April 21/Huge addition of 1.434 million oz into the SLV/Huge addition of 3.26 tonnes of gold into GLD/Silver OI now at multi year highs despite a flat $16.00 level/ECB threatens Greece that it will cut off its life-line ELA/Greece and Russia to sign historic gas pipeline and distribution deal/Euribor now negative for the first time in history/Poland buys from USA Patriot Defense Systems/

Good evening Ladies and Gentlemen:



Here are the following closes for gold and silver today:


Gold:  $1202.90 down $9.40 (comex closing time)

Silver: $16.00 up 12 cents (comex closing time)


In the access market 5:15 pm

Gold $1202.30

Silver: $16.03



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 good delivery day, registering 659 notices served for 65,900 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 241.72 tonnes for a loss of 61 tonnes over that period. Lately the removals  have been rising!




In silver, the open interest rose by another 2761 contracts despite the fact that Monday’s silver price down by 34 cents. The total silver OI continues to remain extremely high with today’s reading at 179,707 contracts rising to multi-year record highs. The front April month has an OI of 172 contracts for a gain of 0 contracts. 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 0 notices served upon for nil oz.



In gold,  the total comex gold OI rests tonight at 398,518 for a gain of 322 contracts with gold down by $9.40 yesterday. We had 659 notices served upon for 65,900 oz.



Today, we had a huge addition of 3.26 tonnes of   gold inventory at the GLD/  Gold Inventory rests at 742.35  tonnes

Looks to me like London is out of gold.


In silver, /  /we had a huge addition of 1.434 million oz in silver inventory at the SLV/ and thus the inventory tonight is 326.334 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 2761, contracts despite the fall in price on Monday (34 cents). Not only that but the OI for the front month of May fell by only 766 contracts as we have only 7 trading days left before first day notice.  The OI for gold rose by 322 contracts up to 398,518 contracts despite the fact that the price of gold fell by $9.40 on Monday.

(report Harvey)


2,Many important commentaries on Greece

i.The ECB is threatening Greece that they will cut off his emergency life-line: its ELA as more citizens remove Euros from the banking system.

ii. Even the White House is getting nervous about a GREXIT and it’s deleterious effects on the world’s economy.

iii. Russia and Greece to sign a historic gas pipeline deal.  The Blue stream pipeline will now go through Greece bypassing Bulgaria and onto Austria

(zero hedge)


3. China has its 3rd major default.  This time a very big electrical transmission company.

(courtesy zero hedge)


4. Poland buys USA patriot defense systems.  This should annoy Putin greatly

(zero hedge)

5.  Another big story today from Europe where we witness for the first time ever a negative Euribor rate (same as Libor but instead of using the dollar they use the Euro). This means that the borrower of treasuries in a swap for euros receives cash as a bonus for entering the deal!! What is the real reason for this?? (see the commentary on it)


6.  The USA is sending in their ships to counter the Iran ships heading to Yemen.  Today Saudi Arabia announced a halt to bombing and their National Guard will enter Yemen and restore order.

(zero hedge)


we have these and other stories for you tonight



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

Here are today’s comex results:


The total gold comex open interest rose by 322 contracts from 398,196 up to 398,518 with gold down by $9.40 yesterday (at the comex close). We are now in the active delivery month of April and here the OI fell by 640 contracts down to 1,186. We had 624 contracts filed upon on Monday so lost 1600 gold ounces or 16 contracts that will not stand for delivery in April. The next non active delivery month is May and here the OI rose by 2 contracts up to 450.  The next big active delivery contract month is June and here the OI rose by 538 contracts up to 265,080. 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 54,773. The confirmed volume yesterday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 144,341 contracts. Today we had 659 notices filed for 65,900 oz.

And now for the wild silver comex results.  Silver OI rose by 2761 contracts from 176,946 up to 179,707 despite the fact that silver was down by 34 cents, with respect to Monday’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 remained at 172 for a gain of 0 contracts.  We had 0 notices filed on Friday so we neither gained nor lost any  silver contracts standing in this delivery month of April. The next big active delivery month is May and here the OI fell by only 766 contracts down to 67,295.  We have less than 2 weeks before first day notice on Thursday, April 30.2015. The estimated volume today was poor at 33,000 contracts (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in at 71,781 contracts which is excellent in volume. We had 0 notices filed for nil oz today. The fact that very little silver contracts are leaving the May delivery month arena must scare the living daylights out of our banker friends.



April initial standings

April 21.2015



Withdrawals from Dealers Inventory in oz  nil
Withdrawals from Customer Inventory in oz 117,960.103 oz (Scotia)
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 31,982.440 oz (HSBC)
No of oz served (contracts) today 659 contracts (65,900 oz)
No of oz to be served (notices)  527 contracts(52,700) oz
Total monthly oz gold served (contracts) so far this month 2307 contracts(230,700 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   oz

Total accumulative withdrawal of gold from the Customer inventory this month

  396,183.5 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 withdrawals

i) Out of Scotia: 117,960.103 oz



total customer withdrawal: 117,960.103 oz


we had 1 customer deposit:

i) Into HSBC:  31,982.440 oz

total customer deposit: 31,982.440 oz


We had 0 adjustment:



Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 241.72 tonnes for a loss of 61 tonnes over that period. Lately the removals  have been rising!


Today, 0 notices was issued from JPMorgan dealer account and 650 notices were issued from their client or customer account. The total of all issuance by all participants equates to 659 contracts of which 319 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 (2307) x 100 oz  or  230,700 oz , to which we add the difference between the open interest for the front month of April (1186) and the number of notices served upon today (659) 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 (2307) x 100 oz  or ounces + {OI for the front month (1186) – the number of  notices served upon today (659) x 100 oz which equal 283,400 oz or 8.814 tonnes of gold.



we lost 1600 gold ounces that will not stand 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: 567,927.751 or 17.66 tonnes

Total gold inventory (dealer and customer) = 7,771,426.901  oz. (241.72) 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.






And now for silver


April silver initial standings

April 21 2015:



Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 468,850.220 oz (Brinks,CNT,Scotia)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory nil
No of oz served (contracts) 0 contracts  (nil oz)
No of oz to be served (notices) 172 contracts(860,000 oz)
Total monthly oz silver served (contracts) 343 contracts (1,715,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  884,245.2 oz
Total accumulative withdrawal  of silver from the Customer inventory this month  11,068,037.0 oz


Today, we had 0 deposits into the dealer account:

total dealer deposit: nil   oz


we had 0 dealer withdrawal:


total dealer withdrawal: nil oz


We had 0 customer deposit:



total customer deposits: 57,991.900  oz


We had 3 customer withdrawals:


i) Out of Scotia; 60,329.20 oz

ii) Out of CNT: 7999.800 oz

iii) Out of Brinks;  400,617.500 oz


total withdrawals;  468,850.22 oz


we had 1 minor adjustment:  not worth recording



Total dealer inventory: 62.635 million oz

Total of all silver inventory (dealer and customer) 175.161 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 (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 (172) 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:

343 (notices served so far) + { OI for front month of April(172) -number of notices served upon today (0} x 5000 oz =  2,575,000 oz standing for the April contract month.


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


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

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




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

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

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

i) demand from paper gold shareholders

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

vs no sellers of GLD paper.


And now the Gold inventory at the GLD:

April 21.2015: a huge addition of 3.26 tonnes of gold inventory at the GLD/Inventory rests at 742.35 tonnes

April 20.2015: no change in gold inventory at the GLD/Inventory rests at 739.06 tonnes

April 17.2015/ we had a huge addition of 3.01 tonnes of gold inventory at the GLD.  It looks like the raids at the GLD have stopped.

April 16.2015: no change in inventory at the GLD/total inventory at 736.08 tonnes

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 21/2015 /  we had a huge addition of 3.26 tonnes of   gold inventory at the GLD/Inventory stands at 742.35 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 : 742.35 tonnes.




And now for silver (SLV):

April 21.2015/we had another huge addition of 1.434 million oz of silver into the SLV

April 20/ no change in silver inventory tonight/SLV 324.900 million oz.

April 17.2015: no change in silver inventory tonight at the SLV.324.900 million oz

April 16.2015: no change in silver inventory tonight at the SLV/324.900 million oz

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 21/2015 we had another huge addition in inventory of 1.434 million oz  at the SLV / inventory rests at 326.334 million oz





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


Central fund of Canada data not available today/

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

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

1. Central Fund of Canada: traded at Negative 8.8% percent to NAV in usa funds and Negative 8.6% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.8%

Percentage of fund in silver:37.80%

cash .4%

( April 20/2015)



Sprott gold fund finally rising in NAV

2. Sprott silver fund (PSLV): Premium to NAV falls to + 0.94%!!!!! NAV (April 21/2015)

3. Sprott gold fund (PHYS): premium to NAV rises at -.31% to NAV(April 21/2015

Note: Sprott silver trust back  into positive territory at +0.94%.

Sprott physical gold trust is back into negative territory at -.31%

Central fund of Canada’s is still in jail.





