june 19/We await a banking holiday set for Monday in Greece/Russia dumps dollars for gold/

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

 

Gold:  $1201.50 unchanged (comex closing time)

Silver $16.10 down 5 cents.

In the access market 5:15 pm

 

Gold $1200.50

Silver: $16.11

 

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 4 notices serviced for 400 oz.  Silver comex filed with 0 notices for nil oz.

 

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 247.75 tonnes for a loss of 55 tonnes over that period.

 

In silver, the open interest rose sharply by 3,547 contracts as Thursday’s  silver price was up by 19 cents.   The total silver OI continues to remain extremely high,  with today’s reading at 194.591 contracts now at multi-year highs despite a record low price. In ounces, the OI is represented by 973 million oz or 139% of annual global silver production (ex Russia ex China). 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 as they continue to raid as basically they have no other alternative.

In silver we had 0 notices served upon for nil oz.

In gold,  the total comex gold OI rests tonight at 419,870 for a gain of 2,641 contracts as gold was up by $25.10 yesterday. We had 4 notices filed for 600 oz.

 

we had no change in gold inventory at the GLD; thus the inventory rests tonight at 701.90 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 change in inventory at the SLV/327.874 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 3547 contracts to 194,591 despite the fact that silver was up by only 19 cents on Thursday.. The OI for gold rose by 2641 contracts up to 419,870 contracts as the price of gold was up by $25.10 yesterday.

(report Harvey)

2. Today, 7 important commentaries on Greece

zero hedge, Reuters/Bloomberg/Graham Summers/Phoenix Research Capital)

3.  COT report on gold and silver

(Harvey)

4. Gold trading overnight

(Goldcore/Mark O’Byrne)

5. Trading from Asia and Europe overnight

(zero hedge)

6. Trading of equities/ New York

(zero hedge)

7. Russia dumping dollars to buy gold. Reserves are now 1244 tonnes

8. This week’s wrap with Greg Hunter/USAWatchdog

we have these plus other stories to bring your way tonight. But first……..

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

Here are today’s comex results:

The total gold comex open interest rose by 2,641 contracts from 417,229 up to 419,870 as gold was up by $25.10  yesterday (at the comex close).  We are now in the big active delivery contract month of June.  Here the OI fell by 55 contracts down to 521. We had 6 notices served upon yesterday.  Thus we lost 49 contracts or an additional 4900 oz will not stand for delivery as they were no doubt cash settled.  The next contract month is July and here the OI rose by 66 contracts rising to 653.  The next big delivery month after June will be August and here the OI fell by only 541 contracts down to 273,941.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 51,836. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day) was fair at 202,221 contracts. Today we had 6 notices filed for 600 oz.

And now for the wild silver comex results.  Silver OI rose hugely by 3547 contracts from  191,044 up to 194,591 despite the fact that the price of silver was up by only 19 cents, with respect to Thursday’s trading. We continue to have our bankers pulling their hair out with respect to the continued high silver OI.  The front non active  delivery month of June saw it’s OI rise by 46 contracts to 73 contracts. We had 0 contracts delivered upon yesterday.  Thus we gained 46  silver contracts or an additional 230,000 oz that will stand for delivery in this non active June contract month.Somebody was very anxious to get hold of some physical silver.The next delivery month is July and here the OI surprisingly ROSE by 450 contracts up to 80,919. We have less than two weeks left to go before first day notice on June 30 and the front month is not contracting in volume at all. The estimated volume today was poor at 20,891 contracts (just comex sales during regular business hours. The confirmed volume on day (regular plus access market) came in at 75,691 contracts which is excellent in volume. We had 0 notices filed for nil oz today.

June initial standing

June 19.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz    99.93 oz (Brinks)
Withdrawals from Customer Inventory in oz 96.45 (Manfra) oz3 kilobars
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 105,374.433 oz (Manfra, HSBC)
No of oz served (contracts) today 4 contracts (400 oz)
No of oz to be served (notices) 570 contracts (57,000 oz)
Total monthly oz gold served (contracts) so far this month 2659 contracts(265,900 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month 99.93 oz
Total accumulative withdrawal of gold from the Customer inventory this month  457,536.9  oz

Today, we had 1 dealer transaction

Dealer withdrawal:

we had one dealer withdrawal

i) Out of Brinks:  99.93 oz was withdrawn

total Dealer withdrawals: 99.93  oz

we had 0 dealer deposit

total dealer deposit: nil oz
we had 1 customer withdrawal

i) Out of Manfra: 96.45 oz (3 kilobars)

total customer withdrawal: 96.45 oz

We had 2 customer deposits:

i) Into Manfra: 964.50 oz (30 kilobars)

ii) Into HSBC: 104,409.933 oz

Total customer deposit: 110,390.321 oz

We had 0  adjustments:

 

Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 4 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 3 notices were stopped (received) by JPMorgan customer account

To calculate the total number of gold ounces standing for the June contract month, we take the total number of notices filed so far for the month (2659) x 100 oz  or 265,900 oz , to which we add the difference between the open interest for the front month of June (521) and the number of notices served upon today (4) x 100 oz equals the number of ounces standing.

