May 5B/Stalemate in Greece as they are still far apart/USA has a huge trade deficit/The huge deficit will cause first quarter GDP to be negative/Yemen rebels fire into Saudi Arabia as they hit some towns inside Saudi/

Good evening Ladies and Gentlemen:

 

 

Here are the following closes for gold and silver today:

Gold:  $1193.80 up $6.20 (comex closing time)

Silver $16.56 up 14 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 0 notices serviced for nil oz.  Silver comex filed with 3 notices for 15,000 oz

 

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 241.42 tonnes for a loss of 62 tonnes over that period. Lately the removals have been rising.

 

In silver, the open interest fell again by 2,436 contracts as Monday’s silver price was up by 31 cents  The total silver OI continues to remain extremely high with today’s reading at 175,374 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 3 notices served upon for 15,000 oz.

 

In gold,  the total comex gold OI rests tonight at 401,699 for a loss of 9002 contracts despite the fact  gold was up by $12.30 yesterday. We had 0 notices served upon for nil 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 2436 contracts despite the fact that  silver was up in price yesterday.  The OI for gold fell by 9002 contracts down to 401,699 contracts despite the fact that price of gold was up by $12.30 on yesterday. GLD and SLV  remained constant with respect to the inventory levels.

(report Harvey)

2,Three important commentaries on Greece today:

The authorities are getting nowhere with respect to Greece. The IMF wants reforms on pensions, totally against the wishes of Greece/the EU is willing to listen to Greece. The EU wants a primary surplus/the IMF does not necessarily need one:therefore the stalemate/nobody wishes to budge.

(Bloomberg/zero hedge)

3. This caused a meltdown in stocks in Greece, and all of Europe. As I keep reminding everyone it is the derivatives underwritten by the major European and USA banks on Greece that can cause an avalanche of defaults everywhere

(Bloomberg/zero hedge)

4. Yemen rebels fire missiles into Saudi Arabia

(zero hedge)

 

5. Bill Holter’s commentary tonight on honest weights and measures.

6, USA trade deficit skyrockets to 51 billion USA.  This will cause the first quarter GDP to now be negative.

we have these and other stories for you tonight

 

 

 

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

Here are today’s comex results:

The total gold comex open interest fell by a whopping 9002 contracts from 410,701 down to 401,699 despite the fact that gold was up by $12.30 yesterday (at the comex close). We must have had considerable short covering today. We are in our next non active delivery month of May and here the OI fell by 18 contracts falling to 209. We had 1 notice filed upon yesterday.  Thus we lost 17 gold contracts or an additional 1700 ounces will not stand for gold in May. The next big active delivery contract month is June and here the OI fell by 8.185 contracts down to 250,236. 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 60,496. The confirmed volume yesterday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 119,067 contracts. Today we had 0 notices filed for nil oz.

 

And now for the wild silver comex results.  Silver OI fell by 2436 contracts from 177,810 down to 175,374 despite the fact that  the price of silver was up in price by31  cents, with respect to yesterday’s trading. We are into the active delivery month of May. In our May delivery month the OI fell by 147 contracts down to 1101. We had 143 contracts filed upon with respect yesterday’s trading.  So we lost 4 contracts or 20,000 oz will not stand for delivery in this May delivery month. The estimated volume today was poor at 16,849 contracts (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in at 49,224 contracts which is good in volume. We had 3 notices filed for 15,000 oz today.

 

may initial standings

May 5.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz  nil
Withdrawals from Customer Inventory in oz  578.700 oz (Manfra)  18 kilobars
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz nil
No of oz served (contracts) today 0 contracts (nil oz)
No of oz to be served (notices)  209 contracts(20,900) 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  34,062.9 oz

 

Today, we had 0 dealer transactions

total Dealer withdrawals: nil oz

 

we had 0 dealer deposit

total dealer deposit: nil oz
we had 1 customer withdrawals

 

ii) Out of Manfra; 578.700 oz (18 kilobars0

 

total customer withdrawal: 578.700 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 0 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account

To calculate the total number of gold ounces standing for the 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 (209) and the number of notices served upon today (0) x 100 oz equals the number of ounces standing.

 

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

 

No of notices served so far (1) x 100 oz  or ounces + {OI for the front month (209) – the number of  notices served upon today (0) x 100 oz which equals 21,000 oz standing so far in this month of May. (.653 tonnes of gold)

Total dealer inventory: 571,168.307 or 17.76 tonnes

Total gold inventory (dealer and customer) = 7,761,692.243. (241.42) tonnes)

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 241.42 tonnes for a loss of 62 tonnes over that period. Lately the removals  have been rising!

end

 

 

And now for silver

 

May silver initial standings

May 5 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 9,491.65 oz (Delaware,HSBC)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory 615,550.03 oz (CNT, Delaware,Scotia)
No of oz served (contracts) 3 contracts  (15,000 oz)
No of oz to be served (notices) 1098 contracts (5,490,000 oz)
Total monthly oz silver served (contracts) 1929 contracts (9,645,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  nil
Total accumulative withdrawal  of silver from the Customer inventory this month 1,302,702.7  oz

 

Today, we had 0 deposits into the dealer account:

 

total dealer deposit: nil   oz

 

we had 0 dealer withdrawal:

total dealer withdrawal: nil oz

 

We had 3 customer deposits: and 2 very suspect!!

i) Into CNT:  14,683.000 oz ??? exact oz

ii) Into Delaware: 1,000.000 oz ??? exact oz

iii) Into Scotia: 599,867.03 oz

total customer deposits: 616,550.03  oz

 

We had 2 customer withdrawals:

i) Out of Delaware: 4,672.50 oz

ii) Out of HSBC: 4819.15 oz

total withdrawals;  9,491.65 oz

 

we had 0 adjustments:

 

Total dealer inventory: 62.205 million oz

Total of all silver inventory (dealer and customer) 175.260 million oz

.

The total number of notices filed today is represented by 3 contracts for 15,000 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 (1929) x 5,000 oz  = 9,645,000 oz to which we add the difference between the open interest for the front month of April (1101) and the number of notices served upon today (3) x 5000 oz equals the number of ounces standing.

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

1927 (notices served so far) + { OI for front month of April(1101) -number of notices served upon today (3} x 5000 oz = 15,135,000 oz of silver standing for the May contract month.

we lost 4 contracts or 20,000 oz will not stand for delivery.

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

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

 

end

 

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

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

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

i) demand from paper gold shareholders

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

vs no sellers of GLD paper.

And now the Gold inventory at the GLD:

may 5/no change in gold inventory at the GLD/741.75 tonnes

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).

May 5 GLD : 741.75  tonnes.

end

 

And now for silver (SLV):

May 5/no change in silver inventory at the SLV?327.673 million oz

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 23.no 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 5/2015 we had no change in inventory at the SLV  / inventory rests at 327.673 million

 

end

 

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 6.8% percent to NAV in usa funds and Negative 6.5% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.4%

Percentage of fund in silver:38.2%

cash .4%

( May 5/2015)

2. Sprott silver fund (PSLV): Premium to NAV rises to-0.16%!!!!! NAV (May 5/2015)

3. Sprott gold fund (PHYS): premium to NAV falls to -.25% to NAV(May 5/2015

Note: Sprott silver trust back  into negative territory at -0.16%.

Sprott physical gold trust is back into negative territory at -.25%

Central fund of Canada’s is still in jail.

 

end

 

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)

1. Jillian Tett discusses the Greek possible default

 

U.S. Fears a European “Lehman Brothers”

  • European complacency regarding Greek default and exit is high – Tett
  • Narrative to reassure investors that markets have already priced in effects of Greek default
  • U.S. Council on Economics is alarmed by risk being taken by European elites to bring Greece to heel
  • Greek default would cause a new and very “unpredictable” paradigm – huge uncertainty in markets 
  • U.S. policy makers fear unforeseeable knock-on effects

Gillian Tett, markets and finance commentator and an Assistant Editor and former U.S. Managing Editor of the Financial Times, wrote an important and little noticed article last week questioning complacency on the part of European policy makers regarding a Greek default and potential exit or ‘Grexit’.

gillian_tett

Gillian Tett, FT Assistant Editor

Tett wrote that statements out of Germany that Europe could manage a potential Greek exit and that markets had already priced in that eventuality had alarmed certain policy makers in the U.S.

The German stance was a reflection of their frustration with the lack of progress made over three months of talks with Greece and a consequent hardening of tone. However, U.S. officials are alarmed by the risk they see in European complacency to a Greek exit.

Tett is highly respected both in journalism but also in financial and economic circles. In her previous roles, she was U.S. Managing Editor and oversaw global coverage of the financial markets. In March 2009 she was Journalist of the Year at the British Press Awards. In June 2009 her book ‘Fool’s Gold’ won Financial Book of the Year at the inaugural Spear’s Book Awards.