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


Gold and silver trading early this morning

Russia adds 31 tonnes of gold into its official reserves. Normally they purchase around 300,000 oz or 9 tonnes per month. I guess they are in competition with China to obtain as much gold as possible.


(courtesy Goldcore/Mark O’Byrne)


Currency Wars Back As Russia Buys One Million Ounces of Gold in March

– Russia buys one million ounces and increases gold reserves by another 2.6% in March
– Russia sees gold as important monetary and strategic asset in stealth currency wars
– Large purchase by Russia who normally buy some 300,000 ounces a month
– Russian gold reserves, at nearly 40 million ounces, are now fifth largest in the world
– Russia likely coordinating gold reserve accumulation with ex-Soviet States
– Concerns regarding euro and crisis in erstwhile reserve currency, the dollar
– Gold remains central to international monetary system
– Central banks continue to accumulate large volumes


Russia increased its gold holdings by one million ounces in March, bringing its total reserves to nearly 40 million ounces or 1,238 metric tonnes. The Russian one million ounce gold purchase is a large one even by Russian standards as in recent years they have consistently been buying roughly 300,000 ounces per month.

It followed a two month break from the gold market which had led to erroneous speculation that Russia was not interested in increasing its gold reserves any further.

Since 2005, Russia’s gold reserves have increased three-fold. As a comparison, in the second quarter of 2009, Russia only had 550 tonnes of gold in its official reserves meaning that their reserves have doubled in recent years.

Russia’s gold reserves are now at least the fifth largest national gold reserves in the world or sixth largest if one includes the IMF.

Officially Reported Gold Holdings (Not Including People’s Bank of China) - Wikipedia

Russia has consistently dollar cost averaged into gold throughout the global financial crisis and since the recent geopolitical crisis over Ukraine, their gold accumulation has increased.

In the last nine months of 2014, in the midst of sanctions and the collapse in oil prices which led to sharp falls in the rouble, the central bank continued to buy gold, demonstrating the vital strategic importance placed by the government of Russia on the precious metal.

The strategy has proven prudent as gold has acted as a hedge and protected Russia’s reserves from the declining value of the rouble and indeed the declining value of the euro (see chart below).


The ongoing accumulation of official gold by Russia is part of a reserve diversification strategy. Gold is held by central banks as one of their key reserve assets alongside foreign exchange assets including dollars and euros, and also IMF Special Drawing Rights (SDRs).

Some Russian analysts point to the threat of continued western sanctions on Russia as a renewed catalyst for the Russian central bank diversifying out of dollars and euros by increasing its gold reserves.

There is also the strong possibility that Russia is coordinating gold reserve accumulation with ex-Soviet States as we warned of last August.

Given very close economic ties and cooperation between Russia, Kazakhstan and Belarus, and a trajectory towards economic union, it is probable that the these and other ex Soviet countries are coordinating monetary policy which would include a common approach to official gold reserves accumulation.

This will be worth watching in the coming months and years. Like China, it is possible that Russia and its allies may not be fully reporting their gold reserves accumulation to the IMF.

It is not obligatory that they do so and given the very frayed relationship with Washington it seems likely that at some point the Russians may adopt the Chinese stance and not provide data on their gold buying to the IMF.

The People’s Bank of China (PBOC) does not telegraph its intentions or gold purchases to the market as doing so would lead to a surging gold price and to a further devaluation of its foreign exchange reserves.

Aren’t the Russians likely to follow suit and either not declare or partially declare their gold reserve accumulation?

Must Read Guide Currency Wars: Bye, Bye Petrodollar – Buy, Buy Gold


Today’s AM LBMA Gold Price was USD 1,197.70, EUR 1,120.26 and GBP 804.58 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,203.25, EUR 1,120.34 and GBP 806.31 per ounce.

Gold fell 0.71 percent or $8.60 and closed at $1,195.90 an ounce yesterday, while silver fell 1.66 percent or $0.27 closing at $15.99 an ounce.

Gold in Euros - 1 Year

Gold stayed below the $1,200 level as a stronger dollar and a rally in in global equities dimmed the yellow metal’s safe haven appeal for now.

Spot gold in Singapore was down 0.2 percent to $1,194 an ounce near the end of day trading. Gold priced in the beleaguered euro is up another 0.6% today given weakness in the euro.

Russia’s increased its gold reserves to 39.8 million troy ounces as of April 1 from 38.8 million ounces last month, noted their central bank (see blog).

Today, India celebrates the festival of Akshaya Tritiya which is one of the most auspicious days in the calendar to buy gold.

Gold purchases in India are reported to have been slow today due to the poor monsoon. Indians are the world’s second biggest buyers  of bullion and Akshaya Tritiya celebrated on today is usually one of the busiest gold-buying festivals along with Diwali and Dhanteras.

Gold imports in India more than doubled in March to 125 tonnes from 60 tonnes a year before as the trade anticipated healthy demand.

In Europe in late morning trading gold is up 0.2 percent at $1,199.90 an ounce. Silver is up 0.54 percent at $16.05 an ounce and platinum is up 0.27 percent at $1,152.50 an ounce.




(courtesy IndiaTimes/GATA)


Indian gold imports may rise 89 percent in April, jewellers group says


By the Press Trust of India
via The Times of India, Mumbai
Monday, April 20, 2015

MUMBAI — India’s gold imports are likely to rise more than 89 percent at 100 tonnes this month compared with last year, mainly due to weakness in international prices and easing of restrictions by the Reserve Bank of India, an industry body said.

Gold imports stood at 53 tonnes during April last year, according to data given by The All-India Gems and Jewellery Trade Federation.

“Until now we have imported nearly 100 tonnes of gold. So we are expecting the total imports to be a little ove ..

“Until now we have imported nearly 100 tonnes of gold. So we are expecting the total imports to be a little over 100 tonnes,” the federation’s new chairman, Manish Jain, told PTI here. …

… For the remainder of the report:





Peter Boehringer chronicles his campaign to bring Germany’s gold back home:

(courtesy Peter Boehringer/GATA)


Book tells of Germany’s foreign-vaulted gold and the campaign to bring it home


3p ET Tuesday, April 21, 2015

Dear Friend of GATA and Gold:

A book chronicling the German gold repatriation campaign, written by its leader, Peter Boehringer, has just been published. It’s titled “Holt Unser Gold Heim: Der Kampf um das Deutsche Staatsgold,” which is roughly “Bring Our Gold Home: The Struggle over the German State’s Gold.”

In addition to the history of the gold repatriation movement, the book reviews the history of postwar Germany’s vaulting much of its gold abroad and explains gold’s crucial and enduring if unappreciated place in the world financial system.

For the moment the book is available only in German. It can be ordered through Amazon here:


Let’s hope that there soon is demand to put the book into English and other languages.

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




(courtesy Turd Ferguson/GATA)

Rome forum on Chinese currency’s status overlapped Washington forum


10:23a ET Tuesday, April 21, 2015

Dear Friend of GATA and Gold:

Last week’s private meeting in Washington called by the Official Monetary and Financial Institutions Forum and the World Gold Council to discuss the internationalization of the Chinese currency —


— wasn’t the only one of its kind lately. The TF Metals Report’s Turd Ferguson today calls attention to a similar meeting held at almost the same time in Rome by the Bank of China, which, while government-owned, is not to be confused with the Chinese central bank, the People’s Bank of China.

The TF Metals Report’s commentary is headlined “An Overlooked News Item” and it’s posted here:


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



(courtesy Peter Cooper/ArabianMoney.com)


Negative interest rates are heaven for gold prices with $9,000 to $12,000 in an IMF currency reset

Posted on 20 April 2015 with no comments from readers

Did I blink or have the yields on German bonds just gone negative this week? That means after inflation bondholders are losing money. Holders of gold, on the other hand, have just seen record prices in euros. Gold does not pay any interest but it won’t cost you anything to hold either, so prices look set to go up and up.

Gold is one of the few asset classes that performs well in a deflationary economic environment and that is where the global central banks seem to be taking us next. Printing money is apparently having the reverse of the intended effect and lowering price levels and not causing inflation.

Deflation shock

Let the academics debate the reason for that for the next few decades. We investors have to live in the here-and-now and try not to lose money. It is not so easy when asset prices are falling and not rising anymore.

Share prices are likely at or close to their peak now. That’s because as price deflation hits then company profit margins are squeezed and share prices are a function of profit multiples. No profits, no share price.

As for bonds the question simply becomes why would anybody want to hold an asset with a negative income and a huge downside risk in terms of capital value if interest rates ever do eventually go up? For real estate ultra-low interest rates ought to be generally good news for capital values as the cost of servicing a mortgage will be very low.

How much longer are we going to stay in a depressed world economy with much lower rates of growth, low interest rates and deflation rather than inflation? Absent some new technology or a major war it is hard to see the end in sight. Certainly the global central banks seem to be able to do little to help, though it might be a whole lot worse without them.

Silver lining

Gold is likely to make a comeback as a currency and not just as a commodity in such an environment. And because gold reserves are very limited and its price already elevated then silver will rise and rise an alternative precious metal as it did in the past.

