May 4./IMF set to depart from the Troika with respect to Greece/Many expect haircuts on Greece collateral on their ELA/Australia to introduce tax on savings/USA factory orders decline for 5th month in a row/Dow Chemical fires 1750 workers/

 Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold:  $1186.80 up $12.30 (comex closing time)

Silver $16.42 up 31 cents (comex closing time)

In the access market 5:15 pm

Gold $1188.06

Silver: $16.40


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 had a poor delivery day, registering 1 notice serviced for 100 oz.  Silver comex filed with 143 notices for 715,000 oz

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 241.14 tonnes for a loss of 62 tonnes over that period. Lately the removals have been rising.


In silver, the open interest fell again by 1,049 contracts as Friday’s silver price was down by 2 cents.  The total silver OI continues to remain extremely high with today’s reading at 177,810 contracts maintaining itself near multi-year highs 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.



In silver we had 715 notices served upon for 715,000 oz.



In gold,  the total comex gold OI rests tonight at 410,701 for a gain of 446 contracts despite the fact  gold was down by $7.90 on Friday. We had 1 notice served upon for 100 oz.



Today, we no change in gold inventory at the GLD /  Gold Inventory rests at 741.75  tonnes. There is now no question that London is out of gold as London gets deeper into backwardation. China’s major source of gold will now be the FRBNY. China’s demand for gold this week: 51 tonnes.


In silver, /  /we had no change in  silver inventory to the SLV/ and thus the inventory tonight is 327.673 million oz


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


1. Today we had the open interest in silver fall by 1049 contracts as the silver was down in price on Friday.  The OI for gold rose by 446 contracts up to 410,701 contracts as the price of gold was down by $7.90 on Friday. GLD and SLV  remained constant with respect to the inventory levels.

(report Harvey)


2,Two important commentaries on Greece today:

i) an official for the European union states that it would be foolish to believe that Greece will not fail

ii) the IMF set to separate from the Troika/expect the ECB to announce haircuts to collateral provided by Greek banks to the Central Bank of Greece to the benefit of the ECB.

(zero hedge)

3. Australia to introduce a tax on savings

(Martin Armstrong)

4. Bill Holter’s commentary tonight on gold backwardation

5, USA factory orders down for 5th straight month

(zero hedge)

6. Dow Chemical fires 1750 workers and the market rejoices???

(zero hedge)

7. Lawrence Williams; gold demand for this week into China:  51 tonnes

(Lawrence Williams/Mineweb)

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 496 contracts from 410,255 up to 410,701 despite the fact that gold was down by $7.90 on Friday (at the comex close).  We are in our next non active delivery month of May and here the OI rose by 1 contract rising to 227. We had zero notices filed on Friday.  Thus we gained 1 gold contract or an additional 100 ounces will stand for gold in May. The next big active delivery contract month is June and here the OI fell by 1,967 contracts down to 258,421. 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 68,671. The confirmed volume yesterday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 134,231 contracts. Today we had 1 notice filed for 100 oz.


And now for the wild silver comex results.  Silver OI fell by 1049 contracts from 178,859 down to 177810 as the price of silver was down in price by 2 cents, with respect to Friday’s trading. We are into the active delivery month of May. In our May delivery month the OI fell by 479 contracts down to 1248. We had 302 contracts filed upon with respect to Friday.  So we lost 177 contracts or 885,000 oz will not stand for delivery in this May delivery month. The estimated volume today was poor at 24,456 contracts (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in at 35,658 contracts which is fair in volume. We had 143 notices filed for 715,000 oz today.



may initial standings

May 4.2015




Withdrawals from Dealers Inventory in oz  nil
Withdrawals from Customer Inventory in oz  33,484.181 oz (HsBC. Manfra,Scotia)
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz nil
No of oz served (contracts) today 1 contracts (100 oz)
No of oz to be served (notices)  226 contracts(22,600) oz
Total monthly oz gold served (contracts) so far this month 1 contracts(100 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month  nil

Total accumulative withdrawal of gold from the Customer inventory this month

 33,484.181 oz

Today, we had 0 dealer transaction




Today, we had 0 dealer transaction

total Dealer withdrawals: nil oz


we had 0 dealer deposit


total dealer deposit: nil oz

we had 3 customer withdrawals

 i) Out of HSBC; 300.165 oz

ii) Out of Manfra; 32.15 oz

iii) Out of Scotia: 33,151.866 oz


total customer withdrawal: 33,484.181 oz






total customer deposit: nil oz


We had 0  adjustments:


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

To calculate the total number of gold ounces standing for the May contract month, we take the total number of notices filed so far for the month (1) x 100 oz  or 100 oz , to which we add the difference between the open interest for the front month of May (227) and the number of notices served upon today (1) x 100 oz equals the number of ounces standing.

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

No of notices served so far (1) x 100 oz  or ounces + {OI for the front month (227) – the number of  notices served upon today (1) x 100 oz which equals 22,700 oz standing so far in this month of May. (.706 tonnes of gold)




Total dealer inventory: 571,168.307 or 17.76 tonnes

Total gold inventory (dealer and customer) = 7,762,270.993. (241.14) tonnes)



Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 241.14 tonnes for a loss of 62 tonnes over that period. Lately the removals  have been rising!





And now for silver


May silver initial standings

May 4 2015:



Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 60,139.45 oz (Scotia)
Deposits to the Dealer Inventory  33,830.400 (CNT
Deposits to the Customer Inventory 991.35 oz (CNT)
No of oz served (contracts) 143 contracts  (715,000 oz)
No of oz to be served (notices) 1105 contracts (5,525,000 oz)
Total monthly oz silver served (contracts) 1926 contracts (9,630,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  nil
Total accumulative withdrawal  of silver from the Customer inventory this month 1,293,211.0  oz

Today, we had 1 deposits into the dealer account:

i) Into CNT: 33,830.400 oz

total dealer deposit: 33,830.400   oz


we had 0 dealer withdrawal:

total dealer withdrawal: nil oz


We had 1 customer deposits:

i) Into CNT:  991.35 oz



total customer deposits: 991.35  oz

We had 1 customer withdrawals:

i) Out of Scotia: 60,139.45 oz

total withdrawals;  60,139.45 oz

we had 0 adjustments:



Total dealer inventory: 62.205 million oz

Total of all silver inventory (dealer and customer) 174.654 million oz


The total number of notices filed today is represented by 143 contracts for 715,000 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 (1926) x 5,000 oz  = 9,630,000 oz to which we add the difference between the open interest for the front month of April (1248) and the number of notices served upon today (143) x 5000 oz equals the number of ounces standing.

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

1926 (notices served so far) + { OI for front month of April(1248) -number of notices served upon today (143} x 5000 oz = 15,155,000 oz of silver standing for the May contract month.

we lost 177 contracts or 885,000 oz will not stand for delivery.


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




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:

may 4/no change in gold inventory at the GLD./741.75 tonnes

May 1/ we had a huge addition of 2.69 tonnes of gold into the GLD/Inventory rests tonight at 741.75 tonnes


April 30/ no change in gold inventory/739.06 tonnes of gold at the GLD

April 29/no change in gold inventory/739.06 tonnes of gold at the GLD

April 28/ no change in inventory/739.06 tonnes of gold at the GLD

April 27. we lost 3.29 tonnes of gold inventory at the GLD/Inventory rests tonight at 739.06 tonnes

April 24. no changes in gold inventory at the GLD/Inventory at 742.35 tonnes

April 23. no changes in gold inventory at the GLD/inventory at 742.35 tonnes

April 22. no changes in gold inventory at the GLD/inventory at 742.35 tonnes

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


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 : 741.75  tonnes.



And now for silver (SLV):


May 4/ no change in silver inventory at the SLV/327.673 million oz

May 1/no change in silver inventory at the SLV/327.673 million oz

April 30/no change in silver inventory at the SLV/327.673 million oz

April 29/ we lost 2.963 million oz of silver inventory from the SLV/inventory tonight 327.673 million oz

April 28/another huge addition of 1.434 million oz to the SLV/Inventory stands tonight at 330.636 million oz

April 27.we had a huge addition of 2.976 million oz to the SLV/Inventory stands tonight at 329.202 million oz

April 24/ we had a small withdrawal of 88,000 oz of silver at the SLV/326.226 million oz

April changes in silver inventory at the SLV/326.334 million oz of inventory

April 22/no changes in silver inventory at the SLV/326.334 million oz of inventory

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.


May 4/2015 we had no change in inventory at the SLV  / inventory rests at 327.673 million





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 6.7% percent to NAV in usa funds and Negative 6.8% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.3%

Percentage of fund in silver:38.3%

cash .4%

( May 4/2015)



2. Sprott silver fund (PSLV): Premium to NAV falls to-0.18%!!!!! NAV (May 4/2015)

3. Sprott gold fund (PHYS): premium to NAV rises to -.14% to NAV(May 4/2015

Note: Sprott silver trust back  into negative territory at -0.18%.

Sprott physical gold trust is back into negative territory at -.14%

Central fund of Canada’s is still in jail.





Early morning trading from Asia and Europe last night:

Gold and silver trading from Europe overnight/and important physical stories(courtesy Mark O’Byrne/Goldcore)

A terrific interview of John Embry by Dave Kranzler, IRD (courtesy, Dave Kranzler and John Embry/GATA)

Sprott’s John Embry interviewed by Dave Kranzler of Investment Research Dynamics


10:17p ET Friday, May 1, 2015

Dear Friend of GATA and Gold:

Sprott Asset Management’s John Embry was interviewed this week by Dave Kranzler of Investment Research Dynamics, discussing the suppression of the monetary metals markets and the possible triggers for their breakouts. The interview is 40 minutes long and it’s posted at YouTube here:

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



John Embry slams Kitco as anti gold propaganda plus other goodies:

(courtesy John  Embry/Kingworldnews/Eric King/GATA)

Embry, in KWN interview, slams Kitco for anti-gold propaganda


12:25p ET Monday, May 4, 2015

Dear Friend of GATA and Gold: has become an Internet site of anti-gold propaganda, Sprott Asset Management’s John Embry tells King World News today. Embry adds that he fears that Canada’s real-estate bubble is about to pop, devastating recent buyers. An except from the interview is posted at the KWN blog here:…

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



China announces a huge 51 tonnes of physical gold flowed into the SGE and out:  (Gold withdrawals of 51 tonnes  equals gold demand from Chinese citizenry). If this rate continues we will exceed last year’s 2200 tonnes.  As a reminder, the world produces from all mines 2200 tonnes per year ex China ex Russia who keep all gold produced.