In 2007 she was awarded the Wincott prize, the premier British award for financial journalism, for her capital markets coverage. She was British Business Journalist of the Year in 2008.

Tett quotes Jason Furman of the U.S. Council on Economics as saying that a

“Greek exit would not just be bad for the Greek economy, it would be taking a very large and unnecessary risk with the global economy just when a lot of things are starting to go right”.

She adds that U.S. officials have privately expressed deeper concerns about the situation. She puts the difference in attitudes down to two main factors.

The first is that Germany, as a 30% stakeholder in Greek debt, has a lot to lose from leniency toward the Greeks while the Americans have first hand experience – with the Lehman Brothers crisis – of how quickly financial contagion can spread causing a crisis to spiral out of control.

Tett makes three key points regarding the Lehman’s crisis which she believes are pertinent to the current attitude towards the Greek situation.

Firstly, it is nigh on impossible for policy makers to predict and protect against every eventuality that crops up in a crisis. Tett reminds readers that in the wake of the Bear Stearns crisis regulators worked “obsessively” to avert a major crisis and yet could not contain Lehman Brothers catastrophe six months later.

This was because they were focussed on risks posed to the derivatives markets whereas it was an overlooked legal issue which precipitated the Lehman’s crisis, “namely that the UK bankruptcy code ringfenced investor assets differently from New York’s.”

Secondly, if Greece were to fail it would likely bring attention to bear on other debt-laden European economies. When the Greek finance minister made the comment that Italy’s debt was also unsustainable, it was met with hostility but not too many were willing to utterly refute it.

Tett argues that a Greek failure would lead, as Lehman’s did to“wider policy uncertainty: when Lehman failed, the entire paradigm for finance suddenly seemed unpredictable”.

The third point is that “political turmoil matters”. She argues that what really sent the markets into free-fall back in 2008 was the unexpected political decision by the U.S. not to bail out Lehman’s. Political uncertainty stemming from a Greek default and possible exit could cause a similar crisis in Europe and then globally.

Tett acknowledges that the economies of vulnerable countries like Ireland and Spain have been improving which may insulate the eurozone somewhat from contagion.

However, she argues that

“the sheer opacity of financial institutions still creates plenty of scope for nasty logistical and legal surprises” and adds that “there is no guarantee that political surprises would end with a Greek exit; as in 2008, it might initially create more policy uncertainty.”

She sums up by writing that while the Europeans may be able to handle the initial effects of a Greek default, the Americans are concerned by secondary knock-on effects

“Not least because there is a fourth lesson from Lehman Brothers: when a crisis hits, the value of afflicted entities tends to shrivel. The hole in Lehman’s balance sheet became much bigger than anyone imagined. And that is a scary thought to contemplate in relation to any Greek exit scenario — not just for Greece but the entire eurozone.”

Tett is one of the most insightful financial analysts today – she is highly respected and rightly so. She has written favourably ongold due to it being a tangible asset and this tangibility is important in a world where assets and money are increasingly forms of digits on computer screens.

Breaking Gold and Silver News and Research Here.

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,187.40, EUR 1,070.94 and GBP 785.59 per ounce.
Friday’s AM LBMA Gold Price was USD 1,179.00, EUR 1,049.24 and GBP 771.04 per ounce.

Markets in London were closed yesterday but gold and silver saw price gains of 0.92 and 1.6 per cent respectively.

Last week, gold was flat and incurred a marginal 0.05 per cent loss but silver rose 2.8 per cent last week.

GoldCore

Gold in U.S. Dollars – 1 Week

In Asia overnight, Singapore gold prices ticked marginally higher but those gains were lost in London trading this morning.

Markets will focus on monthly jobs data on Friday which should give more clues on whether the Federal Reserve will be raising interest rates any time soon. We suspect not given the recent weak data; this should support gold.

A weak jobs number this week should see gold rise above the $1,200 an ounce level again.

The European Commission slashed Greek economic growth and primary surplus projections today. They forecast deeper price falls and a higher public debt as a result of uncertainty that has dogged Athens policy direction since late 2014.

ECB governing council member Christian Noyer said the spike in eurozone government bond yields in recent days was not a cause for concern.

Assets in gold exchange-traded products held near a six-week high. Gold ETFs holdings were at 1,626.81 metric tons on Monday from 1,627.3 tons on Friday, the highest since March 19, according to data compiled by Bloomberg.

In Europe in late morning trading gold bullion was flat at $1,188.44 an ounce. Silver was down 0.15 percent at $16.43 an ounce and platinum fell 0.29 percent at $1,147.49 an ounce.

Important Guide: 7 Key Gold Must Haves

 

end

 

(courtesy James Turk/Kingworldnews/Eric King)

 

Turk tells KWN when it’s easy and when it’s hard to suppress gold

Section:

7:30p ET Monday, May 4, 2015

Dear Friend of GATA and Gold:

When Chinese markets are closed, GoldMoney founder and GATA consultant James Turk tells King World News today, Western central banks have an easy time suppressing the gold price, but when the London market, where the Western central banks mainly operate, is closed, suppressing the gold price is hard. Turk adds that Greece can’t pay its debts under any circumstances and default is inevitable, with big consequences for the world financial system. An excerpt from Turk’s interview is posted at the KWN blog here:

http://kingworldnews.com/the-catalyst-for-the-next-global-crisis-is-abou…

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

 

end
I reported on this to you on the weekend, the fact that 10 tonnes per month has been moving from the FRBNY:
(courtesy zero hedge/GATA)

Zero Hedge: Gold repatriation from NY Fed continued in March

Section:

3:25p ET Tuesday, May 5, 2015

Dear Friend of GATA and Gold:

Gold repatriation from the Federal Reserve Bank of New York continued in March, Zero Hedge reports today, bringing foreign custodial gold in the New York Fed’s vaults below 6,000 tonnes for the first time in many years:

http://www.zerohedge.com/news/2015-05-05/gold-withdrawals-fed-vault-refu…

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

 

end

 

(Reuters/GATA)

Even Brown Brothers Harriman admits rigging of gold market by central banks

Section:

1:40p ET Tuesday, May 5, 2015

Dear Friend of GATA and Gold:

Dating from 1818, Brown Brothers Harriman describes itself as the oldest private bank in the United States. It is also the newest recipient of a GATA tin-foil hat, on account of its acknowledgment that central banks are surreptitiously manipulating the gold market.

The acknowledgment is reported today by Ross J. Burland, editor of the FX Street Internet site, who excerpts comments made by BBH “analysts” about Venezuela’s recent pawning of its gold reserves —

http://www.gata.org/node/15292

http://www.reuters.com/article/2015/04/24/venezuela-cenbank-idUSL1N0XL0T…

— and the question of whether gold is better than dollars.

Among the “key quotes” from BBH as noted by Burland:

“One of the advantages for Venezuela of the gold swap is that by some accounting it may still count the gold as part of its reserves. This underscores that central bank reserves may not always be what they seem. Central banks have used a number of ploys to hide the extent of their intervention, like operating in the forward market or conducting off-balance-sheet operations, like Brazil’s currency swaps. Similarly, Russia had included its sovereign wealth funds in its reserve calculations, but they are not liquid or available.”

The FX Street report on the comments by the BBH analysts is headlined “Venezuela and Their Gold-vs.-Dollar Experience” and it’s posted here:

http://www.fxstreet.com/news/forex-news/article.aspx?storyid=9308f996-0c…

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

 

end

 

 