Indeed, we are heading for a currency reset as the huge debt mountains of the world become due, cannot be paid and debtors default. The International Monetary Fund could well have no alternative but to include gold in a basket of global currencies in a reset, creating new Special Drawing Rights to restore economic confidence and restart the credit cycle.

But at what value would gold be valued if that happened? Hedge fund manager and author Jim Rickards has calculated a range of between $9,000 and $12,000 an ounce. Gold at around $1,200 today is a steal!

Posted on 20 April 2015
Early morning trading from Asia and Europe last night:

1. Stocks all higher on major Chinese bourses as bubblemania is the name of the game in Shanghai and Hong Kong  /Japan bourse higher /yen falls to 119.44/Shanghai to allow short selling to stop their bubble/China then cuts RRR by 1% and Chinese authorities sooth fears that they want to prick that huge bubble.  Today a huge electrical company’s bonds default.  This could spell trouble as this company is a subsidary of a state owned company

1b Chinese yuan vs USA dollar/yuan slightly weakens to 6.2016

2 Nikkei up by 274.60  or 1.4%

3. Europe stocks up/USA dollar index up to 98.26/Euro falls to 1.0679

3b Japan 10 year bond yield .31% (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.44/

3c Nikkei still  above 19,000

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

3e WTI  57.66  Brent 63.09

3f Gold up/Yen down

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

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

3h  Oil down  for WTI and down for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund below 8 basis points. German bunds in negative yields from 9 years out.

Except Greece which sees its 2 year rate rises a monstrous 28.76%/Greek stocks down a huge 2.99%/ still expect continual bank runs on Greek banks.

3j  Greek 10 year bond yield:  13.48% (up 50 in basis point in yield)

3k Gold at 1198.00 dollars/silver $16.07

3l USA vs Russian rouble;  (Russian rouble down 1/4  rouble/dollar in value) 53.58 , the rouble is still the best acting currency this year!!

3m oil into the 57 dollar handle for WTI and 63 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!! (yesterday lowered its RRR it is effectively doing QE)

30  SNB (Swiss National Bank) still intervening again in the markets driving down the SF.  It is not working:  USA/SF this morning 95.80 as the Swiss Franc is rising against most currencies.  Euro vs SF is 1.0250 well below the floor set by the Swiss Finance Minister.

3p Britain’s serious fraud squad investigating the Bank of England/ the British pound is suffering

3r the 9 year German bund now enters negative territory with the 10 year close to negativity at .07/no doubt the ECB will have trouble meeting its quota of purchases and thus European QE will be a total failure.

3s Last week the ECB increased the ELA to Greece  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. Today, the ECB is contemplating cutting off the ELA which would be a death sentence to Greece.


3t Greece informally asked the IMF to delay its payment for May 1 and they refused.

3 u. With the big meeting in Riga this Friday, there is no new developments on Greece to provide new reforms/thus do not expect anything to develop by Friday.  However Greece’s cash is running out.

If the ECB cuts off Greece’s ELA they would have very little money left to function.

4.  USA 10 year treasury bond at 1.87% early this morning. Thirty year rate well below 3% at 2.55%/yield curve flatten/foreshadowing recession.


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



(courtesy zero hedge/Jim Reid Deutsche bank)

Futures Surge On First Chinese State Bankruptcy, Greek Capital Controls And Approaching Default

Explaining the catalysts that move the “market” overnight has become so farcical it is practically an exercise in futility and absurdism.

We start in China where shortly following the default onoffshore bonds by one of China’s largest property developers, Kaisa, overnight we learned that Baoding Tianwei Baobian Electric Co Ltd would become the third listed Chinese firm to publicly default on an interest payment to bond investors on an onshore issue.  Unlike the previous two defaults, the bond in question was traded on the interbank market, which is much larger and restricted to institutional investors.

More importantly, the company is also a subsidiary of a large central state-owned enterprise, unlike China’s first two defaulters. Which means that should the default proceed without a bailout, the Chinese bond issuing pipeline will likely once again get clogged up over fears of future defaults across the corporate spectrum, which would also suggest even further easing by the PBOC in the coming weeks, and an even more parabolic move by the Chinese equity bubble.

Sure enough, the Shanghai Composite soared 1.8% on the news, and the Hang Seng closed 2.8% higher.

But wait, there was more bad news.

BBG reported that shortly after Greece launched “soft” capital controls, the ECB is now studying measures to rein in Emergency Liquidity Assistance (ELA) to Greek banks, as resistance to further aiding the country’s stricken lenders grows in the Governing Council, people with knowledge of the discussions said. As a reminder, ELA is the only reason why Greek banks are still operating. Without this, and the Cyprus style pervasive capital controls would become a reality in Greece next.

Not surprisingly, shortly thereafter Euro bonds of various Greek banks tumbled to fresh record lows:

  • ETEGA 4.375% 04/30/19 down 0.6 pt to 55.74, record low
  • EUROB 4.25% 06/26/18 down 0.6 pt to 55.34, record low
  • ALPHA 3.375% 06/17/17 down 0.4 pt to 64.15, record low
  • TPEIR 5% 03/27/17 down 0.2 pt to 62.23, record low

Not helping matters was Lord Nigel Lawson, who was chancellor of the exchequer in the government led by Margaret Thatcher, who said “there is a game of chicken going on” between the Germans and the Greeks in an interview with the WSJ. He added that Greece should never have joined the euro and will most likely default, according to a former United Kingdom government finance chief.

As a result of Greece getting ever closer to financial Armageddon, the Euro tumbled as low at 1.0660 overnight on fears that the ECB will be forced to buy plenty of other stuff (because it won’t be bonds: the ECB has almost run out of those) to keep the situation in the Eurozone stable if only for popular consumption purposes. Keep an eye on the 10Y Bund: if the German benchmark slides to 0% or under in the coming days, that will likely be a sign that Greece is indeed finished. But as for stocks, it was up, up, up.

Oh, and let’s not forget that yesterday the US sent ships to the Yemen coast in what appears to be an escalation and one designed to engage the Iran mini flotilla which as we wrote last week was also sent to show support for the Houthi rebel forces.

In short: a relentless barrage of negative news from around the globe, and US equity futures ramped as high as 14 point overnight before trimming their gains to just 7 points as of this writing: perhaps there was some good news that hit and we are unaware of?


European equities trade mixed after initially opening higher on strong earnings and strong performance from Chinese equities but the uptrend was reversed as German ZEW missed expectations (53.3 vs Exp. 55.3) falling for the first time since October 2014. This pushed equities lower alongside significant losses in Greek banks (National Bank of Greece -8.7%, Alpha Bank -4.3%) as the equity market refocused its attention back on to Greece after ECB sources suggested that the ECB may reduce their support for Greek banks (initially only FX markets reacted to the ECB sources, however Greek Banks then placed the squeeze on European equities). Nonetheless, the DAX (+0.5%) has outperformed the Eurostoxx50 (unchanged) helped by good earnings from SAP (+3.1%). Of note, look out for related stocks such as Oracle in the US session.

Elsewhere, UST’s have traded flat alongside core fixed income markets with little fundamental news dictating much direction while the GR/GE spread is seen considerably wider compared to its Eurozone counterparts with the 3y +46.2 bps and 10y +10bps.


EUR is weaker across on crosses on Greece which has boosted the USD (+0.5%). The strong USD has helped pare losses for AUD/USD which was weaker overnight after the RBA Minutes showed that further policy easing may be appropriate in the period going forward as markets expect more than 50% chance of a rate cut in May.


Strong USD (+0.5%) has extended on yesterdays’ gains which has weighed on WTI (-0.2%) and Brent (-0.3%) with spot gold (+0.1%) trading relatively flat, albeit below the USD 1,200 level.

To summarize: European shares mixed, off earlier highs, with the tech and financial services sectors outperforming and basic resources, banks underperforming. ECB said to study measures to rein in ELA to Greek banks. Euro weakens for second day against dollar, Greek 10-yr bonds drop for a seventh day. German ZEW below estimates. 3-month Euribor drops below zero for first time. The Swiss and German markets are the  best-performing larger bourses, Italian the worst. German 10yr bond yields rise; Portuguese yields increase. Commodities decline, with corn, wheat underperforming and natural gas outperforming.