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

No of notices served so far (2659) x 100 oz  or ounces + {OI for the front month (521) – the number of  notices served upon today (4) x 100 oz which equals 317,600 oz standing so far in this month of June (9.977 tonnes of gold).  Thus we have 9.977 tonnes of gold standing and only 17.06 tonnes of registered or for sale gold is available.  We lost 49 contracts or 4,900 oz to probable cash settlements.

Total dealer inventory 548,744.939 or 17.06 tonnes

Total gold inventory (dealer and customer) = 7,965,349.882 (247.75 tonnes)

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 247.75 tonnes for a loss of 55 tonnes over that period.

 

end

And now for silver

June silver initial standings

June 19 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 84,846.770 oz (CNT)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory  929,899.17 oz (Brinks)
No of oz served (contracts) 0 contracts  (nil oz)
No of oz to be served (notices) 27 contracts(135,000 oz)
Total monthly oz silver served (contracts) 222 contracts (11,010,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month 526,732.4  oz
Total accumulative withdrawal  of silver from the Customer inventory this month 5,243,789.0 oz

Today, we had 0 deposits into the dealer account:

total dealer deposit: nil   oz

we had 0 dealer withdrawal:

 

total dealer withdrawal: nil  oz

We had 1 customer deposits:

i) Into Brinks; 929,899.17 oz

total customer deposit: 929,899.17  oz

We had 1 customer withdrawals:

i) Out of CNT: 84,846.77 oz

total withdrawals from customer; 84,846.77 oz

we had 0 adjustment

Total dealer inventory: 57.840 million oz

Total of all silver inventory (dealer and customer) 181.448 million oz

The total number of notices filed today is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in June, we take the total number of notices filed for the month so far at (222) x 5,000 oz  = 11,100,000 oz to which we add the difference between the open interest for the front month of June (27) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing.

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

222 (notices served so far) + { OI for front month of June (73) -number of notices served upon today (0} x 5000 oz ,= 11,465,000 oz of silver standing for the June contract month.

we gained 46 contracts or an additional 230,000 oz will stand for delivery in this non active delivery month of June.

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:

June 19.2015: no change in gold inventory/rests tonight at 701.90 tonnes.

June 18/no change in gold inventory/rests tonight at 701.90 tonnes

June 17/no change in gold inventory/rests tonight at 701.90 tonnes

June 16./no change in gold inventory/Rests tonight at 701.90 tonnes.

June 15/we lost a huge 2.08 tonnes of gold from the GLD/Inventor rests tonight at 701.90 tonnes

June 12/we had a small withdrawal of .24 tonnes of gold from the GLD/Inventory rests this weekend at 703.98 tonnes.

June 11/we had another huge withdrawal of 1.5 tonnes of gold from the GLD/Inventory rests tonight at 704.22 tonnes

June 10/ we had a huge withdrawal of 2.98 tonnes of gold from the GLD/inventory rests at 705.72

June 9/ no change in gold inventory at the GLD/Inventory rests at 708.70 tonnes

June 8/ a big withdrawal of 1.19 tonnes of gold from the GLD/Inventory rests at 708.70 tonnes

June 19 GLD : 701.90  tonnes.

 

end

 

And now for silver (SLV) Please note the difference between GLD and SLV.  GLD has been depleting of gold/SLV has been adding to its inventory.

June 19/no change in silver inventory/327.874 million oz

June 18 no change in silver inventory/327.874 million oz

June 17/no change in silver inventory/327.874 million oz

June 16./no change in silver inventory/327.874 million oz

June 15/we had no change in silver inventory/327.874 million oz

June 12/we had another addition to the tune of 956,000 oz/Inventory rests this weekend at 327.874.  Please note that there has been an addition on each of the past 5 days.

