  Before getting into the answer to this question, it might be better look at China’s “bubbles” first.   Money supply:

As you can see, China’s money supply has gone from 30 trillion yuan to over 120 trillion yuan in 8 years.  The growth rate compounds out to about 18% annually.  The following chart shows their money supply growth slowing drastically, China will need to reflate soon!

  Now let’s look at China’s Shanghai stock market, another bubble.

Their market has virtually doubled in over 90 days, is this “normal”?  Could this be a function of the market anticipating a reflation in money supply …or maybe a devaluation of the yuan versus a marked up gold price?  I’m not sure but putting their money supply together with market action tells me one of several things.  Money supply must begin to grow more rapidly soon, the yuan will need to be devalued or their market values are unjustified, something must give.  Add to this the fact China’s economy (maybe with slightly cooked numbers) is growing slower than any time in the last six years http://www.zerohedge.com/news/2015-04-14/china-gdp-tumbles-lowest-6-years-amid-quadruple-whammy-dismal-dataand it becomes even more clear, China must do something soon.  It is my guess and has been for quite a while, China will pull a page from FDR’s playbook and revalue gold versus the yuan …and the yuan versus other currencies from top to bottom.
  So, why exactly does it matter how much gold China has accumulated and what are the ramifications depending what the number is?  First, if the number comes in “large” (it will), it means China “likes gold” and believes it to be a worthy monetary reserve asset.  A large number would give gold China’s “stamp of approval” so to speak.
  Next, we have the “mathematics” to the equation.  If the number comes in anywhere near 10,000 tons, the natural question then becomes “where oh where did it all come from”?  This is a VERY important question because as I’ve said many times before, gold can only come from current supply and also from above ground supplies in vaults.  We know the total annual global supply (ex China and Russia) is about 2,200 tons of which China has chewed up a very large percentage over the last six years.  Total global production has been 11,000 tons over the last six years, we know India and Russia have been importers, not to mention all the other geographical demand and jewelry.  A number even close to 10,000 tons will raise the question of “how?”, how could China have accumulated this much gold if the world is not producing enough to make the math work?  In other words, if China bought virtually all of the global supply, what was used to satisfy the rest of the world’s demand?
  The answer is easy and so will be the reaction.  The gold MUST have come from Western vaults, namely N.Y. and London.  It would also explain the refineries working 24/7 to melt 400 ounce bars and create kilo bars …they were in fact heading to China!  The big questions will be “which vaults?” and then of course “who’s gold was it?”.  This really matters because a number of 10,000 tons or more would most likely mean the U.S. has dishoarded its gold …and/or sold gold which belonged to someone else.  It will bring up the rule of law if the gold is someone else’s, it will bring up Constitutional law if the gold came from Ft. Know, West Point or another depository.  Please remember that five years ago or so, gold on the market was turning up which had very similar, if not identical “fingerprints” to our own “coin melt” from the 1930’s.  To me, this was as big a telltale sign as gold turning up in 1989 with the “Czar’s stamp” on it.
  The report of 10,000 tons or more held by China will on its own drive gold prices exponential because of the logic that market participants will connect swiftly.  Between the “stamp of approval” and “where did the gold come from”, people will understand the West were the sellers.  Does selling one’s gold make your currency weaker?  Of course it does.  Does a weaker currency make it harder to accumulate gold?  Again, yes.  It is my contention that not only will a weaker currency (the dollar) make it harder to “catch up” and replenish the empty vaults, China will have incentive to “help this process along” by forcing the price higher and more difficult to accumulate.
  As mentioned and illustrated above, China has not been immune to the bubblemania gripping the world.  They are living their own bubble and have exploded their own money supply yet now have the need to goose it again.  If this reverses and becomes an outright contraction, China will be faced with the same dilemma the U.S. was in 1932-1933, they will need to re price gold higher in an effort to devalue their currency and reflate their own system.  It is for this reason I believe they will “set” a price and bid for any and all gold similar to what FDR did when gold was revalued to $35.
  A holding’s announcement and higher bid will do much for China.  It will cement their position of financial strength and also lock many buyers out …not to mention turn some holders into sellers.  Thus increasing China’s holdings even more.  The higher gold price will act as a “filler” for many of the losses China will surely take from paper financial holdings.  A higher gold price will be their internal financial penicillin assuring the financial wounds heal rather than spread and infect the entire body.  Quite oversimplified but please understand this has been the remedy many times before throughout history, either willingly or dragged by the ears!  Regards,  Bill Holter
 end
Early morning trading from Asia and Europe last night:

1. Stocks lower on major Chinese bourses as bubblemania is the name of the game in Shanghai and Hong Kong  /Japan bourse slightly lower /yen rises to 119.49/

1b Chinese yuan vs USA dollar/yuan  strengthens to 6.2049

2 Nikkei down by 38.92  or 0.20%

3. Europe stocks up/USA dollar index up to 99.16/Euro falls to 1.0591

3b Japan 10 year bond yield .33% (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.94/

3c Nikkei still  above 19,000

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

3e WTI  53.91  Brent 59.07

3f Gold down/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 up 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 rises to 23.72%/Greek stocks down huge 3.86%/ still expect continual bank runs on Greek banks.

3j  Greek 10 year bond yield:  12.22% (up 75 in basis point in yield)

3k Gold at 1191.50 dollars/silver $16.15

3l USA vs Russian rouble;  (Russian rouble up 5/8  rouble/dollar in value) 50.59 , the rouble is the best acting currency this year!!

3m oil into the 53 dollar handle for WTI and 59 handle for Brent/Saudi Arabia increases production to drive out competition.