Market Wrap

  • S&P 500 futures up 0.3% to 2098.1
  • Stoxx 600 up 0.5% to 408.9
  • US 10Yr yield down 2bps to 1.87%
  • German 10Yr yield up 1bps to 0.08%
  • MSCI Asia Pacific up 1.1% to 154
  • Gold spot up 0.2% to $1198.8/oz
  • Eurostoxx 50 -0%, FTSE 100 -0.1%, CAC 40 -0.1%, DAX +0.5%, IBEX +0.2%, FTSEMIB -1%, SMI +0.7%
  • Asian stocks rise with the Hang Seng outperforming and the Sensex underperforming.
  • MSCI Asia Pacific up 1.1% to 154; Nikkei 225 up 1.4%, Hang Seng up 2.8%, Kospi down 0.1%, Shanghai Composite up 1.8%, ASX up 0.7%, Sensex down 0.8%
  • Euro down 0.5% to $1.0684
  • Dollar Index up 0.34% to 98.27
  • Italian 10Yr yield up 1bps to 1.5%
  • Spanish 10Yr yield up 2bps to 1.49%
  • French 10Yr yield up 1bps to 0.36%
  • S&P GSCI Index down 0.3% to 429.3
  • Brent Futures down 0.5% to $63.1/bbl, WTI Futures down 0.2% to $56.3/bbl
  • LME 3m Copper down 0.2% to $5969/MT
  • LME 3m Nickel down 0.7% to $12710/MT
  • Wheat futures down 0.9% to 493.8 USd/bu

Bulletin Headline Summary From Bloomberg and RanSquawk

  • European equities were initially stronger on large cap pre-market earnings, however gains were erased following disappointing German ZEW survey and a focus back on Greece uncertainty
  • ECB sources suggest concerns over Greece and that the ELA haircut may be raised has subsequently weighed on Greek asset classes
  • Looking ahead, today sees a light economic calendar with API crude inventories and a raft of US large cap earnings from Verizon, United Technologies, Amgen, Lockheed Martin
  • Treasuries higher with bunds as German investor sentiment falls, ECB said to study curbs on funds to Greek banks; focus remains on next week’s Fed meeting after stretch of weaker than forecast U.S. data.
  • ECB is studying measures to rein in Emergency Liquidity Assistance to Greek banks, as resistance to further aiding the country’s stricken lenders grows in the Governing Council, people with knowledge of the discussions said
  • ECB staff have produced a proposal to increase haircuts banks take on the collateral they post when borrowing from the Bank of Greece, the people said
  • As Greece struggles to find cash to stay afloat, local authorities say they oppose a government decision to use their reserves for short-term financing
  • Germany’s ZEW index of investor expectations fell to 53.3 in April, lower than expected, from 54.8 in March; Bundesbank yesterday said recent data suggest German growth momentum weaker than expected
  • A Chinese power-transformer maker has become the country’s first state-owned company to default on an onshore bond, flagging the government’s rising tolerance for nonpayments as it allows market forces to play a bigger role
  • Koichi Hamada, an adviser to Japanese Prime Minister Shinzo Abe, says that additional easing is needed if BOJ’s inflation goal can’t be met even on a core-core CPI basis, Nikkei reports, citing comments made by Hamada at seminar in Tokyo today
  • Obama will oppose an effort by prominent Senate Democrats to amend a proposed fast-track trade bill with provisions punishing countries for manipulating their exchange rates
  • Sovereign bond yields mostly higher. Asian stocks gain, European stocks and U.S. equity-index futures rise. Crude oil lower, copper little changed, gold higher

US Event Calendar

  • No Data


DB’s Jim Reid concludes the overnight recap


We start in Asia this morning where equity markets have recovered somewhat falling yesterday’s large losses. The Hang Seng (+2.12%) is trading firmer following two successive down days, while China equities have also recovered with the Shanghai Comp (+0.86%) and CSI 300 (+1.38%) higher. Bloomberg has noted that the Shanghai Comp is stronger despite a 4% fall for a subsector of real estate names after the news that Kaisa has officially defaulted on its US Dollar debt. The developer confirmed that it missed two interest payments, meaning it now becomes the first Chinese developer to default on US Dollar debt (which stands at around $2.7bn). Elsewhere, the Nikkei (+1.03%), and ASX (+0.560%) are higher.

Moving on, it was Greece who once again took up much of the attention yesterday. Towards the end of the European session, news emerged that PM Tsipras had signed a legal decree obliging state bodies (with the exception of pension funds) to transfer reserves to the Bank of Greece. The move highlights the desperate liquidity situation, with Greek press Ekathimerini reporting that the move is expected to tap around €1.2bn which should be enough to pay civil servants’ salaries and pensions this month. Critically however, with it looking less and less likely that any sort of agreement and subsequent release of funds will be made at this Friday’s Eurogroup, it’s not obvious if the reserves will be enough to cover the €770m IMF payment due on May 12th. Despite the decree meaning that no parliamentary vote is needed, this looks set to cause some political unrest for Greece with the Mayor of Glyfada (the third largest municipality) commenting that ‘the government’s decision to seize our reserves not only raises legal and constitutional issues, but also a moral one’. Patoulis, the Mayor of Marousi, also commented that ‘it is a politically and institutionally unacceptable decision’ and that ‘no government to date has dared to touch the money of municipalities’.

In the meantime, the ECB’s Constancio yesterday said that the ECB is convinced that there will not be a Grexit and that in the event of a default, then Greece cannot be legally expelled from the Euro. Constancio also noted that capital controls will only be provided upon a request from the Greek government. Meanwhile, the ECB’s Nowotny reinforced the view that although a Grexit would be a huge problem for Greece itself, the contagion effect is likely limited compared to that of two years ago.

Back to markets yesterday, despite relatively limited newsflow and data, equity markets rebounded somewhat as tech stocks bounced and led the gains. Indeed, the S&P 500 (+0.92%) and Dow (+1.17%) recovered to close more or less at their highs for the day. As mentioned, despite all components closing up it was tech stocks (+1.79%) which provided the support as the likes of Apple (+2.3%), Microsoft (+3.1%) and Facebook (+2.9%) rallied with much of the sector due to report this week. On the subject of earnings, Morgan Stanley reported better than expected Q1 results during the session to help support the better tone. In the corporate space however, it was IBM, Royal Caribbean Cruises and Halliburton who caught our eye thematically.

In the case of Halliburton, despite producing better than expected earnings, the energy services provider announced that it was to accelerate the pace of job cuts, taking total job cuts to more than 10% of headcount over the past two quarters. At the same time, the company also announced plans to cut capex by 15% this year, in a similar theme to what we’ve seen in the energy space thus far. IBM and Royal Caribbean also reported profit ahead of analyst expectations, however top line revenues for both companies were less than expected, with the stronger Dollar theme a feature in the management calls after. In the case of IBM, currency movement was said to have accounted for two-thirds of the drop in revenues while Royal Caribbean slashed its full year forecast having cited the stronger Dollar impacting margins significantly. We’ve seen plenty of evidence through this earnings period so far of the stronger Dollar theme playing out and having a negative impact on results.

Away from yesterday’s earnings, it was largely quiet elsewhere in the US session. Data was thin on the ground with just a weaker than expected Chicago Fed National Activity Index to report of (-0.42 vs. +0.10 expected). Fedspeak was centered on the NY Fed’s Dudley who commented that he’s relatively optimistic that the growth prospects for the US economy will improve over the remainder of 2015, however that it’ll be important to determine whether the softness in the March employment report was temporary or, if it foreshadows a more substantial slowing in the labor market. Ultimately Dudley reiterated that timing of normalization remains uncertain because how the economy evolves in also uncertain. The Dollar yesterday climbed for the second consecutive session with the DXY finishing +0.43%. 10y Treasuries ended 2.4bps wider at 1.890%.

10y Bunds extended their gains yesterday as they fell 0.3bps to 0.075%. Peripheral markets were more mixed however, reflecting the Greek headlines as yields in Spain (+1.2bps) and Italy (+0.9bps) widened while Portugal (-0.6bps) was a touch firmer. Much like the US, European equities clawed back some of Friday’s losses as the Stoxx 600 (+0.79%), DAX (+1.74%) and CAC (+0.86%) all finished strongly. Performance in Greek assets was unsurprisingly weaker however as Greek equities finished 0.1% lower and 3y yields widened 161bps to now yield 27.4%.

Turning over now to today’s calendar, its particularly data light for the most part in both the European and US time zones with just the German ZEW survey expected. 35 S&P 500 companies reporting in the US will likely provide much of the direction however. Amgen, Verizon and Yahoo being the highlights.




As we explain above, the first Chinese state owned company defaults on its bonds and this could lead to serious consequences:


(courtesy zero hedge)

First Chinese State-Owned Firm Defaults On Its Bonds

Just hours after Chinese property developer Kaisadefaulted on two dollar-denominated 2018 notes (the 30-day grace period on some $52 million in interest due March 18 expired), we learn that a third publicly-listed Chinese firm will now miss a coupon payment proving yet again that “you never know where the skeletons in the closet are or what company will be next.”

This time it’s Baoding Tianwei Group Co.. which, asBloomberg reports, has been struggling for quite some time:

“Our company suffered huge losses in 2014 and the debt to asset ratio surged quickly,” Baoding Tianwei said in today’s statement. “Our company has lost financing ability and suffered from a capital shortage. We can’t raise enough money to repay interest, despite all the efforts we have made.”


Baoding Tianwei had a loss of 10.14 billion yuan in 2014, according to today’s statement. A statement from the company on April 3 showed that by the end of last year, Tianwei had some 1.86 billion yuan of overdue borrowings. Its 22.96 percent stake in listed firm Baoding Tianwei Baobian Electric Co. has been frozen by local courts because of its dispute with creditors, according to China Credit Rating Co.