June 11.2015: we had another monster of an addition to the tune of 2.791 million oz/Inventory rests at 326.918

June 10/another monster of an addition to the tune of 1.126 million oz/Inventory rests at 324.127

June 9/ a monster of an addition to the tune of 3.393 million oz/inventory rests at 323.001 million oz.

June 8/no change in inventory/SLV inventory rests at 319.608 milion oz.

June 5 a huge addition of 1.433 million oz of silver added to the SLV/Inventory at 319.608 million oz

June 19/2015: no change in silver inventory/SLV inventory rests tonight at 327.874 million oz

 

end

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

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

1. Central Fund of Canada: traded at Negative 8.0% percent to NAV in usa funds and Negative 7.9% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 62.2%

Percentage of fund in silver:37.7%

cash .3%

( June 19/2015)

2. Sprott silver fund (PSLV): Premium to NAV falls to +.36%!!!!! NAV (June 19/2015)

3. Sprott gold fund (PHYS): premium to NAV falls to – .37% to NAV(June 19/2015

Note: Sprott silver trust back  into positive territory at +.36%.

Sprott physical gold trust is back into negative territory at -.37%

Central fund of Canada’s is still in jail.

Sprott formally launches its offer for Central Trust gold and Silver Bullion trust:

SII.CN Sprott formally launches previously announced offers to Central GoldTrust (GTU.UT.CN) and Silver Bullion Trust (SBT.UT.CN) unitholders (C$2.64)
Sprott Asset Management has formally commenced its offers to acquire all of the outstanding units of Central GoldTrust and Silver Bullion Trust, respectively, on a NAV to NAV exchange basis.
Note company announced its intent to make the offer on 23-Apr-15 Based on the NAV per unit of Sprott Physical Gold Trust $9.98 and Central GoldTrust $44.36 on 22-May, a unitholder would receive 4.45 Sprott Physical Gold Trust units for each Central GoldTrust unit tendered in the Offer.
Based on the NAV per unit of Sprott Physical Silver Trust $6.66 and Silver Bullion Trust $10.00 on 22-May, a unitholder would receive 1.50 Sprott Physical Silver Trust units for each Silver Bullion Trust unit tendered in the Offer.
* * * * *

end

At 3″30 the CME released the famed COT report which gives up position levels of our major players.

First let us head over to the Gold COT:

COT Gold, Silver and US Dollar Index Report – June 19, 2015
— Posted Friday, 19 June 2015 | Share this article | Comment – New!

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
191,053 115,330 37,042 153,712 230,349 381,807 382,721
Change from Prior Reporting Period
4,240 3,607 3,300 3,435 1,483 10,975 8,390
Traders
134 92 67 54 50 221 184
 
Small Speculators  
Long Short Open Interest  
33,911 32,997 415,718  
-1,326 1,259 9,649  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, June 16, 2015
Our large specs:
\
Those large specs that have been long in gold added 4240 contracts to their long side.
Those large specs that have been short in gold added 3607 contracts to their short side.
Our commercials;
Those commercials that have been long in gold added 3435 contracts to their long side.
Those commercials that have been short in gold added a smallish 1483 contracts to their short side.
Our small specs:
Those small specs that have been long in gold pitched 1326 contracts from their long side.
Those small specs that have been short in gold added 1259 contracts sto their short side.
Conclusions:  commercials going net long again by 1952 contracts.
are they getting a little antsy??
And now the silver COT:
Silver COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
67,315 51,643 22,426 74,139 102,994 163,880 177,063
1,434 8,308 -1,865 2,792 -4,294 2,361 2,149
Traders
101 58 46 45 43 168 130
Small Speculators  
Long Short Open Interest  
27,894 14,711 191,774  
-111 101 2,250  
non reportable positions Change from the previous reporting period
COT Silver Report – Positions as of Tuesday, June 16, 2015

Our large specs:

Those large specs that have been long in silver added 1434 contracts to their long side.

Those large specs that have been short in silver added a huge 8309 contracts to their short side!!!!  and ????

Our commercials:

Those commercials who have been long in silver added 2792 contracts to their long side.

Those commercials who have been short in silver covered a huge 4294 contracts from their short side.

Our small specs:

Those small specs who have been long in silver pitched a tiny 111 contracts from their long side.

Those small specs who have been short in silver added a tiny 101 contracts to their short side.

Conclusions;  commercials go net long by almost 7000 contracts and large specs go massively short>>>this is an accident waiting to happen!!

 

 

 

 

Early morning trading from Asia and Europe last night:

 

Gold and silver trading from Europe overnight/and important physical

stories

(courtesy Mark O’Byrne/ Steve Flood/Goldcore)

THE FOLLOWING IS A MUST READ….

