May 6/The ECB raises ELA by 2 billion euros/now at 78.9 billion euros/MNI states that there is no chance for a Greek deal by Monday/Foreign exchange traders now shun the Greek currency and bonds due to default risk/

Good evening Ladies and Gentlemen:

 

 

Here are the following closes for gold and silver today:

Gold:  $1190.30 down $2.90 (comex closing time)

Silver $16.48 down 7 cents (comex closing time)

 

In the access market 5:15 pm

Gold $1191.55

Silver: $16.50

 

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 308 notices for 1,540,000 oz

 

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 243.51 tonnes for a loss of 59 tonnes over that period. Lately the removals have been rising.

 

In silver, the open interest rose by 320 contracts as Tuesday’s silver price was up by 14 cents  The total silver OI continues to remain extremely high with today’s reading at 175,694 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 308 notices served upon for 1,540,000 oz.

 

In gold,  the total comex gold OI rests tonight at 399,988 for a loss of 1711 contracts despite the fact  gold was up by $6.20 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 a huge withdrawal of  silver inventory at the SLV/ and thus the inventory tonight is 325.53 million oz

 

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

 

1. Today we had the open interest in silver rise by 320 contracts as  silver was up in price yesterday by 14 cents.  The OI for gold fell by 1711 contracts down to 399,988 contracts despite the fact that price of gold was up by $6.20 on yesterday. GLD had no change and SLV, a withdrawal of 2.143 million oz) with respect to the inventory levels.

(report Harvey)

2,Four 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.

 

i. Today we witnessed foreign exchange traders restrict the trading in Greece currency and bonds. The ECB raises the ELA by 2 billion euros to 78.9 billion.

(zero hedge)

ii) Greek unemployment slightly falls to 25.4% last month

(zero hedge)

iii) Greece floats the idea for a charge on withdrawals

iv) MNI reports that a deal is not possible by MOnday

(MNI/zero hedge)

 

3. Bill Holter discusses the fact that we are in another credit crunch right now.

4. ADP, a private polling for employment firm misses badly again on their employment number.  Dave Kranzler  also discusses the number

(ADP/Dave Kranzler/IRD)

5, The two individuals that were apprehended by the CME have now been charged by the CFTC for spoofing in gold and silver.

(zero hedge)

 

we have these and other stories for you tonight

 

 

 

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

Here are today’s comex results:

The total gold comex open interest fell by 1711 contracts from 401,699 down to 399,988 despite the fact that gold was up by $6.20 yesterday (at the comex close). We must have had  short covering today. We are in our next non active delivery month of May and here the OI fell by 5 contracts falling to 204. We had 0 notices filed upon yesterday.  Thus we lost 5 gold contracts or an additional 500 ounces will not stand for gold in May. The next big active delivery contract month is June and here the OI fell by 4,462 contracts down to 245,774. June is the second biggest delivery month on the comex gold calendar. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 54,492. The confirmed volume yesterday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 120,273 contracts. Today we had 0 notices filed for nil oz.

 

And now for the wild silver comex results.  Silver OI rose by 320 contracts from 175,374 up to 175,694 despite the fact that  the price of silver was up in price by 14 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 6 contracts down to 1095. We had 3 contracts filed upon with respect yesterday’s trading.  So we lost 3 contracts or 15,000 oz will not stand for delivery in this May delivery month. The estimated volume today was poor at 16,015 contracts (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in at 34,754 contracts which is fair in volume. We had 308 notices filed for 1,540,000 oz today.

 

may initial standings

May 6.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz  nil
Withdrawals from Customer Inventory in oz  1,695.641 oz (Manfra HSBC, Scotia)   incl 14 kilobars and 20 kilobars
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 68,995.206 (HSBC)
No of oz served (contracts) today 0 contracts (nil oz)
No of oz to be served (notices)  204 contracts(20,400) 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  35,758.6 oz

 

Today, we had 0 dealer transactions

total Dealer withdrawals: nil oz

 

we had 0 dealer deposit

total dealer deposit: nil oz
we had 3 customer withdrawals

 

i) Out of Manfra; 450.10 oz (14 kilobars)

ii) Out of HSBC:  602.541 oz

iii) Out of Scotia:  643.000 oz  (20 kilobars)

 

total customer withdrawal: 1,695.641 oz

We had one big customer deposit:

i) Into HSBC: 68,995.206 oz

total customer deposit: 68,995.206 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 (204) 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 (204) – the number of  notices served upon today (0) x 100 oz which equals 20,400 oz standing so far in this month of May. (.6345 tonnes of gold)

Total dealer inventory: 571,168.307 or 17.76 tonnes

Total gold inventory (dealer and customer) = 7,828,991.85. (243.51) tonnes)

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 243.51 tonnes for a loss of 59 tonnes over that period. Lately the removals  have been rising!

end

 

 

And now for silver

 

May silver initial standings

May 6 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 539,710.505 oz (CNT,HSBC,JPMorgan,Scotia)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory nil
No of oz served (contracts) 308 contracts  (1,540,000 oz)
No of oz to be served (notices) 787 contracts (3,935,000 oz)
Total monthly oz silver served (contracts) 2237 contracts (11,185,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  nil
Total accumulative withdrawal  of silver from the Customer inventory this month 1,842,413.2  oz

 

Today, we had 0 deposits into the dealer account:

 

total dealer deposit: nil   oz

 

we had 0 dealer withdrawal:

total dealer withdrawal: nil oz

 

We had 0 customer deposits:

total customer deposits: nil  oz

 

We had 4 customer withdrawals:

i) Out of CNT: 1,001.000 oz???

ii) Out of HSBC: 368,870.745 oz

iii) Out of JPMorgan: 108,844.400 oz

iv) Out of Scotia: 60,994.36 oz

total withdrawals;  539,710.505 oz

 

we had 0 adjustments:

 

Total dealer inventory: 62.205 million oz

Total of all silver inventory (dealer and customer) 174.721 million oz

.

The total number of notices filed today is represented by 308 contracts for 1,540,000 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 (2237) x 5,000 oz  = 11,185,000 oz to which we add the difference between the open interest for the front month of April (1095) and the number of notices served upon today (308) x 5000 oz equals the number of ounces standing.

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

2237 (notices served so far) + { OI for front month of April (1095) -number of notices served upon today (308} x 5000 oz = 15,120,000 oz of silver standing for the May contract month.

we lost 3 contracts or 15,000 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 6/no change in gold inventory at the GLD/741.75 tonnes

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 6 GLD : 741.75  tonnes.

 

end

 

And now for silver (SLV):

May 6/we had a huge withdrawal of 2.143 million oz of silver from the 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 6/2015 we had a huge change in inventory at the SLV (withdrawal of 2.143 million oz)  / inventory rests at 325.53 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 6.9% percent to NAV in usa funds and Negative 6.6% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.3%

Percentage of fund in silver:38.3%

cash .4%

( May 6/2015)

2. Sprott silver fund (PSLV): Premium to NAV falls to-0.66%!!!!! NAV (May 6/2015)

3. Sprott gold fund (PHYS): premium to NAV falls to -.26% to NAV(May 6/2015

Note: Sprott silver trust back  into negative territory at -0.66%.

Sprott physical gold trust is back into negative territory at -.26%

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)

 

China One Step Closer to Becoming World’s Gold Hub

– Shanghai Gold Exchange one step closer to becoming the globe’s major gold hub
– China tests system at Shanghai Gold Exchange (SGE) to establish yuan-denominated gold price fix
– SGE opened last year allowing trade in physical gold as opposed to electronic futures contracts on COMEX
– Yuan fix, which has broad regional support, will rival the century old LBMA fix
– China now world’s largest producer and buyer of gold
– Chinese government, central bank and people have affinity towards gold

gold_bars_goldcore

Chinese ambitions to become the world’s leading gold trading hub and international financial hub have taken another step forward.

Trials were quietly conducted to launch a yuan-backed gold pricing benchmark last month, according to Reuters today.

China, the world’s largest gold producer and buyer, feels its market weight should entitle it to be a price setter for gold bullion. It is asserting itself at a time when the established benchmark, the century old London ‘gold fix’, is under scrutiny because of long-running allegations of price manipulation.

The new Chinese gold price benchmark may be launched before the end of the year.

The Shanghai Gold Exchange (SGE) opened last year and trades in contracts for physical gold (1 kilogram). It has quickly been establishing itself as the fastest growing gold trading hub in the world as many participants in the gold market move away from the COMEX.

Many investors and miners have grown disillusioned with the COMEX system due to concerns that the price of gold is being manipulated lower by dumping contracts for vast amounts of gold onto the market which leads to sharp price falls and curtails positive sentiment and momentum in the gold market and reduces investment demand.

The new yuan benchmark is set to rival the century old LBMA system. It has broad regional support with the participation of foreign banks as well as those from China including western banks.

“Top Chinese banks including Industrial and Commercial Bank of China (ICBC) and Bank of Communications are members of the exchange, along with foreign banks Australia and New Zealand Banking Group, Standard Chartered and HSBC, among others,” according to Reuters.

The LBMA has been under pressure in recent years due to lack of transparency in the price fixing process. While the yuan fix will be determined by “members of SGE’s international board”, it will be against a backdrop of contracts for physical gold trading at the SGE.

The LBMA benchmark, on the other hand, is determined by bullion banks on the basis of undisclosed “over the counter” trades. The LBMA said last week it was considering the possibility of creating an exchange for gold trading in the city, a shift away from the over the counter (OTC) system.

shanghai_gold_withdrawals_goldcore
SGE Gold Withdrawals – 50.796 tonnes for the week ending April 24th

The LBMA has been engaged in a public relations campaign to regain its credibility. The old system was reformed last year but the current system is, however, little more transparent.