(courtesy Bill Holter/Miles Franklin)
Honest weights and measures …
A few weeks back I thought about writing an article on “honest weights and measures” and why they are important.  There has been so much news recently, I almost forgot it as a topic.  A funny thing happened since then.  Last week while in church during the sermon, the pastor quoted from the Bible, Proverbs 20-10.  This verse states “differing weight and differing measures, the Lord detests them both”.  I thought this was quite a coincidence, my thinking of the topic and then being reminded of it in church.
  The CIA of course says “there are no coincidences” but I assure you there are, or a much higher power at work here.  You see, I began reading the Bible a few months back and just so happened to be reading “Proverbs” currently.  I didn’t know where this quote regarding weights and measures was in the Bible so I called our pastor and asked him.  Lo and behold, it was on the very next page where I had last left off reading!
  As for the topic of weights and measures, of differing ones, this is the very core of the problems in the world today.  I say this not so much because the weights and measures are “differing”, no, we are far far beyond that.  The weights and measures are just outright FALSE and have been since 1971, or even as far back as the 1944 Bretton Woods agreement.
  In ancient times, false weights and measures (stealing) was done in several manners.  Coins could have their edges either shaved or clipped.  They could also have lesser valued metal than gold or silver “mixed in” and no one would be the wiser until Archimedes discovered the “weight to volume” relationship.  Then along came “fractional reserve” banking where a bank would hold only 10% (or not!) of the gold to back notes or currencies they had written.
  Of course now in modern day, “money” really hasn’t anything to do with weights or measures.  “Money” is printed (mostly digitally) in any amounts that central banks choose.  Millions, billions, trillions, and then these amounts are levered even further …and further again …it doesn’t matter!  Well, this is not true, it DOES matter, just not yet.  There is a saying, “a fair day’s wage for a man’s work”.  In today’s world this is no longer so from several vantage points.  First, back in the day of “Leave it to Beaver”, Ward could go to work and provide comfortably for his family of four.  This is not so today, both Ward AND June have to work, and in many cases this is still not enough to provide comfort.
  The second vantage point is from that of “settlement”.  A worker bee shows up to work for the week and then is paid in dollars, euros, pounds, yen or even yuan.  None of these are actual settlement, they are all “liabilities” of the issuer and only considered an asset by the holder because he can trade it to someone else.  All of these currencies have value because they are “accepted as payment”, what value would (will) they have if they are not accepted?  Of what value do these notes or digits have on their own other than their “acceptance”?  Is there any cost whatsoever to their creation?  Ask yourself the most basic of questions, if something is “free” to create in any quantity, what then is its “value”?
  “Manmade” money (fiat) has created the problems we have today and now after many years is coming to a head.  The ONLY way for a fiat currency, or in the current case a fiat world to continue is to have inflation.  If inflation were to cease or worse, deflation takes hold, then it is “system over” as in game over.  The world has reached a point of debt saturation where more debt cannot be taken on and any new debt actually takes away from an already declining system.  “Good inflation” (markets going up) is about to end, you can clearly see this as VOLUME is and has been drying up over the last 12 months.  You can also see this in the real economy.  The U.S. has been through the biggest inventory build in history while China’s trade seems to be going into a freeze mode.

This chart is particularly scary because China has been the economic engine pulling the world along since the financial crisis.  A 20% drop in trade in just one quarter is ominous!

  I mention China above because it is my belief they will ultimately inherit the financial throne. The Chinese have been voraciously accumulating gold because they realized the West’s “weights and measures” were becoming criminally out of control.  I believe China will at some point (when there is no more gold for them to accumulate) will revalue their currency the yuan versus gold.  This will be the heart of your reset and China will become the new arbiter of global weights and measures.  My guess is that the yuan will have an honest relationship to gold for at least 25-50 years until they begin to face the same problems the U.S. did after the Bretton Woods agreement.
  Before, during, or immediately after China announces their holdings or revalues their yuan to gold, the “paper” in the West will burn.  We will see the “everything is worth nothing” moment and those who stored their labor in paper balances will be ruined.  I will leave you with this thought, would you do business with or deposit your hard earned savings with a bank, broker or insurance company that refused to allow an audit?  What if this institution has refused to an allow an audit for each of the last 60 years?  How much confidence would this “bank” have left?  It is for THIS very reason the Chinese have been “running” the gold bank, “trust” is about the only thing left in Fort Knox!  Regards,  Bill Holter
end
And now overnight trading in stocks and currency in Europe and Asia

1 Chinese yuan vs USA dollar/yuan strengthens to 6.2085/Shanghai bourse down 4%

2 Nikkei  closed

3. Europe stocks well down/USA dollar index up to 95.51/Euro falls to 1.1142/

3b Japan 10 year bond yield: small fall to .36% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 120.37/

3c Nikkei still  above 20,000

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

3e WTI  59.50  Brent 67.00

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 45.0 basis points. German bunds in negative yields from 4 years out.

Except Greece which sees its 2 year rate rises quite a bit to 20.05%/Greek stocks down 3.46%/ still expect continual bank runs on Greek banks.

3j  Greek 10 year bond yield:  10.59% (up 4 in basis point in yield)

3k Gold at 1192.50 dollars/silver $16.53

3l USA vs Russian rouble;  (Russian rouble up 4/10  rouble/dollar in value) 51.37 , the rouble is still the best acting currency this year!!

3m oil into the 59 dollar handle for WTI and 67 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 93.28 as the Swiss Franc is still rising against most currencies.  Euro vs SF is 1.0372 well below the floor set by the Swiss Finance Minister.

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

3r the 4 year German bund remains in negative territory with the 10 year close to negativity at +.45/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.

3t Greece has to pay 200 million euros by tomorrow

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 2.85%/yield curve flatten/foreshadowing recession.

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

 

(courtesy zero hedge/Jim Reid Deutsche bank)

 

Futures, Treasurys Flat After Chinese Stock Bubble “Incident”; Bunds Stage Feeble Rebound

If yesterday’s laughable lack of volume (helped by the closure of Japan and the UK) coupled with hopes that the end of the buyback blackout period was enough to send stocks surging if only to end with a whimper below all time highs despite what is now looking like three consecutive quarters of Y/Y EPS declines according to Factset, today’s ramp will be more difficult for the NY Fed and Citadel to engineer, not least of all due to the headwind of the overnight “incident” by China’s stock bubble which saw the Shanghai Composite tumble by 4%,the most since January. 

In fact, if volume is anything but abysmal, it may be tough to push stocks higher at all, now that the only signal that matters is: if volume low then buy, if volume high then sell.

 

Asian stocks finished the session in the red despite the positive Wall Street close as the S&P 500 extended Friday’s gains, the biggest in more than a month. Shanghai Comp (-4%) was the session’s laggard amid liquidity concerns, with around CNY 2.34trl worth of IPO subscriptions officially opening today, as approved by the CSRC on April 23rd which will divert liquidity away from the stock market into new offerings.

In Europe, in an attempt to accelerate negotiations, the IMF threatened to cut off the lifeline it has been lending to Greece unless European partners write off large volumes of the country’s sovereign debt. Consequently, Bunds (+22 ticks) have been supported from the get-go as it continues to retrace last week’s sharp losses, although German 10y yields are still above 0.4% which is the level not seen since the start of ECB QE programme.

Speaking of bonds, USTs have taken a “crushing blow” from European govt bond selloff because of liquidity, not fundamentals, according to Tom di Galoma, head of rates and credit trading at ED&F Man. “The capitulation trade on European debt will soon come to an end and place U.S. Treasuries on more stable footing.” The only question is when.

Furthermore, the GR/GE spread is significantly wider than its European counterparts with Greek 10Y bonds wider by 67bps German 10Ys and Greek 2Y yields rose over 100bps.

Of note, Greece are set to pay the IMF EUR 200mln in interest payments tomorrow and a further EUR 780mln on May 12th. In addition, the ECB are holding a non-monetary policy meeting and may discuss the ELA. Meanwhile UST’s are unchanged on the day amid little fundamental news specifically driving US Treasuries.

Despite opening lower European equities (Eurostoxx50 +0.4%) reversed coursed after being lifted by a stellar earnings report from UK banking giant HSBC (-1.9%), although later retraced all of its upside. The UK bank holds a 7% weighting in the FTSE and boasts a GBP125bln market cap. This consequently resulted in European stocks shrugging off negative closes in China due to the CSRS tightening its grip on margin trading and investors booking profits and switch money into a flood of IPOs.

In FX markets, the USD-index (+0.2%) has continued this week’s trend and is firmer against the major pairs, with the EUR exhibiting broad-based weakness and EUR/USD maintaining a downward trend since Friday after finding resistance at its 100DMA at 1.1283. Elsewhere, the RBA cut its Cash Rate Target by 25bps to a record low 2%, as expected. AUD/USD initially came under selling pressure, falling by 65 pips, as the central bank further jawboned the currency. Nonetheless, the weakness was short-lived as the RBA hinted at a future neutral bias, saying that it views inflation consistent with its target over the forthcoming 1-2yrs which strengthened AUD. Moreover, the central bank failed to offer any form of forward guidance on monetary policy, with focus now turning to Friday’s quarterly SOMP release.

Heading into the North American open, WTI and Brent crude futures trade in the green with WTI continuing to eye the USD 60/bbl level to the upside. Despite the strength in the USD, prices have been bolstered by ongoing conflict in Libya which has subsequently led to the halting of flows to the nation’s Zeutina port. Meanwhile spot gold (-0.08%) has traded in a relatively tight range in the session so far.