 

Greek Contagion Abyss Looms – Wealth Preservation Strategies

  • Greece, EU and Banks Staring Into Abyss
  • Markets Are “Irrationally Exuberant” – Gods Punish Hubris
  • “Invisible Hand” Propping Up Sanguine Markets
  • Short Term Considerations
  • Long Term Considerations
  • Best Case Outcomes
  • Worst Case Outcomes
  • Wealth Preservation Strategies

We are here, staring into the abyss. The greatest monetary experiment of the modern world – the euro, encapsulating the largest middle class market of consumers ever assembled is about to face its greatest test to date.

To say anxieties are high is an understatement. Normally the broad markets will weigh up downside risk as the markets formulate and assimilate varying views on matters of importance, but not so in this case.

euro_drachma

 

The markets are decidedly sanguine, as if an “invisible hand” is propping them up, guiding them, nudging them, buying any dips in stock and bond markets and maintaining calm.

The VIX measure of U.S. stock volatility, is languishing at 15 – not even whimpering. Gold, that other key barometer of risk, has only seen slight gains and languishes at $1,200 per ounce.

It is as if the fire alarms have been turned off despite the fire beginning to rage.

Is the Working Group on Financial Markets or Plunge Protection Team (PPT) working tirelessly through proxy Wall street banks to keep gold depressed and prop up leading benchmarks such as the S&P 500 and thus the wider markets?

There are many that believe that Wall Street banks and central banks work closely together and coordinate policy and market interventions. They are sometimes dismissed as “conspiracy theorists.” Despite much evidence showing that banks have manipulated and rigged markets frequently.

Ironically, those that dismiss this as conspiracy theory are the same people who would say that if the central banks and governments are not propping up and intervening in markets, they should be.

If central banks are not already “market makers of last resort” then it seems likely that they soon will be and indeed overnight the IMF has called for this.

Such interventions simply paper over the cracks for a period of time – meanwhile the fire is burning, the structure is crumbling and will ultimately collapse.

bail-ins-considerations

A Greek exit from the euro would change everything. The greatest change being simply doubt and fear regarding the outlook for other vulnerable EU nations, EU banks and the EU banking and financial system.

From that day forward every statement from every EU official will have a risk premium attached to it.

They will say this and that, but the market will here “maybe” this, “maybe” that. As such the costs of participation in every financial transaction will alter, as the accounting for “what if” scenarios slowly gets priced in.

This change in risk perception and pricing, rather counterintuitively, is in fact a good longer term development. The markets have become increasingly captive by non elected and elected officials within the world monetary apparatus.

These ‘hidden hands’ have, and are, over anxious and seek to to quell market volatility and market dislocation in what they believe to be in the interest of the  public good. They believe that market volatility is a bad bad thing – when in fact nothing could be further from the truth.

It was this same hubris and “super man” mentality that created the first global financial crisis and indeed financial crises throughout history.

The same mistakes are being made over and over again. Market hubris and official hubris is rife. How apt – Greek gods liked to punish those guilty of being overconfident and arrogant.

We are seeing this misdiagnosis being played out in the current negotiations between the Troika and the Greek government. Ultimately the effect of a Greek exit could manifest in any number of ways, with  far reaching consequences for our interconnected global capital market with all of its regulatory gaps, opaque credit structures and massive $200 trillion and growing debt burden.

Short term considerations

  • capital controls and extent of
  • bank collapse and bail-ins
  • credit market contagion
  • Greek euro exit
  • rising government bond yields and interest rates
  • geopolitical considerations and Russian influence

Long term considerations

  • higher interest rates
  • stock market fall
  • “PIIGS” contagion
  • global contagion?
  • effect on Germany (arguably the greatest Euro benefactor)
  • loss of confidence in ECB, monetary union and euro
  • increase in nationalism
  • makes Brexit more likely?