(courtesy Lawrence Williams/Mineweb)


China’s SGE Gold Flows Still At High Level – 51 tonnes Last Week

Lawrence (Lawrie) Williams


May 4, 2015

Net Chinese gold imports from Hong Kong have slipped, but SGE withdrawals continue very strong.

For the second week in a row, gold withdrawals from China’s Shanghai Gold Exchange (SGE) have been at around 50 tonnes – a high level for the post Chinese New Year period. Withdrawals from the exchange for the first 16 weeks of the year have already reached around 780 tonnes suggesting that if flows out of the SGE are maintained we could be in for a new record year with withdrawals well in excess of those of 2013, which totalled almost 2,200 tonnes. As we have said in these pages before, whether one considers SGE withdrawal figures to equate to Chinese gold demand, which the Peoples Bank of China would seem to suggest, or whether the true consumption figure is actually quite a bit lower as the mainstream gold analysts reckon, they still remain an excellent indicator of demand growth or fall in the world’s biggest market for the yellow metal.

Time was when Chinese mainland net imports from Hong Kong were considered the best proxy for Chinese demand and up until just over a year ago this was very much the case with the majority of Chinese gold imports coming in by this route. But since then the Chinese have opened up the routes by which gold can be imported and we suspect that now at least 40% of gold imports, probably even more so far this year, go directly into the Chinese mainland via ports such as Shanghai and Beijing, thus bypassing Hong Kong altogether.

For example, perhaps the most important route for gold into China is from the UK to Switzerland, where the gold is re-refined into more suitable sizes for the Asian markets, and then on to China. Bloomberg reports that, for example, in March 46.4 tonnes of gold were exported from Switzerland directly into China with only 30 tonnes going to Hong Kong – around a 60:40 ratio. The fact that such a high percentage was thus going directly to the Chinese mainland received little or no comment despite this being such a significant switch in the gold trade route. This compares with figures late last year which had a little over 30% of Swiss gold exports to China and Hong Kong going directly to the mainland with the balance to Hong Kong. It was also noted that US trade statistics for gold exports showed that in early 2014 nearly all the gold exported to China and Hong Kong was directly to the latter, while by late in the year 36% was going directly to the mainland (See: 36% of October U.S. gold exports to China went direct rather than via Hong Kong).

Thus Hong Kong, as a trade route for gold into India, can no longer be considered a proxy for Chinese demand and reports suggesting otherwise should be ignored. Indeed, one of these was the recent Reuters article headed China’s gold imports from Hong Kong dipped to 7-month low, with the article seeming to imply that this meant that Chinese demand was falling off sharply too. The report ended with the sentence “China does not provide official trade data on gold, so the Hong Kong figures serve as a proxy for flows to the mainland”. As noted above, in our view they no longer do and should be totally disregarded as such an important indicator nowadays, although Hong Kong still remains an important gold import route.

China is now reported to be further relaxing its restrictions on import routes in allowing Chinese mining companies with overseas gold mining subsidiaries, to import their gold directly to the mainland too, as well as allowing more banking entities to import directly. All this could make Hong Kong increasingly less relevant as an import route for gold into China.




Gold paperization in India won’t be happening any time soon


4:30p ET Sunday, May 3, 2015

Dear Friend of GATA and Gold:

Writing today in The Hindu, the second-largest English-language newspaper in India, published in Chennai (formerly Madras), former Indian government official Sutanu Behuria explains why the sort of monetization — paperization, actually — recently proposed by the country’s government for the vast amount of gold held by the Indian public is not going to happen any time soon.

It’s not just because of the centrality of gold in Indian culture and religion, Behuria writes. It’s because the country lacks the infrastructure that would be necessary to standardize and evaluate any gold submitted for monetization.

“Previous gold monetization schemes,” Behuria notes, “have had very little success. The 1999 gold deposit scheme could not achieve even a conservative target of 50 tonnes. A major reason for the failure has been the inherent distrust in the credibility of the valuation process, besides the reluctance on the part of individuals to disclose gold assets for fear of attracting punitive levies. …

“The only way to accurately determine gold content in jewellery is to melt it and then draw a representative sample for testing. Such purity verification infrastructure is almost nonexistent in India. The assaying and hallmarking of handmade gold jewellery is at best a misplaced assurance prone to substantial misinterpretation. Further, given the size of the country and the widespread demand for gold in the form of jewellery, even such infrastructure as is available is woefully inadequate. …

“Successful implementation and operationalization of the gold monetization scheme would necessarily require 1) a national network of purity verification centers, 2) world-class refining and fabrication facilities, and 3) secure storage and distribution facilities. In addition, details of interest to be paid, tenure of the deposit, collateralized lending, and so on will have to be worked out.

“It is likely that it will take considerable time to put the architecture in place.”

Behuria’s commentary is rather misleadingly headlined “All That Glitters Is Not Gold” and it’s posted at The Hindu’s Internet site here:…

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




LBMA adviser, former Barclays exec will help central banks rig the gold market


By Ronan Manly
Sunday, May 3, 2015

A few weeks ago, through GATA, I called attention to the assertion by the chief executive of the London Bullion Market Association, Ruth Crowell, that the London gold market can never be fully transparent while central banks remain such big participants:

Here is another telling comment by someone connected to the LBMA concerning central banks and the gold market, Jonathan Spall. The comment is found on the Internet site of his precious metals consultancy company, G Cubed Metals Ltd.:

G Cubed Metals Ltd. was established by Spall last year soon after he left Barclays in London, where he was a product manager in the commodities area and acted as one of Barclays’ directors in the London Gold Market Fixing Ltd. company.

1. Stocks lower on major Chinese bourses as bubblemania is the name of the game in Shanghai (down) and Hong Kong down  /Japan bourse up 11.62 or 0.06% /yen falls to 119.80/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.

Since leaving Barclays, Spall has, he says, conducted an “independent review” of the candidates for the LBMA silver price competition (last June and July), served as an “independent chair” for the LPPM daily platinum and palladium fixings last August until they moved to an automated platform, and last October was appointed “senior adviser” to the LBMA.

Spall provides his credentials at his company’s Internet site here:

Other people, not identified by G Cubed, are described as the firm’s affiliates, since Spall “has teamed up with a number of other leading authorities in this field” so that “G Cubed Metals will be able to put together the right team for the job”:

Spall’s telling comment about central banks is on the “Services” page of the G Cubed site. He says:

“All connected with G Cubed Metals are well aware of the need for confidentiality in all financial markets as well as the additional sensitivity that comes from transacting in precious metals — particularly when it involves the ‘official sector’ such as governments, central banks, and sovereign wealth funds.”


And a duplicate in PDF format, just in case:

Confidentiality in business is often a given, and in relation to precious metals, if the “additional sensitivity” in precious metals transaction was related to physical security and security of transport and vaulting, this would fall under normal “additional security.” But the context of Spall’s comment suggests that this “additional sensitivity” means market sensitivity. This is supported by the Spall’s next observation, which clarifies that, yes, indeed, there is a need for “additional sensitivity” particularly “when it involves the official sector, such as governments, central banks, and sovereign wealth funds.”

Spall therefore concedes that the London gold market and the LBMA will not provide transparency when dealing with the “official sector” because the “official sector” requires this lack of transparency. Spall’s statements thus also indicate that the commercial sector will gladly give the official sector this “additional sensitivity” — that is, this lack of transparency.

So the question becomes: What transactions in gold are being undertaken by the “official sector” that require such secrecy and sensitivity?

Most likely these official transactions involve the surreptitious rigging of the gold and currency markets, transactions that, in 1999, the staff of the International Monetary Fund found member central banks so determined to conceal:

Spall’s advertisement for his new company is more evidence supporting the frequent assertion by GATA Secretary/Treasurer Chris Powell that “the location and disposition of national gold reserves are secrets far more sensitive than the location and disposition of nuclear weapons.”


Ronan Manly is a gold market researcher and consultant to GATA.




On Friday, we reported to you that London was again in backwardation in gold and silver.  However this time gold has been much deeper in backwardation than before.  Bill Holter explains its significance:

(courtesy Bill Holter/Miles Franklin)


Backwardation is a function of supply.


We live in a truly messed up and Orwellian world if you will.  In many parts of Europe, interest rates are negative.  Savers “pay” for the privilege of banks to hold their money, lenders pay sovereign treasuries to lend, new homeowners who borrow to buy property are paid to borrow.  This situation where borrowers get paid and lenders pay also exists between banks which is really strange because you would think bankers understand money and interest …just a little?