Bulletin headline summary from Bloomberg and RanSquawk

  • Strong earnings from HSBC offer support to European equities shrugging off the negative closures in Asia
  • Greek concerns weigh on the EUR and help Bunds (+16 ticks) retrace some of its recent correction
  • Looking ahead sees the release of US Trade Balance, Service PMI, ISM Non-Manf. Composite, API crude oil inventories, New Zealand Employment Change, Milk Dairy Trade Auction, BoC Deputy Governor Wilkins and notable large cap earnings from Disney and DirecTV
  • Treasuries steady overnight, 30Y yields retreat from highest since December as EGBs stabilize; focus on Friday’s nonfarm payrolls report, est. +230k, unemployment rate to 5.4%.
  • “The Treasury market has taken a crushing blow from the European government bond sell-off due to liquidity rather than fundamentals. The capitulation trade on European debt will soon come to end and place US Treasuries on more stable footing,” ED&F Man head of U.S. rates Tom di Galoma writes
  • European Commission said that impasse over Greece’s fiscal crisis is strangling the economy, a forecast that will make it harder to meet bailout goals as talks to ease its liquidity squeeze drag on
  • IMF has warned eurozone creditors that it may cut off support to Greece unless European lenders write off “significant” amount of its sovereign debt, FT reported yesterday
  • Australia cut interest rates to a fresh record low and said there are signs of improving household spending, sending the currency and bond yields higher as markets bet policy makers won’t ease further
  • Two years of client withdrawals at Pimco’s Total Return Fund have cost it the title of the world’s biggest bond mutual fund, which now belongs to Vanguard’s Total Bond Market Index Fund
  • DoubleLine Capital’s Jeffrey Gundlach sees the same investment potential in the municipal debt of Puerto Rico as he did in mortgage markets in 2008 — so he’s buying
  • Texas and other states suing to overturn Obama’s immigration initiative asked an appeals court to keep in place a judge’s order blocking the program until a final decision on whether it’s legal
  • Sovereign bond yields mixed.  Asian stocks mostly lower, European stocks gain; U.S. equity-index futures fall. Crude oil and copper higher, gold unchanged

 

DB’s Jim Reid concludes the overnight recap

 

If we carry on the recent price action by the time we get to next month’s conference we may have to encourage core European Government bond treasurers to speak as yields continue to go higher and higher. Yesterday saw another +8.4bp added to 10 year bunds after Friday’s holiday with 30yr Bund yields +10.9bps higher at 0.994% – back to levels not seen since early March. It wasn’t just Bunds which finished weaker. Both developed and peripheral markets sold-off as 10yr yields in France (+8.0bps), Netherlands, (+8.8bps), Switzerland (+3.7bps), Spain (+4.8bps), Italy (+3.4bps) and Portugal (+1.9bps) all closed wider. Greece was the lone outperformer as the 10yr yield finished 9.4bps tighter. It was a better day for European equity investors however as the Stoxx 600 (+0.55%), DAX (+1.44%) and CAC (+0.70%) all closed higher.

The S&P 500 (+0.29%) and Dow (+0.26%) both also closed higher after better than expected macro data and constructive earnings reports helped support a better tone. On the latter, results from Berkshire Hathaway (post Friday close), Comcast and Cablevision in particular beat on both the earnings and revenue front while Anadarko Petroleum (after market close) became the latest oil company to fall victim to the downturn in prices, reporting its biggest quarterly loss in more than a decade, lowering capex further and reporting an eye-watering $3.7bn write-down on a single field in Utah.

Markets in Asia this morning are generally weaker with the Hang Seng (-1.00%) and Shanghai Comp (-1.84%) in particular trading lower. Equity markets in Japan are still closed while credit is largely unchanged. The main news this morning is in Australia where the RBA has cut rates by 25bps to 2% as expected, with the central bank commenting that further Aussie Dollar depreciation seems likely and necessary. The Aussie Dollar has been volatile post the move, immediately declining -0.5% before then recovering and now trading +0.5% higher on the day.

In terms of the data yesterday, markets appeared to be buoyed by a better than expected factory orders print (+2.1% vs. +2.0% expected), while the ISM NY print for April bounced 8.1pts to 58.1. Treasuries were better offered yesterday and extended their recent decline with the 10y and 30y part of the curve finishing +3bps and +4.9bps wider on the day. The 30y yield is in fact now at its highest yield (2.877%) since December 8th last year although Fed Funds contracts were little changed with the Dec15, Dec16 and Dec17 contracts 0bps, -0.1bps and -0.1bps respectively.

Comments from the Chicago Fed’s Evans yesterday lent support to the doves camp after the more hawkish comments from Williams and Mester on Friday. Despite tending to believe that most of what we saw in the first quarter was transitory, Evans noted that ‘I see significant risks, but few benefits, to increasing rates prematurely’, focusing on the need for more wage growth in particular to support a change in his view to lifting rates sooner. Meanwhile San Francisco Fed President Williams reiterated his views on Friday saying that he is optimistic over the US economy and that ‘we’re finally coming into the light at the end of the proverbial tunnel’.

In Europe the final April manufacturing PMI readings were mixed. The Euro-area print was revised up one-tenth of a point to 52, while regionally we saw Germany (+0.2pts to 52) revised up but the France reading (-0.4pts to 48) revised down. Elsewhere, the Italian reading was revised up 0.5pts to 53.8 and the Spanish reading was revised down modestly (-0.1pts to 54.2). Finally the Sentix investor confidence reading for the Euro area came in higher than expected (19.6 vs. 19.1 expected).

Away from the data, Greek headlines yesterday were focused on an article published in the FT which suggested that the IMF may cut off its support to Greece unless European lenders write down significant amounts of its sovereign debt. The article suggests that the IMF may hold back its portion (around half) of the €7.2bn tranche of bailout aid that Greece is in talks over. The article does appear to be somewhat backdated however, with the note referring to data arising from the eurozone finance ministers meeting in Riga last month which showed Greece would post a primary deficit of up to 1.5% of GDP, well below the 3% primary surplus target. More importantly however, a Reuters article yesterday reported that the ECB is unlikely to change the collateral policy this week and emergency liquidity assistance is set to be extended for another week. The article probably helps support some of the better performance in Greek assets as well as the moves wider in core rates after earlier worries that an increase to haircuts on Greek collateral was a possibility this week.

With negotiations between Greece and its creditors continuing today, Deputy Finance Minister Dragasakis is due to meet with Draghi today in Frankfurt while Finance Minister Varoufakis is due to meet French Finance Minister Sapin in Paris.

Wrapping up yesterday’s news, the Fed’s quarterly bank loan survey showed little change in lending standards for loans in the commercial and industrial sector and little change in demand for these loans. There were however some reports of easing on lending terms for a number of types of residential mortgages while demand for autos and credit cards rose. Perhaps more interestingly, there was also a special question on exposure to loans offered in the oil and natural gas drilling or extraction sector. The report commented that banks are expecting more delinquencies and charge-offs from the sector over the remainder of the year, however the report also noted that ‘exposures were small, and that they were undertaking a number of actions to mitigate the risk of loan losses’. The report showed the institutions are taking measures to protect themselves, ‘including restructuring outstanding loans, reducing the size of existing credit lines, requiring additional collateral, tightening underwriting policies on new loans or lines of credit, and enforcing material adverse change clauses or other covenants’.

Looking ahead to today’s calendar now, the European Commission economic forecasts will likely be closely watched this morning, while data wise its fairly quiet in the European timezone with just Euro-area PPI expected. It’s busier in the US this afternoon however with trade data, the final April composite and services PMI’s, the IBD/TIPP economic optimism survey and also the ISM non-manufacturing reading all expected today.

 

end

 

Chinese stock tumble 4%/most in 4 months. Australia cuts its interest rate to record lows

 

Trading in Asia overnight:

 

(courtesy zero hedge)

China Stocks Tumble Most In 4 Months; Australia Cuts Rates To Record Low

Yesterday, when we heard that China brokers may impose tighter margin requirements to contain what is now a laughable stock bubble we said that tonight’s Shanghai session could get exciting:

It did: overnight the Shanghai Composite tumbled by 4.1% to under 4300, the biggest one day drop since January 19.

Additionally, the Shanghai Stock Exchange Property Index falling 8% although keep in mind that the sub-index added 52% in 3 months to end-April on relentless hopes of central bank easing the worse the economic data got. The rout also spread to Hong Kong where the HSI dropped as much as 1.9%, down 4th day in longest loss streak since March 11.

While it is too early to know if the Chinese stock bubble has finally burst, it is just as unclear what precipitated the selloff. On one hand Reuters attributes the drop to the previously noted collateral concerns saying “media reports of tougher margin requirements by some brokerages added to concerns about market liquidity ahead of a new batch of share listings.” Specifically, brokerages such as CITIC Securities Co Ltd, Haitong Securities Co Ltd and Huatai Securities Co Ltd tightened requirements for margin financing this month in a bid to control risks, the Shanghai Securities News reported on Tuesday.

This is major concern for China where the unprecedented jump in margin debt coupled with an explosion in new accounts has been the primary driver behind the relentless rise in the Shanghai Composite. “The move could curb money inflows in a highly-leveraged stock market rally. The outstanding value of margin financing – the amount of money investors have borrowed to buy stocks – has exceeded 1.8 trillion yuan ($290 billion) and repeatedly smashed records in recent sessions.”

“I suspect the brokerages are doing so under the guidance of regulators, so this reflects regulators’ intentions,” said Zhang Chen, analyst at Shanghai-based hedge fund manager Hongyi Investment. “It gives an excuse for some investors to take profit.”