Central banks are now being considered for membership of the LBMA. This will further undermine the LBMA’s credibility among some participants in the physical gold market given concerns that certain central banks may be involved of gold price manipulation.

An LBMA statement excuses the association from providing transparency, stating, “the role of the central banks in the bullion market may preclude ‘total’ transparency, at least at public level.”

At the same time it should give extra clout to the besieged association who, in their restructuring program, were forced to give some Chinese banks seats on their board. These banks have no say, however, in determining the benchmark.

The move to establish a yuan-based gold pricing benchmark is only natural. China is the world’s largest gold producer and officially the second largest buyer of gold. Although many believe that China has surpassed India in terms of gold demand and SGE withdrawals suggest this to be the case.

As Reuters report, “China … feels its market weight should entitle it to be a price-setter for bullion and it is asserting itself at a time when the established benchmark, the century-old London fix, is under scrutiny because of alleged price-manipulation.”

It will be very interesting to see how the SGE and the LBMA interact in the coming years. The increasing importance of the SGE means that the physical gold market should assume more importance, as should the fundamentals of global physical supply and demand.

Shanghai and the SGE is emerging as the leading international gold bullion trading hub. This is a positive for gold due to the People’s Bank of China (PBOC) and Chinese governments favourable stance towards gold.

A favourable stance which is mirrored by the favourable disposition of the Chinese people – culturally the Chinese view gold as an important store of value.

Important Guide to Currency Wars: Currency Wars: Bye, Bye Petrodollar – Buy, Buy Gold

 

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,191.25, EUR 1,063.41 and GBP 785.22 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,187.40, EUR 1,070.94 and GBP 785.59 per ounce.

Gold and silver saw small price gains yesterday of 0.35 and 0.73 per cent to $1,192.90 and $16.54 per ounce respectively.

gold_chart_goldcore_06-05-2015

In Asia overnight, Singapore gold prices ticked higher initially prior to giving up those gains and weakness has continued in London trading this morning.

European stocks stabilised after Asian stocks fell today in line with weak U.S. markets as equities investors were spooked by a vicious selloff in sovereign bonds globally and a very large U.S. trade deficit. The disappointing U.S. trade data for March painted an even bleaker economic picture of the first quarter and led to the dollar and stocks coming under pressure.

The sudden spike in bond yields is being mirrored by an equally rapid rally in resources. This means investors globally are becoming less concerned about the risk of deflation and more concerned about the risk of inflation or stagflation.

Oil prices rose again today and are 15% above their recent lows. Prices are holding near their 2015 highs, continuing a month-long rally that was supported by renewed weakness in the dollar and a disruption to oil supplies from Libya.

gold_chart_2_goldcore_06-05-2015
Gold in U.S. Dollars – 5 Years

Volumes in the global spot gold market have fallen to their lowest in a year, with shrinking liquidity and a slowdown in interbank trade making customers reluctant to transact on a large scale

As the first week of May draws to a close, Reuters reports that “sales of gold American Eagle coins by the U.S. Mint have had a relatively soft start to the month, with 4,500 oz of coins sold so far (April’s total was 29,500 oz, down by a third from March). Silver Eagle coins have totalled 783,500 oz.

In Europe in late morning trading gold bullion was flat at $1,192.44 an ounce. Silver was down 0.6 percent at $16.51 an ounce and platinum fell 0.1 percent at $1,146 an ounce.

 

end

GATA Chairman Murphy’s ‘Midas’ commentary posted at Zero Hedge

Section:

9:26p ET Tuesday, May 5, 2015

Dear Friend of GATA and Gold:

GATA Chairman Bill Murphy’s nightly gold market “Midas” commentary at LeMetropoleCafe.com reviews some of GATA’s dogged efforts over the years to call attention to the rigging of the gold market by central banks. The commentary is headlined “Rant Time” and it’s posted in the clear at Zero Hedge here:

http://www.zerohedge.com/news/2015-05-05/rant-time

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

 

end

TF Metals Report: HFT-driven ‘markets’ continue to distort prices

Section:

11:37a ET Wednesday, March 6, 2015

Dear Friend of GATA and Gold:

The price of gold futures remains tied by high-frequency trading to the Japanese yen, not to the U.S. dollar, the TF Metals Report’s Turd Ferguson writes today, noting that while the dollar is sinking again, gold isn’t rising. His commentary is headlined “HFT-Driven ‘Markets’ Continue to Distort Prices” and it’s posted at the TF Metals Report here:

http://www.tfmetalsreport.com/blog/6820/hft-driven-markets-continue-dist…

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

end

China tests yuan gold fix amid pricing ambitions, sources tell Reuters

Section:

By A. Ananthalakshmi
Reuters
Wednesday, May 6, 2015

SINGAPORE — China conducted trial runs for the planned launch of a yuan-denominated gold fix last month, three sources familiar with the matter said, in a sign that the world’s second-biggest bullion consumer was moving closer to creating a benchmark price.

The state-run Shanghai Gold Exchange, on whose international platform the fix will be launched, conducted the trial with major Chinese banks and a few foreign banks, the sources said this week.

The SGE could not be immediately reached for comment.

China, also the top gold producer, feels its market weight should entitle it to be a price-setter for bullion and it is asserting itself at a time when the established benchmark, the century-old London fix, is under scrutiny because of alleged price-manipulation. …

… For the remainder of the report:

http://www.reuters.com/article/2015/05/06/us-gold-china-fix-idUSKBN0NR06…

end

 

 

(courtesy Bill Holter/Miles Franklin)

Credit crunch all over again!

 

It smells like crunch time to me, the markets have flattened or begun to even roll over on continuously decreasing volume.  The economy has also turned down all over the world including in China.  Europe is contracting, Britain has finally figured out their finances are FUBAR and the U.S. would not show growth if not for the biggest inventory build in history.  Oil tankers are sitting idle (and full) all over the world, is this a sign of “recovery” or of stagnation.  The Baltic Dry index is plumbing news, this would be a sign of what?  When
I wrote crunch time above, I should have clarified, it looks “credit” crunch time and this time there is no white knight to save the day.
   Zerohedge penned an article Monday where even Citigroup talks about this lack of liquidity.  After years of massive deficit spending and quantitative easing amongst the major central banks of the world …liquidity is drying up!
clip_image002
  Credit requests are being turned down at a record pace.  This is just one aspect of liquidity being withdrawn but look at the “speed” that it is happening, and the depth or magnitude compared 2008.  In an effort to reflate, again, sub prime loans are being packaged and gobbled up.  “Government Using Subprime Mortgages To Pump Housing Recovery – Taxpayers Will Pay Again“.    Not because they are rated “AAA”, no, this time because they provide “yield”…ANY yield.  It doesn’t matter whether they default or not …they “yield” something now, right now!  The obvious question then becomes “what bullets are left” by the Fed to reverse the collapse this time around?
  The real and short answer is “none”.  The above chart is just one of the real economy, the real problem is if a chart could be constructed of “derivatives losses”.  This one would be a doozy and the reaction would be an immediate and global panic.  We won’t be able to see a real time chart until after the fact, we can’t see behind the curtain because that would create a panic on its own.  I know I have written about this aspect before, the “truth” must be hidden at all costs, it is important because it is the last line of the defense of “confidence”.  Greek bonds, even though default is imminent CANNOT in any way be marked to true value.  Ratings services are already hinting at and devising ways to not recognize nonpayment by Greece as something other than a default.  In what world is nonpayment not a default?  Would your bank believe YOU if you didn’t pay …and then said “don’t worry, I didn’t default”?
  I showed you a chart yesterday of Chinese shipping container activity, this was followed by the largest trade deficit ever by the U.S..  NOT because we are importing more but because our exports are drying up.  A sure sign the strong dollar is beginning to bite and trade overall is slowing.  The expansion of the trade deficit guarantees a negative 1st Quarter GDP even after bogus pie in the sky reporting.  As Zerohedge put out yesterdayhttp://www.zerohedge.com/news/2015-05-05/us-trade-deficit-excluding-crude-was-biggest-ever-or-why-qe4-coming “QE4 is coming”.  I say QE4 will absolutely tank confidence because we have already taken more than “three strikes”!  Confidence by the way has been the very last vestige and has been used, re used and overused, QE4 will expose this.
  Please understand the connections I am making here, it is not just the real economy nor just the financial markets, it is both …and at the same time.  This is 2008 all over again except much larger, far reaching and more severe.  The markets are far larger than the central banks collectively, call this Dr. Frankenstein and his monster if you will.  The real economy is no longer generating enough cash flow to service the debt hung around its neck … while the financial sector hangs on by the thread of “non” mark to market.
  The truth cannot come out and no, truth will not just hurt us.  On the contrary, the truth will outright kill the system(s) as we knew them.  Do not fool yourself, do not “hope” I am wrong.  Get yourself into a financial bunker lined with gold and “lose” as little as possible when the system comes down because most of what is not inside your bunker and outside of the system will be “re appropriated” shortly.  No one and no central bank will, nor has the ability to come to your rescue this time around!  Best described, it will be every man for himself.  Regards,  Bill Holter
And now overnight trading in stocks and currency in Europe and Asia

1 Chinese yuan vs USA dollar/yuan strengthens to 6.1965/Shanghai bourse and Hang Sang down

2 Nikkei  closed

3. Europe stocks up/USA dollar index down to 94.77/Euro rises to 1.1234/

3b Japan 10 year bond yield: small fall to .36% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.76/

3c Nikkei still  above 20,000

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

3e WTI  61.81  Brent 69.00

3f Gold down/Yen up

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

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt.  Fifty percent of Japanese budget financed with debt. 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 53.0 basis points. German bunds in negative yields from 5 years out.