3n Higher foreign deposits out of China sees huge 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 with the 10 year close to negativity/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 today by another  large 800 million euros.  The new maximum is 74.0 billion euros.  The ELA is used to replace depositors fleeing the Greek banking system.  The bank runs are increasing exponentially.

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

 

3t ECB meeting today, Greece is a major topic.  Unlikely a deal by April 24.

4.  USA 10 year treasury bond at 1.89% early this morning. Thirty year rate well below 3% at 2.54%/yield curve flatten/foreshadowing recession.

 

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

 

 

(courtesy zero hedge/Jim Reid Deutsche bank)

 

Futures Jump Following Worst Chinese Eco Data In 6 Years

Today’s even highlight is the monthly ECB meeting day. Given we’re only a few weeks into a new policy that’s scheduled to last 18 months, expect a lot of questions on whether they can see out the term given the distortions its creating in European bond markets. Greece will also be a focus.

If yesterday stocks surged on the worst 4-month stretch of missing retail sales since Lehman, one which BofA with all seriousness spun by saying “it seems not unreasonable to suspect that the March 2015 reading on retail sales gets revised up next month”, then the reason why futures are now solidly in the green across the board even as German Bunds have just 14 bps to go until they hit negative yields and before the ECB is fresh out of luck on future debt monetization, is that overnight China reported its worst GDP since 2009 together with economic data misses across the board confirming China’s economy continues its hard landing approach despite a stock market that has doubled in the past year.

Unexpectedly the Shanghai Composite was down overnight despite what is “clearly” evidence of more PBOC easing, and even the bubbly Hang Seng could barely eek out a 0.2% increase. Elsewhere in Asia, stocks trade mostly lower led by Chinese bourses amid poor data, with the Shanghai Comp (-1.2%) on course to for its biggest drop in 6-weeks. Q1 GDP (7.0% vs. Exp. 7.0% (Prev. 7.3%) and March industrial production (Y/Y 5.6% vs. Exp. 7.0%) came in at their 6yr lows, while retail sales (Y/Y 10.2% vs. Exp. 10.9%) also tumbled to multi-year lows. ASX 200 (-0.6%) was weighed on by the Chinese data while the Nikkei 225 (-0.2%) was weighed on by a strong JPY.

European equities bounce back from yesterday’s negative close with the energy sector leading gains after API crude inventories printed a much smaller build than its previous reading, which had reported its largest build since February 18th. In stock specific news, the latest merger deal including Nokia and Alcatel Lucent was confirmed premarket, with the deal valued at EUR 15.6bln. However, Alcatel Lucent (-12.3%) underperform in Europe as the French telecommunications company are to receive 0.55 Nokia shares for one Alcatel Lucent share, which equates to 8% less than Alcatel’s closing price yesterday.

Fixed income markets have been relatively tentative ahead of todays’ ECB rate decision with Bunds ebbing higher and consequently printed fresh contract highs as the market seeks further clues on whether the central bank could alter the purchase programme in the future, while UST’s have tracked German paper amid little fundamental news in the session.

The USD-index has partially recovered some of yesterdays’ US retail sales inspired losses causing broad based EUR weakness which saw EUR/GBP make a technical break below 0.7200. Elsewhere, GBP/USD has also been subject to selling pressure with political uncertainty still lingering as the latest YouGov and Sun poll showed; Lab 35% vs. Con 33% compared to yesterdays’ poll which indicated Lab 34% vs. Con 33%. Separately, lacklustre data releases from China, in the form of Q1 GDP (7.0% vs. Exp. 7.0% (Prev. 7.3%) and March industrial production (Y/Y 5.6% vs. Exp. 7.0%) came in at 6yr lows, while retail sales (Y/Y 10.2% vs. Exp. 10.9%) also tumbled to multi-year lows which weighed on AUD/USD as the pair subsequently broke 0.7600 handle to the downside.

In terms of commodities, WTI and Brent crude futures have held onto yesterday’s gains following the release of the API crude inventories data, however upside was capped on the release of the IEA monthly oil report as it forecasted that Saudi Arabia are to increase oil production which would lead to OPEC supply rising to its highest level since 2011. Additionally, today’s DoE crude inventories data is expected to show a build of 3.6mln bbl compared to last weeks’ mammoth build of 10.949mln bbl. In precious metal markets, spot gold has traded in a tight range, albeit in minor negative territory alongside modest strength observed in the USD.

In summary: European shares rise ahead of ECB rate decsion with the basic resources and energy sectors outperforming and media, tech underperforming. The Italian and Dutch markets are the best-performing larger bourses, U.K. the worst. The euro is weaker against the dollar. German 10yr bond yields fall; French yields decline. Shares in Shanghai declined for the first time in four days after China GDP; Aussie drops. Commodities gain, with corn, silver underperforming and Brent crude outperforming. ECB to probably leave benchmark rate unchanged at today’s meeting, according to economists. U.S. mortgage applications, Empire manufacturing, net TIC flows, NAHB housing market index, industrial  production, capacity utilization due later.