Additionally, liquidity has been soaked up by a flurry of new IPOs with the market grappling with short-term liquidity pressures as nine companies start taking subscriptions from investors on Tuesday with more scheduled to launch share sales later this week. Altogether, subscription for new batch of A-share IPOs is expected to peak today with a total of 25 IPOs in early May estimated to drain 2.34 trillion in yuan of liquidity according to Bloomberg calculations.

All of this follows a move by the RBA in which the Australian central bank cut rates as expected from 2.25% to 2.00%, a record low.

Rising property prices in Australia’s biggest city, Sydney, a strong currency and a drop in iron ore prices were among the reasons for the cut.

The cut is the second this year, following a previous 25 basis point cut in February.

Here is Goldman’s take:

Bottom Line: As expected, the RBA cut rates by 25bp in May, but a subsequent initial ~US40c rally in the AUD suggests financial markets viewed the lack of an explicit easing bias in today’s brief statement in a relatively hawkish light. In our view, however, it is important to acknowledge that in months where the RBA changes the policy rate it tends to reflect more on the decision itself and does not always communicate a clear forward-looking reference in the statement attending the decision. This was the case in February 2015, for example – with an easing bias more clearly articulated not long after that. In turn, and with the RBA’s current economic forecasts already calibrated on further easing in any case, we would not be surprised to see an easing bias expressed more explicitly in Friday’s Statement on Monetary Policy (SMP; if a more moderate one).With May’s rate cut closely following 1Q2015 CPI, we also believe the timing of today’s decision underscores the importance that the RBA places on actual CPI outcomes in framing its outlook for inflation – raising the risk that the rate cut we currently have penciled in for July is delivered a month later in August (following 2Q2015 CPI). In the interim, we expect Friday’s SMP to reveal further growth downgrades, and to continue to refocus attention on trends in household demand (as opposed to broader measures of aggregate demand). All in all, we believe the coming months will see ongoing benign inflation and note that our proprietary indicators are flagging downside surprises on the growth/employment front. Against the backdrop of the rising risk of slippage in the timing of the rates lift-off in the US, we continue to lean towards another rate cut this year.

What was clearly notable about this particular rate announcement is that it was not frontrun by HFTs….

unlike previous occasions

… even though as a reminder Australia’s regulator found no illegal activity previously and merely blamed lack of liquidity on the massive, and directionally correct, moves:

Preliminary findings reveal moves in the Australian Dollar ahead of the announcementto be as a result of normal market operations in an environment of lower liquidity immediately ahead of the RBA announcement. The reduction in liquidity providers is a usual occurrence prior to announcement in all markets. Much of the trading reviewed to date was linked to position unwinds by automated trading accounts linked to risk management logic and not misconduct.

And here we thought that HFTs add liquidity.

In any event, even if one had known the statement in advance, that subsequent move in the AUD was such that pretty much everyone’s stops were taken out first to the downside, and then to the upside.

Most surprisingly, despite the rate cut, Australia’s ASX200 index closed just a fraction in the red.

 

end

 

The big story of the day.  It seems that there is a huge conflict between the various parties as to how to handle the Greek problems:

The IMF insists on pension reforms but the EU do not really care

The EU wants a positive primary surplus of which the IMF does not care.  Greece is hurtling into oblivion;

 

2 articles.

 

(lst article/Bloomberg/2nd article zero hedge0

EU Demands Concessions as Greece Hurtles Toward Deadlines

 

 

 

(courtesy Bloomberg/Lacqua)

Euro-area finance chiefs urged Greece to bow to their terms for releasing aid within days to avert a cash crunch.With Greek officials fanning out across the continent to plead their case, Portuguese Finance Minister Maria Luis Albuquerque warned Tuesday that the currency bloc won’t make contingency plans to prepare for a possible breakdown in talks and encouraged Greek Prime Minister Alexis Tsipras to take the offer on the table.

“It has been difficult but we still hope it will be possible to have a good outcome of this discussion,” Albuquerque said in a television interview in London.

European officials are concerned that Greece may struggle to meet its obligations this month unless Tsipras drops his opposition to cutting pensions and making it easier to fire workers. His government faces about 1 billion euros ($1.1 billion) in payments to the International Monetary Fund coming due on top of public workers’ salaries and pensions.

The euro fell for a third day on Tuesday as the time left to release aid ahead Greece’s payment deadlines ran down. The currency lost 0.2 percent at 11:47 a.m. London time to $1.1119 and Greek stocks fell 3.3 percent.

Germany’s Wolfgang Schaeuble said he’s “skeptical” that the euro-area finance ministers will be able to reach a deal at their next meeting on May 11. Spanish finance chief Luis de Guindos held out the prospect of some flexibility on the conditions for releasing aid at a committee hearing in the parliament in Madrid, even as he highlighted Greece’s perilous financial position.

“We are confident that there will be some steps ahead in the coming days,” de Guindos said. “It’s important that that happens because Greece’s liquidity situation is getting increasingly complicated.”

Diplomatic Push

As negotiations aimed at easing Greece’s liquidity crisis continue, Greek Finance Minister Yanis Varoufakis held a “useful” meeting with his French counterpart Michel Sapin in Paris, according to an e-mailed statement from the government in Athens.

Varoufakis will also meet European Economic Affairs Commissioner Pierre Moscovici later in Brussels and Deputy Prime Minister Yannis Dragasakis will meet European Central Bank President Mario Draghi at 5:30 p.m. in Frankfurt.

Tsipras has also spoken with International Monetary Fund Managing Director Christine Lagarde about the state of the negotiations, the IMF said late Monday.

The European Commission explained Tuesday how the impasse over Greece’s fiscal crisis is strangling the economy, making it harder to meet the targets set out in the bailout program as talks to ease its liquidity squeeze drag on. In its spring forecasts, published in Brussels, the commission sees the Greek economy growing just 0.5 percent this year, down from 2.5 percent in February.

“The conditions to support growth are in place but uncertainty and tighter financing conditions are holding back the recovery and weighing on public finances,” the commission said. Even though the economy grew for the first time since 2007 last year, positive momentum has been “hurt by uncertainty since the announcement of snap elections in December,” it said.

 

end

 

zero hedge discusses the above huge story!!

 

(courtesy zero hedge)

 

Greek Deal In Limbo After “Serious Disagreement” Between EU, IMF

On Monday afternoon, news broke that the IMF looked to be splintering from the rest of the Troika over just what conditions must be met in order for Greece to receive a €7.2 billion tranche of aid the country desperately needs to pay salaries, pensions and, ironically, the IMF. According to FT, Christine Lagarde and company are set to demand that Athens’ European creditors write-off enough of their Greek debt to bring the country’s debt-to-GDP ratio down to a ‘sustainable’ (whatever that means in the Greek context) level over the next several years. Otherwise, the organization argues, disbursing aid to Athens is equivalent to throwing money into a black hole, as the country’s fiscal situation is still in dire need of reform.

Of course much of what Greece owes in May is due to the IMF itself and so, as we remarked yesterday, “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).”

Today, we get yet another indication that negotiations are now not only complicated by Greece’s unwillingness to cross Syriza’s “red line” campaign promises, but by friction between the country’s creditors who, in an irony of ironies, now appear to be at odds over their own set of “red lines.”

More via Bloomberg:

EU, IMF failing to coordinate means compromise in Greek talks not possible, a Greek govt official says in e-mail. 

 

EU, IMF have different red lines: IMF insists on pension system overhaul, labor market deregulation; EU Commission insists on primary deficit: Official

 

Serious disagreement between EU, IMF creates deadlock in negotiations

This means it’s now Greece’s turn to blame creditors for the intractability of the negotiations:

“Serious” policy differences between Greece’s two major lenders – the European Union and the International Monetary Fund – are preventing the country from reaching a compromise with lenders, a Greek government official said on Tuesday.

 

“The result is that the institutions have red lines everywhere: pension, labour (IMF), and primary surplus (Commission). Against this background there cannot be a compromise. The responsibility belongs exclusively to the institutions and their weakness in coordinating”…

 

The Greek official said the IMF was being insistent on pension and labour reforms that Athens opposes, while the European Commission was more leninent. The Europeans, on the other hand, were being strict on the target for a primary budget surplus while the IMF was less worried about that, the official said.

 

The IMF also wants Greek debt to made viable through a writeoff of debt, while the European Commission is against such debt relief, the official said.

Meanwhile, Tsipras is said to have spoken with both Lagarde and Angela Merkel over the phone even as Germany unleashed the Schaeuble who promptly threw still more cold water on any remaining hope for an imminent breakthrough:

Greece may not be able complete the preparatory work needed for an agreement on financial aid before euro-area finance ministers meet in Brussels next week, German Finance Minister Wolfgang Schaeuble said.

 

“The Eurogroup will take up these matters only on the basis of the comprehensive report by the institutions,” Schaeuble said at a press conference in Berlin Tuesday, referring to the European Commission, the European Central Bank and the IMF. “I’m rather skeptical that we can get there by Monday, but I’m not ruling it out.”