The interesting thing about Baoding Tianwei though, is that it’s a subsidiary of a state-owned firm and initially, some observers wondered whether the parent would step in to avert a default by the power transformer manufacturer which needed to make nearly $14 million in interest payments on April 2016 notes by the close of business Tuesday.

As it turns out, the government did not intervene and Baoding Tianwei has indeed defaulted marking the first default by a state-run enterprise.

 The implication is that Beijing may allow the market to play a greater role in determining companies’ financial future — even if those companies are state-run. This sets up an interesting dynamic considering that 1) it’s looking increasingly likely that the dreaded “hard landing” will materialize in China, and 2) at more than $14 trillion as of 2013, the country has the largest corporate debt burden on the planet. Here’s Bloomberg again:

China’s economy expanded at the weakest pace since 2009 last quarter, with output, investment and retail data pointing to a deepening slowdown, data released by the statistics bureau in Beijing on April 15 showed. On Sunday, the central bank cut the reserve-requirement ratio for banks by 1 percentage point, stepping up stimulus policies.


China’s corporate debt is the highest in the world, former central bank adviser Yu Yongding wrote in the official China Daily last week. Companies had $14.2 trillion in debt at the end of 2013,exceeding every other country including the U.S., which had $13.1 trillion in company obligations, Standard & Poor’s said in a June report…


“We need to be aware the government won’t be able to protect all the state-owned companies,” Ivan Chung, an analyst at Moody’s Investors Service, said in a phone interview today. “For those that are not strategically important, they may receive less government support and encounter repayment difficulties when their fundamentals weaken.”


For its part, China South Industries Group (Baoding Tianwei’s state-owned parent) had the following to say about the issue:

“The affair has no connection with us.” 

The situation inside Greece is getting worse by the minute. After soft capital controls, the ECB is now threatening to cut off their all important life line:  the ELA which now stands at 74 billion euros.  Also one million workers have not been paid for over 5 months.  The natives are getting restless!!
(courtesy zero hedge)

Following “Soft” Capital Controls, ECB Threatens Greece With ELA Cut Even As 1 Million Workers Go Unpaid For Months

Things for insolvent, cashless Greece are – not unexpectedly – getting worse by the day.

Following yesterday’s shocking decree that the government will confiscate local government reserves and “sweep” them into the central bank to provide the country more funds as it approaches another month of heavy IMF repayments, earlier today Bloomberg reported that the ECB would add insult to injury and may increase haircuts for Greek banks accessing Emergency Liquidity Assistance, thus “reining in” the very critical emergency liquidity which has kept Greek banks operating in recent weeks as the bank run sweeping the domestic banking sector has gotten worse by the day.

ECB staff have proposed increasing the discounts imposed on the securities banks post as collateral when borrowing from the Bank of Greece, the people said, asking not to be named as the matter is private. While adjusting these so-called haircuts hasn’t been formally discussed by the Governing Council, it may be considered if Greece’s leaders fail to quickly convince euro-area finance ministers they can reform their economy and secure bailout funds, one of the people said. Greek bank stocks slid.

According to Bloomberg, the ECB staff proposal lays out three options to reduce central-bank risk: “the scenarios envisage returning haircuts to the level before late last year, when the ECB eased its collateral requirements for Greece; to set them at 75 percent; or to set them at 90 percent. The latter two options could be applied if Greece is in an “orderly default” under a formal ECB program or a “disorderly default,” CNBC said, without further elaborating on those terms.

Any reduction in ELA availability would be devastating to Greece, where depositors continue to pull cash from banks accounts to the tune of several hundred million euro every week, and the central bank “seeks to match the outflow with ELA. The Bank of Greece keeps a buffer of around 3 billion euros of ELA allowance in reserve, to give it time to react to a possible bank run, one of the officials said.”

Any reduction in this buffer would lead to a self-fulfilling bank run prophecy and accelerate the deposit flight to the point where the local banks are forced to halt operations, and Greece is forced to replace the “soft” capital controls already rolled out with “hard” ones.

To restrict or veto ELA funding, which is provided at the Greek central bank’s own risk with consent from Frankfurt, a two-thirds majority of the Governing Council is necessary. A growing minority is opposed to continuing to provide the assistance indefinitely, one of the people said.

And while the date of the next ECB governing council is May 6, the locals aren’t waiting around: as the following chart shows, the prices on Greek government bonds just tumbled to a record low.


The Greek sovereign debt isn’t doing any better:


Meanwhile, the reality is that for a majority of the Greek population, none of this really matters because as Greek Ta Nea reports, citing Labor Ministry data, about one million Greek workers see delays of up to 5 months in salaries payment by their employers. The Greek media adds that about 45% of salaried workers in Greece make no more than €751 per month, country’s old minimum wage; which also includes part-time workers.

So will the Greeks just ignore macro developments as their country slides into insolvency oblivion? Perhaps not: according to the latest Skai TV poll, fewer than half of Greeks, or 45.5%, said that the government’s strategy in negotiations with creditors is correct, down from 55.5% in late March, and a plunge from the 72% in early February.  Also notable: the number of Greeks who say the strategy is outright wrong rose to 39.5% vs 27.5% in late March, and 22.5% in early February.

If and when wages are withheld long enough, and the bank capital controls are officially enforced, and when the majority of the population finally turns soure on its idealized image of the new “radical left” regime, and demands a new government, only then will the Troika succeed. Or rather it will succeed only if the Syriza government is replaced with another one made up of former Goldman employees and various Troika-friendly technocrats.

If the replacements come from the neo-nazi Golden Dawn then all bets are off.




Now the White House is getting nervous on the potential for a GREXIT:

(courtesy zero hedge)

White House Refutes European Complacency: Warns Grexit Threatens Global Economic Recovery

Despite our exposure of the contagious risk increases in peripheral bond spreads,“many European officials believe a Greek exit would be manageable, and in contrast to 2010-2011, we wouldn’t see the same cascading effect on countries like Spain or Ireland,” according to the European Centre for International Political Economy in Brussels and EU Chair Jeroen Djisselbloem even noted that the Greek situation can be isolated.”

Germany also confident…


However, it appears America is getting nervous at Europe’s apparent complacency… White House economic adviser Jason Furman says a Greek exit from the euro zone would present “VERY LARGE AND UNNECESSARY RISK FOR GLOBAL ECONOMY.”


And UK Chancellor George Osborne is not so complacent:

“The situation in Greece is the one at the moment that’s the most worrying for the world economy,” Osborne told reporters.


“A misstep could easily return the world economy to the situation we were in 3 or 4 years ago”

* * *

Still we are sure everything will be fine…




As promised, Greece may sign their big deal with Russia on the Blue Stream gas pipeline project.  The cost of the pipeline is 2 billion euros to be paid for by Russia and European interests. Mr Obama will not be a happy camper if Greece faces eastward!

(courtesy zero hedge)

Greece May Sign Russia Gas Deal As Soon As Today

It appears that Herr Schaeuble will be left in the cold as following comments from the Greek energy minister that a deal is coming “soon,”  it is being reported that:


According to Gazprom’s CEO comments on Greek TV, following his meeting with Greek PM Tsipras, Russia will guarantee 47BCM/YR of gas via Greece with the link to be built by a Russian-European group at a cost of around €2 billion.

First, talks with Russia on extension into Greece of Turkish Stream pipeline are positive, will continue with aim of concluding “soon,” Greek Energy Minister Panagiotis Lafazanis says in comments broadcast live on state-run Nerit TV.


Then RIA reports,


Of course this should not be a huge surprise as we noted previously:

Peskov reiterated that the Greeks had not requested financial assistance during talks in the Kremlin earlier this month between Prime Minister Alexis Tsipras and Russian President Vladimir Putin.

“Naturally the question of energy cooperation was raised. Naturally … it was agreed that at the expert level there would be a working-out of all issues connected with cooperation in the energy sphere, but Russia did not promise financial help because no one asked for it,” Peskov was quoted as saying.

Of course, this is merely diplomatic double talk, and all it suggests is that Russia is awaiting the official admission from Greece that it will pivot to Russia. For that to happen, Greece will have to formally state that in addition to creditor negotiations it is now openly looking to Moscow (and Beijing) for additional aid. The problem is that such a statement would promptly end any hopes of a Greek deal with its Troika creditors.

*  *  *

As a reminder, Russia is not acting out of the kindness of his heart, but merely engaging in another calculated move, one which kills two birds with one stone:

  • Following the death of the South Stream, whereby the EU pressured Bulgaria to refuse passage of the Russian gas pipeline to Europe, Russia needed an alternative route of bypassing Ukraine (and Bulgaria) entirely, something which according to Kremlin’s plan should happen over the next 3 years. And with Hungary and Serbia all eager to transit Russian gas to the Austrian central european gas hub, Greece was the missing link for a landline transit. With this agreement, Russia gets the green light to extend the Blue Stream all the way to Austria and preserve its dominance over the European energy market while leaving Ukraine in a completely barganining vacuum.