  As a question to set the foundation, I ask you this; if you could sell something today for $100 and be contractually guaranteed to be ABLE to buy it back 30 days later at $99, would you do it?  I hope your answer is not only yes, but you return with “how many times can I do this, it’s free money?!”.  In the real world, this is called arbitrage.  Rarely does the condition ever exist on a single exchange, normally when it does exist it happens over two or more exchanges and even time zones.  The discrepancy can be miniscule as billions of dollars scan the globe 24 hours a day looking for this situation and lock the profit in until there is no more to be had.  Arbitrage is a big business and for the most part, RISK FREE.  The condition described above is called “backwardation”, the remedy is ALWAYS arbitrage.
  Please notice I bold printed three words, “able, risk-free, and always”.  Starting with the first word “able”, if we changed that word to either possibly or cannot, the whole equation changes as the trade is no longer risk free and will not ever be done without risk assessment.  As I understand it, physical gold is in backwardation in London and silver in Asia.  Why has not big money stepped in and arbitraged the “guaranteed” profits out of these markets?
  The answer of course is that the profit is not guaranteed.  The reason backwardation is persistent is because the fear of not being able to get your metal back 30 days into the future.  It is being deemed by the market that gold today (a bird in the hand thing) is more valuable than a “promise” to get it back in 30 days …because promises are made to be broken!  The fear obviously exists of a failure to deliver in the future, there can be NO other explanation why physical gold in hand is more expensive than gold 30 days in the future.  If you would like to tell me that the situation exists because interest rates are negative then please explain to me how interest rates can be negative and the logic behind it!
  Andrew Maguire spoke of this again last Friday, he also spoke of the new “Allocated Bullion Exchange” (ABX)which was set to begin in late April and has been pushed back a few weeks.  I must confess to giving out incorrect information last month, I believed this was an offshoot of the SGE, Shanghai Gold Exchange, it is not.  Their homepage is up but not yet fully functional.  ABX intends to arbitrage the differences between the various global gold exchanges …on a PHYSICAL basis.  In other words, when one buys they ask for delivery and when one sells they will deliver the real product.  We will soon see how willing the shorts are to pummel metals prices with weeks or even months worth of global production “on paper”.  I believe it is entirely possible to see LBMA cleaned out and followed by COMEX of their inventories within a very short timespan.  An operation as such would not require huge amounts of capital, $10-$20 billion should be more than enough to do the trick!
  After writing the above, news has come out the IMF board meeting to discuss China’s inclusion to the SDR has been postponed.  A decision and announcement must be done prior to sometime in October.  I am still of the mind that China will put their cards on table and include audited numbers.  Will they request or even demand an audit from the other players?  I don’t think they have to overtly, by auditing their own gold they are “politely” asking the others to provide proof of theirs.
  I point this out because of the connection involved between backwardation and whether or not the Western powers really do have the gold.  The connection is of course the “supply” and whether it will continue to be forthcoming.  The arbitrageurs seem not willing to take the risk it won’t be, not even for 30 days.  Otherwise the backwardation would not exist.  If the supply has in fact been surreptitiously coming from Western vaults and questions come regarding official numbers, the supply may discontinue and the “I want my gold” moment will be at hand.
  As Andrew said, “this will accelerate the process of re set”.  I agree and would add, it’s been a long time coming, the tail should never have been allowed to wag the dog but then again, in what world do borrowers get paid to borrow?  Regards,  Bill Holter

And now overnight trading in stocks and currency in Europe and Asia


1b Chinese yuan vs USA dollar/yuan weakens to 6.2093/Poor Chinese HSBC PMI below 50 at 48.4

2 Nikkei  closed

3. Europe stocks up/USA dollar index up to 95.55/Euro falls to 1.1136/

3b Japan 10 year bond yield: another jump to .37% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 120.22/

3c Nikkei still  above 20,000

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

3e WTI  59.51  Brent 66.87

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. Last night Japan refused to increase it’s QE

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. German 10 yr bund rises to 37.0 basis points. German bunds in negative yields from 4 years out.

Except Greece which sees its 2 year rate rises quite a bit to 20.13%/Greek stocks down .13%/ still expect continual bank runs on Greek banks.

3j  Greek 10 year bond yield:  10.55% (up 8 in basis point in yield)

3k Gold at 1182 dollars/silver $16.32

3l USA vs Russian rouble;  (Russian rouble down 9/10  rouble/dollar in value) 51.95 , the rouble is still the best acting currency this year!!

3m oil into the 59 dollar handle for WTI and 66 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 can spell financial disaster for the rest of the world/China may be forced to do QE!! (last Monday they 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 93.55 as the Swiss Franc is still rising against most currencies.  Euro vs SF is 1.0416 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/Poor UK manufacturing report today.

3r the 4 year German bund remains in negative territory with the 10 year close to negativity at +.37/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 1.4 billion euros. The new maximum is 76.9 billion euros.  The ELA is used to replace depositors fleeing the Greek banking system.  The bank runs are increasing exponentially. The ECB is contemplating cutting off the ELA which would be a death sentence to Greece and they are as well considering a 50% haircut to all Greek sovereign collateral which will totally wipe out the entire Gr. banking and financial sector.



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

4.  USA 10 year treasury bond at 2.13% early this morning. Thirty year rate well below 3% at 2.84%/yield curve flatten/foreshadowing recession.


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


(courtesy zero hedge/Jim Reid Deutsche bank)

Futures Levitate Following Worst Chinese Mfg PMI In One Year, Brent At 2015 Highs; Bund Slide Continues

The good news for stocks started overnight when the final Chinese HSBC Manufacturing PMI printed well below the 49.4 expected, or at 48.9, the biggest contraction in one year, which meant calls for more easing would be imminent. And naturally, after starting off eark, the Shanghai Composite closed near its highs, up 0.9%. However, the good news (for stock) out of China’s deteriorating economy was partially overshadowed by “bad news” for stocks following the final Eurozone Mfg PMI which rose from 51.9 to 52.0, with Germany rebounding from 51.9 to 52.1 even as France missed expectations and continued contracting at a 48.0 PMI.

Finally, a more positive tone out of the Greek negotiations ahead of the country’s May 6 payment to the IMF, should have pushed the Stoxx into the red (because a “fixed” Greece means less ECB liquidity injections and intervention) but a nearly 100 pip swing lower in the EURUSD on no news and no volume to its day lows at 1.113 appears to have kept the sellers in check.

But the best news is twofold: volumes continue to be lethargic with both the UK (May Day bank holiday) and Japan closed until Thursday (Golden Week), while the bulk of the S&P500 has now exited the stock buyback quiet period. As such, ignore record equity outflows – all the matters is that corporate CFOs, flush with brand news bond issuance cash, will tell their favorite Wall Street trading desk to buy stocks at just the right inflection point sending the market surging just as shorts once again test the downtrend and the 50 DMA.

Meanwhile, the bond (and Bund) rout continues, with the 10Y Bund trading wide of 0.40% at last check as Mario Draghi is delighted that he will be able to continue QE much longer than if the entire German curve was trading at -0.2% and thus no longer eligible for purchases.

A deeper look at global markets shows Asian equities mostly rose with Chinese bourses at the forefront in the wake of disappointing Chinese data, with the final Chinese HSBC Mfg PMI posting its largest contraction in a year at 48.9 vs. Exp. 49.4. Shanghai Comp (+0.9%) and Hang Seng (+0.3%) both trade in the black as the poor data led to speculation the government would add to monetary stimulus. ASX 200 (+0.1%) fluctuated between gains and losses as strength in basic materials offset weakness in financials, after Westpac’s earnings (-3.5%), indexes 2nd largest bank, missed street expectations. Of note, Japanese stock markets are closed for the Golden Week holiday.

With the UK out of the market due to the bank holiday, European equities trade higher in a relatively muted session so far, following on from positive closes in Asia. Meanwhile, Syngenta (+7%) leads the gainers in Europe with US listed company Monsanto said to be an interested party in the Swiss agricultural giant. Separately, Infineon (+3.2%) and Dialog Semiconductor (+5.7%) are among the outperformers in Europe with the latter retracing some of last week’s losses and are said to have been awarded a contract to supply a power management socket for the Apple iWatch. According to a note from Deutsche Bank, Infineon are expected to boost guidance on tomorrow when reporting Q2 numbers.

Focus remains on Greece with talks continuing to gain traction following the shake-up of the Greek cabinet, which has helped the GR/GE spread to be the tightest in Europe. Meanwhile, Bunds play catch-up with UST’s due to the Labour Day holiday in Europe with 10y yields sitting above 0.4% for the first time since the start of the ECB’s bond buying programme. Meanwhile, UST trade relatively range-bound amid a lack of fundamental news driving much price action.

The USD-index bounced back off 2 week lows following hawkish comments on Friday prompting broad-based weakness in the EUR, with Greek optimism not yet filtering through to FX markets as uncertainty behind Greece having adequate funds continues to weigh ahead of their IMF payments due on Wednesday and May 12th. However, GBP/USD remains flat despite the heightened expectations of a hung parliament as Labour and the Conservatives look less likely to gain a sole majority heading into Thursday’s election. Ahead of tomorrow’s RBA rate decision, AUD fell for a 4th consecutive session, as participants continued bringing forward rate cut expectations, with OIS pricing in an 80% chance of a 25bps rate cut.

In the energy complex, spot gold has held onto overnight gains despite the firmer USD after Chinese HSBC Manufacturing
PMI (Apr F) M/M 48.9 vs. Exp. 49.4 which is the biggest contraction seen in a year. Elsewhere, WTI and Brent crude are seen higher with Brent crude reaching its highest level in 2015 with nothing fundamental driving price action.

In summary:  European stocks rise as continental bourses reopen after May 1 holiday with Danish, Norwegian shares outperforming and Italian underperforming. U.K., Irish exchanges closed for holiday. Among sectors, basic resources, chemicals outperform while autos, banks underperform. Yields on German, French sovereign notes fall while Italian, Spanish yields rise. Brent crude falls in light trading. Gold, silver, PGMs rise. U.S. equity index futures down slightly. Germany April manufacturing PMI is 52.1 vs flash reading 51.9, while Eurozone April manufacturing PMI is 52 vs flash reading 51.9. U.S. factory orders, ISM New York due later.