Best case outcomes

  • Greek default – ECB blinks and continues liquidity support
  • Greek get a deal to peg debt obligations to growth and spread repayments over the very long term
  • stability returns, bailout countries return to more solid economic growth as interest rates begin to slowly normalise
  • Greece and its new currency start recording significant growth in a post debt overhang world

Worst case outcomes

  • capital controls across Europe until Greek exit is managed
  • Greek exit in a messy way, euro credit seizes up as collateral bombs go off  – “Lehman II”
  • bail-ins imposed on depositors across world – further devastating depositors, small and medium enterprises and our economies
  • banks and hedge funds smell blood and start rounding on the next weakest member, shorting bonds and local markets, forcing an exit
  • likely Italy, Spain, Ireland, Portugal and in time France targeted in terms of interest rate sensitivity
  • Euro becomes a lame duck currency, all countries start to prepare for an exit orderly or otherwise. New euro launched with exclusively northern European industrial economies
  • collapse of western banking system…for a period of time

Wealth preservationstrategies

  • Speculate by going short euro and long drachma and Greek assets
  • Own USD, NOK, HKD, SGD, CHF in safe banks in safe jurisdictions
  • Diversify cash holdings to non European banks and offshore institutions
  • Own physical precious metals  in safe vaults in safe jurisdictions

Short term considerations

Greek banks have haemorrhaged over €30 billion since October. Over €2 billion was withdrawn between Monday and Wednesday and likely as much since then as the talks intensified and the situation worsened this week.

The problem can only have been exacerbated by an ECB official’s suggestion at a closed door meeting on Thursday – in response to a direct question from Dutch Fin Min Jeroen Dijsselbloem – that the Greek banks would not open on Monday as reported by Reuters.

The ECB later denied that this was the case but clearly capital controls are on the table. That being said Bloomberg reports that “the Governing Council of the European Central Bank plans to hold an unscheduled call on Friday to discuss Emergency Liquidity Assistance available for Greek lenders, according to two people familiar with the plans”.

Whether the ECB agrees to raise the ceiling on the ELA is not certain. The leak reported by Reuters suggests that certain parties are happy to provoke bank runs in order to force the hand of the Greek government.

bails-ins-infographic-goldcore

We may soon see capital controls imposed in Greece as depositors are bailed-in to try keep the banks afloat.

At the start of June the European Commission ordered 11 EU countries to enact the Bank Recovery and Resolution Directive (BRRD) within two months or be hauled before the EU Court of Justice.  EU regulators ordered 11 countries to adopt the new EU deposit bail-in rules.

Were another serious crisis to materialise with regard to European banks and markets in the coming days on the back of a Greek default it seems likely that emergency legislation would be put in place that would allow bail-ins to take place.

Whether the ECB provides ELA to save all Greek banks, just the strategically important banks or none at all will likely be decided as much by political factors as financial ones.

A widespread banking crisis would weaken the resolve of the Tsipras government but would present unforeseeable contagion risks to Europe’s interconnected financial system despite Dijsselbloem’s assurances that the EU is prepared for all eventualities.

In January, JP Morgan highlighted in a report that exposure to Greek debt among banks in France and Germany is relatively low but warned that peripheral nations – particularly Italy – were at risk of contagion.

It is unclear if core eurozone banks can absorb losses from Greek exposure but in the short term it would likely lead to a tightening in capital markets as distrust among financial institutions cause them to hold their reserves.

Italian, Spanish and Portuguese bond yields rose in a very jittery market after a eurozone finance ministers’ meeting ended yesterday with no breakthrough in the deadlocked Greek debt talks.
Italian, Spanish and Portuguese 10-year yields were five to seven basis points higher at 2.35 percent, 2.34 percent and 3.16 percent, respectively this morning.

In the short term, government bond yields could surprise and yields decline again. However in the medium and long term, government bond yields are only going to go one way and that is higher with attendant consequences for our $200 trillion in debt saturated world.

Longer term considerations

Geopolitical considerations are to the fore and yet rarely considered by most analysts.

Greece may decide that its interest – painful though it may be in the short term – lies outside of the eurozone. Certainly its experience since the launch of the euro in 2001 has been an unmitigated disaster.

Between 1960 and 2001 Greece enjoyed more or less constantly improving prosperity. Total production increased 600% in that period – more than double that of Germany. Post-euro Greece’s productivity has plummeted 26%.

Were it to pull out of the single currency, it would not be without powerful friends in the region. Today, Tsipras is visiting St. Petersburg for a meeting with President Putin where they will sign a non-binding agreement on bringing Russian gas into Europe via Greece.

The “Turkish Stream” project would see a pipeline from Turkey go through Greece and eventually to Austria via Serbia and Hungary. Russia seeks to bypass Ukraine and to bring NATO member Greece into its sphere of influence would greatly undermine NATO.

While the Greeks have insisted that they have no intention of availing of Russian financial assistance it is a fact that such assistance has been offered and remains an option.

The BRICS New Development Bank comes into operation next month.