  • Perhaps just as importantly, suddenly Russia will energy as the generous benefactor riding to Greece’s salvation, in turn even further antagonizing the Eurozone and further cementing favorable public opinion. As a reminder, several weeks ago we showed that Russia already has a higher approval rating among the Greek population thatn the Eurozone. In this way, Russia has just won a critical ally for the very low price of just €5 billion, without even having to restructure the entire Greek balance sheet should Greece have exited the euro and been attracted to the Eurasian Economic Union. Which also means that all future attempts to impose further sanctions on Russia by Europe will fail thanks to the Greek veto vote.

Russia is not alone in seeking to divide the spoils of the collapsing Eurozone: Beijing has also sought to invest in Greece’s infrastructure and bought up €100m worth of short-term government debt last week the Telegraph reports.

*  *  *

Most importantly, we suspect, given the total illiquidty of Greece is:


Providing a much needed potential flow of cash into the country securitized on that future cashflow from the pipeline deal… and enabling them to avoid Europe’s austerity demands.

As Bloomberg reports, the gas transit guarantees will help Greece “to get additional commercial credits for other projects.”

But stoically, spokesman Sergei Kupriyanov says by phone in response to question if company will provide loans to Greece:

“Gazprom isn’t a bank.”

*  *  *

Finally, for those confused about the flow of funds, here it is:

Russia (Gazprom) gives Greece money, which Greece uses to repay the IMF, which uses the Greek money to fund a loan to Kiev, which uses the IMF loan to pay Russia (Gazprom).

A perfect circle.




Yesterday Bill Holter brought you the story on reverse repurchase agreements which are basically swaps between the Fed and financial institutions whereby the Fed provides treasuries for dollars. The treasuries are needed to provide much needed collateral. Today we learn that the ECB is also engaging in the lending of its securities, albeit for different reasons.  We have telling you on countless occasions the scarcity of treasury collateral as the ECB executes QE.  Today we learn that Euribor went negative for the first time ever.  This means that banks who borrow receive bonus cash from the lender for borrowing  treasuries on a swap for Euros. Why?  What is going on here?  The answer is simple: Spanish citizens (or Italian, Portuguese etc) would rather buy and store German bunds, even  with a negative yield than to store their hard earned euros in a Spanish (Italian, Portuguese) bank.  The negative Euribor rate will create havoc on derivative models.


(courtesy zero hedge)


European Banks Are Paid To Borrow For First Time Ever As Euribor Goes Negative

Mario Draghi said this week that the transmission channels for European Q€ were opening up and crowed how well his cunning plan was working (by well we assume he means stocks are up). Today we get the ultimate test of that ‘transmission’ as 3-Month EURIBOR fell below 0.00% for the first time ever(likely wreaking havoc on European derivative pricing models). In English that means banks are being paid to borrow from one another in the interbank money-markets (which sounds a lot like a ‘glut’ of excess cash) seemingly confirming ICMA’s de Vidts fears: “We are scared about the [repo] market freezing,” as the ECB is “driving without headlights in the dark.”Of course this is yet another disturbing distortion on the heels of homeowners being paid to take out mortgages…

Banks now paid to borrow from one another…



As fears of the repo market in Europe freezing appear to be confirmed… (via Reuters),

The European Central Bank (ECB) risks secured-lending or repo markets grinding to a halt unless it works more closely with national central banks (NCBs) to improve liquidity, a senior trade association official told Reuters.


The 5.5 trillion euro ($6 trillion) repo market is vital for banks and companies to manage their cash balances, offering short-term loans in exchange for government debt as collateral.


Godfried de Vidts, the chair of the International Capital Market Association’s European Repo Committee, said unless the ECB took action within the next few months, investors might start avoiding euro zone bonds.


That might push borrowing costs up in the longer term.


“Investors could become reluctant to invest in euro zone debt,” he said, noting that his committee had voiced its concerns to officials at the ECB.


The ECB has allowed bonds bought under its trillion-euro purchase scheme (QE) to be used as security for loans, a precaution against any surge in repo prices that might occur as QE sucks securities out of the market.


But traders say that the system does not allow bonds to be leased for long enough, is too restrictive on the amount parties can borrow and is very expensive.


“We are scared about the market freezing,” de Vidts said.


In recent weeks, one 10-year Bund became so scarce that market players paid up to 2.5 percent to lend cash in exchange for the German bond, dealers said.


De Vidts said the ECB’s “securities lending” framework also relies too heavily on NCBs offering their own lending programs, and many of them have not yet put systems in place.


NCBs are responsible for 80 percent of purchases under QE, with the ECB directly buying the remaining 20 percent in the roughly 7-trillion-euro euro zone government bond market.


“We are driving without headlights in the dark,” said de Vidts, proposing that the ECB centralizes the scheme in Frankfurt.


“You are getting this scenario – which is a nightmare for the repo market – of a re-nationalization of a market that had developed to become European.”


Last week, ECB President Mario Draghi said the bank saw no evidence QE was creating a shortage of bonds, or that this might happen in the future.

*  *  *

This won’t end well.

Oh!! why not get Vladimir Putin little riled up against us:
(courtesy zero hedge)

Sabre-Rattling Soars: Poland Buys US Patriot Air Defense System, Gold Pops

Just days after Russia lifts sanctions on Iran and prepares to send its S-300 missile defense system, it appears Washington has retaliated. As TASS reports, Poland – on Russia’s doorstep – has decided to buy the US Patriot air-defense system (made by Raytheon) for a total cost of around $9bn: “The US proposal has been found to be more profitable from the viewpoint of Poland’s security and implementation of commitments within NATO framework.” Washington, keen to ensure Warsaw signed up with Raytheon, has decided to loan Poland a battery of Patriots until the deal is signed.

As TASS reports,

Poland has chosen the supplier for its national missile defense system.According to the country’s Defense Ministry, it is the US company Raytheon, the manufacturer of Patriot air defense missile systems.

“The US proposal has been found to be more profitable from the viewpoint of Poland’s security and implementation of commitments within NATO framework. Patriot systems are used in several countries,” the ministry said.

Taking part in the tender was the Italian-French Eurosam corporation that manufactures the SANP/T systems. The Defense Ministry said one of important criteria in the selection of the air defense systems was their capability to resist Russian Iskander missile systems.

The project to form a national missile defense system in Poland is called Wisla. It envisions acquisition of eight medium-range air defense system batteries. Each of them will be equipped with GEM-T and PAC-3 MSE missiles. The Defense Ministry did not mention their quantity.

The signing of the contract is scheduled for 2016. Within three years after signing, the supplier should provide two batteries of one of available versions to Poland. The target configuration with a radar should appear in the republic in 2022-2025.

*  *  *

As The FT notes, Raytheon’s Patriot system will give Poland the ability to defend itself against air missiles and military aircraft…

Washington was keen for Poland to choose Raytheon’s missile system, and has agreed to loan Warsaw a temporary set of Patriot batteries until the purchased products are delivered.

…procurement decisions were fraught with delays and controversy because of heavy lobbying from all sides and Warsaw’s desire to ensure it balanced geopolitical concerns and its needs to increase employment.

*  *  *

While it is perhaps coincidence, precious metals jumped around the time the headlines on Poland hit…

Saudi Arabia orders its National Guard to enter Yemen.  No doubt to restore law and order:
(courtesy zero hedge)

Saudi Arabia Orders Its National Guard To Enter Yemen War

Over the better part of the past month, the only entities actively involved in the proxy war in Yemen against the local Houthi rebel force have been air force units, mostly under Saudi command as part of Operation “Decisive Storm.” Which probably explains why there has been little if any progress to note in pushing back said rebellion which, armed heavily thanks to the US government, has successfully managed to push the current president into an indefinite exile.

That changed hours ago, when Saudi Arabia’s King Salman ordered the Saudi Arabian National Guard, widely regarded as the kingdom’s best equipped military ground force, to take part in Riyadh’s campaign against Iran-allied Houthi rebels in Yemen.

As Reuters notes, “military operations in the campaign have so far been carried out by the Royal Saudi Air Force and the Royal Saudi Land Forces, which answer to the Defense Ministry. The national guard is a separate military structure run by its own ministry.”

Which means that what has been an airborne war until now is about to become a land war.

But it will hardly stop there: recall that two weeks ago we reported that in a sign of support for the Houthis, Iran had dispatched the 34th fleet of the Iranian Navy has left for the Gulf of Aden and Bab al-Mandab Strait.



And, as we predicted, the US promptly retaliated with a naval dispatch of its own, and as was reported yesterday, “U.S. Navy officials say the aircraft carrier USS Theodore Roosevelt is steaming toward the waters off Yemen and will join other American ships prepared to intercept any Iranian vessels carrying weapons to the Houthi (HOO’-thee) rebels fighting in Yemen.”

That, or other Iran ships just generally in the vicinity.

And with US support in the Red Sea which will soon migrate north toward the true objective of this latest middle east conflict, Syria, one can be certain that Russia will not be far behind.

Especially if, as we are learning today, what was until recently “only” an air war is about to become a land war, likely one with naval reinforcements from all sides.