Market Wrap:

  • S&P 500 futures little changed at 2101.2
  • Stoxx 600 up 0.1% to 394.9
  • US 10Yr yield down little changed at 2.11%
  • German 10Yr yield down 1bps to 0.37%
  • MSCI Asia Pacific up 0.1% to 153
  • Gold spot up 0.4% to $1183.8/oz
  • Eurostoxx 50 -0.6%, CAC 40 -0.3%, DAX +0.1%, IBEX -0.5%, FTSEMIB -0.5%, SMI +0.1%
  • Asian stocks rise with the Shanghai Composite outperforming and the Topix underperforming.
  • MSCI Asia Pacific up 0.1% to 153; Nikkei 225 up 0.1%, Hang Seng down 0%, Kospi up 0.2%, Shanghai Composite up 0.9%, ASX up 0.2%, Sensex up 1.2%
  • Guo’s Fosun to Buy Ironshore in $1.84b Insurance Deal
  • Syngenta Rises 12% Amid Takeover Interest From Monsanto
  • Myriad ‘Actively Looking’ for Acquisitions: WSJ Cites Capone
  • Letv Sports Website Said Valued at $450m After Funding
  • Mubadala, Temasek Unit Said to Plan Sale of Dunia
  • Euro down 0.31% to $1.1164
  • Dollar Index up 0.09% to 95.38
  • Italian 10Yr yield up 3bps to 1.52%
  • Spanish 10Yr yield down 3bps to 1.51%
  • French 10Yr yield down 1bps to 0.64%
  • S&P GSCI Index up 0% to 444
  • Brent Futures down 0% to $66.5/bbl, WTI Futures up 0.1% to $59.2/bbl
  • LME 3m Copper closed up 1% to $6400/MT on May 1
  • LME 3m Nickel closed down 1.4% to $13750/MT on May 1
  • Wheat futures down 0.4% to 472.3 USd/bu

Bulletin Headline Summary from Bloomberg and RanSquawk

  • A relatively quiet session with the USD -index (+0.2%) bouncing back off 2 week lows and Greek optimism failing to filter through to FX markets
  • Bunds (-47 ticks) play catch-up with UST’s, after positive data from the US on Friday spurred a selloff in US Treasuries
  • Treasuries steady overnight, 10Y and 30Y yields holding near highest since early March, after losses last week that pushed 5Y-30Y yields out of 6-week ranges amid bund- led losses for EGBs.
  • Greece is still far from an agreement with its international creditors as Prime Minister Alexis Tsipras tries to persuade officials to ease the flow of liquidity to the country
  • Unemployment data on Wednesday will highlight that more than a quarter of Greeks remain out of work, according to economists; EC will also give latest assessment of country this week, will probably cut its 2015 growth forecast
  • Asian companies are thinking twice about their dealings with European partners as jitters persist over whether Greece will splinter the euro area, the Asian Development Bank’s chief economist said
  • HSBC/Markit’s final China PMI was at 48.9, missing the median estimate of 49.4 in a Bloomberg News survey and lower than the preliminary reading of 49.2
  • Two gunmen were killed Sunday in Texas after opening fire on a security officer outside a provocative contest for cartoon depictions of Prophet Muhammad, and a bomb squad was called in to search their vehicle as a precaution, authorities said: AP
  • Afghan security forces are suffering record casualties in their first battles against the Taliban since the U.S. combat mission in Afghanistan ended in December after more than 13 years
  • Sovereign bond yields higher.  Asian, European stocks higher; U.S. equity-index futures gain. Crude oil, gold and copper higher


DB’s Jim Reid concludes the overnight recap


This morning China released its final April HSBC manufacturing PMI print and it makes for somewhat subdued reading after the figure was revised down 0.3pts to 48.9, the lowest monthly print in 12 months. Having initially declined over a percent, equity markets in China have recovered with the Shanghai Comp (+0.85%) and CSI 300 (+0.86%) both rebounding and no doubt helped by the hope that the soft print adds to the argument for further stimulus for the region. Elsewhere, with a number of markets closed in Asia for public holidays, the region is fairly low on activity however bourses are mostly in positive territory with the Hang Seng (+0.38%), Kospi (+0.35%) and ASX (+0.12%) higher in particular.

Moving on, Greece continues to generate plenty of headlines. Despite the better tone last week that some sort of deal may be announced on the weekend, as we’d largely expected no agreement was made with reports on various wires now suggesting that Greece is aiming for a deal sometime this month. Despite further commentary that progress is being made, key differences are said to still remain around fiscal assumptions and labour and pension reforms which continue to hold up progress. With talks due to resume this morning, a report in Greek press Ekathimerini has caught our attention with the article suggesting that the Greek government is hopeful enough that a common ground will be found to trigger an emergency Eurogroup meeting before this Wednesday. The article notes that Wednesday is an important date given that the ECB may look to increase the haircuts applied to collateral offered by Greek lenders in exchange for liquidity. We expect that significant progress would need to be made between now and then however in order for this to be true.

We’ll review the week ahead in detail later, however quickly looking at the potential market moving events this week, US payrolls on Friday will be the clear focus. In terms of expectations, our US colleagues are expecting a +225k print which matches the current Bloomberg consensus, while they expect the unemployment rate to drop one-tenth to 5.4%. Elsewhere, Thursday’s UK Election will be closely followed while Greece will once again be front and centre.

In terms of the UK General Election, our economics colleagues noted in the Focus Europe piece published on Friday that opinion polls continue to suggest an uncertain outcome with the conservatives now expected to be the largest party by a narrow margin over Labour. This appeared to be backed up by the YouGov poll for the Sunday Times on the weekend which showed the Conservatives at 34% versus Labour at 33%, with UKIP (13%), Liberal Democrats (8%) and the Scottish National Party (5%) following. With the polls extremely close, our colleagues expect that coalition negotiations could be tense and lengthy. In terms of market impact, they note that a labour win would likely see a slower deficit reduction and possibly (modest) higher interest rate rises, while a Conservative government could rattle markets concerned with the promise of an EU referendum.

Looking back at markets on Friday, it was fairly quiet in the European timezone with most equity markets closed (the UK being the exception with the FTSE closing +0.36%), however over in the US the S&P 500 rebounded +1.09% after two previous days of declines, despite a host of softer data prints and a stronger day for the Dollar. Indeed the Dollar, as measured by the DXY recovered +0.74% after seven previous days of declines, while Treasuries continued their weak stretch as the benchmark 10y widened 8.2bps to close at 2.114% – the highest yield since March 13th.

Despite the weaker set of US data on the whole on Friday, the moves in Treasuries appeared to come about following the ISM manufacturing print in particular. With the April headline reading unchanged at 51.5 (vs. 52.0 expected), markets appeared to latch onto some of the finer details in the print which showed new orders (+1.7pts), new export orders (+4pts) and production (+2.2pts) all rising. The employment (-1.7pts) component made for slightly more subdued reading however. Elsewhere, ISM prices paid rose less than forecast to 40.5 (vs. 42.0 expected) while construction spending for March was weak (-0.6% mom vs. +0.5% expected). The final April prints for manufacturing PMI (revised down one-tenth of a point to 54.1) and the University of Michigan consumer sentiment (unchanged at 95.9) were largely as expected – the latter seeing the 1y inflation expectations reading tick up a touch to 2.6% (from 2.5%). Finally vehicle sales also disappointed with total vehicle sales coming in below market (16.5m saar vs. 16.9m expected) for April. Following Friday’s data, the Atlanta Fed GDPNow model lowered its Q2 GDP expectation to +0.8% from the initial +0.9% estimate.

There was also some focus on Fedspeak on Friday which may have contributed to the move in Treasuries on Friday. The Cleveland Fed’s Mester – the first to comment post last week’s FOMC – hovered on the hawkish side after saying that ‘all meetings are on the table’ in relation to a first rate rise. Mester (non-voter) went on to say that ‘we’re getting close to the point where it’s going to be time to lift off, and now it’s going to be this decision based on the data’. The San Francisco Fed’s Williams somewhat reinforced Mester’s comments later in the day, saying that liftoff may be possible at any time but that ‘it would require the data to be good’.

Elsewhere, in Europe equity markets were closed on Friday as mentioned. Bond markets were open however and Bunds extended their recent weakness as the 10y closed wider (+1bp) for the fifth consecutive day (and eighth in nine sessions) at 0.373%, marking a +22bps move on the week. The move over the course of the week was in fact the largest widening move (in basis points) since the first week of 2013. Peripherals on the other hand outperformed as 10y yields in Spain (-7.2bps), Italy (-6.3bps) and Portugal (-3.3bps) all tightened.

Turning over to this week’s calendar now, we kick off this morning in Europe with the final April manufacturing PMI readings for the Euro area, Germany and France. The May Sentix investor confidence reading for the Euro area is also due today also. Over in the US this afternoon, focus will be on the ISM New York followed closed by factory orders data. Moving to Tuesday, the European Commission Economic Forecasts will be of some interest in the morning session, while data wise it’s fairly quiet in Europe with just Euro-area PPI due. It’s busier in the US however, with trade data, the IBD/TIPP economic optimism survey as well as the final April composite and services PMI’s and preliminary ISM non-manufacturing print due. Wednesday’s early attention will be on the April services and composite PMI readings which are scheduled for China (preliminary) as well as the UK (preliminary), Euro-area, Germany and France (all final). March retail sales for the Euro-area will also be of some focus. Over in the US on Wednesday, the April ADP employment change print will be an important prelude for Friday, while we are also due nonfarm productivity and unit labour costs. It’s fairly quiet data-wise on Thursday, with just French industrial and manufacturing production and German factory orders scheduled, however much focus will be on the UK General Election. We’ve got more employment data due in the US on Thursday meanwhile with Challenger job cuts and initial jobless claims readings expected as well as consumer credit. It’s a busy end to the week on Friday with industrial production and trade data expected for Germany, as well trade data for the UK due. Friday’s focus in the US will of course be on the April payrolls. The usual employment associated readings are also due on Friday including the unemployment rate and average hourly earnings. Aside from the data, earnings season continues with 86 S&P 500 companies due and 108 Euro Stoxx companies. Fedspeak will of course warrant much attention with Evans, Williams, George, Kocherlakota and Lockhart expected to speak while the Fed’s Yellen and IMF’s Lagarde are due to speak on Wednesday.




Over the weekend..

(courtesy zero hedge)

“Completely Absurd” To Think Greece Won’t Default In May: Official

Facing a pensioner rebellion and a looming €780 million payment due to the IMF on May 12, Greece’s back is now truly against the wall. Last Tuesday, Athens appears to have run out of cash, triggering an 8 hour delay in pension payments which left some pensioners walking away from ATMs empty-handed. This didn’t sit well with the country’s retirees who reportedly disrupted a state pension fund board meeting and demanded that cash reserves not be transferred to the central government as mandated by a decree that came down last month.