Faith in the ECB would be greatly undermined and with it faith in the euro currency. For half of it lifetime the euro has been in crisis. With the exit of Greece it will be apparent that the architects of the euro system may not be omniscient and that the euro is by no means guaranteed a permanent existence.

Were Greece to exit the euro, wilfully or not, it would lead to surge in nationalism in Europe. We have seen hostility towards Greece being whipped up in sections of the German media and vice versa.

Among peripheral states there are large swathes of the population who now view the EU as a destructive force in their societies. As mentioned above, Greece was economically successful prior to the launch of the euro.

Both Spain and Italy were also industrial powerhouses pre-2001. But having to compete with their northern neighbours on an equal currency footing has destroyed their export capacity. In these countries many people believe that austerity has has been foisted upon them to protect a project that has not benefited their societies particularly well.

In the core of the eurozone there is also a surge in nationalism as taxpayers resent what they see as their subsidising of inefficient and unproductive welfare states. However, Germany has derived enormous benefit from the euro project through its ability to export across Europe to countries whose currencies should be much weaker than its own.

Germany and the other core nations may ultimately decide to go it alone and establish a new joint currency of the costs begin to outweigh the benefits of the current system. Indeed, plans were drawn up to do just that in 2011.

Alternatively the terrible experience of the single monetary union may out the German people and elites and indeed other Northern Europeans completely off monetary unions and we may see a reversion to national currencies.

The scepticism towards the EU displayed by many voters in the UK can only be reinforced as the current fiasco continues to unfold. David Cameron’s promised referendum on Britain leaving the EU will likely receive more support as Europe’s unmanageable problems continue to fester.

Stock markets, currently levitating on the panglossian narrative that we live in the best of all possible worlds – despite dismal PE ratios and stagnation in real economies around the globe – would likely be jolted from their slumber. With rising rates the ability to prop up markets with practically unlimited QE cash would be greatly impaired.

The contagion would likely spread to peripheral eurozone nations like Italy, Spain, Ireland and Portugal whose banks are still on life support. The ability of the powers that be to contain the cumulative effect of multiple bank crises on the eurozone core is debatable.

Wealth preservationstrategies

In the short term the dollar is regarded as a “safe-haven”. So long as the prevailing psychology remains the dollar should provide a degree of protection for those seeking to avoid euro contagion.

U.S. assets are still extremely popular despite increasingly poor fundamentals.

Allocations to global equities and bonds should be reduced.

Cash should be diversified and spread around in different non-European banks and institutions. For high net worth seeking wealth preservation in the form of cash, owning a few of the safer currencies remains advisable. These include the Norwegian krone, Singapore dollar, Hong Kong dollar and the Swiss franc.

The most effective hedging instrument and safe haven asset remains gold bullion. We advise clients to own physical gold and silver in the safest vaults in the safest jurisdictions in the world.

Must-read guides:

Protecting Your Savings In The Coming Bail-In Era

From Bail-Outs To Bail-Ins: Risks and Ramifications – includes 60 safest banks in the world

 

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,198.15, EUR 1,058.86 and GBP 755.65 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,198.00, EUR 1,050.65 and GBP 752.42 per ounce.

Gold rose $15.00 or 1.26 percent yesterday to $1202.10 an ounce. Silver climbed $0.03 or 0.19 percent to $16.20 an ounce.

Gold in Singapore for immediate delivery was essentially flat at $1,200.11 an ounce near the end of the day,  while gold in Switzerland was also flat. Gold is tethered to the $1,200 an ounce level and remarkably gold traded in an extremely tight range of just $3.40 in the last 10 hours – between $1,198.20 an ounce and 1,201.60 an ounce.

gold-usd-goldcore-19-06-2015
Gold in USD – 1 Week

Gold is on track for its second weekly rise aided  by a softer dollar, the Greek debt debacle and the U.S. Federal Reserve chairperson, Janet Yellen’s, dovish comments from this week’s monetary policy statement.

The Fed said yesterday that a rate hike would come only after further improvement in the U.S. labor markets and more confidence that inflation would rise. The Fed is estimating lower rates now in 2016-2017, than those which had been forecasted in March. In addition, most policy makers are in favor of hiking rates only once this year or waiting until next year.

Shanghai Gold Exchange premiums were at $2 an ounce to the global benchmark, from a premium of about $1-$2 yesterday. In China, surging stock markets appear to have drawn investors away from the yellow metal in recent months but the recent sharp falls in the Chinese stock market may lead to renewed Chinese demand.

gold-gbp-goldcore-19-06-2015
Gold in GBP – 1 Week

In India, gold bars are now trading at discounts, which shows a dip in demand, attributed to the beginning of the rainy monsoon season.