As a reminder, Monday is D-Day, as Athens must make a €780 million payment to the IMF and unless the IMF agrees to effectively pay itself by loaning Greece more money, that payment will be missed at which point “all bets are off.”

And Greek bonds not happy:

 end
The above caused this to happen:

Greece Sparks Meltdown in Euro-Area Bonds as Italy, Spain Tumble

A slump in euro-area government bonds gathered force on concern Greece’s talks with creditors will fail to clinch a deal in time to prevent a default.

As Greek bonds tumbled, the repercussions spread across the region, with Spain’s 10-year yield rising the most since June 2013 to the highest this year. German bunds, the region’s benchmark sovereign securities, were swept up in the selloff with Treasuries after an unexpected jump in growth for U.S. service industries.

Greece’s debt standoff is exacerbating tension in euro-area bond markets, which already succumbed to their worst month since 2013 in April. The nation blamed international creditors for a failure to find an agreement in its bailout talks, saying a deal won’t be possible until they agree on a common set of demands. Portugal’s Finance Minister Maria Luis Albuquerque said on Tuesday Greek Prime Minister Alexis Tsipras should take the offer on the table.

“There had been some hope we’d get more positive comments out over the weekend, but again a disappointing lack of progress,” said Owen Callan, a fixed-income analyst at Cantor Fitzgerald LP in Dublin. “This is a general paring back of risk positions.”

Spain’s 10-year yield jumped 29 basis points, or 0.29 percentage point, to 1.80 percent at 4:16 p.m. London time. It reached 1.81 percent, the highest since Dec. 17. The 1.6 percent security due in April 2025 fell 2.675, or 26.75 euros per 1,000-euro ($1,119) face amount, to 98.205.

Debt Crisis

The prolonged fiscal impasse is threatening Greece’s fragile recovery and reviving memories of the region’s debt crisis earlier this decade that threatened to rip apart the currency bloc and resulted a restructuring of Greek debt that was the biggest in history.

In forecasts published on Tuesday, the European Commission predicted the Greek economy would grow 0.5 percent this year, down from the 2.5 percent estimated in February. Adding to the tension, the Financial Times reported that the International Monetary Fund warned it may cut off support to Greece.

“Greek economic conditions are deteriorating,” said Frederik Ducrozet, an economist at Credit Agricole SA’s corporate and investment banking unit in Paris. “It’s negative in terms of the fiscal revenues and the backdrop for the negotiations. But it also provides Greece with some bargaining power when they negotiate the primary surplus for this year and next.”

Yields on Italian 10-year debt climbed as much as 30 basis points to 1.84 percent, a level last seen on Jan. 12. The 30-year yield surged 35 basis points to 2.90 percent. Trading volume in the first Italian bond future contract rose to the highest since March 18.

Trader Discomfort

Germany’s 10-year yield increased for a sixth-straight day, adding six basis points to 0.52 percent. Borrowing costs are climbing even as the European Central Bank sticks with purchases of 60 billion euros of the region’s debt a month to revive the economy. The quantitative-easing plan sent the yield to a record-low 0.049 percent as recently as April 17.

“It is quite strange that German bund yields are rising so much despite the risk-off sentiment on the back of Greece’s development,” said Gianluca Ziglio, a fixed-income strategist at Sunrise Brokers LLP in London. “It seems people are not comfortable with current levels of bund yields anymore given the potential change in the inflation outlook.”

The yield on Greek two-year notes rose 151 basis points to 21 percent, and the 10-year bond yield added 56 basis points to 11.11 percent.

Trading in Greek government bonds remains scant, with no turnover through the Bank of Greece’s electronic secondary securities market, or HDAT, on Monday, according to Athens News Agency.

Central-bank data showed trading volume across all maturities through HDAT totaled 2 million euros in April, the least since February 2012. Volumes plunged to zero in October 2011 after peaking at 136 billion euros in September 2004.

end

 

 

Just one question:  only Deutsche bank????

 

(courtesy zero hedge)

SEC Commissioner Furious At Deutsche Bank’s “Decade Of Lying, Cheating, And Stealing”

Last week we commented on the latest travesty in the legal system when Deutsche Bank paid $2.5 billion to settle charges that it had manipulated LIBOR, EURIBOR and various other -BORs. As usual in situations such as this one, not a single banker went to prison, but there was some hope that Deutsche Bank’s gross criminal conduct would at least land it on the SEC’s “bad actors” list, which is like the Dodd-Frank equivalent of ‘time out’ and restricts the offender from participating in exempt securities offerings.

Not to worry: as we reported as part of its settlement, Deutsche Bank, as well as every other criminal financial institution, had – deep in the fine print – inserted language that exempted the offender from such stigma. As the WSJ noted, “the language allows the banks to avoid asking the SEC for a waiver—a process that has become fraught with uncertainty amid commissioner disagreements over whether to allow financial firms to avoid a “bad actor” ban…”

We concluded that “It’s good to be TBTF” because clearly no matter how many laws are violated and how much money is stolen (LIBOR was the reference security for nearly $1 quadrillion in global rate-sensitive derivatives), i) nobody ever goes to prison, ii) there are absolutely no negative consequences, and iii) the cost of running a criminal organization is tiny – the settlement usually amounts to far less than 1% of the gains reaped from years of illegal activities.

Frankly, at this point one should just sit back and watch in amusement, because until the revolution and/or war predicted by Paul Tudor Jones arrives and the guillotines start working overtime, nobody in a position of wealth or power will be held accountable.

That same message was, in rough terms, what prompted SEC commissioner Kara Stein, a Democrat, to write her “dissenting statement” regarding granting Deutsche Bank the waiver for ineligible issuer status.

Here are the choice excerpts:

I respectfully dissent from the Commission’s Order (“Order”), approved on May 1, 2015, by a majority of the Commission. The Order grants Deutsche Bank AG a waiver from ineligible issuer status triggered by a criminal conviction of its subsidiary, DB Group Services (UK) Ltd. (collectively with Deutsche Bank AG, “Deutsche Bank”), for manipulating the London Interbank Offered Rate (“LIBOR”), a global financial benchmark. This waiver will allow Deutsche Bank to maintain its well-known seasoned issuer (“WKSI”) status, which would have been automatically revoked as a result of its criminal misconduct absent a Commission waiver.

 

With these WKSI advantages comes a modicum of responsibility. WKSIs must meet the very low hurdle of not being ineligible. This means that, among other things, they have not been convicted of certain felonies or misdemeanors within the past three years. In granting this waiver, the Commission continues to erode even this lowest of hurdles for large companies, while small and mid-sized businesses appear to face different treatment.

 

This criminal scheme involving LIBOR manipulation was designed to inflate profits, and it was effective. It created the impression that Deutsche Bank was more creditworthy and profitable than it actually was. Accordingly, the conduct affected its financial results and disclosures. Because LIBOR plays such an important role in the worldwide economy, manipulation of it goes to the heart of many aspects of Deutsche Bank’s disclosures. Interest rates represented to clients and the public also were clearly false. Based on this conduct, I do not find any basis to support the assertion that Deutsche Bank’s culture of compliance is dependable, or that its future disclosures will be accurate and reliable.

Even the SEC is shocked that the CFTC is an organization that caters exclusively to keeping criminal bankers out of prison, rather than getting them in it:

 
 

In addition, the Commission adopted rules disqualifying felons and other “Bad Actors” from Rule 506 offerings on July 10, 2013. Based on the criminal conduct in this case, I expected to receive a request from Deutsche Bank AG for a waiver from the automatic disqualification contained in Rule 506. After all, the final CFTC order was “based on a violation of any law that prohibits fraudulent, manipulative, or deceptive conduct.” It should therefore trigger an automatic disqualification absent a waiver.

 

However, based on a loophole contained in Rule 506(d)(2)(iii), the CFTC has intervened and prevented the bad actor disqualification question from even coming before the Securities and Exchange Commission. The CFTC saw fit to opine on the SEC’s Rule 506 jurisprudence about whether Deutsche Bank AG should receive a waiver from automatic disqualification under SEC rules. It is unclear to me what, if any, analysis went into this decision and what prompted the CFTC to insert language into its final order stating that a bad actor disqualification “should not arise as a consequence of this Order.”The implications of the CFTC’s actions here — and in other actions — are deeply troubling. The Commission should closely review this provision and how it is being used.

Don’t worry: former CFTC chief Gary Gensler will soon be US Treasury Secretary – then it will be his job to make sure no criminal with a net worth over a few million dollars ever has to face the US “judicial” system.

In the meantime, the CFTC will never do its actual jobs and root out maniupulation and rigging in precious metal markets…

… instead leaving it to fringe blogs):

As for the piece de resistance:

Deutsche Bank’s illegal conduct involved nearly a decade of lying, cheating, and stealing. This criminal conduct was pervasive and widespread, involving dozens of employees from Deutsche Bank offices including New York, Frankfurt, Tokyo, and London. Deutsche Bank’s traders engaged in a brazen scheme to defraud Deutsche Bank’s counterparties and the worldwide financial marketplace by secretly manipulating LIBOR. The conduct is appalling. It was a complete criminal fraud upon the worldwide marketplace.

