May 12 c/Greece borrows from the IMF holding account to pay the IMF back/Tensions in the middle east rise with respect to Iran/Bond market rescued again by central banks but yields still rise appreciably/

Good evening Ladies and Gentlemen:

 

 

Here are the following closes for gold and silver today:

Gold:  $1192.60 up $9.40 (comex closing time)

Silver $16.51 up 21 cents (comex closing time)

 

In the access market 5:15 pm

Gold $1192.50

Silver: $16.51

 

 

Gold/Silver trading: see kitco charts on the right side of the commentary

 

Following is a brief outline on gold and silver comex figures for today:

 

At the gold comex today, we had a poor delivery day, registering 1 notice serviced for 100 oz.  Silver comex filed with 166 notices for 830,000 oz

 

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 242.56 tonnes for a loss of 60 tonnes over that period. Looks to me like the comex is bleeding profusely!!

 

In silver, the open interest rose by 1072 contracts despite the fact that Monday’s silver price was down by 14 cents  The total silver OI continues to remain extremely high with today’s reading at 177,096 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 166 notices served upon for 830,000 oz.

 

In gold,  the total comex gold OI rests tonight at 401,480 for a loss of 6,952 contracts as gold was down by $5.90 yesterday. We had 1 notice served upon for 100 oz.

 

Today, we had no changes in  gold Inventory, at the GLD.  It rests tonight at 728.32  tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold.

 

In silver, /   no changes with respect to silver inventory at the SLV/ and thus the inventory tonight remains at 322.662 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 1072  contracts as  silver was down in price yesterday by 14 cents.  The OI for gold fell by 6952 contracts down to 401,480 contracts as the price of gold was down by $5.90 yesterday. GLD had no change and SLV, no changes  with respect to the inventory levels.

(report Harvey)

2,Today we had 1 major commentaries on Greece today:

(zero hedge/ UKTelegraph)

 

3.Tensions rise again with respect to Iran and the USA 

(zero hedge)

4 Ted Butler on his take as to what is going on in the silver market.

(Ted Butler)

5. Goldcore discusses the huge rise in art prices

/(Goldcore)

6.  The USA may use military in its confrontation with China in the South China sea

(zero hedge)

7. Koos Jansen on China’s  silk road project and it includes gold

(Koos Jansen)

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 6952 contracts from  408,432 down to 401,480 as  gold was down by $5.90 yesterday (at the comex close).  We are in our next non active delivery month of May and here the OI fell by 7 contracts falling to 149. We had 0 notices filed upon yesterday.  Thus we lost 7 gold contracts or an additional 700 ounces will not stand for gold in May. The next big active delivery contract month is June and here the OI fell by 13,628 contracts down to 208,032. 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 92,862. The confirmed volume yesterday ( which includes the volume during regular business hours + access market sales the previous day) was fair at 164,643 contracts. Today we had 1 notices filed for 100 oz.

 

And now for the wild silver comex results.  Silver OI rose by 1072 contracts from 176,026 up to 177,096 despite the fact that the price of silver was down  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 141 contracts down to 574. We had 8 contracts filed upon with respect yesterday’s trading.  So we lost 133 contracts or an additional  655,000 oz will not stand for delivery in this May delivery month. The estimated volume today was extremely poor at 18,168 contracts (just comex sales during regular business hours. The confirmed volume on yesterday (regular plus access market) came in at 36,828 contracts which is fair in volume. We had 166 notices filed for 830,000 oz today.

 

May initial standings

May 12.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz    nil
Withdrawals from Customer Inventory in oz  192.90 oz Manfra
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 80,802.256 oz (Scotia, HSBC)
No of oz served (contracts) today 0 contracts (nil oz)
No of oz to be served (notices)  148 contracts(14,800) oz
Total monthly oz gold served (contracts) so far this month 2 contracts(100 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month 164,151.8 oz
Total accumulative withdrawal of gold from the Customer inventory this month  36,369.5 oz

 

Today, we had 0 dealer transactions

 

 

total Dealer withdrawals: nil oz

 

we had 0 dealer deposit

total dealer deposit: nil oz
we had 1 customer withdrawal

 

i) Out of Manfra; 196.90 oz

 

 

total customer withdrawal: 196.90  oz

 

We had 2 customer deposits:

i) Into HSBC: 32,110.62  oz

ii) Into Scotia: 48,691.636 oz

total customer deposit: 80,802.256  oz

 

We had 1 minor  adjustment:

i) out of Delaware:

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

 

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

To calculate the total number of gold ounces standing for the May contract month, we take the total number of notices filed so far for the month (2) x 100 oz  or 100 oz , to which we add the difference between the open interest for the front month of May (149) and the number of notices served upon today (1) x 100 oz equals the number of ounces standing.

 

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

 

No of notices served so far (2) x 100 oz  or ounces + {OI for the front month (149) – the number of  notices served upon today (1) x 100 oz which equals 15,000 oz standing so far in this month of May. (.466 tonnes of gold)

we lost 700 oz that will not stand for delivery

 

Total dealer inventory: 372,738.572 or 11.59 tonnes

Total gold inventory (dealer and customer) = 7,798,996.04. (242.56) tonnes)

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 242.56 tonnes for a loss of 63 tonnes over that period. Lately the removals  have been rising!

 

end

 

 

And now for silver

 

May silver initial standings

May 12 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 76,176.67 oz (Brinks, Scotia)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory  1,489,490.226 (CNT, Scotia,Delaware,JPM)
No of oz served (contracts) 166 contracts  (8300,000 oz)
No of oz to be served (notices) 408 contracts (2,040,000 oz)
Total monthly oz silver served (contracts) 2496 contracts (12,480,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  126,359.680 oz
Total accumulative withdrawal  of silver from the Customer inventory this month 2,853,067.3  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 4 customer deposits:

i) Out of CNT 1001.000 oz  ???

ii) Out of Scotia:  769,007.265 oz

iii) Out of JPM:  600,814.01 oz

iv) Out of Delaware:  118,667.95 oz

total customer deposits: 1,489,490.226  oz

 

We had 2 customer withdrawals:

 

 

i) Out of Scotia:  50,943.210 oz

ii) Out of Brinks:  25,233.46 oz

 

total withdrawals;  76,176.67 oz

 

we had 1 adjustment

i) Out of CNT:  434,855.95 oz was adjusted out of the customer and this landed into the dealer account at CNT

 

Total dealer inventory: 60.117 million oz

Total of all silver inventory (dealer and customer) 177.723 million oz

So we have both gold and silver being drained from the dealer (registered) side at the comex.

.

The total number of notices filed today is represented by 166 contracts for 830,000 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 (2496) x 5,000 oz  = 12,480,000 oz to which we add the difference between the open interest for the front month of April (574) and the number of notices served upon today (166) x 5000 oz equals the number of ounces standing.

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

2496 (notices served so far) + { OI for front month of April (574) -number of notices served upon today (166} x 5000 oz = 14,520,000 oz of silver standing for the May contract month.

we lost 133 contracts or an additional 655,000 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 12/no change in inventory at the GLD/inventory rests at 728.32 tonnes

May 11/ no changes at the GLD/Inventory rests at 728.32 tonnes

May 8/ they should call in the Serious Fraud squad as the owners of the GLD just saw 13.43 tonnes of gold leave its vaults heading for China:

Inventory tonight:  728.32 tonnes

May 7. no change in gold inventory at the GLD/741.75 tonnes

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 12 GLD : 728.32  tonnes.

 

end

 

And now for silver (SLV)

May 12/no changes at the SLV/Inventory rests at 322.662 million oz

May 11/no changes at the SLV/Inventory rest at 322.662 million oz

May 8/ today we lost a huge 2.87 million oz of silver from the SLV/Inventory 322.662

 

May 7/no change in silver inventory/325.53 million oz

May 6/we had a huge withdrawal of 2.143 million oz of silver from the SLV/325.53 million oz

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 12/2015  no changes at the SLV / inventory rests at 322.662 million oz

 

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 7.0% percent to NAV in usa funds and Negative 6.7% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.2%

Percentage of fund in silver:38.4%

cash .4%

( May 12/2015)

2. Sprott silver fund (PSLV): Premium to NAV rises to-0.51%!!!!! NAV (May 12/2015)

3. Sprott gold fund (PHYS): premium to NAV falls to -.39% to NAV(May 12/2015

Note: Sprott silver trust back  into negative territory at -0.51%.

Sprott physical gold trust is back into negative territory at -.39%

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)

 

Hyperinflation in Art Investment Market as Picasso Sells for $179 Million

 

– Picasso’s “Les Femme d’Alger” sells for a record $179 million
– Most expensive painting ever sold at auction
– Hyperinflation in art market as painting appreciated nearly $150 million in 20 years …
– Reports in February of the private sale of Gauguin’s “When Will You Marry” for $300 million
– Art price volumes doubled since 2009
– As currencies debase super rich seek out stores of value
– Gold remains accessible store of value for middle classes

Pablo Picasso’s “Les Femme d’ Alger”

Pablo Picasso’s “Les Femme d’ Alger” sold at Christie’s in New York last night for $179 million – the highest price ever paid at auction for a painting.

It smashed the record previously held by Francis Bacon’s “Three Studies of Lucian Freud” which sold for $142 million in 2013.

The painting appreciated nearly $150 million in less than 20 years. Hyperinflation appears to be taking hold in the art investment market.