The European Cental Bank (ECB) has called an emergency meeting today and the European Union (EU) has one scheduled on Monday. Trying to get an agreement for Greece to meet its debt repayments due at the end of the month is the agenda. The debtors and creditors are deeply divided.

gold-eur-goldcore-19-06-2015a
Gold in EUR – 1 Week

Gold has seen safe haven haven demand increase as a Grexit probability rises although many are surprised that the gains have been quite muted. This may be a case of muted so far and gold will likely outperform other assets in the coming days if the situation further deteriorates which seems likely.

In late morning European trading gold is up 0.02 percent at $1,200.57 an ounce. Silver is down 0.25 percent at $16.14 an ounce, while platinum is up 0.15 percent at $1,084.76 an ounce.

Breaking News and Research Here

 

end

 

USA treasuries on the shelf of Russia is declining and those funds are purchasing gold.  Russia has now 1244 tonnes to its official reserves.

(courtesy Dave Kranzler/IRD)

Russia Continues To Dump Dollars And Buy Gold

The enormous effort by eastern hemisphere countries to diversify their reserves out of the dollar and into physical gold is quite remarkable. The latest reports out of Russia show that is has cut its dollar exposure in half since January 2014 and appears to be accelerating its accumulation of gold:

OUT OF DOLLARS (source: Smaulgld.com, U.S. Treasury):

RussiaDollars

AND IN TO MORE GOLD:

RussiaGold

Meanwhile, physical gold held in western custodial accounts at Central Banks and trading exchanges continues its exodus.

Koos Jansen has reported that custodial gold at the Bank of England dropped another 351 tonnes in the latest reporting period: Bank of England Custodial Gold Drops 351 tonnes

Craig Hemke of TF Metals Report did some sleuth-work on the Comex vault data and discovered that over 37 tonnes of gold was removed from Scotia Bank’s customer custodial account at the Comex:   Investor Gold Flees Scotia’s Comex Vault

Finally, since February 11 this year, over 72 tonnes of gold has been removed from the GLD trust.  The only way gold is removed from the GLD trust is if any of the Approved Participant banks – the usual suspected criminals – redeems 100,000 share baskets of GLD stock in exchange for physical gold bars held in Trust.   In fact, I have heard reports from several credible sources in London that big investment accounts which have tried to exchange shares for gold have been denied.  If you read through the fine-print of the GLD prospectus, you’ll find that the Trustee indeed has the option of denying exchange for physical requests.

The big question in my mind – and one which we’ll never know the answer to until it’s too late for the victims- is whether or not the gold being removed from custodial accounts held at banks, Central Banks, exchanges and GLD is being delivered to their rightful titled owners or if its being hypothecated by the bullion banks and shipped to the east.

I have a instinctual belief that when the “gold grab” begins in earnest in the west, and the trusting entities/individuals who trusted their gold with criminal bullion banks look to take delivery, we will find that “Mother Hubbard’s Cupboard is bare.”

We are in an era in which Rule of Law has been replaced by Rule By Those In Power.  There is no accountability for the wealthy elite and, and the political puppets of those elite, as they continue their massive theft of wealth from the western economic and financial system.

end

(COURTESY CHRIS POWELL/GATA/Reuters/)

IMF official foresees central banks buying everything in next market crash

Central banks buying bonds to conduct unprecedented stimulus programs over the last three years — most recently the European Central Bank — have also been blamed for sucking volume out of the market, making it less liquid.Vinals said it was unclear whether markets were simply more volatile or whether there were systemic consequences, but it would take time to find a solution,”The time it takes for the global regulatory community and central banking world to find a solution this time may be longer than the time where one episode of big illiquidity happens,” Vinals told a meeting of the International Organization of Securities Commission in London.

“Then the question is what to do. In my view the only thing that can be done at that time is that central banks should become again market makers of last resort.”

Ashley Alder, chief executive officer of Hong Kong’s Securities and Futures Commission, said central banks acting as market markers of last resort was the “last thing” he wanted to see.

“If you react to that by piling more intervention on intervention, you encourage more untoward risk taking and you end up with even greater amount of mispriced risk,” Alder told the conference.