Then Saudi Arabia declares an end to the aerial bombing;
Saudi National guard to enter Yemen to restore law and order
(courtesy zero hedge)

Oil Tumbles After Saudis Declare End To Yemen Aerial Bombing Campaign

Saudi Arabia said its campaign of airstrikes in Yemen have succeeded in removing threats to the kingdom and other regional countries, bringing to an end Operation “Decisive Storm.”As Bloomberg reports, the Saudi Defense Ministry said a coalition of mostly Sunni Muslim nations has “successfully eliminated the threat to the security of Saudi Arabia and neighboring countries,” by destroying the heavy weaponry and ballistic missiles held by the Shiite Houthi rebels. This comes one day after Gulf envoys told The United Nations that Yemen strikes won’t end soon. Saudi Arabia hopes to restart a Yemeni political process and will begin “Operation New Hope,” which appears to mean Saudi National Guard ground troops.


Oil reacts… because war is over, right?

Of course it is also settlement day so Oil liquidty is thin at best and moves exaggerated.

*  * *

As Bloomberg reports,

Saudi Arabia said its campaign of airstrikes in Yemen have succeeded in removing threats to the kingdom and other regional countries.

The operations by a coalition of mostly Sunni Muslim nations has “successfully eliminated the threat to the security of Saudi Arabia and neighboring countries,” by destroying the heavy weaponry and ballistic missiles held by the Shiite Houthi rebels, the Saudi Defense Ministry said in a statement late Tuesday carried by the official Saudi Press Agency. It didn’t say whether the campaign will continue.

The airstrikes were an attempt to roll back gains by the Houthis and force them to resume talks to resolve the country’s crisis. The rebels have driven Yemen’s Saudi-backed ruler, President Abdurabuh Mansur Hadi, into exile.

Saudi and other Gulf Arab officials accuse the Houthis and their allies of being tools of Iran, a charge they have denied.

Iran’s deputy foreign minister, Hossein Amir-Abdollahian, earlier on Tuesday expressed optimism that the bombing of Yemen would end “within hours,” citing unspecified diplomatic efforts. The Houthis have said they’re willing to resume talks on a political settlement in Yemen, though they say they won’t accept Hadi’s return to power.

*  *  *



Meanwhile US warships continue to trawl the coast of Yemen…

This comes a day after U.S. Navy said aircraft carrier USS Theodore Roosevelt was steaming toward the waters off Yemen to beef up security and join other American ships that are prepared to intercept any Iranian vessels carrying weapons to the Houthi rebels.

The deployment comes after a U.N. Security Council resolution last week imposed an arms embargo on Houthi leaders.

The Navy has been beefing up its presence in the Gulf of Aden and the southern Arabian Sea in response to reports that a convoy of about eight Iranian ships is heading toward Yemen and possibly carrying arms for the Houthis. Navy officials said there are about nine U.S. warships in the region, including cruisers and destroyers carrying teams that can board and search other vessels.

And new Saudi King Salman has called up The National Guard

Saudi Arabia’s King Salman has ordered the country’s National Guard — considered the Kingdom’s best trained and equipped military force — to join the military campaign against Iranian-backed Shiite rebels in neighboring Yemen.

National Guard troops had already deployed along Saudi Arabia’s southern border with Yemen, but the order from Salman on Tuesday could pave the way for a long-discussed ground incursion into Yemen to confront the rebels, known as Houthis.

*  *  *

We suspect war is not over.



Copper falls again:
(courtesy zero hedge)

Copper Plunge Continues Despite Chinese Stimulus

Since China unleashed its latest (and greatest since 2008) RRR cut, stock prices have surged amid the liquidity hype. However, perhaps more indicative of the underlying reality of just what good an RRR cut will do to a debt-saturated economy full of weak credits thanks to tumbling asset prices, copper prices have now plunged over 6% in the last 2 days



But still BTFATH in Chinese stocks…


Charts: Bloomberg


Oil related stories:
The layoffs in Texas is having a dramatic effect on their economy.
Today, Baker Hughes announced a 17% cut in their workforce as the oil slump is ripples through their economy:
(courtesy zero hedge)

Baker Hughes Cuts 17% Of Workforce As Oil Slump Ripples Through Economy

Tyler Durden's picture

One thing we’ve been keen to point out whenever and wherever the occasion arises, is the vast and ridiculous discrepancy between BLS calculations of job losses in the oil & gas space and those reported by both Challenger and by the companies who are actually doing the firing. Through February for instance, the government reckoned that around 3,000 jobs had been lost this year in oil & gas exploration and extraction. That figure was just a “shade” lower than the 40,000 reported by Challenger:

Fast forward to the beginning of April when, in “Dear Texas, Welcome To The Recession,” we drew attention to the following rather ominous graphic which shows that the state which has until recently served as the country’s post-crisis job creation engine has suffered from 47,000 layoffs YTD, or more than three times the number of job cuts posted by the next closest state:

Finally, in “Job Cuts In Industries ‘Closely Related’ To Oil Likely To Triple,” we highlighted data from Goldman which shows that in past oil downturns, layoffs in sectors related to oil & gas were generally triple what they have been during the current slump, meaning that, in Goldman’s words “we should begin to see more of an effect in these other areas as well.”  

Today, in the latest sign that depressed crude prices are likely to ripple through the economy for some time to come and in the process make the government’s unemployment figures look like even more of a farce than they already do, we learn that Baker Hughes has now increased the number of jobs it plans to cut from 7,000 to 10,500 (or nearly a fifth of its workforce) and the best (or worst) part is, that may not be the end of it. Here’s the statement:

During the first quarter we took necessary actions to reduce our cost base and resize our footprint to mitigate current market conditions. These actions include the closure and consolidation of approximately 140 facilities worldwide along with the idling or impairment of excess assets and inventory. Correspondingly, we made the decision to increase our headcount reductions to a total of approximately 10,500 positions, or 17% of our workforce, which is 3,500 positions higher than what we previously announced. Combined, these actions are projected to reduce cost by more than $700 million on an annualized basis.


Looking out to the second quarter, we expect unfavorable market conditions to persist. North America and international rig counts are projected to continue declining across most onshore and shallow water markets, which would further intensify the oversupply of oilfield services. We will continue monitoring market conditions closely and will take actions as necessary to optimize efficiency, while retaining the capacity to flex up when market conditions improve.

As for Richard Fisher’s assertion that a negative outlook for the Texas economy premised on the decline in oil prices amounts to “bull droppings” (to use the PG-13 version of what he actually said), JPM is here to tell the now retired Dallas Fed chief that “unfortunately, the only thing dropping in the Texas economy is the number of jobs.” Here’s the note:

The Texas Workforce Commission recently reported that nonfarm employment dropped by a huge 25,400 in March, a decline the magnitude of which hasn’t been seen since mid-2009 (see the chart below). To put that in perspective, the 0.2% drop in employment would be equivalent to a 304,000 monthly drop at the national level. The swing in momentum is particularly sharp, as Texas had been averaging job gains of 34,000 per month last year. The March decline follows a sharp slowing in January and February and has occurred alongside a big deterioration in Texas business sentiment. Moreover, the elevated level of jobless claims in Texas on into April suggests that monthly job losses could persist past March.


Job losses of the size Texas experienced last month are rarely seen outside of recessions. Looking at things from the demand side there are also indications the Texas economy may be near contracting. At the national level, cutbacks in oil & gas-related capex could shave about 0.5%-point from Q1 GDP growth. The Baker Hughes rig count (which is used by BEA to estimate this category of investment) indicates that just over half of the reduction in rig count has occurred in Texas. Given Texas’ 9.2% weighting in the national GDP, this means oil & gas capex alone could be taking about 2.7%-points off of Q1 GDP growth in Texas — a big hole to get out of to achieve positive growth.


Fisher’s more optimistic prediction for the Texas outlook rested on its diversification into non-oil industries. The Texas economy is diversified, and is home to many world-class companies that have nothing to do with fossil fuels. So then what did Fisher get wrong? One doesn’t have to look farther than the Dallas Fed’s own research for an answer. Shortly after the energy price collapse of 1986 the Dallas Fed estimated that every job lost in the oil and gas sector had a knock-on effect of another 2.6 jobs lost in various non-energy sectors – retail, hospitality, etc. It seems a similar phenomenon is at work in the current episode. In the industry detail table below you will see that the mining and logging industry (of which oil & gas extraction is a subsector) saw employment decline by 2,800. Retail trade alone suffered twice as many losses, down 6,600. A variety of other service industries also saw declining employment.

After the market closed, oil dropped again due to increase in ATI inventories:

Oil Drops After API Inventories Show Builds Accelerating Again

After last week’s smaller than expected API and DOE inventories data (which was merely average when considering the massive build from the prior week), it appears the machines have realized that everything is not awesome again in the crude complex. For the 15th week in a row, invenrtories rose – this time by more than expected at 5.5mm bbl (against a 2.5mm bbl expectation). Crude prices are slipping lower…


The reaction is clear…


Bear in mind that this latest rip was all predicated on the API report from last week (confirmed by the DOE report)…


Your more important currency crosses early Tuesday morning:


Euro/USA 1.0679 down .0069

USA/JAPAN YEN 119.44 up .227

GBP/USA 1.4876 down .0033

USA/CAN 1.2244 up .0018

This morning in Europe, the Euro fell again by 69 basis points, trading now well below the 1.07  level at 1.0679; 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 down again in Japan by 23 basis points and trading well below the 120 level to 119.44 yen to the dollar.