Painted in 1955, Les Femmes d’ Alger is based on Delacroix’s 1843 painting “Femmes d’Alger dans leur Appartement” a sensuous depiction of how the European imagined a harem scene with luxuriantly dressed woman smoking hashish from a hookah. Picasso’s depiction is more overtly erotic exploring the strange psychology of sexual fascination with the female form.

The record breaking price for the piece reflects the ever expanding bubble in high end art. In February, Bloomberg reported that Gauguin’s “When Will You Marry” was rumoured to have been sold to the Qatar Museum Authority for almost $300 million – one of the highest prices ever paid for a painting.

Keanu Reeves and “When Will You Marry” Painting

Indeed, the sale of high end art has more than doubled in price volume since 2009. Back then art sales totalled $6.3 billion. In the intervening period, with QE cash sloshing around the markets, further enriching the world’s super wealthy, prices for luxury art have surged and last year the total market was priced at $16.3 billion.

This surge in price has been mirrored by the rise in prices for luxury property in London and other major cities as the super-rich seek stores of value for their cash.

The trend of rising prices in luxury art is succinctly described by the Washington Post:

“The steady inflation of the art market can be summed up with a quick glance at the list of most expensive auctioned works. At number five is a Picasso sold for $106.5 million in 2010. Number four is Edvard Munch’s iconic “The Scream” sold for $120 million in 2012. A year later, Francis Bacon’s “Three Studies of Lucian Freud” reached $142.4 million. And then there were the two heavy hitters from Monday’s auction: Picasso’s “Women of Algiers (Version O)” for $179.4 million and Alberto Giacometti’s “Man Pointing” for $141.3 million, which is the most expensive sculpture ever sold at auction.”

There is risk for art “investors” to continue to shell out enormous sums of cash in a market that appears increasingly frothy.

However, as with luxury property, we suspect that these well informed individuals are seeking out art as a store of value because ultimately, even at highly inflated prices, it may turn out to be less risky than holding cash in a bank that can be devalued and is may be subject to deposit bail-ins.

William Banzai “Women of Cashiers”

The art market looks very toppy. It is subject to sentiment like all markets today and this could lead to sharp price falls should jitters begin to creep in regarding very high valuations. As a diversification, art has some merit as it is not correlated with financial assets, but only as a small part of an overall portfolio.

For those of us who cannot afford a Picasso – as the great heritage of western ideas and art continue to be shuttered away into private Xanadus – gold remains an accessible and ideal store of value.

Indeed history shows that it is one of the, if not the, ultimate store of value.

Must read guide and research on bail-ins here:
Protecting Your Savings In The Coming Bail-In Era


MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,184.45, EUR 1,051.07 and GBP 755.49 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,184.75, EUR 1,062.20 and GBP 768.37 per ounce.

Gold in USD - 1 Day

Gold fell $5.10 or 0.43 percent yesterday to $1,183.40 an ounce, and silver slipped $0.20 or 1.21 percent to $16.28 an ounce. Gold in Singapore was at $1,182.83 an ounce near the end of day trading in Asia prior to flat lining in Europe before a sharp spike in gold soon after the LBMA gold price was fixed.

Significant volatility and sharp price moves in the global bond markets herald coming volatility. This may be making investors nervous. The bond market volatility seen in recent days may at last be benefitting gold.

Government bonds sold off again today leading to sharp falls in stock markets. Japanese government bonds fell sharply overnight after the weakest auction since the Lehman collapse saw yields rise sharply from nearly zero percent levels.

Gold fell with equities yesterday and the small dip may have been the result of less safe haven bids as Greece made a $837 million payment to the IMF a day early.

Some form of Grexit remains on the cards as Greek Finance Minister Yanis Varoufakis said the liquidity situation was “terribly urgent” and a deal to release further funds was needed in the next couple of weeks.

The SPDR Gold Trust, the world’s largest gold-backed ETF saw its largest decline this year on Friday, a signal of bearish sentiment.

June 16-17 is the U.S. Federal Reserve’s next policy meeting. San Francisco Federal Reserve President John Williams made comments that the Fed is unlikely to provide any warning ahead of an increase to interest rates, claiming that the Fed needs to “get out of this business of telegraphing decisions in advance.”

Although the problem with Fed communications is not the timing but rather the frequently contradictory nature of such communications and the fact that they frequently fail to do what they say they will do – having promised to increase interest rates since 2009.

In European late morning trading precious metals are higher in dollar terms. Gold is up 1 percent at $1,195.69 an ounce. Silver is up 1.03 percent at $16.46 and platinum is up 0.93 percent at $1,136.90.

Breaking News and Research Here

end

 

Ted Butler’s take on what is going on in silver behind the scenes:

(courtesy Ted Butler)

 

The Biggest Silver Haul in History

Theodore Butler

|

May 11, 2015 – 2:19pm

As I’ve mention previously JPMorgan is still stopping (taking) silver deliveries in its own house account. In the May COMEX futures contract, they’ve taken over three million ounces so far. It still looks like JPM will take another million ounces or so before the delivery period is over. This is in addition to the 7.5 million ounces the bank took in the March delivery period.

Another standout development in recent weeks has been the withdrawal of 5 million ounces from the big silver ETF, SLV. This large withdrawal would appear to be a big buyer converting shares into metal for the purpose of acquiring physical silver and avoiding the 5% ownership reporting requirement. I believe this is the work of JPMorgan and represents the mechanism by which the bank has amassed the bulk of the 350 million ounces I claim it has acquired over the past four years.

The U.S. Mint sold 783,500 Silver Eagles in just two days after going 4 or 5 days with no sales. Then the Mint reported a scant 50,000 additional coins sold over the next two days. This is precisely the erratic level of sales that indicates the presence of a big buyer. I can’t certify that the big buyer is JPMorgan, but everything I look at points to them.

The Canadian Royal Mint reported sales last week its 2014 sales of Silver Maple Leafs and the same pattern that has characterized the U.S. Mint was clearly revealed. Sales of silver coins hit a new record, with more than 29 million Silver Maple Leafs sold. The big buyer of Silver Eagles has also been accumulating Silver Maple Leafs. Over the past four years the big buyer has bought, at least 30 million ounces of Canadian Maple Leafs and 75 million U.S. Silver Eagles totaling more than 100 million ounces of silver in bullion coin sales alone. I’m convinced JPMorgan is the big buyer.

How in the world can JPMorgan eventually sell hundreds of millions of ounces of silver without flooding the market and causing prices to crash? This is what JPMorgan does as a regular part of their business – accumulate and then liquidate massive market positions before most people get out of bed every morning. It is second nature to them. In my opinion, this silver will be sold before most people realize they bought it in the first place. Buying 350 million ounces of silver was the hard part, selling it will be a snap.

The big buyer is exploiting a loophole in the law that requires the Mint to produce to whatever the demand might be. So JPMorgan artificially depresses prices via short sales on the COMEX and then requests that the US Mint sell it all the Silver Eagles it can produce. It doesn’t care if it is paying $2 over the spot price, JPM wants all the silver it can get its hands on. But what about selling the coins I claim JPMorgan has acquired? The coins will not be sold as coins, but melted into 1,000 ounces bars. In fact, some of the 100 million+ ounces of coins may have already been melted and cast into good delivery bars. Considering that the coins are the same purity as 1,000 ounces bars, melting is a simple and a low cost process.

At the end of 2007, when the price of silver was less than $15, but close to the highest price it had been in 25 years, Bear Stearns assumed the role of the biggest silver and gold short when these positions were transferred from AIG. From the end of 2007 to March 2008, the price of silver rose to $21 and gold rose from $800 to $1,000. Based upon the size of the short positions that Bear Stearns held the investment bank had to come up with more than $2 billion in margin money. Bear was unable to do so and the U.S. Government arranged for JPMorgan to take over Bear Stearns and its massive COMEX short positions in silver and gold.

With the cooperation from the federal government, JPMorgan was able to turn silver (and gold) prices sharply lower into year end 2008 and made well over one billion dollars as a result of falling metals prices. Thus, they were able to greatly reduce the short positions inherited from Bear Stearns. JPMorgan then repeated the process of selling short great additional quantities of COMEX short contracts on metals price rallies buying back those short positions when prices fell. JPMorgan’s profits from the short side of COMEX silver and gold, amounted to hundreds of millions and even billions.

This process was repeated by JPMorgan in COMEX silver until the fall of 2010, when silver began to rise in earnest due to a developing physical shortage that drove prices to nearly $50 by the end of April 2011. On the run up, it must have become clear to JPMorgan that a physical silver shortage was developing and for the bank to try to fight it with additional paper short sales would be futile. Therefore, two decisions were made; one, it would be necessary to create such a large break in silver prices so as to crush the momentum of the price rise and two, the developing physical shortage proved that silver was destined to blow sky high in time and JPMorgan should position itself accordingly. The big break in prices started on May 1, 2011 and broke the back of the silver price. Less visible is the evidence that JPMorgan began to acquire the biggest physical silver stockpile in history.