Market Wrap

  • S&P 500 futures up 0.1% to 2093
  • Stoxx 600 up 0.7% to 414.4
  • Euro down 0.59% to $1.0592
  • Dollar Index up 0.49% to 99.21
  • US 10Yr yield little changed at 1.9%
  • German 10Yr yield down 1bps to 0.13%
  • MSCI Asia Pacific down 0.4% to 152.6
  • Gold spot down 0.2% to $1190.5/oz
  • Eurostoxx 50 +0.6%, FTSE 100 +0.3%, CAC 40 +0.6%, DAX +0.4%, IBEX +0.6%, FTSEMIB +0.8%, SMI +0.4%
  • Asian stocks fall with the Kospi outperforming and the Shanghai Composite underperforming.
  • MSCI Asia Pacific down 0.4% to 152.6; Nikkei 225 down 0.2%, Hang Seng up 0.2%, Kospi up 0.4%, Shanghai Composite down 1.2%, ASX down 0.6%, Sensex down 0.2%
  • Italian 10Yr yield down 1bps to 1.3%
  • Spanish 10Yr yield up 1bps to 1.3%
  • French 10Yr yield down 1bps to 0.4%
  • S&P GSCI Index up 0.9% to 421.6
  • Brent Futures up 1.6% to $59.4/bbl, WTI Futures up 1.6% to $54.1/bbl
  • LME 3m Copper down 0.2% to $5935/MT
  • LME 3m Nickel up 0.7% to $12680/MT
  • Wheat futures up 0.2% to 497.3 USd/bu

Bulletin Headline Summary from Bloomberg and RanSquawk

  • European equities bounce back from yesterday’s negative close with the energy sector leading gains after API crude inventories printed a much smaller build than its previous reading
  • The USD-index has partially recovered some of yesterdays’ US retail sales inspired losses causing broad based EUR weakness which saw EUR/GBP make a technical break below 0.7200
  • Looking ahead, sees the release of the ECB rate decision, US Empire Manufacturing, Industrial Production, Bank of Canada rate decision and the NZ Dairy Milk Trade Auction
  • Treasuries steady after yesterday’s rally on weaker than expected U.S. retail sales, trailing bigger gains in bunds before ECB rate decision, Draghi press conference.
  • Six weeks into the EU1.1t QE program, Draghi is set to be asked at his regular press conference what happens if he succeeds before the provisional end-date of September 2016
  • China’s economy expanded 7% in 1Q, weakest pace since 2009, with output, investment and retail data pointing to a deepening slowdown
  • Greek government officials and the nation’s creditors resume talks in Athens about the stalled review of the cash-strapped country’s bailout on Wednesday, a day after ECB extended the lifeline to keep the nation’s lenders afloat
  • A Labour-led government could put pressure on Bank of England officials to increase interest rates earlier than markets expect as it eases fiscal austerity, according to firms from AXA Investment Managers to Blackrock
  • The EU escalated its four-year-old probe into Google Inc., accusing the Internet giant of abusing its dominance of the search-engine market and starting a new investigation into its Android mobile-phone software
  • Obama agreed to accept compromise Iran legislation that he didn’t want after it became clear that Democratic lawmakers would join with Republicans in demanding a say on the nuclear deal with the Islamic Republic
  • Sovereign bond yields lower. Asian stocks mostly lower. European equities, U.S. equity-index futures gain. Crude oil higher, copper and gold decline

 

DB’s Jim Reid completes the overnight event recap

 

Today will likely throw you out of sync a bit given it’s an ECB meeting day, mid-month on a Wednesday. Given we’re only a few weeks into a new policy that’s scheduled to last 18 months, expect a lot of questions on whether they can see out the term given the distortions its creating in European bond markets. Greece will also be a focus. It’s a busy day elsewhere but before we review China’s latest GDP (in-line) and the key monthly economic releases (weaker), this morning we’ve just published our 17th annual default study entitled “2017-2018 – The Next Default Cycle??. The report confirms the recent trend of ultra low defaults seen since 2003 (with 2009 a relatively mild blip). More recently the 2010-2014 cohort just completed is the lowest 5-year period for HY defaults in modern history. We continue to stress that this is due to the (decade plus long) artificial fixed income market which has accelerated in a world of QE and ZIRP. However we also show that the benign default environment post crisis has been helped by relatively steep yield curves (YC). Default cycles have often been linked to the ebbing and flowing of the YC through time with a fairly long lead/lag (30 months). When YCs are steep, as they were immediately post crisis, it signals an attractive carry risk/reward profile ahead for investors/banks. Our model now shows rising but still below average default rates well into 2017.

However there are warning signs ahead. The YC has been flattening steadily in the US and more dramatically in Europe. A perfect default storm could be created for 2018 if the Fed then compounds this by raising rates in 2015/16. This could create a much flatter YC over the next year if the long-end reacts more to rock bottom European yields, low inflation, a shortage of high quality assets or fears of a Fed policy error. What happens next with the Fed and the curve could create the next default cycle in 2017/18. One sector with nearer-term default risk is US Energy. Our US strategists discuss how a third of all US HY Energy Single-Bs and CCCs are at risk of some form of debt restructuring with oil prices around these levels for a few quarters. For the full report with all the usual charts and tables as to where spreads are relative to default risk please see the note in your inbox around an hour before this one.

Moving onto markets this morning, China is the main focus after Q1 GDP fell in line with expectations at 7.0% yoy. Other data indicators were soft however. Retail sales (10.2% yoy vs. 10.9% expected), industrial production (5.6% yoy vs. 7.0% expected) and fixed asset investment (13.5% vs. 13.9%) were all below market. The GDP reading is the lowest since 2009. After all the data Chinese equities have been volatile, initially rising +0.6% with the hope of more stimulus on the horizon, before then selling off. The Shanghai Comp (-1.11%) and CSI 300 (-0.85%) are both currently lower as we go to print but could have changed again by the time you read this. Bourses elsewhere are lower also. The Nikkei (-0.10%), Hang Seng (-0.05%) and ASX (-0.61%) falling along with the AUD (-0.47%). Elsewhere, news that the Central Bank of Sri Lanka has cut benchmark rates by 50bps to 7.5% means that they are now number 47 on our list of countries easing in 2015 (counting Europe as 19 countries).