The pound was down this morning as it now trades well below the 1.49 level at 1.4876  (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 18 basis points at 1.2244 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). Swiss franc is now 1.0280 to the Euro, trading well above the floor 1.05.  This will continue to create havoc with the Hypo bank failure.

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

The NIKKEI: Tuesday morning : down by 18.39  points or 0.09%

Trading from Europe and Asia:
1. Europe stocks mixed

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) green/India’s Sensex in the red/

Gold very early morning trading: $1198.00



Early Tuesday morning USA 10 year bond yield: 1.87% !!!  down 2  in basis points from Monday night/

USA dollar index early Tuesday morning: 98.26 up 35 cents from Monday’s close. (Resistance will be at a DXY of 100)


This ends the early morning numbers, Monday morning


And now for your closing numbers for Monday:


Closing Portuguese 10 year bond yield: 2.09% up 8 in basis points from Monday  (Contagion hits Portugal)


Closing Japanese 10 year bond yield: .32% !!! up 1 in basis points from Monday


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


Spanish 10 year bond yield: 1.45% !!!!!!


Your Tuesday closing Italian 10 year bond yield: 1.45% down 3  in basis points from Monday:

trading 0 basis points above Spain.





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


Euro/USA: 1.0733 down .0015  ( Euro down 15 basis points)

USA/Japan: 119.66 up .451  ( yen down 45 basis points)

Great Britain/USA: 1.4928 up .0018   (Pound up 18 basis points)

USA/Canada: 1.2280 up .0057 (Can dollar down 57 basis points)

The euro fell again stopping any further gains as the uSA dollar rose against most currencies today.   It settled down 15 basis points to 1.0733. The yen was down 45 basis points points and closing well above the 119 cross at 119.66. The British pound gained considerable  ground today, 18 basis points, closing at 1.4928. The Canadian dollar lost a lot of ground to the USA dollar, down 57 basis points closing at 1.2280.

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





Your closing 10 yr USA bond yield: 1.91% up 2 in basis points from Monday



Your closing USA dollar index:

97.97 up 7 cents on the day.


European and Dow Jones stock index closes:


England FTSE up 10.80 or 0.15%

Paris CAC up 5.05 or 0.10%

German Dax up 47.67 or 0.40%

Spain’s Ibex up 37.20 or 0.33%

Italian FTSE-MIM down 92.72 or 0.40%


The Dow: down 85.34 or 0.47%

Nasdaq; up 19.50 or 0.39%


OIL: WTI 56.28 !!!!!!!

Brent: 63.27!!!!


Closing USA/Russian rouble cross: 53.43 down 1/5 rouble per dollar






And now your important USA stories:


NYSE trading for today.

Sell Everything: Dow, Dollar, Bonds, Crude, Copper, & Credibility Down

Which is the worse reason for authorities to offer on the catalyst of the Flash Crash – a decent-sized Mutual fund puts in a larger-than-average sell order, a one-man-band in London manages to ‘spoof’ the US equity market into a crash, or the entire farcical market being driven by machines and nothing more… RIGGED!!!!

Yesterday Trannies loved higher oil prices, today they love lower oil prices…

Thanks to overnight hope, cash indices all opened gap up, Nasdaq spiked on Biotech deal then went nowhere, Dow/S&P dropped…

Most notable today was the break in Nasdaq vs Dow and S&P that started as the US equity opened…

Since Friday, Trannies are the big winners and Dow the relative loser…

Energy stocks now well into the red on the week as Financiala and Materials limp lower…

Just as an FYI – this whole ramp off the 100DMA was a big stop-run to last week’s highs…

VIX continues its manic-depressive behavior…

Treasury yields rose from pre-open lows leaving 30Y up 6bps since Friday…

Rates started to move higher as the USD started to sell off…

Commodities were mixed with PMs up (gold above $1200) and crude and copper lower…

Copper continues its post-RRR-Cut slump…

As Crude dumped into settlement on Yemen headlines, bouncing off yesterday lows…

Which reminds us… here is the correlation between the market and crude (intraday) this year…

Charts: Bloomberg


And now for your humour story of the month:
(courtesy zero hedge)

Full Scapegoat Retard: Trader Arrested For 2010 Flash Crash

Remember when the SEC, and specifically the agency’s former lead HFT investigator Greg Berman, blamed the entire May 2010 Flash Crash on Waddell & Reed (and not HFT)? Well, it is time to change the entire narrative once again, in yet another attempt to ‘restore” confidence in a rigged and manipulated market. The scapegoat? Navinder Singh Sarao.


But wait, it gets better:


And the punchline:


From the report:

So, uh, 5 years later we find that the SEC was only kidding about that whole Waddell & Reed farce, and that this time it actually has the right perpetrator.  Or is it simply that one can’t arrest an algo or a vacuum tube.

In any event, the market is now unrigged and unmanipulated dear retail investors, and the water is warm. Pretty please, because the banks, HFTs and hedge funds are desperate to sell some of the trillions in stock they have bought on the way up and without you there is nobody to sell to.

In other news, Jon Corzine’s Vapor Capital Mismanagement has broken off its merger with Nav Sarao Futures Limited PLC.

Also please ignore the “fact” that we now trade in a world in which one (1) person can break the entire market.

* * *

Also, please ignore, or best of all forget, that a year ago the SEC launched an investigation into whether Virtu and every other major HFT firm was engaged in layering and spoofing:

The U.S. Securities and Exchange Commission has been seeking information on 10 registered broker dealers as part of an ongoing investigation into high-frequency trading strategies, according to an internal SEC document reviewed by Reuters.

The regulator told its staff in late March that it was interested in seeing any tips, complaints, or referrals that they receive concerning the brokers and high frequency trading.

The firms listed are Allston Trading LLC; Hudson River Trading LLC; Jump Trading LLC; Latour Trading LLC, which is an affiliate of Tower Trading; Merrill Lynch, Pierce, Fenner & Smith, owned by Bank of America Group; Octeg LLC, which has been merged into a unit of KCG Holdings Inc; Tradebot Systems Inc; Two Sigma Investments LLC; Two Sigma Securities LLC; and Virtu Financial.

They are all some of the largest trading firms in the U.S. Allston and Jump are both based in Chicago. Hudson River, Latour, Merrill, Two Sigma, and Virtu are headquartered in New York. KCG is in Jersey City, New Jersey, and Tradebot is based in Kansas City, Missouri.

Jump, Latour, Bank of America, Hudson River, Tradebot and KCG declined to comment. The other firms did not immediately respond to a request for comment.

Their number and the open-ended quest for information shows that the SEC is casting a wide net as it looks to unearth wrongdoing in the marketplace. It is not known if the SEC found any violations of securities laws at any of the firms. The SEC declined to comment.

A number of government agencies, including the SEC, New York State Attorney General Eric Schneiderman’s office, the Commodity Futures Trading Commission and the Federal Bureau of Investigation have said they had active probes into high-speed and automated trading.

The SEC has been seeking evidence of abuse of order types, as well as traditional forms of abusive trading like “layering” or “spoofing” and other issues relating to high-frequency trading that might be violations of the law, SEC Director of Enforcement Andrew Ceresney told Reuters in May (reut.rs/1kwSqF5).

Spoofing and layering are tactics where traders places orders that they cancel before they are executed to create the false impression of demand, aiming to trick others into buying or selling a stock at the artificial price.

High frequency trading firms account for more than half of all trades in the U.S. stock market, and are often seen as modern-day market makers. They make it easier for investors to trade by stepping in and taking the other sides of many orders and profiting off of trading spreads.

Scrutiny around high-frequency trading intensified following the March 31 release of best-selling author Michael Lewis’ book, “Flash Boys: A Wall Street Revolt.” In the book, Lewis contends that high-frequency traders have rigged the stock market, profiting from speeds unavailable to others.

We are confident these firms did nothing at all wrong.

* * *

All joking aside, at least the CFTC finally figured out that it at least has to blame spoofing, layering, momentum ignition and every other aspect of HFT market manipulation on what Sarao was “doing.” In fact, allegedly Sarao was doing this until a few weeks back, which suggests that not only one person crashed the market, but one person was responsible for manipulating it all the way to where it is now.

And yes, we are still laughing, because for the CFTC and DOJ to have the gall to actually bring up this charge against one person, indicates just how broken things really must be.

Then again, it was inevitable: just like the housing crash was blamed on 28-year-old Goldmanite Fabrice Tourre, so the Flash Crash had to be blamed on one person too.

One thing is certain though: when the entire rigged, fraudulent, manipulated market crashes and burns one final time, it will all be the HFTs’ fault (as we have been saying since 2013), and not the central banks and their $22 trillion (more than the GDP of the US and Japan) in assets.

And who can’t wait for an algo perp walk.




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