  1. In little more than a month, as a result of the big break in silver prices staring on May 1, 2011, some 60 million ounces were liquidated from the big silver ETF, SLV, as a result of plain vanilla selling by investors who sold their shares in reaction to plunging prices. When net selling occurs in SLV, metal is automatically redeemed from the trust on a mechanical basis. The shares were sold and the metal was withdrawn from the trust as prescribed by the prospectus. That doesn’t mean the metal was dumped on the streets of London or ceased to exist. The metal fell into the ownership of someone and the most likely candidate was the entity that arranged for the selloff in the first place. The entity which stood to gain the most by the selloff was JPMorgan. They picked up their first 50-60 million ounces as a result of the May 2011 silver smack down.
  1. Pressed for space to store the silver it planned to acquire, JPM opened its own COMEX warehouse in April 2011 and from zero ounces in 2011, that warehouse has turned into the biggest COMEX silver warehouse of all with nearly 55 million ounces on deposit. The start date proves intent by JPMorgan to acquire silver.
  1. In 2012, JPMorgan physically transferred 100 million ounces of silver from its own custodial warehouse for SLV to the Brinks warehouse in London, leaving ample space in the former SLV warehouse to store 100 to 200 million ounces of silver that would come to be owned by JPMorgan and that would never require public disclosure. This is the most plausible explanation for why JPMorgan would move the silver to the Brinks warehouse. All the movements of metal out of SLV over the years, reeks of JPMorgan converting SLV shares to metal to be stored in its own warehouse in London on an undisclosed basis. An easy 200 million ounces can be accounted for in this manner.
  1. The unusual and unprecedented turnover of physical silver in the COMEX-approved silver warehouses that began in April 2011 suggests to me that JPMorgan has been causing the movement in its quest to acquire physical silver. An easy 100 million ounces acquired by JPMorgan can be deduced from the more than 750 million ounces turned over in the COMEX warehouses over the past four years. How hard would it be for JPMorgan to “skim” 100 million ounces off a turnover of 750 million ounces?
  1. The recent acceptance of more than 10 million ounces on COMEX futures deliveries and the physical movement of most of that metal into the JPM COMEX warehouse is a mere fraction of the total amount of silver JPMorgan has acquired over the past four years, but it is clearly the most transparent and may point to JPMorgan reaching the maximum amount of physical silver it intends to acquire, indicating we may be close to when the bank decides to let silver prices rise.

I’m using the number of 350 million ounces as what JPMorgan has acquired, but the real amount may be in excess of 500 million ounces. I’m being somewhat conservative in saying 350 million ounces because I’m worried that those who deny that JPM has acquired any physical silver heads might explode if the number is closer to half a billion ounces. I’m not looking for anyone to lose their minds, but to understand what these facts mean.

Ted Butler

May 11, 2015

end

 

As we will describe below(zero hedge), Greece has run out of money as it pays the IMF with IMF money:

(courtesy GATA)

Greece drains its emergency account at IMF to repay IMF loan

Section:

Greece Tapped Its Emergency IMF Reserves to Pay IMF Debt: Sources

By Lefteris Papadimas and George Georgiopoulos
Reuters
Tuesday, May 12, 2015

ATHENS — Greece emptied an emergency IMF holding account to repay 750 million euros (L539.4 million) due to the international lender, a Greek central bank official said, avoiding default but underscoring the dire state of the country’s finances.

With Athens close to running out of cash and a deal with its international creditors still elusive, there had been doubts about whether the leftist-led government would pay the IMF or opt to save cash to pay salaries and pensions this month.

Members of the International Monetary Fund are required to keep a holding account, which may be used for emergencies, but the money can be used only with the lender’s approval, the central bank official said.

A government official told Reuters that Athens used about 650 million euros from the holding account and 100 million euros from its cash reserves to make the payment on Monday. …

… For the remainder of the report:

http://uk.reuters.com/article/2015/05/12/uk-eurozone-greece-idUKKBN0NX0Q

 

end

More fines for the crooked banks on the FX rigging. They plead guilty to criminal activity but get a waiver so they can continue to operate:

 

(courtesy London’s Financial Times)

Big banks finalize $6 billion-plus settlements on FX rigging

Section:

From the Financial Times, London
Monday, May 11, 2015

Five of the world’s biggest banks are finalising agreements to collectively pay more than $6 billion for allegedly manipulating foreign exchange markets, with an announcement expected as soon as Wednesday.

Switzerland’s UBS will pay less than $800 million, people familiar with the situation said. The highest fines will be borne by the UK’s Barclays, which is expected to agree to pay about £2 billion, or about $3.1 billion. JPMorgan Chase, Royal Bank of Scotland, and Citigroup are all expected to pay as much as $1 billion each. …

… For the remainder of the report:

http://www.ft.com/intl/cms/s/0/4e3eca04-f7cb-11e4-9beb-00144feab7de.html

 

end

 

 

 

Our resident expert on China’s gold demand and exchanges:

(courtesy Koos Jansen)

 

Posted on 12 May 2015 by

China’s Silk Road Economic Project Will Include Gold

The Chinese government seems to be very keen on developing the New Silk Road Economic Belt as fast as possible; an initiative, said to be designed by President Xi Jinping himself, that will increase economic cooperation in the wide Eurasian region. At a stunning speed China and Russia take the lead in strengthening ties in the area. For the wind down of the US dollar hegemony the Silk Road economic project is an important tool. As part of this project two clubs are rapidly developing as we speak, the Asian Infrastructure Investment Bank (AIIB) and the Eurasian Economic Union(EEU). Additionally, China is incorporating gold into the Silk Road project.

The Asian Infrastructure Investment Bank

The AIIB is an international financial institution proposed by China in 2013 to finance infrastructure projects in Asia. The Chinese government has been frustrated with the slow pace of reforms in established institutions like the IMF and World Bank, which are dominated by the US. China’s rapid economic growth in recent years has made them pursuing a greater input in these institutions, but the US has neglected to honor these requests appropriately, forcing China to launch its own institutions.

Despite the US has been pressuring its allies from signing up as AIIB prospective founding members only Japan obeyed, signaling a demise of US power and failing US foreign policy. In a milestone event many western countries have submitted for membership in March and April 2015, amongst others the UK, Switzerland, Sweden, Spain, Portugal, Norway, the Netherlands, Italy, Germany, France, Finland, Denmark, Australia and Israel. The AIIB articles of agreement are expected to be completed by the end of 2015.

China is now playing multiple games at the same time by developing the AIIB and concurrently pressuring the IMF to reform. One of China’s goals is for the renminbi to be included into the IMF’s basket of currencies the Special Drawing Right (SDR). On April 30, 2015, the IMF’s Director Of The Communications Department, Gerry Rice, stated in a press briefing about the SDR review “Yes, the work has begun” (see this video at 28:15). The first IMF board meeting on the SDR review originally scheduled in May 2015, has been “deferred, because the work is underway” (see the same video at 31:30).

The Eurasian Economic Union

The President of Kazakhstan, Nursultan Nazarbayev, first suggested the idea of creating a regional (Eurasian) trading bloc during a speech at Moscow State University In 1994. Afterwards Belarus, Russia and Kazakhstan formed a free trade zone, which turned into a customs union, followed by a single economic space, finally reaching an economic union (the EEU) on May 29, 2014, when an agreement was signed by the Supreme Eurasian Economic Council in Astana, Kazakhstan.

Worth noting is that according to Pravda.ru Nazarbayev is of the opinion the US dollar is an illegal and non-competitive means of payment, “the world currency was not de jure legitimate because it was never adopted by any communities or organizations. There is no such international law,… the world currency market is not a civilized market, as the system of world currency issuance is not being controlled”. Nazarbayev believes the world is heading towards a new monetary system, from “defective capitalism” to “the new capitalism that would be based on a non-defective currency.” Chinese President Xi Jinping visited Kazakhstan in September 2013 where he raised the initiative of the Silk Road Economic Belt at the Nazarbayev University. In March this year China and Kazakhstan signed 33 deals on industrial capacity cooperation.

The EEU is aggressively expanding; its latest official members are Armenia and Kyrgyzstan. By looking at the EEU flag, that displays the whole of Asia, it doesn’t take a lot of imagination to expect they’ll continue expanding. Turkey has mentioned it likes to join and there are talks with Vietnam to form a free trade area.

EEU flag
EEU flag

Russian news outlet RT has disclosed that Vladimir Putin and Xi Jinping have signed a decree on cooperation in tying the development of the EEU with the Silk Road economic project. “The integration of the Eurasian Economic Union and Silk Road projects means reaching a new level of partnership and actually implies a common economic space on the continent,” Putin said. Furthermore, columnist for Russian news outlet Sputnik, Pepe Escobarstated, “What we have here, above all, is the China-led New Silk Road directly connecting with the Russia-led EEU. China and the EEU are bound to set up a free trade zone”. The EEU could potentially grow into a very significant power bloc.

More from Escobar:

The always-evolving strategic partnership is not only about energy – including the possibility of Chinese-controlled stakes in crucial Russian oil and gas projects – and the defense industry; it’s increasingly about investment, banking, finance and high technology.

…The partnership’s reach is extremely wide, from Russia-China cooperation within the Shanghai Cooperation Organization (SCO) to the Russia-China stake in the new BRICS development bank, and to Russian support to the Chinese-led Asian Infrastructure Investment Bank (AIIB) and the Silk Road Foundation.

…Beijing and Moscow, along with the other BRICS nations, are fast moving to trade independently of the US dollar, using their own currencies. In parallel, they are studying the creation of an alternative SWIFT system – which will necessarily be joined by EU nations, as they are joining the AIIB.