Now, with a reshuffled negotiating team (characterized by less Varoufakis and more negotiating), PM Tsipras is racing to strike a deal on reforms that would allow the country’s creditors to disburse the bailout money Athens needs to pay… well, to pay its creditors (we’ll ignore the circular reasoning there for now).

More from Bloomberg:

While talks have picked up pace in recent days, the two sides are still trying to bridge differences on stalled reforms. It isn’t yet clear that there will be enough progress to clinch a deal in time for the planned May 11 meeting of euro-area finance ministers, some officials warned.


“They’re working hard now and that’s what we’ve gained,” Dutch Finance Minister and Eurogroup President Jeroen Dijsselbloem told reporters in the Hague. “But in the end we only look at the results and we’re not that far yet.”


Greek Prime Minister Alexis Tsipras told his cabinet on Thursday he’s confident of closing a deal, even as his government sent conflicting signals on its willingness to agree on reforms required under the 240 billion-euro ($268 billion) bailout. Faced with debt payments totaling about 1 billion euros to the International Monetary Fund on May 6 and May 12, Greece hopes there will be enough progress in the talks by next week to allow the European Central Bank to restore liquidity access for the country’s cash-strapped banks…


Dijsselbloem said it was too early to say whether talks with Greece had reached a turning point. While there has been progress in terms of the process after Tsipras reshuffled the negotiating team, pushing aside Finance Minister Yanis Varoufakis, there is still a long way to go on the substance, a person familiar with the matter said, asking not to be named because the talks are private.


The official said that the Greek government’s economic assumptions are very optimistic, making it difficult to agree on the extent of fiscal adjustment measures the country must adopt to meet goals under its bailout.

Despite attempts by both sides to project an air of optimism, the stark reality seems to be that Greece will attempt, to the bitter end, to stick with its “red line” campaign promises as practicality, reality, and the economic suffering of the Greek populace seem to have taken a permanent back seat to Syriza’s desire to hold on to whatever political legitimacy the party has left. Meanwhile, some officials have now suggested that even if a deal were struck this weekend, there simply is no chance that Athens will make the payment due to the IMF on May 12.

Via Bloomberg:

Even if an agreement between Greece and international creditors reached, it would take weeks for the next aid tranche to be paid, Handelsblatt reports, citing people close to the government.


Greek government hoped to pay ~EU750m to IMF on May 12 with help of international creditors: Handelsblatt


It’s “completely absurd” to think money will be transferred by then, as “prior actions” by Greece would be required, approved by Greek parliament, even in the event of a deal: Handelsblatt

And here is Athens which appears to be re-adopting the now infamous “tax driver” approach:


So while things do not look particularly promising in terms of avoiding a Greek default in just 10 days’ time, Athens can always (re)play the war reparations card.

From Reuters:

German President Joachim Gauck expressed support on Friday for Athens’ demands for reparations for the Nazi occupation of Greece in World War Two, even though the government in Berlin has repeatedly rejected the claims.


Gauck, who has little real power in Germany but a penchant for defying convention, said in an interview to be published in Saturday’s Sueddeutsche Zeitung newspaper that Germanyshould consider its historical responsibility to Greece.


“We are not only people who are living in this day and age but we’re also the descendants of those who left behind a trail of destruction in Europe during World War Two — in Greece, among other places, where we shamefully knew little about it for so long,” Gauck said.


“It’s the right thing to do for a history-conscious country like ours to consider what possibilities there might be for reparations.”


Greece’s demand for 278.7 billion euros ($312 billion) in reparations for the brutal Nazi occupation have mostly fallen on deaf ears, but some legal experts say it may have a case.


Many in Greece blame Germany, their biggest creditor, for the tough austerity measures and record unemployment that have followed from two international bailouts totaling 240 billion euros.

And although German economy minister and vice-chancellor Sigmar Gabriel recently called Greece’s reparations claims “stupid”, Merkel is striking a concilliatory tone ahead of WWII’s anniversary:

Germans “have a special responsibility to deal in an aware, sensitive and knowledgeable way with what we perpetrated under Nazism.”


“[We can’t draw a line in the past] we see that in the debate in Greece and in other European countries, too.”


“I fully understand [the] long-lasting wounds and concerns that there are in other countries.”

As we noted last month, Greece is expected to bring up the issue again and again with whatever tools it has in its hands. Until it decides to solve the issue in the courts.

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




Then this afternoon we received this huge story whereby the IMF is now threatening to splinter off the rest of the Troika due to non performance by Greece.  It states that Greece is heading for a primary 1.5% deficit not a surplus. (A primary surplus is when government receipts is greater than government expenditures minus interest payments)  The IMF will never fund anybody with a primary deficit. Also on May 6.2015, the ECB is meeting and it will decide whether to force more collateral upon Greece re the ELA.  Any haircut on collateral will wipe out Greece for good.



(courtesy zero hedge)

IMF Splinters From Rest Of Troika, Threatens To Cut Off Greek Funding

At this point it’s become fairly obvious to even the most casual observer that Greece is headed for some manner of default. The only real question is who gets shorted and when, as well as a relatively new question: which debt will Greece will default on first (just because it has so many choices).

After a decree to sweep excess cash from local government coffers to the central bank didn’t go entirely as planned, Athens was forced to delay pension payments by 8 hours last Tuesday, prompting retirees to storm a pension fund board meeting, and at least one official recently claimed that even if a deal had been struck yesterday, there simply was no way — logistically speaking — that Greece could possibly make its May 12 payment of €780 million to the IMF.

Now, FT is reporting that the IMF may refuse to disburse its part of the remaining €7.2 billion Athens would theoretically receive if negotiations produced a breakthrough unless the country’s European creditors agree to write-off a portion of their Greek debt. Here’s more:

Greece is so far off course on its $172bn bailout programme that it faces losing vital International Monetary Fund support unless European lenders write off significant amounts of its sovereign debt, the fund has warned Athens’ eurozone creditors.


The warning, delivered to eurozone finance ministers by Poul Thomsen, head of the IMF’s European department, raises the prospect that it may hold back its portion of a €7.2bn tranche of bailout aid that Greece is desperately attempting to secure to avoid bankruptcy.


Eurozone creditors, who hold the vast bulk of Greek debt, are adamantly opposed to debt relief. But IMF support is crucial both for its funds and to sustain political backing for the Greece bailout, particularly in Germany.


According to two officials present at a contentious meeting of eurozone finance ministers in Riga last month, Mr Thomsen said initial data the IMF had received from 


Greek authorities showed Athens was on track to run a primary budget deficit of as much as 1.5 per cent of gross domestic product this year.


Under existing bailout targets, Athens was supposed to run a primary surplus — government receipts net of spending, excluding interest payments on sovereign debt — of 3 per cent of GDP in 2015.


With the large surplus now turning into a sizeable deficit, Greece’s debt levels would begin to spike again.

FT also notes that this has happened before and although European lenders had agreed to consider write-offs in exchange for the IMF funneling cash to Athens, the loans were never actually reduced.

Essentially the IMF is reluctant to give Greece any more money while the country is still running a deficit — that is, they’re not terribly excited about throwing cash into a blackhole. Instead, they may demand that Athens’ debt-to-GDP ratio be reduced the old fashioned way: by simply forcing the ECB and the German taxpayer to write down their portion of the existing debt. This amounts to the most absurd kind of can-kicking one can possibly imagine, as without reforms, Greece will quickly replace the old debt that’s written off with new debt which will then have to be written off at some future date when Grexit again rears its ugly head and so on and so forth.

It also strongly suggests that the IMF is threatening to not pay… itself: after all the bulk of upcoming Greek interest and principal payments are to the IMF. Which is why the “patient” Greeks are expected to smile and nod knowingly at this latest hollow IMF threat, in which it is now unclear if Lagarde is the Troika’s good cop (demands a debt haircut) or bad cop (refuses to pay Greece any more).

Meanwhile, Kathimerini notes that the ECB is considering several options for new haircuts on collateral pledged by the insolvent Greek banking sector for ELA:

Greece is hoping that it will find enough common ground with its lenders to trigger an emergency Eurogroup before May 6, when the European Central Bank’s government board is due to meet next to decide on the provision of liquidity to Greek banks.


Wednesday is seen as a key day by the Greek government not just because it wants to alleviate its cash shortage problems as soon as possible but also because ECB officials could opt to increase the haircut that the central bank applies to the collateral offered by Greek lenders in exchange for liquidity.


Kathimerini understands that the ECB is working on three scenarios: Haircuts of 44 percent, 65 percent and 80 percent. The current discount applied to Greek banks’ collateral is 23 percent. Should the ECB choose the more drastic scenarios, local lenders would find it increasingly difficult to come up with the amount of collateral needed in order to maintain the flow of liquidity from Frankfurt.

Since it appears the IMF will not shy away from throwing its weight around as it sees fit when the going gets tough, we wonder whether the organization already has other political parties (primarily in Spain and Italy) that it has added to its list of “non grata” political organizations like Syriza, whose election will result in the prompt pulling of funds and demands for a sovereign default, if mostly on the backs of Greman taxpayers and not so much the IMF itself?


We have been highlighting this to you for the past month.  It sure looks like the ECB is running out of long end bonds to purchase:

Has The ECB Run Out Of Willing Bonds Sellers On The Long End?

Ever since its launch (as well as before) the ECB’s QE program has been plagued by suggestions that there may not be enough bonds for Mario Draghi to monetize in order to continue the program until its scheduled conclusion in September of 2016. Or rather, the bonds are there, but due to regulatory, liquidity and purely technical reasons, there is a scarcity of willing sellers at any price (a price which at a minimum yield of -0.20% per CUSIP assures sellers of guaranteed profits).

Which is why many carefully poured over today’s monthly update of the ECB’s public sector purchase programme (PSPP) aka QE for the month of April, to see if there was a decline in purchases, or if there was anything else worth noting.

On the surface, things were great: after purchasing €47.4 billion in March, the ECB purchased a total of €95.1 billion through April 30, or €47.7 billion in April: a €300 million increase from the previous month.