Before we look at markets elsewhere, yesterday also saw the release of the 4th edition of DB’s “Random Walk” annual survey of global prices. The piece is a compilation of prices and price indices from countries and cities around the world to provide a reasonably good map of global prices. The team highlight in this year’s survey the extent to which exchange rate movement’s impact relative prices across countries. In previous years, Australia had consistently been the world’s most expensive country while the United States had been the cheapest developed country. This year, however, the strength of the USD has significantly narrowed the gap between the two. Similarly, shopping in Europe and Japan now feels a lot cheaper than before. In interesting other findings the team note how despite the USD appreciation, the United States remains the cheapest place to buy an i-Phone 6 and, barring India and Canada, it is also the cheapest place to buy a pair of Levi’s 501. For watching a movie the team recommend readers try Mumbai, Delhi and Kuala Lumpur but avoid Zurich (and also to avoid Zurich if you want a hair-cut – not a problem for me) whilst for a quick weekend getaway, Sydney, Paris and London remain the most expensive whilst Mumbai and Delhi are the cheapest. Indian cities are also the cheapest places to go out on a date.

Back to markets, corporate earnings and macro data yesterday provided much of the direction as the S&P 500 (+0.16%) and Dow (+0.33%) eventually pared back earlier losses to close higher while European equity markets finished largely in the red as the Stoxx 600 (-0.47%) and DAX (-0.90%) fell. Better than expected corporate earnings out of both JP Morgan and Johnson & Johnson before the open initially helped lift sentiment, however these modest gains were quickly wiped out following the March retail sales print out of the US. Both the headline (+0.9% mom vs. +1.1% expected) and core (+0.5% mom vs. +0.6% expected) came in below market, causing the S&P 500 to sell off and eventually strike an intraday low of -0.5%, before a rally in energy stocks (+1.77%) helped drag the index back into positive territory as WTI (+2.66%) and Brent (+0.86%) closed higher.

Delving deeper into yesterday’s data and retail sales in particular, the retail control component (which is a direct input into GDP) was also weaker than expected at +0.3% mom (vs. +0.5%) expected. Our US colleagues noted that for the quarter, retail control actually declined at a -0.7% annualized rate which was the worst performance since Q2 2009. Inflation-adjusted, the reading was slightly better (unchanged) but still the weakest since Q2 2012. As well as the weakness in retail sales, the NFIB small business optimism survey was also weak, declining 2.8pts to 95.2 and the lowest reading since June. Other second tier releases offered few surprises as business inventories (+0.3% vs. +0.2% expected) and PPI (-0.8% yoy vs. -0.9% expected) both came in a touch higher than expected.

There was a similar move in US Treasuries post the data, as the benchmark 10y yield, having hovered around 1.920% pre-release fell to an intra-day low of 1.853% before eventually closing nearly 3bps down on the day at 1.899%. The Dollar ended its run of 6 consecutive positive sessions as the DXY closed down 0.76%. Meanwhile, Fed Funds expectations fell. The Dec 15 (-1.5bps), Dec 16 (-1.5bps) and Dec 17 (-5.5bps) contracts all fell to 0.35%, 1.00% and 1.56% respectively. In fact, the contracts are now 22bps, 45bps and 50bps off their highs in yield from early March. Finally, the latest Atlanta Fed GDPNow was unchanged following yesterday’s data at +0.2% for Q1, however this still sits well below the bottom end of the range of consensus forecasts which overall averages 1%.

The weaker data in the US appeared to play its part in European markets also, although more headlines around Greece most probably contributed. We’ll come to those shortly, however yesterday’s weaker tone helped support further strength in core bond markets as 10y yields in Germany (-1.9bps) and France (-2.5bps) extended gains. In fact, yesterday saw the 8y Bund close 1.8bps lower taking it -0.008% in yield. That move now means that the Bund curve is trading in negative territory up until the 8y maturity with 9y (0.052%) and 10y (0.136%) yields creeping closer now.

It was fairly quiet data-wise in the region with just a strong industrial production (+1.6% yoy vs. +0.8% expected) out. However over in the UK, yesterday’s CPI data offered few surprises with the headline coming in at 0.0% yoy as expected. Unrounded we actually dipped into YoY deflation for the first time since 1960 but this won’t make the headlines. The core weakened further to +1.0% yoy (vs. +1.2% expected) – reinforcing the more consensus view now that a 2015 rate hike looks unlikely. Gilts tightened across the curve, although led by the 10y in particular which closed 7.9bps lower at 1.513%.

Back to Greece, headlines that European officials have indicated a deal is unlikely to be reached by the April 24th Eurogroup meeting attracted attention. According to German press Handelsblatt, EC Vice-President Dombrovskis said that the EU is unlikely to agree to Greek aid this month given the lack of readiness by authorities to reform pension and labour markets. EU ministers will instead take stock of progress according to the report. Warning signs were also sent from the ECB’s Knott who warned that a default for Greece may have a contagion effect, particularly in the event of an un-hoped for bankruptcy. The IMF’s Blanchard warned that, unsurprisingly, more work still needs to be done and that a ‘crisis that would unsettle financial markets can’t be ruled out’.

Turning to the day ahead, German inflation will provide much of the focus this morning with the final March reading due while in France we also get the preliminary CPI print. The ECB meeting is also scheduled for later in the day. Over in the US this afternoon, we’ve got empire manufacturing, industrial production, manufacturing production, capacity utilization and the NAHB housing market index all due.