There have also been talks for an EEU joint currency titled Altyn, which refers to an ancient currency that used to circulate in Eurasia. In the past Altyn has never been minted in gold, although in Turkic, a language family spoken in Eurasia, Altyn does mean Gold.

Make sure English captions are turned on in the next video clip from Russian television about Altyn.

Belarus, Kazakhstan, Russia and China have all substantially increased their official gold reserves since the first quarter of 2000. Kyrgyzstan to a lesser extent and Armenia has currently no official gold reserves.

Naamloos
Source: World Gold Council

“One Belt One Road” And Gold.

It was first disclosed by Albert Cheng, Managing Director of the World Gold Council, in a speech at the Dubai Multi Commodities Centre April 12, 2015; China has ambitions to include gold in the One Belt One Road (OBOR) economic project. From one of Cheng’s slides we can read:

China Gold Market – the next 10 years – Integrate gold cooperation into One Belt, One Road

– Mr. Xu Luode, President of Shanghai Gold Exchange and a National People’s Congress (NPC) delegate proposed that to integrate gold market development into the strategic development plan of “OBOR” to the NPC & CPPCC ended in mid-March, 2015.

– His proposal suggested that cooperation and development mechanism to involve major gold producers/users along the OBOR.

– This initiative to be led by People’s Bank of China, Ministry of Foreign Affairs, National Development and Reform Commission, Ministry of Commerce and other related ministries, should be developed by leveraging the Shanghai Gold Exchange as the trading hub, and be integrated into the “OBOR” plan.

– Related specialized plans and supportive policies will also be developed to balance the regional developments in China and accelerate the interconnection with countries along the routes.

At first I was a bit skeptical towards these statements; when the Xi Jinping launches new projects all the subordinate bureaucrats need to show that their respective departments will contribute to this. Previously the Shanghai Gold Exchange (SGE) has been very clear about its international ambitions with the SGE International Board, but before any of this is realized let’s not copy-paste every idea they put out, I thought.

However, the first signs of cooperation in the gold industry along OBOR are reality, time to pay attention. On May 11, 2015, China’s largest gold mining company, China National Gold Group Corporation (CNGGC), announced it has signed an agreement with Russian gold miner Polyus Gold to deepen ties in gold exploration. The cooperation will include mineral resource exploration, technical exchanges and materials supply.

“China’s Belt and Road Initiative brings unprecedented opportunities for the gold industry. There is ample room for cooperation with neighboring countries, and we have advantages in technique, facilities, cash, and talents,” said Song Xin, General Manager of CNGGC and President of the China Gold association. Song Yuqin, Deputy General Manager of the Shanghai Gold Exchange has stated, “Asians have a tradition of collecting gold. The gold trade is expected to become a significant component of transactions by ‘Belt and Road’ countries.”

Koos Jansen
E-mail Koos Jansen on: koos.jansen@bullionstar.com

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

1 Chinese yuan vs USA dollar/yuan strengthens to 6.2089/Shanghai bourseup and Hang Sang down

2 Nikkei closed up by 3.93 points or .02%

3. Europe stocks all down/USA dollar index down to 94.40/Euro rises to 1.1243/

3b Japan 10 year bond yield: huge rise to .46% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.95/Japan losing control over their bond market

3c Nikkei still just above 20,000

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

3e WTI 60.24 Brent 66.34

3f Gold up/Yen down

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

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt. Last night Japan refused to increase it’s QE

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund rises to 71.6 basis points. German bunds in negative yields from 4 years out.

Except Greece which sees its 2 year rate falls slightly to 21.17%/Greek stocks down .11%/ still expect continual bank runs on Greek banks.

3j Greek 10 year bond yield rises to: 10.94%

3k Gold at 1193.00 dollars/silver $16.45

3l USA vs Russian rouble; (Russian rouble up 6/10 rouble/dollar in value) 50.26 , the rouble is still the best acting currency this year!!

3m oil into the 60 dollar handle for WTI and 66 handle for Brent/Saudi Arabia increases production to drive out competition.

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation. This can spell financial disaster for the rest of the world/China may be forced to do QE!!

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning 92.50 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0394 well below the floor set by the Swiss Finance Minister.

3p Britain’s serious fraud squad investigating the Bank of England/

3r the 4 year German bund remains in negative territory with the 10 year moving further away from negativity at +.71/the ECB losing control over the bond market.

3s This week the ECB increased the ELA to Greece by another large 2.0 billion euros. The new maximum is 78.9 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 on Wednesday. They did not pay the 700 million plus payment to the IMF today and thus a technical default.

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 2.35% early this morning. Thirty year rate well below 3% at 3.11% / yield curve flatten/foreshadowing recession.

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

(courtesy zero hedge/Jim Reid Deutsche bank)

 

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

 

(courtesy zero hedge/Jim Reid Deutsche bank)

Global Bond Rout Returns With A Vengeance; 10Y Treasury Tumbles Under Key Support; Futures Pounded

It all started again in Asia, although not in China where the berserker mania bid for stocks has returned and the SHCOMP is now up nearly 5% in the past two days following the PBOC’s latest easing, but in Japan where once again the massively illiquid JGB market, of which the BOJ owns roughly a third as of this moment, is going through yet another shock period (if not quite VaR yet) with last night’s 10 Year JGB auction seeing the lowest Bid to Cover since 2009.

This was the beginning, and promptly thereafter bond yields around the globe spiked once more, with 10-year Treasury yields climbing to a five-month high, as the global rout in debt markets deepened. The biggest casualty so far is the Bund, which having retraced some of the flash crash losses from two weeks ago is once again in panic selling mode, and while not having taken out the recent 0.8% flash crash wides, traded just shy of 0.75% this morning.

Germany’s 10-year bund yield, the euro area’s benchmark, rose 12 basis points to 0.73 percent and Japanese yields also increased.

Just as notably, treasury bond yields have also spiked, jumping seven basis points to 2.35% and breaching the 2.32% support zone we noted last week.  Recall: “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.”

With the support now breached, freefall came next and sure enough:

  • 10Y TREASURY YIELD RETRACES 50% OF 2014-2015 DECLINE
  • 30Y TREASURY YIELD RETRACES 50% OF 2014-2015 DECLINE

Needless to say, the bond rout has spread to all core and peripheral European markets as well, in what increasingly more as suggesting is merely the ECB selling off bonds in a somewhat “uncontrolled” manner just so it can continue doing QE for another 15 months, instead of being stopped out by -0.20% yields across all curves. It remains to be seen if this too “conspiracy theory” is proven right.

And since in recent day, the bond and equity markets are tied to the hip, US equity futures are sliding fast and confirming once again that Dennis Gartman’s newsletter – in both comedic and market fade timing – is unparalleled. Our advice: wait for Gartman to urge being comfortably short in paper money terms here before BTFD.

In any event, European fixed income products have been a key focus for market participants with Bunds (-160 ticks) drifting lower in a continuation of the move seen yesterday with USTs subject to spillover selling from Bunds and heavy corporate issuance this week from the US. Sentiment for fixed income products was also dampened overnight following today’s 10yr JGB auction, which printed the lowest b/c in 6-years. Expectations originally had been for the 10yr JGB auction to be more successful, with Thursday’s 30yr auction more a focus for concern. On a technical note, Bund June’15 future contracts currently reside below the 50% retracement (152.24) between last week’s low and yesterday’s high, while US 10yr and 30yr yields both trade above the 50% level of the 2014/15 decline.

Higher European yields have continued to weigh on European equites (Euro Stoxx -1.7%) given the subsequent implications for European borrowing costs with macro newsflow otherwise relatively light. Today’s downward pressure has seen
the FTSE 100 (-1.7%) give back all post-election gains, while on a
sector specific basis, defensive stocks lead the way lower while the DAX (-2.1%) is partially weighed on by BMW (-3.0%), after Audi overtook BMW in luxury car sales in April.

Higher European yields have provided the EUR with some upside this morning with EUR extending on its gains after breaking through 1.1200 to the upside, tripping light Asian based stops and the 100DMA at 1.1219. GBP has shrugged off reports suggesting the UK could consider an EU referendum as soon as 2016 to avoid conflict with French and German elections. Instead GBP has been supported by a beat on expectations for UK industrial & manufacturing data (UK Manufacturing Production (Mar) M/M 0.4% vs. Exp. 0.3%, Prev. 0.4%, Rev. 0.5% & Industrial Production (Mar) M/M 0.5% vs. Exp. 0.0%, Prev. 0.1%), with corporate and leveraged demand touted in the pair. GBP/USD broke above its 200DMA to the upside at 1.5624; with the pair having previously not traded above this DMA since Aug 2014. Elsewhere, AUD has managed to hold onto its overnight gains after breaking above 0.7900, amid cross related flows following encouraging Australian home loans and investment lending data.

In the commodity complex, energy prices have largely been swayed by the broadly weaker USD (-0.9%) with WTI (+USD 0.98) and Brent (+USD 1.21) trading higher amid light newsflow. However, despite this morning’s gains, the market has ignored a note from Goldman Sachs warning that crude prices could face selling pressure in the near-term due to rising oil  stockpiles, with the recent upturn in prices leading to the possibility of US shale drillers adding to the surplus. In precious metals markets, both spot gold and silver trade relatively sideways. Today also sees APR crude oil inventories, after last week’s inventory (-1500k) showed the first drawdown in stockpiles since Jan 6th. Elsewhere, overnight iron ore reached 10 week highs after a lack of imported iron ore led to the consumption of port reserves thus driving up prices.