The breakdown by nation also revealed nothing substantial, with that biggest wildcard of all, Germany, seeing a moderate increase in purchases with Draghi buying €11.1 billion in German bonds, after purchasing a virtually identical amount the month before.


However, a very different picture emerges when looking at the breakdown by weighted average remaining maturity of ECB bond purchases.

As a reminder, a month ago we learned that the average weighted average maturity in the first month of monetizations as of March 31 was 8.56 years.

What is surprising is that as of April 30, this average maturity dropped substantially, or by 0.31 years, to 8.25, which also suggests that in April alone, the average maturity of purchased bonds must have been some 0.62 years lower, or roughly under 8.00 years.

Further, one look at the chart below shows that nowhere was the scarcity of long-maturity bond (or sellers thereof) more acute than in Spain, which in March had the longest average maturity of all nations at 11.66 and has since tumbled to 9.73. Since the amount of Spanish bonds purchased in March and April was nearly identical, it implies that in April the ECB bought bonds with an average weighted maturity somewhere in the 7.8 year range: a huge drop month over month.

The same, but to a less dramatic extent, is apparent with the ECB’s purchases of Italian, French and, yes, German debt as well, all of which had a notably lower average weighted maturity.


In other words, while the ECB is representing that it has no limitations on total monthly volume purchases, it is suddenly finding itself forced to buy increasingly more bonds on the short-end.

Which brings up the question: is this due to the specific shift in the purchasing strategy of the ECB, or has the ECB simply run out of bond sellers on the long end and as a result is forced to buy ever shorter-maturity paper?

If the answer is the latter, it confirms that the ECB will indeed have a very difficult time of completing its QE until its stated maturity (forget about it being open-ended in 2017 and beyond), because quite simply unless the ECB lowers its yield threshold of purchases, which in turn would mean lowering the discount rate one more from -0.20% to -0.50% or even less, then it will very soon have no bonds which to monetize on the short-end either.

And once the market realizes that the ECB is indeed facing a massive shortage of not only collateral but willing sellers, then the recent selloff in Bunds will be a pleasant distant memory as German paper trades promptly right back at its record tight yields of 0.05% and into negative territory promptly thereafter.

Submitted by Martin Armstrong via Armstrong Economics,


The reason I moved the Solution Conference forward was due to the fact that all my sources behind the curtain were screaming from the four corners of the world that the new age of Economic Totalitarianism is upon us all. Australia will be the first to introduce a compulsory tax on savings. This is the ultimate Marxist state for now anyone with spare cash is the enemy of the Conservative Tony Abbott government. What I laid out at the Solution Conference is the ONLY way out of this nightmare. It is time for people to start spreading the word and get behind changing the game plan while we still have a game in play. We have to stop this confiscation of all wealth and the continual borrowing and taxation. This will lead to the total destruction of Western culture for we are plagued by power hungry insane politicians who cannot see past their nose.

The new compulsory control is already provided for in the 2015 Australian budget. So that everyone who has any savings must pay taxes on on their savings. The measure is expected to serve as a global test balloon for Europe and North America will watch the outcome in Australia. If there will be no massive resistance of Australian savers, the rest of the world should expect this outright confiscation very rapidly.

Tony Abbot has proven to be a real Marxist. He is taking the Australian people into the economic abyss from which only war and bloodshed can emerge. This is really Atlas Shrugged in high gear. The Abbot Government will introduce its draft budget for 2015 tax on savings and it will to announce this measure before the formal decision on the budget.

Prime Minister Tony Abbott said that it was now all about to relieve families and small businesses. For this, the new tax is to be used. The problem is clear. There will be no reduction in taxes for these people, it will only be more money in the pocket of corrupt and seriously deranged politicians who are destroying the western civilization in the blink of an eye.

Abbott also said there would be some hard decisions in the new budget because this was inevitable. For the banks, the government’s plans are anything but good news. Abbott’s anti-capitalism view will put him up there with Lenin no doubt when history is allowed to be written honestly perhaps in a hundred years or some. This decision of a tax on savings would seriously harm the government and if there are any smart Australians, it should now be a race to get the hell out of the banks. The banks should see a massive withdraw. Take your money and buy tangible assets even gold, but you just cannot store it in a bank. Movable assets will be the key and buying equities in the USA may be the only real game in town to protect money.

It is hard to fathom how Australian banks will attract or hold on to deposits in this new Abbott-style of Economic Totalitarianism. The opposition is of course outraged by the decision of the Abbott Conservative government. This is not a labour government demonstrating what I have said – economically there is no difference between left and right – just hand them the money.

IMF Debt

The introduction of this tax on money in Australia led by Tony Abbott is the trial balloon for the global economy. The IMF’s Christine Lagarde has led the battle to impose French socialism/communism upon the entire world. I have warned that she is the most dangerous woman on the planet. Do not forget that it was the French elite who sold the idea of communism to Marx – not the other way around. Now the French elite have control of the IMF and they have persuaded all other global financial institutions to also require such a compulsory levy for several years because they see it as the only way to resolve the debt crisis – just confiscate the people’s money. In the wake of the G20 discussions such measures are usually prepared and coordinated. The public knows about it only when there are hardly any ways to prevent the action and mainstream press sell the people down the river cheering it all the way.

You better wake up before the coffin is nailed shut.

Oil related stories:

The truth behind the USA shale industry:
(courtesy zero hedge/David Einhorn)

US Shale Sector Crashes After David Einhorn Repeats What Everyone Knows Already

Greenlight’s David Einhorn has come out swinging at the Fed-fueled fracking frenzy and, after pointing out facts that are extremely widely known, and have been explained innumerable times here, sent Shale stocks tumbling… led by the so-called “MotherFracker” – Pioneer Natural Resources…


Pioneer is down…

And the rest of the sector is weaker…

Einhorn Presentation…

*  *  *

Einhorn concludes:

  • “Pioneer’s business model is like using $50 bills to counterfeit $20s”
  • “Either way the frackers are fracked”
  • “Many are buying frackers as a higher oil price play… A better alternative: buy oil.”

Energy stocks still cheap?

*  *  *

As we previously detailed (via Deutsche Bank) – and NOTHING has changed, except now Einhorn is pushing the trade…

So how big of an impact on fundamentals should we expect from the move in oil price so far and where is the true tipping point for the sector? Let’s start with some basic datapoint describing the energy sector – it is the largest single industry component of the USD DM HY index,however, given this market’s relatively good sector diversification, it only represents 16% of its market value (figure 2). Energy is noticeably tilted towards higher quality, with BB/B/CCC proportions at 53/35/12, compared to overall market at 47/37/17. We find further confirmation to this higher-quality tilt by looking at Figure 3 below, which shows its leverage being around 3.4x compared to 4.0x for overall market. Similarly, their interest coverage stands at noticeably higher levels, even having declined substantially in recent years (Figure 4).

Energy issuer leverage has increased faster than that of the rest of the market in recent years, but this trend has largely exhausted itself in recent quarters. As Figure 5 demonstrates, growth rates in total debt outstanding among US HY energy names have been only slightly higher relative to the rest of HY market. It is almost certain in our mind that with the current shakeout in this space further incremental leverage will be a lot harder to come by going forward.

Perhaps the most unsustainable trend that existed in energy going into this episode shown in Figure 6, which plots the sector’s overall capex expenditure, as a pct of EBITDAs. The graph averaged 150% level over the past four years, clearly the kind of development that could not sustain itself over a longer-term horizon. Our 45%-full sample of issuers reporting Q3 numbers has shown this figure coming down to 110%, a move in the right direction, and  yet a level that suggests further capacity for decline. This chart also shows, perhaps better than any other we have seen, the extent to which current economic  recovery in the US has in fact been driven by the energy development story alone.

The next question we would like to address here is to what extent the move in oil so far could translate into actual credit losses across the energy sector. To help us approach this question we are borrowing from the material we are going to discuss in-depth in next week’s report on our views on timing/extent of the upcoming default cycle. For the purposes of the current exercise we will limit ourselves to saying that we have identified total debt/enterprise value (D/EV) as an important factor helping us narrow down the list of potential defaulters. Specifically, our historical analysis shows that names that go into restructuring, on average, have their D/EV ratio at 65% two years prior to default, and, expectedly, this ratio rises all the way to 100% at the time of restructuring. From experiences in 2008-09 credit cycle we have also determined that there was a 1:3 relationship between the number of defaulting issuers and the number of issuers trading at 65%+ D/EV prior to the cycle. Again, we are going to present detailed evidence behind these assumptions in the next week’s report.

For the time being, we will limit ourselves to applying these metrics to current valuations in the US HY energy sector, and specifically, its single-B/CCC segment. At the moment, average D/EV metric here is 55%, up from 43% in late June, before the 26% move lower in oil. About 28 pct of energy B/CCC names are trading at 65%+ D/EV, implying an 8.5% default rate among them, assuming historical 1/3rd default probability holds. This would translate into a 4.3% default rate for the overall US HY energy sector (including BBs), and 0.7% across the US HY bond market.

Looking at the bond side of valuation picture, we find that energy Bs/CCCs are trading at a 270bp premium over non-Energy Bs/CCCs today (Figure 7). This premium implies incremental default rate of 4.5% (= spread * (1 – recovery) = 270 * (1-0.4) = 4.5%). Actual default rate among US HY Bs/CCCs is currently running at 3%, a level that we expect to increase to 5% next year (not to be confused with overall US HY default rate, currently running at 1.7% and expected to increase to 3.0% next year).

The bottom line is hardly as pretty as all those preaching that the lower the oil the better for the economy:

In the next step we are attempting to perform a stress-test on oil, defined this way: what would it take for overall US energy Bs/CCCs segment to starttrading at 65%+ total debt/enterprise value? Our logic in modeling this scenario goes along the following lines: if a 25% drop in WTI since June 30th was sufficient to push their average D/EV from 43 to 55, then it would take a further 0.8x similar move in oil to get the whole sector to average 65 = (65-55)/(55-43) = 0.8x, which translates into another 20% decline in WTI from its recent low of $77 to roughly $60/bbl. If this scenario were to materialize, based on historical default incidence, we would expect to see 1/3rd of US energy Bs/CCCs to restructure,which would imply a 15% default rate for overall US HY energy, and a 2.5% contribution to the broad US HY default rate.