Except Greece which sees its 2 year rate rises quite a bit to 21.74%/Greek stocks down 0.26%/ still expect continual bank runs on Greek banks.

3j  Greek 10 year bond yield:  10.89%

3k Gold at 1191.00 dollars/silver $16.44

3l USA vs Russian rouble;  (Russian rouble up 5/10  rouble/dollar in value) 49.91 , the rouble is still the best acting currency this year!!

3m oil into the 61 dollar handle for WTI and 69 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 92.41 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 5 year German bund remains in negative territory with the 10 year close to negativity at +.53/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 paid the 200 million euros owed to the IMF as interest payment

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 2.19% early this morning. Thirty year rate well below 3% at 2.92%/yield curve flatten/foreshadowing recession.

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

(courtesy zero hedge/Jim Reid Deutsche bank)

 

Violent Moves Continue In European Bond Market; Equity Futures Rebound With Oil At Fresh 2015 Highs

This is how DB summarizes what has been the primary feature of capital markets this week – the huge move in European bond yields: “On April 17th, 10-year Bunds traded below 0.05% intra-day. Two and a half weeks later and yesterday saw bunds close around 1000% higher than those yield lows at 0.516% after rising +6.2bps on the day. This is the highest level since January 21st. To be fair Bunds were the outperformer in Europe yesterday with Italian, Spanish, Portuguese 10 year yields +27.2bps, +27.7bps and +29.8bps higher. These are now +49bps, +49bps and +63bps higher than when QE started.”

Right out of the European open today, the government bond selloff accelerated with the 10Y Bund reaching as wide as 0.595% with the periphery following closely behind when at 9:30am CET sharp, just as the selloff seemed to be getting out of control, it reversed and out of nowhere and a furious buying wave pushed the Bund and most peripheral bonds unchanged or tighter on the day! Strange, to say the least. Also, illiquid.

The bund selloff has kept pressure on the EUR, which rose as high as 1.127 before also retracting some of the gains. As for the driver – according to many the latest catalyst for the “reflation” trade is the surge in oil, which is now 50% from its 2015 lows, mostly on the back of hopes that this time Chinese easing will translate into greater demand for crude. This coupled with the first API drawdown since mid-January has sent WTI surging again, and at last check it was just shy of $62, while Brent is rapidly approaching the “unambiguously bad” (right Larry Kudlow?) $70 barrier.

So as US traders walk into the work today, Bunds trade marginally in the red following their recent trend by extending losses early in the European session and seeing the German 10yr yield at one point reach YTD highs, with prices falling almost 500 ticks since last week, however the German benchmark pared most of the morning’s losses later in the session with some desks suggesting Bunds were oversold. Analysts at BNP Paribas suggest the sell-off is not over yet and Bunds could continue to fall on each piece data that beats expectations. On the data front, Eurozone service and composite PMI figures with the exception of Germany have exceeded expectations and placed further weight on fixed income products. In sympathy with the move lower in Bunds, Gilts were also been dragged lower earlier in the European session with sentiment also dampened by the UK general election, subsequently leading the UK 10yr yield to break above 2% for the first time since December. Finally, for USTs, yields broke above the 200 DMA at 2.189%, however failing to hold above the handle.

Despite a relatively muted start to the session for equities, stocks have been lifted by the slew of Eurozone PMI data (54.1 vs. Exp. 53.7, Prev. 53.7), with the DAX modestly outperforming after being supported by Allianz following their pre-market trade update.

One thing to watch out for will be any source comments regarding potential haircuts for Greek collateral to obtain ELA funding, which is a topic of discussion at today’s ECB non-monetary policy meeting. Ahead of which, analysts at Goldman Sachs note collateral has been more than ample so ECB could tighten the ELA an increase discounts, adding that Greek banks have become big users of the ELA over 2015 with nearly 20% of bank assets used for the ELA compared to zero in December. Speaking of Greece, earlier today it was reported that the country had successful made its €200 million interest payment to the IMF. Many more to follow.

Asian stocks ended in the red as participants observed caution following yesterday’s global equity sell-off. Both the Hang Seng (-0.41%) and Shanghai Comp (+1.62%) spent most of the day on the front foot before falling into negative territory prior to the close, after yesterday saw the latter post its biggest 1-day drop since Jan 19th. The selloff comes despite Xinhua, China’s official press agency, downplaying yesterday’s liquidity and margin trading clamp-down worries, referring to the declines as temp adjustments. The ASX 200 (-2.31%) was the session’s laggard weighed on by financials, after lacklustre earnings from Commonwealth Bank (-5.85%), the index’s 2nd largest listing. Of note, Japanese Stock markets were closed for Greenery Day.

In FX, GBP was earlier provided some reprieve by the latest UK services PMI (59.5 vs. Exp. 58.5) after recent downward pressure as a result of political uncertainty ahead of the UK general election. NZD continues to reside at its lows in the wake of the NZ employment report which showed signs of weak wage inflation growth and subsequently triggered expectations of a potential RBNZ rate cut. Elsewhere, the USD continues to face selling pressure after continuing yesterday’s move to break below its 100 DMA at 95.08.

Elsewhere, Fed’s Kocherlakota (Non-Voter, Dove) repeated his April 14th remarks by saying that the Fed should hold off raising rates until at least next year. Kocherlakota added the US could see a contraction in GDP due to trade estimates. Whilst later today Fed’s Yellen (Voter, Dove), George (Non-Voter, Soft Hawk) and Lockhart (Voter, Dove) are all scheduled to speak.

WTI and Brent crude futures continue to be supported by the latest API data which showed the first drawdown in stockpiles since Jan 6th (-1.5mln vs. a prev. build 4.2mln), while stockpiles at Cushing fell by 336k bbls. Prices were also further supported by a weaker USD ahead of today’s DOE crude report. In metals markets, both spot gold and spot silver trade relatively unchanged with metals specific news flow relatively light.

In summary: European shares rise slightly as govt bonds continue their slide, with bund yields rising for seventh day to
2015 high. Dollar falls vs euro while crude oil gains for second day. Gold falls for first day in three. Asian stocks fall, with Hang Seng declining for fifth day. U.S. equity index futures rise after S&P 500 yesterday declined most this month. U.S. mortgage applications, ADP employment change, nonfarm productivity, unit labor costs, mortgage delinquencies, mortgage foreclosures among data due later.

Market Wrap

  • S&P 500 futures up 0.3% to 2089.5
  • Stoxx 600 little changed to 391
  • US 10Yr yield up 2bps to 2.2%
  • German 10Yr yield up 3bps to 0.55%
  • MSCI Asia Pacific down 0.5% to 152.1
  • Gold spot down 0.1% to $1192/oz
  • 54.8% of Stoxx 600 members gain, 43.2% decline
  • Eurostoxx 50 +0.7%, FTSE 100 +0.5%, CAC 40 +0.4%, DAX +0.7%, IBEX +0.6%, FTSEMIB +0.8%, SMI -0.8%
  • Asian stocks fall with the Jakarta Composite outperforming and the ASX underperforming.
  • MSCI Asia Pacific down 0.5% to 152.1; Nikkei 225 closed, Hang Seng down 0.4%, Kospi down 1.3%, Shanghai Composite down 1.6%, ASX down 2.3%, Sensex down 2.2%
  • Western Union Said to Be in Early Talks to Buy MoneyGram
  • TPG Telecom Lifts Bid for iiNet to A$1.6, Displaces M2 Offer
  • Blackstone Said to Sell U.S. Apartments for About $650m
  • GIC Said to Seek Up to $980m Stake in Brazil’s Rede D’Or
  • Alfa, Harbour Energy Bid $1.7b for Pacific Rubiales
  • MoneyGram Said to Have Hired Advisers as It Weighs Sale: FT
  • Euro up 0.44% to $1.1234
  • Dollar Index down 0.26% to 94.83
  • Italian 10Yr yield up 2bps to 1.82%
  • Spanish 10Yr yield up 3bps to 1.81%
  • French 10Yr yield up 3bps to 0.85%
  • S&P GSCI Index up 0.8% to 454
  • Brent Futures up 1.4% to $68.5/bbl, WTI Futures up 1.8% to $61.5/bbl
  • LME 3m Copper down 1% to $6418/MT
  • LME 3m Nickel down 0.1% to $14280/MT
  • Wheat futures up 0.6% to 469.5 USd/bu

Bulletin Headline Summary from RanSquawk and Bloomberg:

  • Bunds trade marginally in the red heading into the North American crossover after yields earlier reached YTD highs, with prices falling almost 500 ticks since last week.
  • Despite a relatively muted start to the session for equities, stocks have been lifted by the slew of Eurozone PMI data.
  • Looking ahead, US ADP Employment Change is due at 1315BST/0715EDT, comments are expected from a host of Fed speakers and source comments may filter out regarding potential haircuts for Greek collateral to obtain ELA funding.
  • Treasuries steady overnight, 10Y and 30Y yields hold above 200-DMAs at multi-month highs; 10Y bunds stabilize, yield 0.527% after touching record low 0.049% in mid- April.
  • Recent selloff is “potentially dangerous” since move is likely a position-driven action led by Europe rather than a U.S.-led selloff based on good economic data, RBC says
  • ECB officials will debate tighter rules for the liquidity that Greek lenders rely on for survival, two people familiar with the matter said, a move that underscores the fragility of the country’s financial system
  • Greece has made a EU200m payment to IMF, CNBC says, citing Reuters
  • Greece’s unemployment rate in Feb. dropped to 25.4% from a revised 25.6% in the previous month, according to e-mailed statement from the Athens-based Hellenic Statistical Authority
  • U.K. party leaders are staking their final claims for power at rallies across the country before Thursday’s election with polls still showing no clear winner
  • As Microsoft mulls whether to launch a bid for Salesforce.com, it will have to weigh the benefits of a big expansion in cloud computing against the drawbacks of a high price and a costly, time-consuming integration
  • The Senate will take up legislation to give Obama the trade negotiating authority he wants “very soon,” Senate Majority Leader Mitch McConnell said
  • Sovereign bond yields higher.  Asian stocks fall, European stocks, U.S. equity-index futures rise. Crude oil higher, copper and gold lower

 

DB’ Jim Reid concludes the overnight summary

 

On April 17th, 10-year Bunds traded below 0.05% intra-day. Two and a half weeks later and yesterday saw bunds close around 1000% higher than those yield lows at 0.516% after rising +6.2bps on the day. This is the highest level since January 21st. To be fair Bunds were the outperformer in Europe yesterday with Italian, Spanish, Portuguese 10 year yields +27.2bps, +27.7bps and +29.8bps higher. These are now +49bps, +49bps and +63bps higher than when QE started. The core sell-off seems to be part of a steady re-pricing of inflation risk and it was noticeable that Oil hit five-month highs yesterday as Brent closed +1.61% at $67.52/bbl and WTI ended +2.49% at $60.40/bbl. The stronger US non-manufacturing ISM (57.8 vs. 56.2 expected) added to the sell-off but it was already well advanced by then. For the peripherals a lack of positive follow through in Greece encouraged the sell-off as comments from Greek finance minister Varoufakis tempered some hopes that an agreement would be in place by the Eurogroup meeting on May 11th. Specifically, Varoufakis said that the May 11th meeting will likely be ‘another step in the direction of the final agreement’, suggesting that the tone has somewhat changed from a deal being imminent (as had been the case with various headlines last week) to a deal happening soon. This change somewhat confirms our view that Greece and its creditors are still clearly not fully aligned in views which in turn keeps the pressure on Athens with a referendum a very real possibility in the event of ‘failed’ agreement. Greek 10y yields led the sell-off in bonds yesterday, closing +63bps wider.

It’s ironic that 2-3 weeks ago markets were discussing how QE might end early. However the very fact that peripherals have behaved as they have done in recent weeks should ensure QE’s longevity so the bid should remain consistent for Euro government bonds. The ECB’s Jazbec supported this yesterday after saying that the policy measures seem to be working so far and that it’s too early to talk about how the ECB will act when the mandate is reached.

Yesterday’s US trade balance print for March also generated plenty of headlines as the $51.4bn deficit came in well above the $41.7bn expected, as well as rising significantly from $35.4bn in February to make it the largest deficit since October 2008. Our colleagues in the US noted that two factors appeared to weigh on the number; the impact of the West Coast port dispute and also the clear influence of the stronger Dollar. Crucially however, the rise in the deficit means that they expect Q1 GDP to now be revised down 70bps to -0.5%. After market close, the Fed’s Kocherlakota reiterated the above saying that Q1 GDP will likely be revised negative, while the ‘softening’ of the US economy in the first quarter ‘is a matter for concern’ and underlines his view that rates should be left on hold for the remainder of the year.

With the revision, YoY nominal GDP should migrate down to a low 3-handle for Q1. We always see the Fed’s dual mandate very roughly benchmarked by broad Nominal GDP trends as this includes both growth and inflation. Interestingly there have been 118 Fed rate hikes since 1948. In the quarter of the hike the average YoY nominal GDP has been 8.63%. Only twice out of these 118 hikes have rates been raised in a quarter when the YoY rate was below 4.5%. The first was in September (Q3) 1958 when the actual QoQ annualised NGDP was 12.3% and the only reason the YoY had fallen so far was because of a sharp recession in Q4 1957 and Q1 1958 creating a base impact. The other occasion was in September 1982 where the Fed was coming to the end of a period of squeezing inflation out of the system. This hike was actually reversed a month later and should be seen in the context of 9 rate cuts between June 1981 and December 1982 where the Fed Funds rate fell overall from 20% to 8.5%.

So both these occurrences were fairly exceptional. All remaining 116 rate hikes over the sample period saw NGDP 4.5% or higher at the time with 112 occurring with NGDP above 5.5%. Since the recovery started mid-way through 2010, US NGDP has averaged 3.9% with all 20 quarters somewhere between 3.3% and 4.7%. We were at 3.9% in Q1 before any revisions (like from yesterday’s trade data) and it seems we’ll test the bottom of the post crisis range with them. Clearly NGDP could spike up between Q2-Q4 but it would take a lot to see it above 4.5% and we still worry that a Fed rate hike could be a policy error with NGDP so low. There is no template in history for assessing the likely consequences of raising rates when growth is this low, asset prices are generally this high and with debt still so large. To be safe we’d like to see NGDP consistently get to at least a 5-handle before rates rise.

Treasuries were certainly not immune to the sell-off in bonds yesterday as the 10y benchmark closed +4.1bps wider at 2.185% and crept closer to the YTD highs seen in early March (2.241%). It wasn’t a great day to be long equities either yesterday as the S&P 500 (-1.18%) and Dow (-0.79%) traded lower over the course of the session. Other US data releases yesterday were a little disappointing. The final April services PMI (57.4 from 57.8) and composite PMI (57.0 from 57.4) were both revised down, while the May IBD/TIPP economic optimism print (49.7 vs. 50.0 expected) disappointed. The Dollar snapped two previous successive days of gains as the DXY ended 0.42% lower.

However we did see the strong ISM non-manufacturing print mentioned earlier. With one eye on payrolls on Friday as well as the ADP employment change reading today as a prelude, the employment index component rose a tad to 56.7 (from 56.6 in March) and the highest level in six months – also well above the 6-month average of 55.6. Along with the strong employment index component from the manufacturing ISM, with the readings seen as a leading indicator, the data will likely provide some optimism ahead of Friday’s payrolls but expect a lot of attention on today’s ADP report in the meantime.

Away from the big moves in bond markets in Europe yesterday, European equities took a steep leg lower as the Stoxx 600 (-1.46%), DAX (-2.51%), CAC (-2.12%), IBEX (-2.74%) and FTSE MIB (-2.76%) all reversed earlier gains as the US session kicked into gear while in credit Crossover closed 12bps wider. Yesterday’s moves in fact saw most equity markets wipe out their QE gains so far. Since the QE program started on March 9th, the Stoxx 600, DAX and CAC are now -0.80%, -1.94% and +0.20% respectively while peripheral bourses have also given up most of their gains (IBEX +0.21%, FTSE MIB +0.62%).

Yesterday’s weakness in risk assets came despite upgraded European Commission economic forecasts. The Commission raised its growth forecast for the Euro area to 1.5% for this year from 1.3% back in the February report. 2016 growth was left unchanged at 1.9%. There was a higher forecast for inflation as both 2015 (+0.1%) and 2016 (+1.5%) CPI was upgraded 20bps each. It was a less rosy picture for Greece however as the Commission slashed the country’s growth forecast for this year to +0.5% from +2.5% previously.

Looking at our screens this morning, after the further sell-off in China equities yesterday after we went to print, the CSI 300 (+1.99%) and Shanghai Comp (+1.35%) have rebounded in early trading and seemingly put aside some of the worries after reports that two securities firms (Haitong and Tebon) had raised the requirement for margin financing. Elsewhere, the Hang Seng (+0.91%) is trading higher while the Kospi (-1.66%) and ASX (-1.63%) are lower – the latter falling despite the RBA’s rate cut yesterday. Bond markets have continued the theme from the European session yesterday. 10y yields in Australia (+15.2bps), South Korea (+5.1bps), Singapore (+3.8bps), and Indonesia (+3.7bps) have all widened. Credit markets are around a basis point wider meanwhile.

Back to Greece briefly, as well the comments from Varoufakis yesterday, there were also some suggestions that Athens is pointing fingers at indifferences between its creditors the IMF and European Commission. Various wires noted a Greek government official as saying that ‘serious disagreements between the IMF and EU’ were causing issues and that both creditors had set contradictory ‘red lines’ with the IMF refusing to compromise on labour deregulation and pensions reforms while the EC is continuing to insist that fiscal targets are met.

Turning over to the day ahead now, it’s a busy day in the European timezone this morning as we get the final April services and composite PMI readings for the Euro-area and also regionally in Germany, France and also the UK. Retail sales for the Euro area will also be closely watched. As well as the ADP employment change print which will likely be this afternoon’s highlight, we also get Q1 nonfarm productivity and unit labour costs. Fedpseak will be closely watched today, with the Fed’s Yellen and IMF’s Lagarde due to speak in a panel discussion. Elsewhere, George and Lockhart are also due to speak.

end

 

Greek unemployment eases a bit to 25.4%, still extremely high.

(courtesy zero hedge)

Greek unemployment eases to 25.4 percent in February

(Reuters) – Greece‘s jobless rate dropped slightly to 25.4 percent in February from a downwardly revised 25.6 percent rate in the previous month, statistics agency ELSTAT said on Wednesday.