In summary: European shares remain lower with the autos and financial services sectors underperforming and bank, oil & gas outperforming. Most European bond yields rise, Japanese 10-year bond yield gains. U.K. industrial output exceeds forecasts, pound climbs to 2015 high. Fed’s Dudley says interest rate increases will mark regime shift The German, U.K. markets are the worst-performing larger bourses, Italian the best. Euro is stronger vs dollar. German 10yr bond yields rise; Japanese yields increase. Commodities gain, with nickel, corn underperforming and Brent crude outperforming. U.S. monthly budget statement, small business optimism, JOLT job openings due later.

Market Wrap

  • S&P 500 futures down 0.7% to 2083.4
  • Stoxx 600 down 1.7% to 394.6
  • US 10Yr yield up 6bps to 2.34%
  • German 10Yr yield up 11bps to 0.72%
  • MSCI Asia Pacific down 0.2% to 151.5
  • Gold spot up 0.4% to $1188.5/oz
  • 6.5% of Stoxx 600 members gain, 92.8% decline
  • Eurostoxx 50 -1.8%, FTSE 100 -1.7%, CAC 40 -1.6%, DAX -2%, IBEX -1.7%, FTSEMIB -0.8%, SMI -1.1%
  • Asian stocks fall with the Shanghai Composite outperforming and the Sensex underperforming
  • MSCI Asia Pacific down 0.2% to 151.5; Nikkei 225 little changed%, Hang Seng down 1.1%, Kospi down 0%, Shanghai Composite up 1.6%, ASX up 0.9%, Sensex down 2.4%
  • Euro up 0.99% to $1.1265
  • Dollar Index down 0.73% to 94.32
  • Italian 10Yr yield up 10bps to 1.87%
  • Spanish 10Yr yield up 11bps to 1.86%
  • French 10Yr yield up 11bps to 1.01%
  • S&P GSCI Index up 1.3% to 447.9
  • Brent Futures up 2.1% to $66.3/bbl, WTI Futures up 1.8% to $60.3/bbl
  • LME 3m Copper up 1.1% to $6432.5/MT
  • LME 3m Nickel down 1.1% to $14120/MT
  • Wheat futures down 0.1% to 480.5 USd/bu

Bulletin Headline Summary from Bloomberg and RanSquawk

  • Bunds drift lower in a continuation of the move seen yesterday with USTs subject to spillover selling from Bunds
    and heavy corporate issuance this week from the US.
  • European yields have continued to weigh on European equities given the higher borrowing costs for European
    companies, with FTSE lower by 1.7%, giving back all post-election gains.
  • GBP trades above its 200 DMA, bolstered by strong UK industrial & manuf
  • Treasuries slide led by long-end as rout in EGBs continues; quarterly refunding begins today with $24b 3Y notes, WI yield 1.06% vs 0.865% in April, 1.104% in March.
  • Although the timing is uncertain, the Fed’s first rate increase since 2006 will usher in a “regime shift” that will stir financial markets when it occurs, said New York Fed President William C. Dudley
  • Greece handed the ECB an excuse to maintain life support for its financial system by persuading its skeptical German-led creditors it’s serious about delivering the policies needed to escape a default
  • Greece used up ~EU650m reserves from its SDR IMF holdings account to meet loan payment of ~EU750m due to IMF today,  Kathimerini newspaper reports, without citing anyone;  Reserves kept in IMF holdings account need to be replenished within one month
  • IMF has signaled to Eurogroup that it doesn’t want to participate in a potential rescue of Greece, Spanish newspaper El Mundo reports
  • China adopted the IMF’s standards for its latest balance of payments data as the nation seeks to obtain reserve-currency status for the yuan
  • Japan sold 2.4t yen ($20b) in 10Y bonds at average yield of 0.434%, highest since Dec. 2014; 2.24 bid-to-cover lowest since Feb. 2009, down from 2.75 at previous auction
  • U.K. industrial production rose 0.5% in March, the most in six months and higher than forecasts for no change
  • A magnitude 7.3 earthquake struck Nepal on Tuesday less than three weeks after a temblor killed more than 8,000 people in the Himalayan nation
  • Sovereign bond yields surge.  Asian stocks mostly higher, European stocks tumble, U.S. equity-index futures decline. Crude oil, gold, copper higher

US Event Calendar

  • 9:00am: NFIB Small Business Optimism, April, 96.0 (prior 95.2)
  • 10:00am: JOLTS Job Openings, March (prior 5.133m)
  • 2:00pm: Monthly Budget Statement, April, est $138b (prior $106.9b)

Central Banks

  • 12:45pm: Fed’s Williams speaks in New York
  • 5:05pm: Reserve Bank of New Zealand’s Wheeler holds news conference in Wellington

DB’s Jim Reid concludes the overnight recap

Most bond markets in Asia this morning have generally tracked yesterday’s weakness with 10y yields in Japan (+4.6bps), Hong Kong (+5.8bps), South Korea (+4.3bps) and Australia (+13.6bps) higher as we go to print. It’s a bit more muted in the Treasury market meanwhile with the 10y benchmark yield (-0.7bps) modestly paring back some yesterday’s lurch higher in yield. Elsewhere equity markets are trading with little obvious direction with the Nikkei (-0.38%) and Hang Seng (-0.32%) both lower and the Shanghai Comp (+0.66%) and ASX (+0.68%) firmer. Credit markets in Asia are around a basis point wider.

The weakness in Treasuries was in fact led by the longer end yesterday with the yield curve bear steepening. 30y yields finished 14bps higher to close back above 3% at 3.041% for the first time since December 2nd. The closing level is the highest since November 20th. 5y Treasuries meanwhile closed 11.2bps higher at 1.601%. As mentioned the sell-off appeared to be a continuation of the weakness in the Europe session with the rally that we saw in Bunds on Friday lasting for all of one day. Yesterday 10y Bund yields closed 6.3bps higher at 0.608% and in other developed bond markets Netherlands (+6.5bps), Sweden (+5.0bps), Switzerland (+1.8bps) and France (+6.5bps) all saw yields moves higher. Peripherals also softened with Italy (+9.1bps), Spain (+8.3bps) and Portugal (+8.9bps) was once again underperforming.

In terms of Greece yesterday and specifically the Eurogroup meeting, as we’d come to expect, there was little material new news to come out of the meeting. Instead, the commentary centered around more progress being made but not enough yet to warrant a release of funds to Greece. A joint statement put out after the meeting between the two sides said that ‘we welcomed the progress that has been achieved so far’ but that ‘at the same time, we acknowledged that more time and effort are needed to bridge the gaps on the remaining issues’. Eurogroup President Dijsselbloem backed this up saying that ‘I’m not satisfied but just a bit more optimistic, the way the talks take place in the way they negotiate has been improved’. Despite Varoufakis saying that there was some considerable convergence between the sides, he reiterated the fragile liquidity situation that Greece finds itself with and when asked about a potential timeframe for when cash may run out, commented that ‘we are talking about the next couple of weeks’.

Interestingly however and with talks dragging on, German finance minister Schaeuble seemingly didn’t downplay the issue of Greece holding a potential referendum, saying that ‘if the Greek government thinks it should hold a referendum, it should hold a referendum’ and that ‘maybe it would even be the right measure to let the Greek people decide whether they’re ready to accept what needs to be done’. Any support towards a referendum from the European side will be important given the distinct possibility that Tsipras is unable to pass any sort of agreement through parliament. In the mean time and with cash seemingly close to running out, news of yesterday’s ‘progress’ and also the news that a transfer order was put in for the €750m IMF payment due today may help ease some of the worries over any potential haircut increase by the ECB tomorrow.

Away from the moves in bond markets yesterday, it was fairly subdued in markets elsewhere. The S&P 500 (-0.51%) and Dow (-0.47%) both fell while the Dollar closed 0.23% higher (DXY). In Europe equity markets were a tad more mixed with the Stoxx 600 (+0.29%) higher although the CAC (-1.23%) and the DAX (-0.31%) both fell. Energy stocks certainly contributed to the weaker showing for US equities as the component led declines (-2.05%) with Noble Energy (-6.23%) in particular weaker. The market appeared to react negatively to the news that the company is set to buy Rosetta Resources in what will be the first major shale deal since the collapse and selloff in oil – a potential early sign that M&A is returning to the sector. Oil markets actually bounced off their intraday lows but still closed down yesterday with WTI (-0.24%) and Brent (-0.73%) declining to $59.25/bbl and $64.91/bbl respectively. Gold was 0.37% lower at $1184/oz.

Fedspeak yesterday was confined to the San Francisco Fed’s Williams who suggested that the Fed should not telegraph rate hikes and instead let economic data dictate while accepting that fewer hints out of the Fed could lead to volatility in markets. As a result Williams reiterated that every meeting is a possibility and therefore on the table for liftoff, before going on to say that he expects growth to bounce back in Q2 with unemployment potentially back down to 5% or below by the end of the year. Williams, like other recent Fed commentators, noted that he believes the weak Q1 was a ‘big anomaly’.

Elsewhere, it was a very quiet day on the data front with no releases in the European session other than the Bank of England holding rates at 0.5% as expected and just a secondary release in the US session with the April labour market conditions index declining to -1.9 from -1.8 previously.