How should one trade an ongoing collapse in oil prices? Simple: sell B/CCC-rated energy bonds and wait to pick up 10%.

If this scenario were to materialize, the US energy Bs/CCCs would have to trade at spreads north of 1,800bp, or about a 1,000bps away from its current levels.Such a spread widening translates into a 40pt drop in average dollar price from its current level of 92pts for energy Bs/CCCs.

It gets worse, because energy CapEx is about to tumble, which means far less exploration (and US fixed investment thus GDP), far less supply, and ultimately a higher oil price.

As the market adjusts to realities of sharply lower oil prices, it is important for to remember that the US HY energy sector is a higher quality part of the market. Higher credit quality will help many of them absorb an oil price shock without jeopardizing production plans or ability to service debt.Their capex rates, expressed as a pct of EBITDAs, have already declined from an average of 150% over the past four years to roughly 110% today. We still consider this level to be high and thus subject to further pressures. This in turn should work towards slower rates of supply growth, and thus ultimately towards supporting a new floor for oil prices. A 25% in oil price so far has pushed debt/enterprise valuations among US energy B/CCC names to a point suggesting 8.5% future default probability, while their bonds are pricing in a 9.5% default probability.

And the scariest conclusion of all:

Finally, our stress-test shows that a further 20% drop in WTI to $60/bbl is likely to push the whole sector into distress, a scenario where average B/CCC  energy name will start trading at 65% D/EV,implying a 30% default rate for the whole segment. A shock of that magnitude could be sufficient to trigger a  broader HY market default cycle, if materialized.

And now back to the old “plunging oil prices are good for the economy” spin cycle.


Your more important currency crosses early Monday morning:


Euro/USA 1.1136 down .0056

USA/JAPAN YEN 1.2022 up .187

GBP/USA 1.5106 down .0017

USA/CAN 1.2124 up  .0012

This morning in Europe, the Euro fell quite a bit by 56 basis points, trading now well below the 1.12  level at 1.1136; 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 17 basis points and trading just above the 120 level to 120.22 yen to the dollar.

The pound was well down this morning as it now trades just below the 1.52 level at 1.5106  ( still 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 12 basis points at 1.2124 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: this morning : closed

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

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

Gold very early morning trading: $1183



Early Monday morning USA 10 year bond yield: 2.13% !!!  up 2  in basis points from Friday night/


USA dollar index early Monday morning: 94.61 down 20 cents from Thursday’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:2.10% up 1 in basis points from Friday


Closing Japanese 10 year bond yield: .36% !!! par in basis points from Friday


(not good if the Japanese government is losing control of their bond market)


Your closing Spanish 10 year government bond,  Monday, down 3 in basis points in yield from Friday night.


Spanish 10 year bond yield: 1.50% !!!!!!


Your Monday closing Italian 10 year bond yield: 1.53% up 3  in basis points from Friday:

trading 3 basis points higher than Spain.






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


Euro/USA: 1.1149 down .0043  ( Euro down 43 basis points)

USA/Japan: 120.12 up .086  ( yen down 9 basis points)

Great Britain/USA: 1.5121 down .0002   (Pound down 2 basis points)

USA/Canada: 1.2094 down .0043 (Can dollar up 43 basis points)


The euro fell today.   It settled down 43 basis points against the dollar to 1.1149 as the dollar rebounded today on all fronts with massive central bank intervention. The yen was down 9 basis points  and closing just above the 120 cross at 120.12 The British pound lost a little ground today, 2 basis points, closing at 1.5121. The Canadian dollar gained a lot ground to the USA dollar, up 43 basis points closing at 1.2094.

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: 2.14% up 3 in basis points from Friday



Your closing USA dollar index:

95.44  up 15 cents on the day.


European and Dow Jones stock index closes:


England FTSE off

Paris CAC  up 35.48 points or .70%

German Dax  up 165.47 points or 1.44%

Spain’s Ibex   up 44.10 points or .39%

Italian FTSE-MIB  up 171.65  or .74%


The Dow: up 46.34 or 0.26%

Nasdaq; down 11,54 or 0.23%


OIL: WTI 58.92 !!!!!!!

Brent: 66.41!!!!


Closing USA/Russian rouble cross: 52.01 down 1 rouble per dollar on the day.






And now your important USA stories:


NYSE trading for today.

Volumeless Stocks Test Record Highs On Downbeat Data

Last week’s message to TPTB… (appears to have been heard loud and clear)…

Another day, another rally on even weaker volume (with UK and Japan away on holiday) and shitty data… Spot The Difference…

Who could have seen this coming?

But the best news is twofold: volumes continue to be lethargic with both the UK (May Day bank holiday) and Japan closed until Thursday (Golden Week), while the bulk of the S&P500 has now exited the stock buyback quiet period. As such, ignore record equity outflows – all the matters is that corporate CFOs, flush with brand news bond issuance cash, will tell their favorite Wall Street trading desk to buy stocks at just the right inflection point sending the market surging just as shorts once again test the downtrend and the 50 DMA.

after China’s dismal data, Germany’s surprise, and US Factory Orders printing weakest YoY growth run since 2008…

Small Caps spurted higher at the open – thanks to Gartman’s suggestion of shorting – but the excitement faded back as the day wqore on…

Social Media never bounced…

And Shale plays stumbled on Einhorn but that was an awesome opportunity to BTFD!

Credit markets remain less exuberant…

Treasury yields ended the day higher once again with the selling poressure coming (once again) during the US session

(even as Bunds sold off during the EU session)

The dollar closed modestly higher with EUR fading 0.5% – note just how dead USDJPY was – with Japan on Golden Week…

Chaos in commodities early on left gold and silver up, crude and copper down

From the 8amET “moment” – once again…

Some context for Silver’s move…

Charts: Bloomberg



USA factory orders drop year over year for 5 consecutive months. And they call this a recovery?

(courtesy zero hedge)

US Factory Orders Drop YoY For 5th Consecutive Month

After 6 months of MoM drops (something not seen outside of a recession),  February saw a modest 0.2% rise in Factory orders which has spurred economists to extrapolate a 2.0% expectation for March. However, while Factory Orders rose 2.1% in March, Feb was revised lower (to a -0.1% drop) leaving US Manufacturing Orders down 4.0% YoY. The series of YoY drops continues (now at 5 consecutive months) to indicate arecessionary environment. The ratio of inventories-to-shipments remains stuck at extremely elevated levels.

For those curious how Factory Orders “beat” rising by 2.1% compared to the 2.0% expected, and yet the final dollar number was still below the expected one, the answer is simple: when you revise the base number lower, a 2.1% increase is not nearly enough.


Leading to a “beat” MoM, even if in dollar terms it was a miss, and will lead to a downward GDP revision.


Year over Year, this is the 5th consecutive monthly drop… hint: recession.


And Inventories to Shipments suggests all is not well



Now its Dow Chemical’s turn to layoff massive amount of workers;

(courtesy zero hedge)

Dow Fires 1,750 After Boosting Share Buyback Program To $10 Billion

Several months ago we showed that in the aftermath of its brush with vocal activists such as Dan Loeb and Nelson Peltz, Dow Chemical did everything it could to push its stock price as high as it possibly could go. It did this in the simplest of ways: by buying back its own stock. In fact, over the past year, DOW bought back over $4 billion in DOW shares after barely doing any stock repurchases in prior years.


But that’s just the beginning.

As a reminder, six months ago, Dow increased its share buyback plan by $5 billion which boosted the total share repurchase program to just shy of $10 billion.  It did this so CEO Andrew Liveris would keep his job, and keep shareholders happy as it scrambled to prevent Daniel Loeb’s push to split the company.

Of course, it also didn’t hurt that as a result of the buybacks, shareholders were ok with a 30% jump in the CEO’s compensation despite a consistent decline in DOW’s net income.


Still, without an organic growth in the company, and with increasing compensation for C-suite execs, and with just financial engineering to make the company appear prettier than it is, someone had to foot the bill.

Sure enough, moments ago we found precisely who.

On April 29, 2015, the Board of Directors of The Dow Chemical Company (“Dow” or the “Company”) approved actions to further streamline the organization and optimize the Company’s footprint as a result of the pending separation of a significant portion of Dow’s chlorine value chain. These actions, which will further accelerate Dow’s value growth and productivity targets, will result in a reduction of approximately 1,500 to 1,750 positions across a number of businesses and functions.

And there you have it: stock not following the company’s profitability decline due to buybacks, activists happy because stock is gradually rising, and the CEO is delighted because he made 30% more last year.

As for those 1500-1750 workers who just got laid off to make sure all the above could take place, well, they can just daytrade DOW stock. And by trade, we mean front run the company’s upcoming surge in buybacks.


Michael Snyder

Major U.S. Retailers Are Closing More Than 6,000 Stores

Submitted by Michael Snyder via The Economic Collapse blog,

If the U.S. economy really is improving, then why are big U.S. retailers permanently shutting down thousands of stores?  The “retail apocalypse” that I have written about so frequently appears to be accelerating.  As you will see below, major U.S. retailers have announced that they are closing more than 6,000 locations, but economic conditions in this country are still fairly stable.  So if this is happening already, what are things going to look like once the next recession strikes?  For a long time, I have been pointing to 2015 as a major “turning point” for the U.S. economy, and I still feel that way.  And since I started The Economic Collapse Blog at the end of 2009, I have never seen as many indications that we are headed into another major economic downturn as I do right now.  If retailers are closing this many stores already, what are our malls and shopping centers going to look like a few years from now?