February’s reading, based on seasonally adjusted data, is the lowest since July 2012 when unemployment stood at 25.3 percent. The jobless rate hit a record high of 27.9 percent in September 2013.

Unemployment has come down from record highs as the economy stabilised last year after a severe slump, but remains more than double the euro zone‘s average of 11.3 percent in February.

Greece’s economy, which grew 0.7 percent last year, is expected to expand by only 0.5 percent this year based on the latest EU Commission forecasts.

(Reporting by George Georgiopoulos)

 

end

 

This is the first of soft controls: Greece floats the idea of a surchage on cash withdrawals:

(courtesy zero hedge)

Greece Floats Surcharge On Withdrawals As ECB Considers Cuts To Liquidity Lifeline

As we first reported on Monday and as we outlined in more detail on Tuesday, the IMF and Greece’s EU creditors are now at odds over what constitutes an acceptable set of reforms. Although disagreements between the IMF and the rest of the Troika over Greece are not unprecedented, Syriza era negotiations have been largely characterized by the fractious relationship between Athens and its creditors, with Greek FinMin Yanis Varoufakis personifying the tension. With Varoufakis now sidelined, talks looked set to move forward but have now stalled amid what some officials have described as intractable differences between the “red lines” adopted by the IMF and the supposedly more lenient terms favored by the EU. This is further complicated by reports that the IMF is pushing for the EU to write-off a portion of its Greek debt. In the end, it’s no longer clear who’s the ‘good cop’ and who’s the ‘bad cop.’

Today’s news flow out of Greece starts with what look like more ‘soft’ capital controls as Athens is considering the imposition of a surcharge on withdrawals and transfers and is also mulling a ‘ceiling’ on the latter.

Via DailyMail:

Greece has revealed it is to introduce a surcharge for all cashpoint withdrawals and financial transactions in a desperate attempt to prevent citizens withdrawing their money from the country’s beleaguered banks.

Ministers hope the controversial move could raise as much as €180 million, which the Athens government hopes will help the country avoid defaulting on debts owed to international creditors…

Clarifying that the charge will not apply to money paid in to a bank account, a senior finance ministry official told The Times: ‘The surcharge is just one of a grab-bag of measures we are considering if things get tough.’

The official added that Greece is also considering a ceiling on bank transfers over €1 million in what could fire the starting pistol for capital controls if Greece does go bust over the coming months.

Meanwhile, Athens reportedly managed to scrape together enough cash to make a €200 million payment to the IMF today, but the real test comes on Monday when Greece must come up with more than €700 million to meet its obligations.

Additionally, the ECB will reportedly discuss increasing the haircut on collateral pledged by Greek banks for ELA, a move which could intensify the cash crunch and tighten the screws on the banking sector ahead of Monday’s do-or-die IMF payment. Here’s Bloomberg:

European Central Bank officials will debate tighter rules for the liquidity that Greek lenders rely on for survival, two people familiar with the matter said, a move that underscores the fragility of the country’s financial system.

The Governing Council will discuss Wednesday whether to raise discounts on the collateral Greek banks pledge in exchange for emergency funding, said the people, who are familiar with the agenda and asked not to be identified. Governors will also review how much more Emergency Liquidity Assistance to offer Greek banks.

With access to capital markets shut and deposits flowing out of their vaults, Greek banks depend on ELA to stay afloat. While economists say the ECB is unlikely to demand higher haircuts without a green light from Europe’s politicians, the debate shows how concerned some central bankers are about Greece’s solvency 100 days after Prime Minister Alexis Tsipras came to power.

And a bit more color:

ECB is reviewing provisions for Emergency Liquidity Assistance for Greek banks today, Goldman Sachs says.

ECB has raised ELA cap on 12 occasions

Today’s review may be in spotlight for several reasons: ELA balance can be used to track deposit flows, and may signal that these re-accelerated in recent weeks; ELA collateral may be at risk from haircut revisions.

Collateral has been ample so far, ECB may eventually tighten ELA provision, has option to increase discount for Greek sovereign exposure from ~23% now to 44%, 65% or even 80%.

Of course no update on Greece’s descent into complete insolvency would be complete without a Schaeuble reality check:

WWII while reparations calls are “nonsense”: Schaeuble

Reparations “false topic” to raise in discussion: Schaeuble

Schaeuble says Greece has failed to get Russian financial aid

Speaking of reality, we’ll close with the following statistics which, while billed as a slight ‘improvement’, underscore the dire economic situation Greeks are forced to confront on a daily basis:

Greece’s unemployment rate in Feb. dropped to 25.4% from a revised 25.6% in the previous month, according to e-mailed statement from the Athens-based Hellenic StatisticalAuthority. Est. 25.6% from 4 economists surveyed. Unemployment rate for Greeks aged 15-24 at 50.1% in Feb.Overall female jobless rate 29.1% vs 22.4% for men.

 

end

 

With the IMF and the EU commission differing of major issues, it sure looks like a Greek deal on Monday is not possible..here is why!!

 

(courtesy zero hedge)

 

 

Greek Deal On Monday “Not Possible” MNI Reports Despite Troika Attempt To Reconcile Differences

 

 

With the crucial May 12th €774mm Greek IMF payment looming (and thus even more critical May 11th deadline for the Eurogroup’s decision to release around €7bn in additional funds to Greece), the much-discussed ‘splintering’ of the Troika (The Institutions as the Greeks would prefer we describe them) appears to be gradually un-splintering. Today’s statement from the EU talks that the members of the Troika “share the same objective” may reassure some after the ‘limbo’ ofserious disagreements between the European Commission and The IMF. However, with various ‘red lines’ remaining unaddressed, EU sources say a deal on Monday is not possible.

 

The statement is unequivocally designed to suggest everything is awesome in the Troika and they have all made friends again…

 

Though we suspect the many varied ‘red lines’ of The Institutions are anything but settled…

“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.

But we should all feel comforted that a 3-line statement tells us otherwise... as the deadline looms.

 

 

However, as MNI reports,

The European Central Bank’s Executive Board discussed during their meeting on Tuesday various options for raising the haircut on Greek government bonds used as collateral in lending operations with the Bank’s Emergency Liquidity Assistance facility, senior Eurosystem sources have told MNI.

 

The sources said that even though the Board did not reach a final conclusion, it will review the various options during Wednesday’s Governing Council meeting, at which, besides considering the question of whether to hike ELA for Greece, members will be called to vote on whether a haircut should be decided today or in the next weeks.

 

If the necessary majority is found, then the decision will be communicated in writing around 21:00 CET Wednesday evening, one source said.

 

A Greek banking source commented that a possible raise in the haircut by 10% would be tolerable, but a 20% raise would make the credit facility of the Greek banks quite difficult and wouldn’t be sustainable for many weeks.

With the punchline being…

Apart from that, the Greek officials explained the liquidity situation of Greece and affirmed their desire to obtain a written statement from the Eurogroup on Monday that negotiations are progressing towards a deal. Such statement, according to the Greek side, would enable the ECB loosen its stance on Greece.

 

However, multiple Eurozone sources have told MNI that a deal on Monday is not possible and that the two sides are still quite far from reaching an Agreement.

Which we suspect explains the baord-based derisking in global risk assets as uncertainty is looming and ECB support waning.

end

 

Then late this afternoon:

 

Capital controls hit Greek banks as foreign exchange trading by international dealers are curtailed as credit lines are cut.

The ECB increased the ELA by 2 billion euros today to 78.9 billion euros.

No haircut on Greek collateral debt as of yet.

 

Capital Controls Hit Greek Banks: FX Trading Curbed As Credit Lines Cut

While officials have begun their own versions of capital controls by raiding pension funds, confiscating local government cash, and surcharges on withdrawals (and transfer ceilings); it appears the market participants themselves have now imposed their own share of capital controls. As Bloomberg reports, international securities firms are curtailing trading with major Greek banks – pulling credit lines and restricting FX trading limits – as fear of Grexit looms.

Bloomberg reports,

Greek banks are increasingly being hampered from trading currencies, one of most liquid markets, as international dealers cut back credit lines and costs soar, according to people with knowledge of the trades.

International securities firms are curtailing trading with Greece’s major lenders that may expose them to the risk of a default by the nation and the possible use of capital controls to stem outflows from banks, the people said, asking not to be named because they are not authorized to speak publicly. Those threats are adding to concern that the euro would decline in the event of a default or a Greek exit from the currency region, leaving counterparties exposed to multiple risks, said the people.

A months-long impasse on Greece’s bailout talks with creditors has prompted depositors to withdraw funds from the nation’s lenders, leaving banks no choice but to rely on emergency funds for liquidity. The ECB on Wednesday raised the limit on Emergency Liquidity Assistance, people familiar with the matter said, a sign the financial system remains under strain.

“The latest sign the market is attempting to fortify itself against a Greek default is playing out in the FX market,” said Mark Williams, a former bank examiner for a Federal Reserve bank and now a lecturer at Boston University’s Questrom School of Business. “The market has increasingly become aggressive in preparing for a Greek default and in protecting itself from the potential financial impact.”

* * *

While they’re still in a position to trade in the currency market, Greek banks are assuming additional risk as they struggle to hedge some of their positions and dealing costs have risen, said the people.

On some transactions, the bid-offer spread is as much as 50 percent higher than it was a year ago, said one person.Limited access to interbank trading hasforced Greek banks to hoard an additional 5 billion euros to 6 billion euros in liquidity because they need to maintain higher buffers of cash, according to a Greek banking official.