In terms of the day ahead, the calendar picks up slightly today with French business sentiment and UK industrial and manufacturing production due out this morning. Over in the US this afternoon, the April NFIB small business optimism reading is the early print and we follow this up later in the day with more employment data in the JOLTS job openings report for March and also the April monthly budget statement.

 

end

 

The big story of the day:  Greece pays the IMF it’s 750 million euros by borrowing 650 million euros from its holding account and 100 million euros from funds borrowed from municipalities.  The problem is that 650 million euros must be returned to the IMF in 30 days.  Greece has no chance.  Also the IMF basically stated that it wants nothing to do with Greece from now on

(courtesy zero hedge)

 

Greece Effectively Defaults To IMF Using SDR Reserves To “Repay” Fund; 1 Month Countdown Begins

When Monday’s Eurogroup meeting concluded without an agreement between Greece and its creditors, it should have been game over for Athens. With pensioners at their breaking point and with local governments reluctant to comply with a decree mandating a sweep of excess cash reserves, the idea that Greece would somehow be able to scrape together €750 million euros to make a scheduled payment to the IMF today seemed far-fetched at best which is why we asked the following question Monday afternoon:

Where, if not from local governments who have been extremely reluctant to comply with Athens’ cash sweep decree, and if not from the IMF which will apparently not be paying itself tomorrow after all, is Greece going to get three quarters of a billion euros in the next 12 hours?

We now know the answer to that question. As Bloomberg reports, citing Kathimerini, Greece tapped IMF reserves to pay .. well, to pay the IMF:

Greece used up ~EU650m reserves from its SDR IMF holdings account to meet loan payment of ~EU750m due to Fund today, Kathimerini newspaper reports, without citing anyone.

Reserves kept in IMF holdings account need to be replenished within one month

IMF agreed over weekend for their use, given Greece’s liquidity situation; without use of those reserves, payment due today wouldn’t be possible.

Reuters has a bit more color:

Greece tapped emergency reserves in its holding account at the International Monetary Fund to make a crucial 750 million euro (539 million pounds) debt payment to the Fund on Monday, two government officials said on Tuesday.

With Athens close to running out of cash and a deal with its international creditors still elusive, there had been doubts whether the leftist-led government would pay the IMF or opt to save cash to pay salaries and pensions later this month.

Member countries of the IMF have two accounts at the fund – one where their annual quotas are deposited and a holding account which may be used for emergencies.

One official told Reuters that Athens used about 650 million euros from the holding account to make the payment.

“We made use of money in our holding account in the fund,” the official said, declining to be named. “The government also used about 100 million of its cash reserves.”

This explains why Yanis Varoufakis was so confident that the payment would be made and also why the language around the payment confirmation was so bizarre (recall that the heading was “Greece said to have given order for IMF repayment“). It also underscores the degree to which this entire ordeal has now careened into sheer absurdity because disbursing bailout funds that you know will immediately be sent right back where they came from in the form of an interest payment is one thing, but literally paying yourself is another, and the IMF seems to have done the latter on Monday.

Given this, it’s certainly not surprising that Christine Lagarde and company are not thrilled about the prospect of participating further in what has become an outright farce and as El Mundo reports, the fund has now told the ECB and the European Commission that it does not wish to be a part of a new program for Greece.

Via El Mundo (Google translated):

The International Monetary Fund (IMF) has shown the Eurogroup their desire not to be part of a possible third bailout of Greece, which would amount to 50,000 million and would be vital for the survival of the Hellenic country. The absence of really emotional action by the executive with whom Tsipras contain spending and tackle the deficit, as well as the challenges it has done in recent weeks, as the readmission of public employees has caused the agency wants let all the weight of aid to Greece in the hands of the Eurozone and the ECB.

The fact that the IMF wants to stop being part of the bailout of a country is particularly serious, not in vain this institution is always the last resort of economies whose situation is more complicated. Therefore, the IMF has priority over other creditors in the order for recovery and, in all history, only Zimbabwe, Somalia and Sudan have failed to fulfill their obligations to it. However, given the difficulties to unlock a new rescue aid tranche that matures on June 30, the Washington-based organization fears that Greece will become the first economy in a developed nation it incurs a default, as They have confirmed to THE WORLD sources familiar with the process.

For Germany (where lawmakers are already pressuring Angela Merkel to cut the Greeks loose) this may be the final straw.

  • SCHAEUBLE SAYS IMF MUST STAY INVOLVED IN GREECE AID PROGRAM

Greece is now reliant on a similarly ridiculous circular funding scheme to pay public sector employees whereby pensioners will only receive payments if the government is successful at tapping pension funds for cash.

Via Bloomberg:

Greece may be able to meet end-May salaries and pensions payments, if pension funds, municipalities commit more of their cash reserves.

And because all of the above isn’t preposterous enough, Greece will depend on the disbursment of the €7.2 billion left in its current program (about half of which is set to come from the IMF) to replenish the funds it raided from its SDR holdings:

Greece assumes that an agreement will be reached by end-May for disbursement of bailout funds, so that it can replenish holdings account reserves.

In sum: the IMF paid itself on behalf of Greece and will now be forced to pay itself back for paying itself later this month. Or, put differently, Greece has prepaid the IMF with IMF money it doesnt have.

Meanwhile, Greek pensioners are set to adopt a similarly ridiculous self-payment scheme in a matter of weeks even if they don’t entirely appreciate the sheer insanity that’s taken hold in Athens.

And just to prove how dire the situation now is, Market News just reported the following shocker:

  • GREECE CASH RESERVES STAND AT APPROXIMATELY EUR 90 MILLION – EUROSYSTEM SOURCES

The Greek endgame is now upon us.

 

end

 

With bunds plunging again, all central banks came to the rescue again.

It was those damn derivatives that keep blowing up!!

 

(courtesy zero hedge)

 

Bund Plunge-Protection-Team To The Rescue (Again)

If there is one thing more faith-in-central-planning-destroying than a drop in equity prices, it is a collapse in bond prices. Last week, when Bunds (and Treasuries) collapsed (with 10Y Bund yields spiking up to 75bps), there was a sudden appearance of a deep-pocketed buyer of last resort that rescued bond yields lower (and squeezed stock prices higher). Today, after overnight carnage, Bunds (and Treasuries) are once again mysteriously aggressively bid into the US open

 

 

However, it doesn’t seem to be having the same effect this time…

 

Charts: Bloomberg

 

The middle east tension escalates with this revelation:

(courtesy zero hedge)

Iran Responds To US Naval Escalation, Sends Warship Escort For Yemen Aid Vessel

The tension is palpable on the high seas these days, what with proxy wars raging in close proximity to critical oil chokepoints and “Axis of Evil” members stepping up efforts to deter the suspicious maritime activities of naval powerhouses like The Marshall Islands. You’ll recall that towards the end of last month, Iran seized a Marshall Islands-flagged cargo ship that veered into its waters prompting the the US Navy to announce it would henceforth be escorting ships in the Persian Gulf as a safety precaution.

This was just the latest in a string of seaborne provocations which included Washington’s move to send an aircraft carrier to the waters of Yemen with the intention of supporting efforts to intercept Iranian vessels which the US assumes are carrying weapons intended for the Houthi rebels. Of course Iran would never, ever arm militiamen aiming to usurp a US-backed, Saudi-supported puppet government which is why the following shouldn’t be expected to ruffle any feathers in Washington:

The Iranian Navy is safeguarding ‘Iran Shahed’ ship, the Iranian vessel carrying humanitarian supplies to the war-stricken people of Yemen, according to Rear Admiral Hossein Azad, the commander of the first zone of the Navy.

Iran Shahed ship left the Port of Shahid Rajaei in southern Iran for Yemen after loading humanitarian supplies in the Iranian commercial port on Monday. 

Airstrikes on Yemen by a Saudi-led coalition have killed and wounded thousands of innocent people of the country so far. 

Rear Admiral Azad told IRNA that the 34th fleet of the navy, which is present in the Gulf of Aden and Bab el-Mandeb Strait, provides special support for Iranian vessels carrying humanitarian aid. 

This fleet escorts Iranian commercial vessels and tankers, and also safeguards ships from other nations whenever deemed necessary, Azad said, citing the saving of a ship owned by Hong Kong from pirates by the 34th fleet of the Iranian Navy. 

In other words: nothing to see here, just the Iranian Navy accompanying a ship loaded with “humanitarian supplies” (and certainly no weapons caches) to Yemen, where fighters (who Iran has certainly never armed before) battle Saudi Arabia (which has now positioned a “strike force” on the border) for control of the country.

Needless to say, the US will want to inspect any Iranian aid ships bound for Yemen, setting up yet another potentially tense situation and increasing the chances of an “accident” off the war-torn country’s coast.

 

end

And then this:

US May Use Military To Confront China In South China Sea Islands Dispute

Just days after Japanese PM Shinzo Abe leaves Washington(having stepped up his nation’s military assertiveness), The Wall Street Journal reports that the US Secretary of Defense has asked staff for military options in the South China Sea (as we have detailed China’s land reclamation efforts):

*U.S. MAY USE MILITARY TO CONFRONT CHINA IN SPRATLY ISLANDS DISPUTE: WSJ

Having ironically commented on China’s “bullying,” it appears Nobel-Peace-Prize winner President Obama is preparing for an even bigger objective, amid China’s rising threat to USD dominance (with Yuan liberalization and AIIB success).