Dear Kara, are you really confused why “complete criminal fraud” by a bank goes unpunished? Here is a hint: go to OpenSecrets, type in Deutsche Bank, and you will find just who the German bank paid off to avoid any true penalty. To your great surprise you may even find that the biggest beneficiary of DB’s generosity in 2014 is, drumroll, the Democratic National Convention…

… not to mention over $3 million donated in the last two decades to America’s “two” parties (of which 61% went to democrats).

end
Trouble again in Yemen/Saudi Arabia as the rebels shell across the border in Saudi Arabia:
(courtesy zero hedge)

Yemen Rebels Shell Saudi Arabian City, Casualties Reported; Saudis Vow Retaliation

After the Saudis allegedly halted their air campaign against Yemen’s Houthi rebels on April 21 (allegedly because it promptly resumed the very next day to almost no public announcement), the Yemen civil war and the “skirmishes” by Houthi rebels along the border with the world’s biggest oil exporter were quickly forgotten. Until this morning, when the Saudi press and social media has been overrun with reports that the Saudi city of Najran was shelled by Houthi mortars, an attack which Saudi advisor to the armed forces Ahmed Asiri said “will not pass without a response”.

From Al Riyadh, google translated:

Najran saw Tuesday afternoon fall of several mortar shells at different locations within the city, and according to sources «Riyadh», the number was 6 shells, targeting some civilian sites, government buildings and One landed on the housing guard compound for the memorization of the first Koran fifth Secondary School for Girls Schools hospitality district .

 

«Riyadh» attended some of those sites to monitor these explosions that caused a power outage in a number of districts of Najran city, and met with some of the citizens who have expressed their support with the leadership to deter Alhothin and ousted president rebels, saying they will not be intimidated by such random shells, said the compound guard citizen Yahya Dahmha I was surprised by the fall of the shell at my house in the compound and praise be to Allah that the home and the school was empty and I was on my way to bring up my daughter from high school, pointing out that this work will not scare them away and that the confidence of citizens in the state has no limits. 

 

For his part, Brigadier corner Ahmed Asiri coalition spokesman and adviser forces confirmed in the defense minister’s office that the militia al-Huthi targeted the border areas in Najran mortar, and said that what happened today is part of the chaos experienced by the militia al-Huthi, and that the situation now in Najran safe and the armed forces doing their job on the border to counter the attacks Huthi stressing that the work of today will not pass without a response.

The news was confirmed moments ago by Bloomberg which also quoted state-run television citing coalition spokesman Ahmed Asseri, who said – as noted above – that the attack won’t “pass without a response.” All schools in the province bordering Yemen are now closed.

Further, according to unconfirmed Twitter reports there are been “many casualties” in the missile attack: an attack which appears quite senseless on the surface as it will simply “force” the Saudi national guard, already prepared for a land incursion, to enter Yemen. Unless of course, that was planned all along, and speculation emerges that this was merely the latest Middle Eastern false flag provocation.

A Saudi response now appears just a matter of time, and one which the oil-trading algos are eagerly expecting, pushing Brent to within two dollars of $68.

 

end
Oil related stories:
the reason for the spike in oil today:
(courtesy zero hedge)

WTI Crude Tops $60 (5 Month Highs) After Saudi’s “Leave It To Allah” Comments

WTI Crude is now up 43% from its mid-March lows (at $42), topping $60 for the first time since early December. This is a 25% retracement of the June to March drop. Despite near-record US production (rose last week WoW), record Saudi production, slowing global economies, and expectations that higher prices will bring a flood of new supply as cash-starved frackers start pumping again; it appears the squeeze combined with Middle East tensions is driving the resurgence (for now).

 

With yesterday’s machine-plunge long forgotten – another machine-surge run-stop guaranteed tagging $60 stops…

 

Pushing 5-month highs and a 25% retracement of the drop…

 

With speculation rife over how long Saudi Arabia is content to see oil prices slump (as we noted the nation’s record reserves plunge), the country’s oil minister told CNBC that only Allah knows where prices are heading.

Influential Saudi Oil Minister, Ali Al-Naimi, told CNBC Tuesday that “no one can set the price of oil – it’s up to Allah.” The remark comes amid widespread speculation over how long Saudi Arabia will maintain its decision not to cut production – a move that could support prices.

http://player.theplatform.com/p/gZWlPC/cnbc_global?playertype=synd&byGuid=3000376816&size=530_298

Charts: Bloomberg

 

 end
Oil gets a boost from lower API inventories:

Oil Rises After API Reports First Inventory Draw In 16 Weeks

For the first time since the first week of January, API reports a 1.5 million barrel inventory draw(against last week’s 4.2mm build). This also comes with a 336k draw from Cushing following on from last week’s 162k draw. Oil prices have responded by pushing higher, though it appears most of this was priced in.

If DOE confirms this draw, then this will be the first draw since the first week of Jan…

 

Which appears to have been largely priced in today…

 

Charts: Bloomberg

end

Your more important currency crosses early Tuesday morning:

Euro/USA 1.1142 down .0007

USA/JAPAN YEN 1.2037 up .257

GBP/USA 1.5134 up .0016

USA/CAN 1.2083 down  .0009

This morning in Europe, the Euro fell quite  by 7 basis points, trading now well below the 1.12  level at 1.1142; 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 26 basis points and trading just above the 120 level to 120.37 yen to the dollar.

The pound was well up this morning as it now trades just below the 1.52 level at 1.5134  ( 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 up by 9 basis points at 1.2083 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 ALL in the red … Chinese bourses: Hang Sang red  (massive bubble forming) ,Shanghai in the red  (massive bubble ready to burst),  Australia  in the red: /Nikkei (Japan) closed /India’s Sensex in the red/

Gold very early morning trading: $1192.50

silver:$16.53

 

Early Tuesday morning USA 10 year bond yield: 2.13% !!!  down 1  in basis points from Monday night/

USA dollar index early Tuesday morning: 95.51 up 7 cents from Monday’s close. (Resistance will be at a DXY of 100)

 

This ends the early morning numbers, Tuesday morning

And now for your closing numbers for Tuesday:

 

Closing Portuguese 10 year bond yield:2.39% up a whopping 29 in basis points from Monday

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

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

Your closing Spanish 10 year government bond,  Tuesday, up a whopping 28 in basis points in yield from Monday night.

Spanish 10 year bond yield: 1.78% !!!!!!

Your Tuesday closing Italian 10 year bond yield: 1.81% up 27  in basis points from Monday:

trading 3 basis points higher than Spain.

 

IMPORTANT CURRENCY CLOSES FOR TODAY

 

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

 

Euro/USA: 1.1195 up .0046  ( Euro up 46 basis points)

USA/Japan: 119.83 down .282  ( yen up 28 basis points)

Great Britain/USA: 1.5171 up .0051  (Pound up 51 basis points)

USA/Canada: 1.2070 down .0023 (Can dollar up 23 basis points)

The euro rose today.   It settled up 46 basis points against the dollar to 1.1195 as the dollar fell apart again today on all fronts despite massive central bank intervention. The yen was up 28 basis points  and closing just below the 120 cross at 119.83 The British pound gained a little ground today, 51 basis points, closing at 1.5171. The Canadian dollar gained considerable ground to the USA dollar, up 23 basis points closing at 1.2070.

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: 2.17% up 2 in basis points from Monday

 

Your closing USA dollar index:

95.05  down 38 cents on the day.

 

European and Dow Jones stock index closes:

England FTSE down 58.37 points or .84%

Paris CAC  down 107.90 points or 2.12%

German Dax down 292.17 points or 2.51%

Spain’s Ibex  down 313.50 points or 2.74%

Italian FTSE-MIB  down 640.82  or 2.76%

 

The Dow:down 142.20 or 0.79%

Nasdaq; down 77.60 or 1.55%

 

OIL: WTI 60.46 !!!!!!!

Brent: 67.58!!!!

 

Closing USA/Russian rouble cross: 50.55 up 1 1/2 rouble per dollar on the day.

 

end

 

And now your important USA stories:

 

NYSE trading for today.