One London-based FX sales trader said his bank continues to provide credit lines to Greek counterparties, but these are to just cover day-to-day foreign exchange needs, accommodating transactions on tenors that are no longer than a week, on a case-by-case basis.  

Officials for National Bank of Greece SA, Alpha Bank AE and Piraeus Bank SA declined to comment; officials for Eurobank Ergasias SA didn’t immediately return calls

A central bank official in Athens said he didn’t have a comment.

And all this happens an hour after the ECB announced it has boosted total Greek ELA by another €2 billion to €78.9 billion. Considering total Greek household and corporate deposits were €131 billion as of the end of March, the unspoken message to Greeks is that should they push too hard, the ELA gets yanked leading to an immediate 60% haircut in Greek deposits.

 end
We will be watching the interest rate on the 10 year USA Bond.  If it accelerates through 2.27-2/32% yield, hang onto your hat:
(courtesy zero hedge)

As The 10 Year Selloff Accelerates, “All Eyes On The 2.27%/2.32% Support Zone”

For the chartists out there (and these days that would mean pretty much all momentum-igniting algos who are the only ones left trading these here “markets”) the following note from SocGen explaining why if/when the 10Y selloff rises above 2.32% it may be a time to panic (and vice versa) is quite relevant now that the 10Y is just a few basis points away.

10Y UST: all eyes on the 2.27%/2.32% support zone

The 10Y UST has been forming a possible reversal pattern (Head and Shoulders) since last October and approached the confirmation level at 2.27%/2.32%. 2.27%/2.32% also coincides with the main channel support in force since late 2013 hence highlights this support zone is pivotal. Daily indicators are near multi-month floor hence they render it difficult to state whether this pattern will be confirmed. However, in the instance of 2.27%2.32% is breached, the sell-off would extend further, probably at a fast pace, towards 2.40% and 2.47% next.Near term, as hourly momentum indicators are also near a multi-month floor and positively diverging from prices a short-term pullback is set to happen to 2.15%/2.14%. A break above will mean a deeper retracement to 2.10%/2.08% and possibly even 2.02%/2.00%.

And this is where the 10Y is now:

end
Oil related stories:
DOE reports a big inventory drawdown:
(courtesy DOE/zero hedge)

Crude Pumps (And Dumps) After DOE Show Biggest Inventory Draw In 8 Months

Confirming last night’s API inventory data, DOE just reported a 3.882 million barrel drawdown in total crude inventories (considerably more than the 1.5mm bbbl draw expected). This is the biggest draw since early September. The initial spike took WTI Crude prices above $62.50 but that is fading now…

Biggest draw since September…

 

Oil pumped and dumped…

 

But still well up from last night’s API print…

 

Charts:Bloomberg

end
and now more updates on the “spoofing case”

7 Person CFTC Team Charges Manipulators Identified First On Zero Hedge With Gold And Silver Spoofing

Last Tuesday, as part of our ongoing effort to help the clueless commodity regulator, the CFTC, do its jobs of identifying, preventing and punishing manipulators, we wrote “Dear CFTC: Here Is Today’s Illegal “Spoofing” In Gold Futures” in which we presented “3 examples of spoofing in gold futures which, you’ll note, aren’t difficult to spot if one is willing to expend the tiniest effort.”

The gold spoofing was obvious, and as as the following Nanex charts showed, a cursory glance revealed how large buy and sell orders push prices up and down without every transacting.

2. Another set of instances appear about 50 minutes after the first set (shown in chart 1).

3. Another set of spoofing instances appear about an hour after the second set (shown in chart 2).

 

We go the spoofing right, but we got our audience wrong because the very next day it was not the CFTC, but the exchange on which said manipulation was taking place, the CME, that issued an order denying access to the alleged spoofers we had identified just hours before, Heet Khara and Nasim Salim, and which would be barred from trading on the CME for a period of 60 days.

Fast forward to today when, humiliated at having its job done not only by a for-profit exchange but a tinfoil fring blog first, the CFTC finally did its job and charged United Arab Emirates residents Heet Khara and Nasim Salim with “Spoofing in the Gold and Silver Futures Markets.”Note: “and silver” – this is important.

Here is the full CFTC order:

Court Issues an Ex Parte Restraining Order Freezing Defendants’ Assets and Preserving Records

 

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a civil enforcement action in the U.S. District Court for the Southern District of New York against Heet Khara and Nasim Salim, residents of the United Arab Emirates.  According to the CFTC’s Complaint, Defendants engaged in unlawful disruptive trading practices known as “spoofing” in the gold and silver futures markets by placing bids and offers with the intent to cancel them before execution.

 

Based on Defendants’ pattern of unlawful spoofing conduct and the potential for dissipation of Defendants’ assets, on May 5, 2015, U.S. District Judge Deborah A. Batts issued an Order freezing and preserving assets under Defendants’ control and prohibiting them from destroying documents or denying CFTC staff access to their books and records. The court scheduled a hearing on the CFTC’s motion for a preliminary injunction for May 19, 2015.

 

The Complaint alleges that between at least February 2015 and at least April 28, 2015, Defendants Khara and Salim, both individually and in a coordinated fashion, regularly placed larger aggregate orders for gold and silver futures contracts on the Commodity Exchange, Inc. (COMEX) opposite smaller orders and cancelled the larger orders after the smaller orders were executed.

 

CME Group Inc.’s (CME Group) Market Regulation Department identified the disruptive trading practices and initiated an investigation.  On or about April 30, 2015, CME Group issued notices summarily denying Defendants Khara and Salim’s access to all CME Group markets and any trading platforms owned or controlled by CME Group.  CME Group Inc. operates four self-regulatory organizations and designated contract markets, which are the Chicago Mercantile Exchange Inc., Board of Trade of the City of Chicago, Inc., New York Mercantile Exchange, Inc., and COMEX.

 

CFTC Director of Enforcement Aitan Goelman commented: “Protecting the integrity and stability of the U.S. futures markets is critical to ensuring a properly functioning financial system.  Aggressive prosecution of spoofing is an important part of that mission.  Today’s actions make clear that the CFTC will partner with self-regulatory organizations to find and swiftly prosecute those who engage in such disruptive trading practices, wherever they may be.”

 

In its ongoing litigation, the CFTC is seeking preliminary and permanent injunctive relief, civil monetary penalties, and equitable relief including trading and registration bans and disgorgement.

Curious where your taxpayer dollars go? It took the CFTC seven (7) well-paid manipulation sleuths to figure out what was revealed on the pages of Zero Hedge on the day of the manipulation, without us ever having accepted a single taxpayer dollar.

CFTC Division of Enforcement staff members responsible for this matter are Patryk J. Chudy, David Oakland, Neel Chopra, Katie Rasor, Trevor Kokal, Lenel Hickson, and Manal Sultan.

Finally:

The CFTC thanks and acknowledges the assistance of the CME Group in this matter.

You are welcome.

And perhaps in retrospect it is time for the CFTC to revise its announcement from September 25, 2013

… in which it said:

The Commodity Futures Trading Commission (CFTC or Commission) Division of Enforcement has closed the investigation that was publicly confirmed in September 2008 concerning silver markets. The Division of Enforcement is not recommending charges to the Commission in that investigation. For law enforcement and confidentiality reasons, the CFTC only rarely comments publicly on whether it has opened or closed any particular investigation. Nonetheless, given that this particular investigation was confirmed in September 2008, the CFTC deemed it appropriate to inform the public that the investigation is no longer ongoing. Based upon the law and evidence as they exist at this time, there is not a viable basis to bring an enforcement action with respect to any firm or its employees related to our investigation of silver markets.”

Because, you see, had the “woefully underbudgeted” CFTC, which needed at least 7 employees to discover what took Nanex and Zero Hedge about 10 minutes of work, not closed its particular investigation, it would have caught not only this but countless other instances of gold and silver manipulation…

The good news, of course, is that with a UK spoofer, working out of his parents’ basement, having been charged with causing the Flash Crash, and now two Arabs found guilty of manipulating gold and silver, both the S&P and the gold markets are once again completely unrigged, the CFTC is on top of everything, and investors should, please, come right back in.

end

Your more important currency crosses early Wednesday morning:

 

Euro/USA 1.1234 up .0055

USA/JAPAN YEN 119.76 down .176

GBP/USA 1.5226 up .0059

USA/CAN 1.2014 down  .0061

This morning in Europe, the Euro rose quite sharply  by 55 basis points, trading now well above the 1.12  level at 1.1234; Europe is still reacting to deflation, announcements of massive stimulation, a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, a possible default of Greece and the Ukraine.

In Japan Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31. The yen continues to trade in yoyo fashion as this morning it settled up again in Japan by 18 basis points and trading just below the 120 level to 119.76 yen to the dollar.

The pound was well up this morning as it now trades well above the 1.52 level at 1.5226  ( 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 61 basis points at 1.2014 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: $1191.00

silver:$16.44

 

Early Wednesday morning USA 10 year bond yield: 2.19% !!!  up 1  in basis points from Monday night/

USA dollar index early Wednesday morning: 94.80 down 28 cents from Monday’s close. (Resistance will be at a DXY of 100)

 

This ends the early morning numbers, Wednesday morning

And now for your closing numbers for Wednesday:

 

Closing Portuguese 10 year bond yield:2.55% up another whopping 15 in basis points from Tuesday

 

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

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

 

Your closing Spanish 10 year government bond,  Wednesday, up a whopping 13 in basis points in yield from Tuesday night.