As The Wall Street Journal reports, the U.S. military is considering using aircraft and Navy ships to directly contest Chinese territorial claims to a chain of rapidly expanding artificial islands, U.S. officials said, in a move that would raise the stakes in a regional showdown over who controls disputed waters in the South China Sea.

Defense Secretary Ash Carter has asked his staff to look at options that include flying Navy surveillance aircraft over the islands and sending U.S. naval ships to well within 12 nautical miles of reefs that have been built up and claimed by the Chinese in an area known as the Spratly Islands.

Such moves, if approved by the White House, would send a message to Beijing that the U.S. won’t accede to Chinese territorial claims to the man-made islands in what the U.S. considers to be international waters and airspace.

The proposal under consideration would be to send Navy ships and aircraft to within 12 nautical miles of only those built-up sites that the U.S. doesn’t legally consider to be islands, officials say.

Under the U.N. Convention on the Law of the Sea, reclaimed features aren’t entitled to territorial waters if the original features are not islands recognized under the agreement, U.S. officials say. Under that interpretation, the U.S. believes it doesn’t need to honor the 12-mile zone around the built-up reefs that weren’t considered to be islands before construction there began.

Several U.S. allies in the region have been privately urging the White House to do more to challenge Chinese behavior, warning Washington that U.S. inaction in the South China Sea risked inadvertently reinforcing Beijing’s territorial claims, U.S. officials said. Some allies in the region have, in contrast, expressed concern to Washington that a change in the U.S.’s approach could inadvertently draw them into a conflict.

“It’s important that everyone in the region have a clear understanding of exactly what China is doing,” a U.S. official said. “We’ve got to get eyes on.” The U.S. has been using satellites to monitor building at the islands.

In recent months, the White House has sought to increase pressure on Beijing to halt construction on the islands through diplomatic channels, as well as by calling out the Chinese publicly in recent press briefings and government reports.

And it appears the US military has been testing the waters so to speak…

U.S. military aircraft have repeatedly approached the 12-nautical-mile zone declared by China around the built up reefs. But to avoid an escalation, the planes haven’t penetrate the zone. A senior military official said the flights “have kept a distance from the islands and remained near the 12-mile mark.”

U.S. planes have flown close to the islands where the building has been taking place, prompting Chinese military officers to radio the approaching U.S. aircraft to notify the pilots that they are nearing Chinese sovereign territory. In response, U.S. pilots have told the Chinese that they are flying through international airspace.

The USS Fort Worth, a combat ship, has been operating in recent days in waters near the Spratlys. “We’re just not going within the 12 miles—yet,” a senior U.S. official said.

Finally, it is worth noting that…

The military proposals haven’t been formally presented to the White House, which would have to sign off on any change in the U.S. posture. The White House declined to comment on the deliberations.

Officials said the issue is a complicated one because at least some of the areas where the Chinese have been doing construction are, in eyes of the U.S. government, legitimate islands, which would be entitled to a 12-nautical-mile zone.

*  *  *

As a reminder, China has been busy…

Now, a series of satellite images have confirmed the construction of a 10,000 foot runway on the reef, which would appear to suggest that China may be planning on landing military aircraft such as fighter jets on the reclaimed islands. Here, in glorious HD, are the visuals accompanied by descriptions via the Asia Maritime Transparency Initiative:  see zero hedge for pictures

end

 

Oil related stories:

 

Saudis increase production and yet prices rise!!

(courtesy zero hedge)

Crude Prices ‘Spike’ Despite Saudis Increasing ‘Surge’ Production

As Barclays recently noted, there is a complete decoupling between futures and physical markets for crude oil and nowhere is that more evident than the high volume spike in crude that just happened after Saudi Arabia boosted crude production for a second month to the highest level in at least three decades, helping to raise OPEC output as U.S. growth showed signs of slowing.

As Bloomberg reports,

Saudi Arabia boosted crude production for a second month to the highest level in at least three decades, helping to raise OPEC output as U.S. growth showed signs of slowing.

The Middle Eastern country increased daily crude output by 13,700 barrels in April to an average of 10.308 million,according to data the country communicated to the Organization of Petroleum Exporting Countries’ secretariat in Vienna.

Prices collapsed by almost half last year as Saudi Arabia led OPEC in maintaining production rather than cede market share to booming U.S. output. The group has become more unified about keeping its daily output target of 30 million barrels because prices are now rising, according to Kuwait’s oil minister. Oil in New York has surged more than 40 percent from its March low amid as U.S. drillers pulled a record number of rigs from fields.

“The Saudis must be content that their policy of protecting their market share has worked so well and prices did not stay below $50 for long,” said Christopher Bellew, senior broker at Jefferies International Ltd. in London, who had not seen the report.“They held their nerve and now see a stable market with their share preserved.”

OPEC maintained projections for supply growth from oil producers outside the group in 2015 at 680,000 barrels a day. It also kept its 2015 estimate for demand for the group’s crude at 29.3 million barrels a day. That’s about 1.5 million barrels a day less than the group produced in April.

*  *  *

And so the machines rip crude prices higher… but as is clear, there is plenty going on…

As Barclays noted,
there is a huge disconnect between price action in
physical markets where differentials are signalling oversupply and
futures markets where all looks rosy.
Financial drivers
have been key in this commodity rally, with short-covering driving part
of it, but fresh longs being drawn in. Net speculative length in Brent
crude has doubled since the start of the year to its highest level since
data collection began in 2011.

 

end

 

Then oil jumps even more on API drawdown:

 

Oil Jumps Above $61 After API Shows Larger-Than-Expected Inventory Draw

Following last week’s biggest inventory draw since September 2014 of 3.88 million barrels, expectations were for a relatively small 250k draw this week (with builds in gasoline and distillates). API reported a considerably bigger than expected 2 million bbl draw (with a 827k draw from Cushing). WTI Crude has pushed up above $61 on the news.

 

A 2nd draw in a row…

 

Pushed WTI up over $61…

 

Charts: Bloomberg

end

 

Your more important currency crosses early Tuesday morning:

 

Euro/USA 1.1243 down .0098

USA/JAPAN YEN 119.95 down .157

GBP/USA 1.5678 up .0102

USA/CAN 1.2033 down .0033

This morning in Europe, the Euro rose by a considerable 99 basis points, trading now well above the 1.12 level at 1.1243; 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, rising peripheral bond yields and today falling bourses.

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 16 basis points and trading just below the 120 level to 119.95 yen to the dollar.

The pound was well up this morning as it now trades just above the 1.56 level at 1.5678, celebrating a conservative victory but 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 well up by 99 basis points at 1.2033 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 : up 3.93 points or 0.02%

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

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

Gold very early morning trading: $1193.00

silver:$16.45

Early Tuesday morning USA 10 year bond yield: 2.35% !!! up 8 in basis points from Monday night and it broke through resistance at 2.27-2.32%. This is trouble!!!

USA dollar index early Tuesday morning: 94.43 down 57 cents from Monday’s close. (Resistance will be at a DXY of 100)

 

This ends the early morning numbers, Tuesday morning

And now for your closing numbers for Tuesday:

Closing Portuguese 10 year bond yield:2.41 up 5 in basis points from Monday (continual central bank intervention/and failing today)

 

Closing Japanese 10 year bond yield: .45% !!! up 5 in basis points from Monday/Japanese government losing control over their bond market.

 

Your closing Spanish 10 year government bond, Tuesday, up 8 points in yield (massive central bank intervention/failed again)

 

Spanish 10 year bond yield: 1.83% !!!!!!

Your Monday closing Italian 10 year bond yield: 1.85% up 8 in basis points from Monday: (massive central bank intervention/failed again)

trading 2 basis point higher than Spain.

 

IMPORTANT CURRENCY CLOSES FOR TODAY

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

Euro/USA: 1.1213 up .0067 ( Euro up 67 basis points)

USA/Japan: 119.85 down .278 ( yen up 28 basis points)

Great Britain/USA: 1.5671 up .0095 (Pound up 95 basis points) Conservative win in election last Thursday and thus big demand for pounds.

USA/Canada: 1.2011 down .0083 (Can dollar up 83 basis points)

The euro rose again today sharply. It settled up 67 basis points against the dollar to 1.1213 as the dollar fell badly again on most fronts the following massive central bank intervention to save the financial scene. The yen was up 28 basis points and closing just below the 120 cross at 119.85. The British pound gained huge ground today, 95 basis points, closing at 1.5671, as Britain is celebrating their conservative election majority. The Canadian dollar gained considerable ground to the USA dollar, 83 basis points closing at 1.2011.

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: 2.26% down 2 in basis points from Monday (getting close to the resistance level of 2.27-2.32%) Today’s rescue courtesy of the central banks

 

Your closing USA dollar index:

94.55 down 46 cents on the day.

 

European and Dow Jones stock index closes:

 

England FTSE down 96.05 points or 1.37%

Paris CAC down 53.22 points or 1.06%

German Dax down 200.94 points or 1.72%

Spain’s Ibex down 123.20 points or 1.08%

Italian FTSE-MIB down 216.99 or 0.93%

 

The Dow down 36.94 or 0.20%

Nasdaq; down 17.39 or 0.35%

 

OIL: WTI 60.58 !!!!!!!