 

Stocks Sinko-No-Buyo As Crude Hits 6-Month Highs

But everything was ‘awesome’ yesterday? From “strong” to wrong so quickly…

 

Dip-buyers’ strike today as fears of no moar money sparked selling in stocks and bonds…

 

Small Caps and Nasdaq led the losers today – but everything fell from the open…

 

Which destroyed all of yesterday’s volumeless gains

 

With Small Caps and Nasdaq underperforming post-FOMC

 

To summarize:

  • Dow <18,000 (below its 50DMA)
  • S&P < 2,100 (testing 50DMA)
  • Nasdaq <5,000 (below its 50DMA)
  • Russell 2000 < 100DMA
  • Biotechs <100DMA; and
  • AAPL <50DMA

Surprise!!! Stocks caught down to credit… again

 

VIX was in now way ezxcited about yesterday… just like credit…

 

Shale stocks woke up to what Einhorn said yesterday…

 

Biotechs took another beating…

 

But energy stocks dumped even as oil spiked…

 

 

Treasuries were hammered as US opened… but the sell-off stalled as the equity weakness accelerated…

 

NOTE – 10Y yields tested the 200DMA and rallied back lower

 

The US Dollar slipped for the 7th day in the last 9…

 

Commodities were all higher on the day – led by Crude’s exuberance – with a pre-8amET ramp once again…

 

Crude surged above $61 briefly before fading into the NYMEX close… (click image for massive version)

 

Charts: Bloomberg

Bonus Chart: Yet another collapsing China data point…

 end
 This is a huge story.  The USA trade deficit soars to 51 billion dollars the worst since the financial crisis of 2008 as imports surge and exports die. This will be a huge subtraction to the 1st quarter GDP:
(courtesy zero hedge)
two stories:
First:

US Trade Deficit Soars To Worst Since Financial Crisis; Will Push Q1 GDP Negative

After shrinking notably in Feb, March’s US Trade deficit exploded. Against expectations of a $41.7bn deficit, the US generated a $51.4bn deficit – the worst since Oct 2008 and the biggest miss on record. Exports rose just $1.6bn while imports soared $17.1bn with the goods deficit with China soaring from $27.3bn to $37.8bn in March.

Ironically, just as the “harsh winter” was found to lead to a GDP boost due to a surge in utility spending, so the West Coast port strike which was blamed for the GDP drop, was actually benefiting the US economy as it lead to a plunge in imports. In March, however, the pipeline was cleared, and US imports from China soared by over $10 billion to $38 billion.  End result: prepare for upcoming Q1 GDP downgrades into negative territory, which with a Q2 GDP of 0.8% (per the Atlanta Fed) means the US is this close form a technical recession.

Worst trade deficit since Lehman.

The increase in imports of goods mainly reflected increases in consumer goods ($9.0 billion), in capital goods ($4.0 billion), and in automotive vehicles, parts, and engines ($2.7 billion). A decrease occurred in petroleum and products ($1.1 billion).

The goods deficit with China increased from $27.3 billion in February to $37.8 billion in March

From the report:

The U.S. monthly international trade deficit increased in March 2015 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit increased from $35.9 billion in February (revised) to $51.4 billion in March, as imports increased more than exports. The previously published February deficit was $35.4 billion. The goods deficit increased $14.9 billion from February to $70.6 billion in March. The services surplus decreased $0.6 billion from February to $19.2 billion in March.

Exports

  • Exports of goods and services increased $1.6 billion, or 0.9 percent, in March to $187.8 billion. Exports of goods increased $1.5 billion and exports of services increased $0.2 billion.
  • The increase in exports of goods mainly reflected increases in capital goods ($1.5 billion) and in automotive vehicles, parts, and engines ($0.8 billion). Decreases occurred in consumer goods ($1.7 billion) and in petroleum and products ($0.6 billion).
  • The increase in exports of services reflected an increase in transport ($0.1 billion), which includes freight and port services and passenger fares, and increases in several categories of services of less than $0.1 billion. A decrease in travel (for all purposes including education) ($0.1 billion) was partly offsetting.

Imports

  • Imports of goods and services increased $17.1 billion, or 7.7 percent, in March to $239.2 billion. Imports of goods increased $16.4 billion and imports of services increased $0.8 billion.
  • The increase in imports of goods mainly reflected increases in consumer goods ($9.0 billion), in capital goods ($4.0 billion), and in automotive vehicles, parts, and engines ($2.7 billion). A decrease occurred in petroleum and products ($1.1 billion).
  • The increase in imports of services mainly reflected increases in transport ($0.6 billion) and in travel (for all purposes including education) ($0.1 billion).

Goods by geographic area (seasonally adjusted, Census basis)

  • The goods deficit with China increased from $27.3 billion in February to $37.8 billion in March. Exports increased $0.4 billion to $9.3 billion and imports increased $10.9 billion to $47.1 billion.
  • The goods deficit with Japan increased from $4.3 billion in February to $6.3 billion in March. Exports increased $0.2 billion to $5.6 billion and imports increased $2.2 billion to $11.9 billion.
  • The goods deficit with Germany decreased from $6.3 billion in February to $5.6 billion in March. Exports increased $0.1 billion to $4.3 billion and imports decreased $0.5 billion to $9.9 billion.

So to summarize: First ‘harsh weather’ was found to boost Q1 GDP, and now West Coast port strike boosted imports  with the resumption of Chinese imports in March to slam Q1 GDP into negative territory.

 

end
The second:
(courtesy zero hedge)

Worst Ever US Trade Deficit Excluding Crude Hints At Upcoming QE4

Remember that in a beggar thy neighbor world, where currency warfare has once again broken out between the US, Europe and Japan, for every winner there is a loser. In this case, the loser is the one country that has decided that a strong currency is a great thing for its economy (if only for the time being): that would be the US.

Why is this relevant? Because as the chart below shows, US trade excluding Petroleum, just crashed to $43.7 billion, the worst print in the history of the series, suggesting that portrayals of the US as a resurgent export powerhouse are completely erroneous, and that instead the US is as big a net importer of goods and services (and soon to be oil) as ever.

Biggest ever trade deficit (ex Petroleum)

The crucial point here is that with Shale production now expected to decline (if only modestly: after all those junk bond investors are desperate to keep the MotherFracking dream alive), the US will soon have to import more oil which will require more debt issuance to fund the soaring trade deficit which will require more QE to monetize the deficit.

And thus the stage is set for QE4.

One thing is sure – if the trade deficit surge continues, and Q1 GDP tumbles below 0%, the Fed will be right back at the frontlines, CTRL-Ping the US economy right back into “beggar thy global neighbor” competitiveness. Because as we noted, with Q1 GDP now assured a negative print, and with Q2 GDP according to the Atlanta Fed at 0.8% and likely going lower if there are several “unexpected” spring showers, the US may enter a technical recession as soon as June 30.

Hardly the stuff rate hikes are made of...

end
Conflicting service numbers from two sources.  However export orders collapse in April:
(courtesy zero hedge)

US Non-Manufacturing Rises (ISM) & Falls (PMI) In April As Export Orders Collapse

The hope-strewn bounce in Services PMI over the last 3 months (despite collapsing macro data) has ended. Markit Services PMI dropped in April to 57.4, weakening notably from preliminary expectations of 57.8. Markit remains convinced that their survey implies 3% GDP growth and all is well in the world. ISM Services however smashed expectations, printing 57.8 vs 56.2, its highest since November – despite a plunge in new export orders into contraction.

 

The bounce is over…

 

Markit remains very upbeat though…

“Together with the expansion signalled by the manufacturing survey, the service sector PMI so far points to the economy growing at an annualized rate of 3% in the second quarter, representing a nice rebound from the first quarter’s soft-patch.

 

“Hiring has also remained resilient, boding well for monthly non-farm payroll growth to return above 200,000.

 

Price pressures have also ticked higher, suggesting we may see some further upwards pressure on core inflation in coming months.”

Or Is It? ISM Services…

 

And the breakdown:

 

The cherry-picked respondents remain optimistic as ever:

  • “Avian Influenza is causing concerns, but has not directly impacted our operations.” (Agriculture, Forestry, Fishing & Hunting)
  • “Clients in oil refinery sector have reduced their capital spending due to declining oil prices.” (Professional, Scientific & Technical Services)
  • “Definite signs of economic growth in most markets serviced. New construction and capital spending apparent.” (Finance & Insurance)
  • “Still have backorders/shortages of IV solutions.” (Health Care & Social Assistance)
  • “Pork prices are lower due to abatement of the PEDv virus. Chicken and beef prices are up due to higher demand and output. Corn prices and oil for gasoline have been the bright spot keeping prices from taking off higher.” (Accommodation & Food Services)
  • “Overall we see positive trends; spending has improved.” (Retail Trade)
  • “Low fuel prices continue to have a positive impact.” (Transportation & Warehousing)
  • “Business remains strong for this time of year and looks good for the next 12-18 months.” (Wholesale

As New Export Orders Collapse into contraction

 

Charts: Bloomberg

end
see you tomorrow night
Harvey
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2 comments

  1. Hi Harvey, please email me so I can send you a short important story. Thanks, DSD
    ps. I sent a message to your Facebook ID.

    Like

  2. Harvey, I’ve been reading your column for years. Thanks so much.
    However, I have a very hard time reading your quotes and such that are in the light grey print. I usually just skip them. Maybe you could change to something darker?
    Thanks,
    Jim

    Like

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