 

end

 

China’s GDP tumbles to 7%, the lowest in 6 years.  Retail sales, consumer sentiment and Chinese auto sales also miss expectations:

 

(courtesy zero hedge)

 

China GDP Tumbles To Lowest In 6 Years Amid Quadruple Whammy Of Dismal Data

 

A month ago we warned “Beijing, you have a big problem,” and showed 10 charts to expose the reality hiding behind a stock market rally up over 100% in the last year. Tonight we get confirmation that all is not well – China GDP fell to 7.0% (its lowest in 6 years) withQoQ GDP missing expectations at +1.3% (vs 1.4%). Then retail sales rose 10.2% YoY – the slowest pace in 9 years (missing expectations of 10.9%). Fixed Asset Investment rose 13.5% – the lowest since Dec 2000(missing expectations). And finally Industrial Production massively disappointed, rising only 5.6% YoY (weakest since Dec 2008). Finally, as a gentle reminder to the PBOC-front-runners, a month ago Beijing said there was no such thing as China QE (and no, the weather is not to blame.. but the smog?).

China YoY GDP “nails the number” magically; but under the surface is a disaster…

Because, as we know, GDP in China is whatever the Beijing politicians say it is (very much like in the US), so we dig deeper.

First, Consumer Sentiment:

Perhaps driven by, or resulting in, a collapse in retail sales: The lowest growth in 9 years

… as well as stagnant and declining auto sales (watch out GM).

But it’s not just the consumer though. The very heart of China’s capital intensive economy – fixed asset investment – is now in V-Fib. The weakest FAI YoY since Dec 2000!!

The chart above explains why demand for global commodities will continue to decline for the foreseeable future. The chart below, on the other hand, confirms Yin Weimin worries about a labor slow down: with Industrial Production slowing, there will be far less end-demand for manufacturing production and labor. At 5.6% YTD YoY growth – this is the worst since Dec 2008!!

And all this leading us to the most important chart of all:home prices in China, which are crashing…

… at a pace faster than in what happened to US housing in the immediate aftermath of the Lehman collapse!

And the reason why this is such a problem for China is that unlike the US where the bulk of household wealth is in financial assets (i.e., the market), in China it is the reverse: nearly three quarters of all household assets are in real estate: real estate which is deflating, if not crashing, at an unprecedented pace.

Finally, here is a chart which leaves even us speechless. If indeed Chinese rail freight is indicative of underlying economic trends, then the hard landing is already here.

And finally a gentle reminder from just 4 weeks ago:

  • CHINA MOF OFFICIAL SAYS NO SUCH THING AS CHINA QE: SEC. JOURNAL

But we are sure this data is just bad enough to spark another surge in front-running Chinese stock investor money.

Sure enough:

  • *HANG SENG CHINA ENTERPRISES INDEX EXTENDS GAINS TO 1%

China and Hong Kong stocks love this abysmal data!!

end
As I indicated above Greek 2 year, 3 year and 10 year bonds tumble with their yields the highest in 2 years  (first collapse of Greece).  Greece is now preparing for a default.  In the last paragraph, it is stated that Germany is preparing to help Greece stay in the Euro if they do default.
This story was later refuted by Germany:
(courtesy zero hedge)

Greek Bonds Tumble, Yield Highest In 2 Years On Report Germany Prepares For Greek Default

When everyone begins to draw up the contingency plans you know the end may well be nigh.

Just two days ago FT reported that the Greek government — which has reportedly resorted to “acting like a taxi driver” when it comes to asking for money from creditors — has “come to the end of road” and is prepared to declare a default on its debt to the IMF (so no gas for Kiev?) if no agreement is struck between Syriza and the people who are not to be called “the troika” by the end of this month. Of course, Athens denied the “rumor,” without explaining how it planned to find enough money to make good on its obligations coming due in May.

As FT noted, “a default would almost certainly lead to the suspension of emergency European Central Bank liquidity assistance for the Greek financial sector, the closure of Greek banks, capital controls and wider economic instability.” Couple this with unpaid pensions and salaries and you have the recipe for what we’ll call a “domestic issue” and by that we mean a popular uprising. In what may be an early attempt to head off (or at least ameliorate) such a scenario, Germany is reportedly prepping a plan to support Greek banks in the event Greece does in fact take the plunge. 

From Die Zeit (via Google translate):

[Berlin] is working on a plan that would allow it to keep Greece in the case of a sovereign default in the euro. According to information from the TIME fears the coalition in Berlin that the government in Athens in one of its payment obligations possibly coming weeks can not meet. In such a case, the European Central Bank (ECB) would have to stop supplying the country with the euro.

 

Last week, Greece could barely afford a due payment to the International Monetary Fund (IMF). The now-discussed plan aims to enable the ECB to finance Greece in case of a failure further . For this, the Greek banks would be restored to the extent that they can participate in the financial transactions of the central bank even after a bankruptcy.

All of this would be contingent upon Greece adopting a more conciliatory (and less taxi driver-ish) approach to reforms — we think it’s fair to say that the chances of that are rather slim. In the event Athens isn’t amenable to the plan, Zeit suggests the eurozone will then “facilitate” the transition to the drachma.

Prerequisite for such a concession is but how it is said that Greece are cooperatively show and was ready to meet the reform requirements. If this is not the case, will take a secession from the monetary union in buying the federal government. Even then Greece will but as far as possible be tied to Europe – through aid flows from Brussels to facilitate the transition to its own currency.

 

The German government has declined comment.

As a reminder, UBS raised the probability of a Greek default to 50-60% in an April 2 note which also featured this rather troublesome outlook:

The recent pace of progress is disappointing, so that we need to increase the exit risk probability from 10-20% to 20-30%. In addition, the risk of capital controls is substantial because a default would accelerate deposit flight. 

And from a more recent note:

The country’s cash reserves are running low and are likely insufficient to meet obligations falling due in May which means the pressure on Greece will mount over the next couple of weeks before the Eurogroup meeting on April 24th. A failure to agree a final list of reforms and prolonged withholding of bailout funds as a result would be a very negative outcome for Greece. 