Brent: 66.71!!!!

Closing USA/Russian rouble cross: 50.06 up 7/10 rouble per dollar on the day.

 

end

And now your important USA stories:

 

NYSE trading for today.

Bond-Buying-Frenzy Saves Stocks From Giving Up All ‘Goldilocks’ Gains

Another day of carnage in bond markets, rescued to a smolder by a mysterious global bond buyer… makes us wonder just how long before that ‘smolder’, explodes…

Bonds made the headlines… as overnight carnage was aggressively bid from before the US Open to assuage equity weakness… (TSY yields are still up 8-11bps on since Friday)

Bond prices since Payrolls are higher for 5Y, flatish for 10Y and down for 30Y…

Futures show the swings better than cash… as we pushed down to pre-payrolls levels then bounced as bonds were bid (weak close today like yesterday)

Cash equity indices decoupled today – Trannies ugly, the rest rallying along with bonds, desparately hoping to hold green – but failed 3 times…

The Bottom Line – Stocks now need lower bond yields… or there’s trouble ahead…

And Rate Vol has dramatically decoupled from Stock Vol…

The Dollar gave up yesterday’s gains and then some but once again USDJPY was very stable as EUR and GBP strengthened…

As The Dollar slipped, commodities gained ground… but with a lot of noise on the way…

Post-Payrolls, crude is winning but everything is up…

With crude exuberantly pushing 2015 highs…2nd highest close in 6 months…

Charts: Bloomberg

end

 

wow!! the BLS has finally recognized that something is going on with employment in the Texas oil patch:

 

(courtesy JOLTS/zero hedge)

Labor Department Finally Notices The Jobs Bloodbath In Texas: Midwest “Discharges” Surge To 4 Year High

 

Both in February and in March, in the aftermath of the total collapse in energy-related jobs in Texas, we had a simple, if recurring, question for the Bureau of Labor “Statistcs”:

and:

The answer was Yes and Yes.

However, we are delighted that in the latest monthly JOLTs report, the BLS has finally noticed the bloodbath for highly-paid energy jobs which, as we showed just last week courtesy of Challenger Gray data, is unprecedented and compares to the devastation in the aftermath of the Lehman collapse, namely this.

So what did JOLTs notice?

It wasn’t that job openings – the category most pay attention to in the JOLTS report – not only missed consensus expectations by over 100K, but tumbled from 5.144MM to 4.994MM, the biggest drop since September of 2014…

… but that involuntary terminations, i.e. “layoffs and discharges”, surged from 1.688MM to 1.793MM – the highest since last July – by nearly double the amount of “good” voluntary separations, or “quits”, which rose by 63K to 2.783MM.

But the most notable aspect of today’s JOLTs data was that March layoffs in the Midwest region, aka Texas and the various other shale-heavy regions, saw terminations soar to 455K from 340K, the biggest monthly total in layoffs for the region since June 2011, and the largest monthly jump since August of 2013.

Sadly, this also confirms that the BLS is now just 2-3 months behind the curve on what is really going on in the Texas shale space, where as shown above, the pink-slip storm is now the worst since the Great Financial Crisis. Expect to see the Challenger real-time data trickle through to the BLS with the usual one quarter, seasonally-adjusted delay.

end

 

A good bellwether as to the economic scene in the USA:

(courtesy zero hedge)

Second Largest Coal Miner East Of The Mississippi Files For Bankruptcy: 4000 Patriot Coal Jobs In Peril

At last check Patriot Coal had around 4000 employees. Those soon to be former employees will soon require yet another massive seasonal adjustment by the BLS to be “adjusted” out, because moments ago the second largest coal miner east of the Mississippi and the second largest producer of thermal coal in the eastern US filed Chapter 11 bankruptcy.

As part of its filing, the Peabody spinoff announced it had obtained a $100 million DIP, which will be sued to fund the company until it finds a “strategic buyer” or otherwise restructures its balance sheet. Alas, with the price of coal being where it is these days, the most likely outcome for ticker formerly known as PCX is an outright liquidation and another 4000 people in the rest belt left without jobs who, just like the case of Denny Ryder of Decatur, IL, will promptly disappear from the labor force so as not to spoil the US “recovery” propaganda.

Full Patriot Coal bankruptcy filing statement:

Patriot Coal Corporation (“Patriot” or “the Company”), a producer and marketer of coal in the eastern United States, today announced that it is engaged in active negotiations for the sale of substantially all of the Company’s operating assets to a strategic partner. The Company is also engaged in ongoing discussions with key stakeholders as it evaluates a range of strategic alternatives to maximize the value of its assets.

In conjunction with these activities, Patriot and its wholly-owned subsidiaries today filed voluntary petitions for restructuring under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Virginia, in Richmond, VA. The Company intends to complete its review of strategic alternatives and present a value-maximizing restructuring plan to the Court as quickly as possible.

Patriot expects its customer shipments and mining operations to continue in the ordinary course during the restructuring process. The Company has received a commitment for $100 million in “debtor in possession” (“DIP”) financing led by a consortium of the Company’s secured debt holders to support its continued operations. Upon approval by the Court, the DIP financing, combined with cash generated from ongoing operations will provide sufficient liquidity to support the business during the restructuring process.

Bob Bennett, President and Chief Executive Officer of Patriot, said, “In light of the challenging market conditions, and after a comprehensive review of our alternatives, the Board and management team have determined that this process represents the best path forward for Patriot and its stakeholders. Patriot is dedicated to operational and environmental excellence and, as always, we remain committed to operating safely and serving our customers throughout this restructuring process. We greatly appreciate the continued support of our customers and our suppliers and the ongoing hard work of our employees.”

 

end

 

For your enjoyment:

 

(courtesy Mac Slavo)

 

NBC Confirms Obama Lied About Bin Laden Raid

Submitted by Mac Slavo via SHTFPLan.com

Pulitzer Prize winning investigative journalist Samuel Hersh claimed yesterday that the Obama administrationlied to the American people about certain aspects aspects of the 2011 raid that killed Osama Bin Laden. According to Hersh, the United States did not act alone when Navy SEALs were sent to capture or kill the world’s most wanted terrorist. The real story, according to the report, is that members of Pakistani intelligence services were privy to the raid months before it happened and that it was a “walk-in” Pakistani intelligence officer who gave up the location of Bin Laden rather than a CIA operation that tracked him down by following various couriers. Further, it has been claimed that Bin Laden was not buried at sea the way the Obama administration said, but rather, his limbs were simply thrown from the helicopter after the mission (suggesting that some portion of his body, perhaps his head, were retained for posterity’s sake).

It’s  a markedly different story than the one President Obama told on the night he announced Bin Laden’s death. In that nationally televised speech the President took credit for ordering the raid and made it clear it was a unilateral action involving only American assets.

The Obama administration has spent the last 24 hours working to discredit the story. Pentagon spokesman Col. Steve Warren said the report from Hersh was “largely a fabrication” with “too many inaccuracies.” The White House says the Hersh’s investigation is riddled with inaccuracies.

But according to NBC News, which has reportedly been conducting their own investigation for the last several years, Hersh’s claims aren’t that inaccurate after all.

Two intelligence sources tell NBC News that the year before the U.S. raid that killed Osama bin Laden, a “walk in” asset from Pakistani intelligence told the CIA where the most wanted man in the world was hiding – and these two sources plus a third say that the Pakistani government knew where bin Laden was hiding all along.

 

The U.S. government has always characterized the heroic raid by Seal Team Six that killed bin Laden as a unilateral U.S. operation, and has maintained that the CIA found him by tracking couriers to his walled complex in Abbottabad, Pakistan.

 

The new revelations do not necessarily cast doubt on the overall narrative that the White House began circulating within hours of the May 2011 operation. The official story about how bin Laden was found was constructed in a way that protected the identity and existence of the asset, who also knew who inside the Pakistani government was aware of the Pakistani intelligence agency’s operation to hide bin Laden, according to a special operations officer with prior knowledge of the bin Laden mission. The official story focused on a long hunt for bin Laden’s presumed courier, Ahmed al-Kuwaiti.

 

 

The NBC News sources who confirm that a Pakistani intelligence official became a “walk in” asset include the special operations officer and a CIA officer who had served in Pakistan. These two sources and a third source, a very senior former U.S. intelligence official, also say that elements of the ISI were aware of bin Laden’s presence in Abbottabad. The former official was emphatic about the ISI’s awareness, saying twice, “They knew.”

Source: NBC News

Video Report:

 

The one thing that President Obama could hail as a success during his tenure as President has now been exposed as an outright lie.

It looks like all those ‘conspiracy nuts’ who took issue with the “official” story following the President’s original announcement of bin Laden’s death were not so crazy after all. There’s a reason millions of Americans have lost trust in their government, and especially with the sitting President of the United States. It’s because we have been consistently lied to about anything and everything of any significance.

What else are they lying about?

Fast and Furious gun running? Economic recovery? Official unemployment numbers? Jade Helm military exercises? The Ukraine conflict? Or, what about the deaths of SEAL team members that were supposedly involved with Bin Laden raid?

Flashback: Representative Joe Wilson breaks State of the Union Decorum when he shouts “You Lie” during President Obama’s speech.

How right he was…

end
see you Wednesday night

 

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One comment

  1. Hi Harvey, please check your Facebook ID for a message from me, and/or email me. Thanks DSD

    Like

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