Spanish 10 year bond yield: 1.91% !!!!!!

 

Your Wednesday closing Italian 10 year bond yield: 1.92% up 11  in basis points from Tuesday:

trading 1 basis point higher than Spain.

 

IMPORTANT CURRENCY CLOSES FOR TODAY

 

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

 

Euro/USA: 1.1354 up .0175  ( Euro up 175 basis points)

USA/Japan: 119.35 down .589  ( yen up 59 basis points)

Great Britain/USA: 1.5247 up .0079  (Pound up 79 basis points)

USA/Canada: 1.2042 down .0033 (Can dollar up 33 basis points)

The euro rose today sharply.   It settled up 175 basis points against the dollar to 1.1354 as the dollar fell apart again today on all fronts despite massive central bank intervention. The yen was up 59 basis points  and closing just below the 120 cross at 119.35 The British pound gained a lot of ground today, 79 basis points, closing at 1.5247. The Canadian dollar gained considerable ground to the USA dollar, up 33 basis points closing at 1.2042.

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: 2.23% up 5 in basis points from Tuesday (getting close to the resistance level of 2.27-2.32%)

 

Your closing USA dollar index:

94.12  down $1.02 on the day.

 

European and Dow Jones stock index closes:

 

England FTSE up 6.16 points or .09%

Paris CAC  up 7.52 points or 0.15%

German Dax up 22.47 points or 0.20%

Spain’s Ibex  up 48.00 points or 0.43%

Italian FTSE-MIB up 83.50  or 0.37%

 

The Dow:down 86.22 or 0.48%

Nasdaq; down 19.68 or 0.40%

 

OIL: WTI 60.88 !!!!!!!

Brent: 67.78!!!!

 

Closing USA/Russian rouble cross: 50.92 down 1/3 rouble per dollar on the day.

 

end

 

And now your important USA stories:

 

NYSE trading for today.

Late-Day Buying Scramble Saves Dow’s Year After Yellen Yanks Punchbowl

Translating what Janet Yellen (and Lockhart) said today to stock investors….

Before we start – Trannies are trading 2% below the levels pre-EndQE3 and The Dow was rescued late on into the green YTD for 2015…

UNRIGGED!!!! Every time the Dow lost YTD green, VIX was smashed… and look at the close!!!

Stocks have now given up all the exuberant gains post March payrolls

Volume is back…

The epic late-day ramp was a desparate effort to get The Dow into the green YTD… managed to get Small Caps comfortably green (because you Fight The Fed)

Futures show the swings today more clearly…

On the week, Nasdaq remains the laggard, Small caps outperforming

The initial driver was the weak ADP print which sparked selling in the USD, then Yellen’s comments really pulled the rug…

Shale stocks continue to slide post-Einhorn (even despite this morning’s meltup in crude after DOE inventory draw). Worst still for the frackers, Gartman said “The frackers are going to ramp back up, there is no question at all”

Treasury yields are up 8 days in a row – the longest stretch of increases since 9 days in a row in March 2012. (note the big AAPL issue today whioch may be the driver of the recent weakness in US sessions as ratelocks hit an illiquid market)

10Y yield closes above its 200DMA…

The dollar slipped once again…

Commodities (except for Crude) saw muted activity today…

But crude pumped and dumped after the EOD draw…

Just as an aside, this is what happened in European bond risk today…

Charts: Bloomberg

Bonus Chart: What’s worse than worst?

end

 

Discretionary spending is way down and this is killing the gambling casinos.  Wynn calls the big recovery a complete fantasy:

(courtesy zero hedge)

Wynn Calls “Big” Recovery “Complete Dream” As Gaming Revenues Collapse

Last month, courtesy of Andrew Zatlin’s Vice Index, weflagged the disturbing Q1 rise in traveling hookers. We call the trend disturbing not because we have a prima facie inclination to look with disdain upon all things escort-related but because, as Zatlin notes, when escorts are forced to take their show on the road it means the phones have stopped ringing locally, and if you’re inclined to believe that trends in all-cash businesses are a good leading indicator for trends in consumer spending in general, depressed spending on gambling, alcohol, and other “fun” things does not bode well for economic growth going forward. As you can see from the graph below, The Vice Index hit its lowest level in more than a year in March:

Given this — and given the fact that whatever discretionary income Americans do have is apparently being chanelled into TD Ameritrade accounts — it should perhaps come as no surprise that gaming revenue on the Las Vegas strip fell nearly 10% in March after sliding 4.4% in February.

Meanwhile, the situation in Macau continues to deteriorate at a rather remarkable pace, as gaming revenue fell 39% last month, the eleventh consecutive monthly decline which looks good only in comparison to March’s 39.4% decline and February’s 49% drop. Of course in the deluded minds of China’s millions of newly-minted day traders, a 39% decline represents “stabilization” and so, asBloomberg reports, casino shares rose in Hong Kong on the news:

Wynn Macau Ltd. rose 4.8 percent to HK$16.54 by the close of trading, the biggest gain since April 9. Sands China Ltd. gained 3.3 percent and Galaxy Entertainment Group Ltd. advanced 3.1 percent, while the Hang Seng Index was little changed.

 

Gross gaming revenue in the world’s largest gambling hub fell 39 percent to 19.2 billion patacas ($2.4 billion) last month, meeting a median estimate of a 39 percent decline from eight analysts surveyed by Bloomberg. The drop has slowed for a second consecutive month.

 

“Investors are really just focused on trying to find stabilization or a bottoming,” said Vitaly Umansky, an analyst at Sanford Bernstein.“As long as things aren’t deteriorating,things seemed to be fairly consistent, that’s probably a decent sign from an investor’s perspective.”

Right. As long as things “aren’t deteriorating” and revenues are only falling by 40% that’s a “decent sign.” Unfortunately, some industry heavyweights don’t seem to share the view that the market is set to turn the corner any time soon. Take Steve Wynn for instance who, on the way to slashing WYNN’s dividend by nearly 70%, had the following to say about the company’s outlook for Vegas and Macau and about the so-called “recovery” in the US economy:

Well, the numbers in the first quarter are out. I think the trends in Macau were beginning to be very visible in the fourth quarter, but our hopes for an improvement in the Chinese New Year turned out to be incorrect. And the repositioning of the market and the degradation of the volumes in VIP, have continued even into April. Most of my remarks now are going to include what we’ve seen in the first four months, not just the first three months, because the trends that were clear in January, February and March have continued into April and as we look at the whole year in Las Vegas and Macau, certain simple truths emerge.

 

It is no secret that there’s been a change in mainland China in attitudes towards a number of things that have impacted Macau. That has not – nothing has changed since this all began last October. And the depression of the VIP market continues…

So as we look backwards for the fourth quarter and especially during the last four months, and understand what’s happening, both in Las Vegas because of the Asian impact on Baccarat, and we look back and then we extrapolate and try predict the future, or at least understand what most likely will be the future, it is foolhardily and immature and unsophisticated to issue dividends on borrowed money. We only distribute money that’s free cash flow based upon our earnings that trail…

 

If you were to ask me, since we’re making forward-looking statements, what will the second quarter look like in Las Vegas? Weak. Do you hear me? Weak. So I’m trying to lower expectations here. This notion of a big recovery is a complete dream. I don’t think Las Vegas is experiencing a great recovery. I think it’s still very patchy and I think that that’s probably our non-casino revenue in the first quarter was flat. I’d be thrilled if it was flat in the second quarter.

Besides being a stinging indictment of the pitiable state of the US economy, that’s a fairly unambiguous message from someone who knows a thing or two about this industry and even as the likes of Deutsche Bank called the Las Vegas commentary “overdone”, the bank had the following to say about the outlook for the gaming industry:

[With] market trends showing very limited signs of improving, and more headwinds than tail winds on the horizon (potential visitor traffic curbs, a full smoking ban, and uncertainty around table allocations), visibility is worse than ever in our view. 

Despite the malaise and despite the fact that, as we notedearlier this year, Beijing’s corruption crackdown has likely motivated China’s habitual (and filthy rich) gamblers to move permanently away from the dark-lit Macau gambling parlors to multiple-monitor lit trading desks, there will always, always be BTFDers  — especially when you’re talking about Hong Kong-listed shares. With that in mind, we’ll close with this quote provided to Reuters by Matthew Ossolinski, chairman of Ossolinski Holdings:

“What is the worst that could happen? [Gaming] stocks go down before they go up. But they will go up. We are preparing for a 100 percent increase in shares within the next three years.”

 

end
The consumer is 70% of GDP.  Economic confidence has now crashed the most since July:
(courtesy zero hedge)

US Economic Confidence Crashes Most Since July To Lowest Since December

Despite record-er stock prices, weather excuses for current economic weakness, and The Fed promising that growth is here and everything will be awesome, it appears the message has not reached the US Consumer. Gallup’s U.S. Economic Confidence Index plunged 9 points last week (the largest week-to-week drop since last July) to its lowest weekly score since December. The main driver was a collapse of hope as ‘outlook’ fell to November lows.

Americans’ Ratings of Current Conditions, Economic Outlook Both Down

Gallup’s Economic Confidence Index is the average of two components: Americans’ ratings of current economic conditions and their views of whether the economy is improving or getting worse. The theoretical maximum of the index is +100, if all Americans say the economy is “excellent” or “good” and “getting better.” The theoretical minimum is -100, if all Americans say the economy is “poor” and “getting worse.”