Meanwhile, Greek banks are still hanging on thanks to incremental ELA increases even as talks are still deadlocked and the IMF “can’t rule out” a destabilizing tail event. Via Bloomberg:

  • Talks on resolving Greece’s financial deadlock resume today
  • As negotiations for Greek economic reforms drag on, a further “crisis” that would unsettle financial markets can’t be ruled out, IMF says
  • Greece won access to more emergency cash for its banks; ECB raises the cap on Emergency Liquidity Assistance by EUR 800m to EUR 74b

*  *  *

As for GGBs, well, let’s just say they are pricing in a bit of risk as yields climb to their highest levels since April of 2013:

end
Oh oH!! Varoufakis is set to meet the  Lee Bukheit, the very big sovereign bankruptcy lawyer in the USA  (firm: Cleary Gottlieb).
S and P then downgrades Greece to CCC plus.
(courtesy zero hedge)

Ahead Of Varoufakis’ Meeting With Famous Sovereign Bankruptcy Lawyer S&P Downgrades Greece To CCC+

To think it was just recently in September of last yearwhen the S&P, seemingly unaware of the tragic reality facing Greece in just a few months (by reality we meen democratic elections which overthrew the previous regime which was merely a group of Troika picked technocrats), upgraded Greece to B and said “The upgrade reflects our view that risks to fiscal consolidation in Greece have abated.”

Well, the risks have unabated, and two months after S&P flip-flopped and downgraded Greece back to B- on February 6, moments ago it downgraded it again, this time to triple hooks, aka the dreaded CCC+.

S&P said that without deep economic reform or further relief, S&P expects Greece’s debt, other financial commitments to be unsustainable. S&P views that Greece increasingly depends on favorable business, financial, and economic conditions to meet its financial commitments.

The rater adds that “conditions have worsened due to the uncertainty stemming from the prolonged negotiations between the Greek govt and its official creditors” and that economic prospects could deteriorate further unless talks between Greece and its creditors conclude soon.”

In short: Greece is about to default and/or exit the Eurozone so this time at least S&P is prepared.

Ironically this comes a day before Varoufakis is set to meet with Obama. It will be followed by meetings with European Central Bank head Mario Draghi on Friday, Secretary of the Treasury Jack Lew, Italy’s finance minister Pier Carlo Padoan and IMF officials.

But, as City AM reports, the biggest news is that the Greek Finance Minister “will on Friday meet with infamous sovereign debt lawyer Lee Buchheit, who has helped numerous countries restructure their debt. Buchheit is a partner at top US law firm Cleary Gottlieb.

It comes just a week before a vital meeting of Eurozone finance ministers on 24 April which could be the last chance Greece has of gaining extra funds before hefty repayments are due to its creditors in May.

As a reminder, “Lee Buchheit, a leading sovereign-debt attorney and the man who managed the eventual Greek debt restructuring in 2012, was harshly critical of the authorities’ failure to face up to reality. As he put it, “I find it hard to imagine they will now man up to the proposition that they delayed – at appalling cost to Greece, its creditors, and its official-sector sponsors – an essential debt restructuring.”

The endgame for Greece has arrived.

 

end

The German Finance Minister Schaeuble sees no contagion??? Just look at peripheral bonds yields and spreads these past few days, once it looked like Greece was going to default:

 

German FinMin Schaeuble Sees “No Contagion” From Grexit, Don’t Show Him This Chart

Because all that matters is what some elite says, we are sure the following propaganda from German FinMin Schaeuble will be regurgitated by the mainstream media:

  • *SCHAEUBLE SAYS “YOU CAN’T SEE ANY CONTAGION”

However, if one actually looks at the data – European peripheral bond risk premia have soared in the last week as Grexit fears resurge.

Charts: Bloomberg

end

This is another nightmare for the ECB as the 10 year German bond trades inches from zero at 10 basis points.  The German bond yield is negative from 8 years out.  This would negate the ECB buying much of these bonds setting the stage for a failure in their Draghi’s QE Europe.
(courtesy zero hedge)

German 10Y Bond Yield Plunges To 10bps, Negative To 8 Years

German yields cratered-er today (as DAX flash-crashed into the close). 10Y yields are now at 10.5bps – record lows – and the entire German yield curve is now at negative rates to 8 year maturity. 3-Month German bills hit -42bps!! Must all be a signal of the economic success of Q€ right?

 

German bond yield compression is accelerating…

 

As the curve collapses…

 

Charts: Bloomberg

 

end

 

Oil related stories:
API inventories rise and yet crude (WTI) spikes above 55.00
(courtesy zero hedge)

WTI Spikes Above $55 After Crude Inventories Rise At Slowest Pace In 14 Weeks

For the 14th week in a row, US crude inventories rose; but against expectations of a 3.5mm build (and weak API overnight), DOE printed a mere 1.294mm bbl build – the lowest since the build streak began on the first week of January. Crude prices are spiking on the news (though we note last week saw the biggest build in 30 years with the 2 week average above trend). Total crude inventrory continues to make new record highs (and pressure Cushing capacity).

Lowest build since the 14 week streak began…

But total inventory remains at record highs…

Bear in mind that averaged across 2 weeks, the pace of build remains very stable…

and the reaction…

Charts: Bloomberg

 

end

 

Your more important currency crosses early Wednesday morning:

 

 

 

 

Euro/USA 1.0591 down .0055

USA/JAPAN YEN 119.49 up .044

GBP/USA 1.4744 down .0028

USA/CAN 1.2529 up .0044

This morning in Europe, the Euro fell  again by 55 basis points, trading now well below the 1.06  level at 1.0591; 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 4 basis points and trading just below the 120 level to 119.49 yen to the dollar.