The list below comes from information compiled by, but I have only included major retailers that have announced plans to close at least 10 stores.  Most of these closures will take place this year, but in some instances the closures are scheduled to be phased in over a number of years.  As you can see, the number of stores that are being permanently shut down is absolutely staggering…

180 Abercrombie & Fitch (by 2015)

75 Aeropostale (through January 2015)

150 American Eagle Outfitters (through 2017)

223 Barnes & Noble (through 2023)

265 Body Central / Body Shop

66 Bottom Dollar Food

25 Build-A-Bear (through 2015)

32 C. Wonder

21 Cache

120 Chico’s (through 2017)

200 Children’s Place (through 2017)

17 Christopher & Banks

70 Coach (fiscal 2015)

70 Coco’s /Carrows

300 Deb Shops

92 Delia’s

340 Dollar Tree/Family Dollar

39 Einstein Bros. Bagels

50 Express (through 2015)

31 Frederick’s of Hollywood

50 Fresh & Easy Grocey Stores

14 Friendly’s

65 Future Shop (Best Buy Canada)

54 Golf Galaxy (by 2016)

50 Guess (through 2015)

26 Gymboree

40 JCPenney

127 Jones New York Outlet

10 Just Baked

28 Kate Spade Saturday & Jack Spade

14 Macy’s

400 Office Depot/Office Max (by 2016)

63 Pep Boys (“in the coming years”)

100 Pier One (by 2017)

20 Pick ’n Save (by 2017)

1,784 Radio Shack

13 Ruby Tuesday

77 Sears

10 SpartanNash Grocery Stores

55 Staples (2015)

133 Target, Canada (bankruptcy)

31 Tiger Direct

200 Walgreens (by 2017)

10 West Marine

338 Wet Seal

80 Wolverine World Wide (2015 – Stride Rite & Keds)

So why is this happening?

Without a doubt, Internet retailing is taking a huge toll on brick and mortar stores, and this is a trend that is not going to end any time soon.

But as Thad Beversdorf has pointed out, we have also seen a stunning decline in true discretionary consumer spending over the past six months…

What we find is that over the past 6 months we had a tremendous drop in true discretionary consumer spending. Within the overall downtrend we do see a bit of a rally in February but quite ominously that rally failed and the bottom absolutely fell out. Again the importance is it confirms the fundamental theory that consumer spending is showing the initial signs of a severe pull back. A worrying signal to be certain as we would expect this pull back to begin impacting other areas of consumer spending. The reason is that American consumers typically do not voluntarily pull back like that on spending but do so because they have run out of credit. And if credit is running thin it will surely be felt in all spending.

The truth is that middle class U.S. consumers are tapped out.  Most families are just scraping by financially from month to month.  For most Americans, there simply is not a whole lot of extra money left over to go shopping with these days.

In fact, at this point approximately one out of every four Americans spend at least half of their incomes just on rent

More than one in four Americans are spending at least half of their family income on rent – leaving little money left to purchase groceries, buy clothing or put gas in the car, new figures have revealed.


A staggering 11.25 million households consume 50 percent or more of their income on housing and utilities, according to an analysis of Census data by nonprofit firm, Enterprise Community Partners.


And 1.8 million of these households spend at least 70 percent of their paychecks on rent.


The surging cost of rental housing has affected a rising number of families since the Great Recession hit in 2007. Officials define housing costs in excess of 30 percent of income as burdensome.

For decades, the U.S. economy was powered by a free spending middle class that had plenty of discretionary income to throw around.  But now that the middle class is being systematically destroyed, that paradigm is changing.  Americans families simply do not have the same resources that they once did, and that spells big trouble for retailers.

As you read this article, the United States still has more retail space per person than any other nation on the planet.  But as stores close by the thousands, “space available” signs are going to be popping up everywhere.  This is especially going to be true in poor and lower middle class neighborhoods.  Especially after what we just witnessed in Baltimore, many retailers are not going to hesitate to shut down underperforming locations in impoverished areas.

And remember, the next major economic crisis has not even arrived yet.  Once it does, the business environment in this country is going to change dramatically, and a few years from now America is going to look far different than it does right now.




ISIS claims responsibility for an attack against cartoon contest on Mohammad: (in Garland Texas)


ISIS Claims Responsibility For Texas Shooting That Leaves Two Dead, Police Officer Injured

Yesterday, around 7 pm, dozens of people were at a contest hosted by New York-based American freedom Defense Initiative at the Curtis Culwell Center in Garland, Texas when police said two men pulled up in a vehicle and shot a Garland Independent School District Security guard in the ankle at about 7 p.m. The men were then shot and killed by Garland police.

The incident occurred as the Curtis Culwell Center in Garland hosted a
controversial art event put on by New York-based American freedom
Defense Initiative featuring cartoons of the Prophet Muhammad.

Police officers address attendees at the Muhammad Art Exhibit and Contest after they are prevented from leaving when it was reported that shots were fired and a man is down in Garland, Texas May 3, 2015.

A police officer prevents attendees from leaving the Muhammad Art Exhibit and Contest after shots were fired outside the venue in Garland, Texas May 3, 2015.

However, as the recent massacre at the Paris Charlie Hebdo offices showed, such drawings are deemed insulting to many followers of Islam and have sparked violence around the world. According to mainstream Islamic tradition, any physical depiction of the Prophet Muhammad is considered blasphemous.

According to NBCDFW, “Texas officials are actively investigating to determine the cause and scope of the senseless attack,” Texas Governor Greg Abbott said in a statement. “This is a crime that was quickly ended thanks to the swift action by Garland law enforcement.”

The security guard, 58-year-old Bruce Joiner, was treated released from a hospital nearly two hours later, police said.

“Our thoughts and prayers remain with all those affected tonight,” Abbott said.

As NBC further reports, fears of an “incendiary device” inside the suspects’ vehicle prompted an investigation by a bomb squad unit and the evacuation of nearby businesses. Police are currently using robotic detection equipment to search the vehicle. No device has been found as of this writing.

Dr. Bilal Rana, President of Ahmadiyya Muslim Youth Association released the following statement:

“On behalf of the Ahmadiyya Muslim Youth Association — the largest Muslim youth group in the country — we stand by our fellow Americans in shock and horror at today’s shooting. While we wait for investigators to tell us more about the shooters, we wholly condemn any such acts of violence and find them completely unjustifiable. Our faith calls us to engage in dialogue. So we condemn any use of violence to intimidate anyone.”

Pamela Geller, president of the American Freedom Defense Initiative, said that she planned the Sunday event to make a stand for free speech in response to the outcries and violence over drawings of Muhammad.

And while the FBI did not have any immediate comments or speculation on the reason behind the attac, according to the Site intel group, overnight it was Islamic State supporters who took “credit” for the bungled shooting attack.

If indeed ISIS has found its way to the US, whether for pure provocation, false flag or any other “purposes” of inciting terrorist acts, this will likely be just the first of (many) other attacks which will see the successor of al Qaeda take responsibility for.


Lake Mead supplies water to 4 states:  Nevada, California, Arizona and New Mexico.  It is losing too much water which may force Las Vegas to issue restrictions on use:

(courtesy Wolf Richter/Wolf Street)

Leaking Las Vegas: Forced Rationing Looms As Lake Mead Faces Federal “Water Emergency”

Submitted by Wolf Richter via,

Leak Mead – on your left, when you drive from Las Vegas across the Hoover Dam – is the largest reservoir in the country when at capacity. It’s fed by the Colorado River which provides water for agriculture, industry, and 40 million people in Nevada, Arizona, California, and Mexico, including Los Angeles, San Diego, Phoenix, and Las Vegas. Now after 15 years of drought, the “lake” – a mud puddle surrounded by a huge chalky bathtub ring – is threatening to run dry.

It’s considered “operationally full” when the water level is at 1,229 feet elevation above sea level. On May 2, the water level was down to 1,078.9 feet above sea level, the lowest since it was being filled in May 1937. It’s down 15 feet from the same day a year ago. Over the last 36 months, the water level has dropped 44.8 feet. It’s down 150 feet from capacity.

If the water level is below 1,075 feet elevation – 4 feet below today’s level – by January 1, 2016, it will trigger a federal water emergency. And water rationing. Las Vegas Review Journal reported that forecasters expect the level to drop to 1073 feet by June, before Lake Powell would begin to release more water. Assuming “average or better snow accumulations in the mountains that feed the Colorado River – something that’s happened only three times in the past 15 years,” the water level on January 1 is expected to be barely above the federal shortage level.

Even with these somewhat rosy assumptions of “average or better than average snow accumulations,” the water level would begin set new lows next April. But if the next winter is anything like the last few, all bets are off.

If the level drops below 1050 feet, one of the two intake pipes for the Las Vegas Valley, which gets 90% of its water that way, will run dry. A new $817-million tunnel is being built by the Southern Nevada Water Authority to create a new drain to get the last drop out of the bathtub. It should be ready by September.

The LA Times explains what water rationing would mean for the states:

Las Vegas has long been at a disadvantage when it comes to Lake Mead water. A 1922 Colorado River water-sharing agreement among seven Western states — one still in effect nearly a century later — gives southern Nevada the smallest amount of all; 300,000 acre-feet a year, compared with California’s 4.4 million annual acre-feet. An acre-foot can supply two average homes for one year.


This summer, officials will make their projection for Lake Mead water in January 2016. If the estimate is below 1,075 feet, rationing kicks in: Southern Nevada would lose 13,000 acre-feet per year and Arizona would lose 320,000 acre-feet. California’s portion would not be affected.

Note the last sentence – that California would not be affected. Keeping lawns green in LA is top priority.

“Between Lake Mead and Lake Powell, you have over 50 million acre feet in storage when they’re full,” explained Pat Mulroy, former general manager of the Southern Nevada Water Authority from 1991 until she retired in 2014. “To have them both go down to a quarter of their capacity is a pretty scary proposition,” she said.

Here she is, via Brookings, on the water crisis at Lake Mead, with ghostly images of the lake and of Hover Dam sitting high and dry:


To get through the drought, residents and growers in California’s Central Valley have been pumping water from aquifers to take a shower, fill a glass with water, irrigate almond orchards, or do a million other things.But now, it turns out, even those aquifers, whose water levels are already dropping, are threatened by something else.


see you tomorrow night



  1. Hi Harvey, Please check your Facebook ID for a short story I sent to you. Thanks, DSD


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