For the week ending May 3, 24% of Americans said the economy is excellent or good while 29% said it is poor, resulting in a current conditions score of -5 — down four points from the previous week and the lowest current conditions score since December. The economic outlook score saw a sharper drop of eight points, to -12 — its lowest reading since November. The latest outlook score is the result of 42% of Americans saying the economy is getting better, and 54% saying it is getting worse.

The recent dip in Americans’ economic confidence — which is being dragged down largely by the lower economic outlook component — is likely the culmination of a variety of economic factors.

Though stocks rebounded by last Friday, the previous week had been fraught with market losses in the Dow Jones industrial average and Standard & Poor’s 500 market indexes. Meanwhile, the prices Americans were paying for gas increased in the latter half of April, with the U.S. Energy Information Administration reporting an increase of 17 cents per gallon over two weeks. Gallup has found that Americans’ confidence in the economy is related to how much they pay at the pump. Additionally, the recent report that the nation’s GDP grew a lackluster 0.2% in the first quarter — a disappointing figure compared with previous quarterly growth — may have dampened consumers’ economic hopes.

Source: Gallup

 

end

 

The private ADP employment numbers tumble to 15 month lows.  Manufacturing jobs continue to plunge:

(courtesy ADP)

ADP Employment Tumbles To 15 Month Lows As Manufacturing Jobs Plunge

Following March’s dismal drop in the ADP Employment report (the biggest miss in 4 years) and missing for 3 straight months, April printed a very weak 169k(against notably lowere expectations of a 200k rise). Even worse, February and March was revised even lower. This is lower than the lowest economist estimate.

Large companies were particularly weak which is to be expected considering the unprecedented M&A and buyback spree which is entirely at the expense of workers (and wages) while smaller businesses adding the bulk of the meager jobs print. All job gains were in the Services segment with Manufacturing losing 10,000 jobs in April and the goods-producing sector losing 1,000.

The esteemed Mark Zandi blames this on “the fallout from the collapse of oil prices and the surging value of the dollar.”

Must be the oil port strike again. Or perhaps it rained in the spring?

 

The details:

 

From the report:

Payrolls for businesses with 49 or fewer employees increased by 94,000 jobs in April, down from 105,000 in March. Employment among companies with 50-499 employees increased by 70,000 jobs, up from 64,000 the previous month. Employment gains at large companies – those with 500 or more employees – decreased slightly from March, adding 5,000 jobs in April, down from 6,000. Companies with 500-999 employees added no jobs, after adding just 2,000 in March. Companies with over 1,000 employees added 5,000 jobs, a small improvement from 4,000 the previous month.

 

Goods-producing employment declined by 1,000 jobs in April, down from 3,000 jobs gained in March. 

 

The construction industry added 23,000 jobs, up from 21,000 last month. Meanwhile, manufacturing lost 10,000 jobs in April, after losing 3,000 in March.

 

Service-providing employment rose by 170,000 jobs in April, down slightly from 172,000 in March. The ADP National Employment Report indicates that professional/business services contributed 34,000 jobs in April, up from March’s 28,000. Expansion in trade/transportation/utilities grew by 44,000, up from March’s 41,000. The 7,000 new jobs added in financial activities is a drop from last month’s 12,000.

 

April job gains came in under 200,000 for the second straight month,” said Carlos Rodriguez, president and chief executive officer of ADP. “Companies with 500 or more employees had the slowest growth.”

Mark Zandi, chief economist of Moody’s Analytics, said,

“Fallout from the collapse of oil prices and the surging value of the dollar are weighing on job creation. Employment in the energy sector and manufacturing is declining. However, this should prove temporary and job growth will reaccelerate this summer.”

Change in Nonfarm Private Employment

 

Change in Total Nonfarm Private Employment

 

Change in Total Nonfarm Private Employment by Company Size

 

Change in Total Nonfarm Private Employment by Selected Industry

end

 

Dave Kranzler discusses the ADP number. He also believes that ADP rigs the figures:

(courtesy Dave Kranzler/IRD)

 

 

ADP Payroll Huge Miss – Economy Is Plunging

Ever since the Fed took its “we need to raise rates soon” stance, I have been predicting that we would see QE4 before we see a Fed-driven interest hike.  Note:  the market itself might take yields higher, as we’ve seen happen in the last month at the long end of the curve.

To reinforce my view, ADP reported a huge miss of the consensus Wall Street Einstein Club estimates, coming in at 169k “new” payroll jobs in April vs 205k expected.  The number from March took a huge downward revision from the 189k originally reported to revised 175k.   So much for the integrity of the data – it says a lot about the nature of our financial markets when the stock market reacts to a number that is highly unreliable and inaccurate.

Let’s take a closer look:  February was also revised lower;  manufacturing lost 10,000 jobs;  services supposedly added the bulk of the new jobs.   Even if the report is somewhat accurate in terms of the areas where jobs were lost vs. added, the economy lost high-wage, big pension, big benefits jobs and added low-wage, no benefits jobs.

You may have noticed I referenced the jobs added as “new.”  That’s because ADP’s methodology itself is highly questionable.  In fact, right on its website (LINK), ADP states that the ADP payroll calculation methodology is designed “to more closely match the final print of the BLS numbers.” Furthermore, you’ll see that the ADP “seasonal adjustments” abuse imposed on the data is the same exact statistical meat grinding program used by the Bureau of Labor Statistics – see this LINK.

In other words, the ADP report is just as rigged and highly unreliable as is the Government’s non-farm payroll report.

I would love to be wrong about this, but I stand by my view that the Government is going to rig a huge “beat” of the Wall Street brain trust consensus estimate.  It’s all part of the Orwellian-like kabuki theatre being implemented to manipulate the stock market higher by manipulating the hedge fund HFT algo black boxes.

While I believe the stock market has been set up to “melt up” on Friday, I also believe that after the customary pre/post-8:30 a.m. gold smash as the non-farm payroll report released, gold will stage a huge move higher along with the stock market.

While the Government/Fed still has the ability to manipulate the market, a lot of smart money is catching on and seems to be using all dips to buy gold and silver.  This is why the PPT can’t get gold lower than $1150 or silver lower than $15.50.

end

California adopts unprecedented restrictions as water levels drop at Lake Mead and the drought worsens:

(courtesy zero hedge)

California Adopts “Unprecedented” Restrictions On Water Use As Drought Worsens

Early last month we warned that California’s drought was approaching historic proportions and that if climatologists were to be believed, the country may see a repeat of The Dirty Thirties as experts cite “Dust Bowl” conditions. Governor Jerry Brown has called for statewide water restrictions aimed at reducing consumption by 25%.

Now, the conservation calls are getting much louder as the state’s water regulators have approved “unprecedented” measures aimed at curtailing the crisis.

Via AP:

California water regulators adopted sweeping, unprecedented restrictions Tuesday on how people, governments and businesses can use water amid the state’s ongoing drought, hoping to push reluctant residents to deeper conservation.

 

The State Water Resources Control Board approved rules that force cities to limit watering on public property, encourage homeowners to let their lawns die and impose mandatory water-savings targets for the hundreds of local agencies and cities that supply water to California customers.

 

Gov. Jerry Brown sought the more stringent regulations, arguing that voluntary conservation efforts have so far not yielded the water savings needed amid a four-year drought. He ordered water agencies to cut urban water use by 25 percent from levels in 2013, the year before he declared a drought emergency…

 

Despite the dire warnings, it’s also still not clear that Californians have grasped the seriousness of the drought or the need for conservation. Data released by the board

 

Tuesday showed that Californians conserved little water in March, and local officials were not aggressive in cracking down on waste.

 

A survey of local water departments showed water use fell less than 4 percent in March compared with the same month in 2013. Overall savings have been only about 9 percent since last summer.

 

Under the new rules, each city is ordered to cut water use by as much as 36 percent compared with 2013.

And more color from The LA Times which reports that California will begin cracking down on “wasters” via the imposition of stiff fines as millions of trees die out in National Forests, raising the risk of wildfires :

“Right now we’re scared. Right now we’re in the denial stage. We have to get into acceptance, and we have a relatively short period of time to do it.”

 

Others were more skeptical, citing new data showing that California’s hundreds of urban water suppliers assessed only 682 penalties to water wasters in the last several months after receiving more than 10,000 complaints.

 

The enforcement data demonstrate the “need to make enforcement a true deterrent to water wasting,” said Mark Gold of UCLA’s Institute of the Environment and Sustainability. “People don’t park in posted street sweeping parking spaces three weeks in a row. The vast majority of people in California are not looking at this as a dire situation, yet.”

 

Years of extremely dry conditions are taking a heavy toll on forest lands across California and heightening the fire risk as summer approaches.

 

“The situation is incendiary,” William Patzert, a climatologist for the Jet Propulsion Laboratory, told The Times recently. “The national forest is stressed out”…

 

A new study by the U.S. Forest Service tried to assess the scope of the problem. Researchers estimated that the drought has killed off at least 12.5 million trees in California’s national forests during the drought.

 

The scientists expect the die-off to continue. “It is almost certain that millions more trees will die over the course of the upcoming summer as the drought situation continues and becomes ever more long term,” said biologist Jeffrey Moore, acting regional aerial survey program manager for the U.S. Forest Service.

 


*  *  *

Of course, cutting back will come at a steep cost for utility companies who will promptly attempt to replace an estimated $1 billion in lost revenue by raising prices for consumers. Between rising utility costs and fines of up to $10,000 for egregious violations of the state’s conservation efforts, hydration just got a lot more expensive in California — unless you’re aMotherFracker, in which case none of this applies.

end
see you tomorrow night
Harvey
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