The pound was down this morning as it now trades just above the 1.47 level at 1.4744  (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 down by 45 basis points at 1.2529 to the dollar

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

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

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

3. Short Swiss franc/long assets (European housing/Nikkei etc.  This has partly blown up (see  Hypo bank failure)

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

The NIKKEI: Wednesday morning : down by 38.92  points or 0.20%

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

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

Gold very early morning trading: $1191.50

silver:$16.15

 

 

Early Wednesday morning USA 10 year bond yield: 1.89% !!!  down 1  in basis points from Tuesday night/

 

USA dollar index early Wednesday morning: 99.16 up 39 cents from Tuesday’s close. (Resistance will be at a DXY of 100)

 

 

 

This ends the early morning numbers, Wednesday morning

 

 

 

And now for your closing numbers for Wednesday:

 

 

Closing Portuguese 10 year bond yield: 1.71% down 5 in basis points from Tuesday

Closing Japanese 10 year bond yield: .33% !!! par in basis points from Tuesday

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

Spanish 10 year bond yield: 1.26% !!!!!!

 

Your Wednesday closing Italian 10 year bond yield: 1.26% down 5 in basis points from Tuesday:

 

trading at par with  Spain.

 

 

IMPORTANT CURRENCY CLOSES FOR TODAY

 

 

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

 

Euro/USA: 1.0680 up .0035  ( Euro up 35 basis points)

USA/Japan: 119.14 down .303  ( yen up 30 basis points)

Great Britain/USA: 1.4845 up .0074   (Pound up 74 basis points)

USA/Canada: 1.2302 down .0182 (Can dollar up 182 basis points)

 

The euro rose during the afternoon, stopping any further losses as the uSA dollar was whacked from all sides today.  It settled up 35 basis points to 1.0680. The yen was up 30 basis points points and closing well below the 120 cross at 119.14. The British pound gained considerable  ground today, 74 basis points, closing at 1.4845. The Canadian dollar made a monster move northbound to the USA dollar, up 180 basis points closing at 1.2302.

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

 

 

end

 

 

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

 

Your closing USA dollar index:

98.37 down 41 cents on the day.

 

 

European and Dow Jones stock index closes:

 

 

 

England FTSE up 21.52 or 0.30%

Paris CAC up 36.29 or 0.70%

German Dax up 3.74 or 0.03%

Spain’s Ibex up 73.70 or 0.63%

Italian FTSE-MIB up 277.63 or 1.17%

 

 

The Dow:up 75.91 or 0.42%

Nasdaq; up 33.73 or 0.68%

 

 

OIL: WTI 55.93 !!!!!!!

Brent: 58.84!!!!

 

 

Closing USA/Russian rouble cross: 49.78 up  1 1/4 rouble per dollar

the best advancing currency so far this year.

 

 

 

end

 

 

 

And now your important USA stories:

 

 

NYSE trading for today.

Oilpocalypse Wow – Stocks Pop, Dollar Drops As Crude Hits 5-Month Highs

Terrible China data… no change from Draghi… and dismal data in the US… BTFATH in stocks and crude’s move made this clip seem more than appropriate as“we see the worst in people”

*  *  *

Before we get started, two rather notable things today:

First, DAX dumped at the EU close (for absolutely no good reason whatsoever) and that started the divergence between US and EU stocks….

And Second, WTI Crude was unstoppable as it spiked to $56.69 (from $50 on Friday) – crushing the WTI-Brent spread –

Breaking to its highest level since Dec 2014…

*  *  *

Small Caps led the way on the day (but Trannies decided today – after a huge short squeeze spike at the open – that higher oil prices are not good)… UGLY CLOSE

Futures show the big moves started as Europe opened…

Which on the week leaves Trannies lower – after tagging unch briefly…

The S&P perfectly top-ticked the trendline from March and reversed into the last 30 minutes…

VIX was monkey-hammered back to a 12 handle…

But credit was less excited about the afternoon equity exuberance…

Treasury yields overall were mixed today (long-end slightly higher, short-end slightly lower in yield)

The US Dollar dropped again – mainly after Draghi’s no comments sparked EUR buying but there was an early afternoon tumble as oil soared…

All commodities gained on the day – as the dollar drooped – but Crude caught the attention of most…

Which crushed the Brent-WTI spread…

Charts: Bloomberg

end

 

USA industrial production plunges by the most since 2012 to -.6%. This is the 4th miss in a row!! Also to give flavour to the story, utility output also drops the most in 9 years. Ladies and Gentlemen;  the USA economy is faltering terribly:

(courtesy zero hedge)

 

US Industrial Production Plunges By Most Since Aug 2012, Utility Output Drops Most In 9 Years

US Factory Output was twice as bad at -0.6% – the worst since August 2012 (and lamost worst since June 2009). This is the 4th miss in a row. What is even more stunning is that despite the coldest of cold winters that crashed the US economy, Utilities saw their output crash 5.9% – the most in 9 years(explained as follows – largely reversing a similarly-sized increase in February, which was related to unseasonably cold temperatures). Motor Vehicles saved the data from being a catastrophe with a 3.2% rise (following a 3.6% drop In Feb).

Not a pretty picture…

With Utilities output dropping by the most since 2006…

Charts: Bloomberg

end
The huge New York (Empire) manufacturing index plunges as does new orders to Jan 2013 lows.  The New York manufacturing is an extremely important manufacturing area and they are suffering terribly:
(courtesy zero hedge)

April Empire Fed Manufacturing Plunges, New Orders Crash To Jan 2013 Lows

But it’s April… the weather-bounce is supposed to be here. Empire Fed Manufacturing tumbled to -1.2 in April (missing expectations of a post-weather-bounce to 7.17) from 6.9 in March. Across the board the report was painful as Prices Paid surged, employment plunged, and work hours tumbled. Hope rermains as the business outlook improved (but even there capex and new orders were weak) New Orders stood out as it crashed to its lowest since Jan 2013. It appears there is more afoot than just weather…

No Weather Bounce!!

As New Orders collapsed…

Charts: Bloomberg

 

end

 

Dave Kranzler discusses today’s USA data released:

 

(courtesy Dave Kranzler/IRD)

 

Economic Reports Indicate Economy Entering Crash Mode

Weaker-than-expected headline data in the next week should push consensus expectations meaningfully towards an outright quarter-to-quarter contraction for the April 29th initial estimate of first-quarter 2015 GDP growth. Once all revisions are in place, that first-quarter GDP contraction should be the deepest since the economic collapse from 2007 into 2009, and it would raise serious market concerns for a subsequent, second-quarter GDP downturn (release on July 30th) and formal recognition of a “new” recession.  – John Williams, Shadowstats.com, April 10, 2015

Although the retail sales report for March showed a small bounce from February, it missed consensus estimates by a country mile.  The sales report was boosted by a jump in auto sale in March.  Based on various reports, it sounds like the U.S. Government used taxpayer money to boost their purchases of cars from GM and likely Ford, in order to keep union workers employed.

And, as a matter of fact, the GM sales report for March directly states that “Government sales were up 19% and rental deliveries were down 6%” (link).   So there you have it.  GM’s sales year over year for March were down 2%.  It might have been a disaster if the Government hadn’t stepped in with your money to buy up bulging factory inventory.

Speaking of inventories, the business inventory to sales ratio is starting to mirror the stock market and the dollar and go parabolic – click to enlarge:

BusinessSalesInventories

The parabolic move in the ratio is not due to manufacturing and industrial output, as we’ll see in a minute, it’s because final demand is tanking – along with the middle class.  Note:  The U.S. is China’s biggest customer and China’s exports PLUNGED in March.  Note:  the financial media will NEVER present this data and connect the dots.

Implications…are severely negative for the U.S. dollar, since happy presumptions of ongoing U.S. economic recovery and growth, and expectations of tightening actions by the Fed are likely to fall apart. Some minor pullback in the dollar already has taken place, following the recent signs of mounting U.S. economic weakness. Again, unanticipated by the global markets, these issues have begun to threaten domestic U.S. economic and monetary-policy expectations. Implications also will become increasingly negative for domestic banking-system stability, domestic fiscal policy and related borrowing needs by the U.S. Treasury.  – John Williams, link at the top

This morning the Empire Manufacturing Survey was minus 1.19 vs. “happy presumptions” from Wall Street of plus 7.0.  That is a serious miss.   New orderscrashed to -6.0.  Note:  new orders reflects excessive business inventories and plunging end user demand.

Industrial production for March reported this morning also plunged minus .6% from February.  The Wall Street Ponzi scheme snake oil selling crowd expected a smaller decline of .3%.

Capacitiy Utilization

While the fraud-promoting financial media and Wall Street spinmeisters might start mumbling comments about the weather, we know that the weather across most of the country in March was warmer than normal. I know I played tennis in Denver outside several times during March. That’s highly unusual for March, which is typically the wettest month here in terms of snow.

Given that the consumer has been 70% of the GDP ever since Greenspan’s “maestro” printing press engineered the “it’s different this time new economy,”  perhaps this chart correlates almost perfectly with the path of the general economy – click to enlarge:

retail-sales

Given that the economy appears to be entering “crash mode,” and given that the money supply is now almost 5x higher than it was in 2009, and given that Treasury debt outstanding is now $7 trillion dollars – or 64% – higher now than in 2009, and given that interest rates can only go negative, I would suggest that the Fed is out of tricks and what is coming at us in the system is going to be much WORSE than what occurred in 2008.

end

 

 

The following is another crisis that is spawning:  water is disappearing out of Lake Mead which feeds 3 states:  Nevada, California, and Arizona.

 

(Bloomberg)

Leaving Las Vegas: Lake Mead Water Levels Continue To Crash

The last time we looked at Las Vegas water supply, the comments from professionals were “Vegas is screwed,” and unless water levels in Lake Mead rise by 7%, “it’s as bad as you can imagine.” The bad news… Water levels in Lake Mead have never been lower for this time of year – and this is before the Summer heat seasonal plunge takes effect.

We noted previously, as with many things in Sin City, the apparently endless supply of water is an illusion.

America’s most decadent destination has been engaged in a potentially catastrophic gamble with nature and now, 14 years into a devastating drought, it is on the verge of losing it all.

“The situation is as bad as you can imagine,” said Tim Barnett, a climate scientist at the Scripps Institution of Oceanography. “It’s just going to be screwed. And relatively quickly. Unless it can find a way to get more water from somewhere Las Vegas is out of business. Yet they’re still building, which is stupid.”

And things haven’t improved at all…

Source: The Burning Platform

Which as we concluded previously, is a grave concern:

“It’s just going to be screwed. And relatively quickly,” warns Tim Barnett, of the Scripps Institution of Oceanography, telling The Telegraph, the situation in Las Vegas is “as bad as you can imagine”. After a devastating, 14-year drought drained the reservoir that supplies 90% of the city’s water, the apparently endless supply of water is an illusion as Las Vegas population has soared.

As Barnett ominously concludes, “unless it can find a way to get more water from somewhere, Las Vegas is out of business. Yet they’re still building, which is stupid.”

end
Ellen Brown with Greg Hunter on the huge water shortages in California:
(courtesy Greg Hunter/USAWatchdog)

Drought Number One Emergency in California-Ellen Brown