“You end up with a never-ending cycle that is harder and harder to get out of,” Alder added. …

… For the remainder of the report:

http://www.reuters.com/article/2015/06/18/imf-markets-vinals-idUSL5N0Z43…

Section:

Don’t look now, Jose, but central banks are ALREADY trading everything, to keep gold and commodities down and equities and bonds up:

http://www.gata.org/node/14385

http://www.gata.org/node/14411

http://www.gata.org/node/14818

* * *

IMF’s Vinals Says Central Banks May Have to Be ‘Market Makers’

By Huw Jones
Reuters
Thursday, June 18, 2015

Central banks may need to become “market makers of last resort” if there is not enough liquidity during volatile sell-offs, a senior International Monetary Fund official said on Thursday.

Regulators worry that when interest rates begin rising from their prolonged low levels there will be a stampede for the exits by bond investors and that markets won’t have the liquidity or capacity to deal with it smoothly. …

Jose Vinals, director of the IMF’s capital markets department, said market liquidity has shrunk as capital requirements on banks have increased but that there was no simple relationship between the two.

end
(courtesy Bloomberg/GATA)

Bloomberg News confirms Texas’ gold isn’t at NY Fed

Section:

There’s a Pile of Gold in Manhattan, and Texas Wants It Back

By Lauren Etter
Bloomberg News
Friday, June 19, 2015

Texas wants its gold back from the Yankees, wherever they’re keeping it.

Gov. Greg Abbott signed a law last week to build a depository for its 5,600 bars of the precious metal and, as he said in a statement, “repatriate $1 billion of gold bullion from the Federal Reserve in New York.”

The gold, it turns out, isn’t at the New York Fed — it’s in a rented vault in midtown Manhattan — and is worth about $650 million. Regardless, Texas aims to bring it home. …

… For the remainder of the report:

http://www.bloomberg.com/news/articles/2015-06-19/there-s-a-pile-of-gold…

end

 

(courtesy Bloomberg/GATA)

Greece needs its gold to back a new currency, Commerzbank says

Section:

Greek Gold Sales to Raise Funds Seen Unlikely by Commerzbank

By Eddie van der Walt
Bloomberg News
Friday, June 19, 2015

Greece is unlikely to resort to selling gold because disposing of the hoard valued at about $4.3 billion would only postpone a default, Commerzbank AG said.

Bullion prices would probably fall if the nation were to sell metal on the open market, Commerzbank said in a report Friday. Using gold to raise funds may mean selling to another central bank or the International Monetary Fund, or lending out the metal, it said. …

“Selling gold would deprive the country of its only really valuable reserves, which could be put to good use at a later date, perhaps to stabilize a new currency if Greece exits the euro,” Commerzbank analysts including Frankfurt-based Eugen Weinberg wrote in the report. …

… For the remainder of the report:

http://www.bloomberg.com/news/articles/2015-06-19/greek-gold-sales-to-ra…

 

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

1 Chinese yuan vs USA dollar/yuan strengthens to 6.2075/Shanghai bourse red and Hang Sang: green

2 Nikkei closed up by 183.45  points or 0.92%

3. Europe stocks all in the green/USA dollar index up to 94/44/Euro falls to 1.1297

3b Japan 10 year bond yield: slightly falls  .43% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 123.14/ominous to

3c Nikkei still just above 20,000

3d USA/Yen rate now well above the 123 barrier this morning

3e WTI 59.62 and Brent:  63.20

3f Gold down/Yen down

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund rises to .79 per cent. German bunds in negative yields from 4 years out.

Except Greece which sees its 2 year rate fall  to 28.45%/Greek stocks this morning falls by 0.74%/ still expect continual bank runs on Greek banks /Greek default inevitable/

3j Greek 10 year bond yield fall to to: 12.72%

3k Gold at 1199.95 dollars/silver $16.13

3l USA vs Russian rouble; (Russian rouble down 4/5 in  roubles/dollar in value) 54.30,

3m oil into the 59 dollar handle for WTI and 63 handle for Brent/Saudi Arabia increases production to drive out competition.

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation. This 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 .9233 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0433 just 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 +0.790

3s Ten weeks ago, the ECB increased the ELA to Greece by another large 2.0 billion euros.Six weeks ago, they raised it another 1.1 billion and then 4 weeks ago they raised it another tiny 200 million euros to a maximum of 80.2 billion euros. Three weeks ago, the limit was not raised. Last week, the ECB raised the ELA by 1/2 billion euros to 80.7 billion euros. Last Thursday, it was raised by a huge 2.3 billion euros to 83.0 billion.Yesterday, we hear ( confirmed ) that the ELA has been raised by another 1.1 billion euros to 84.1 billion euros.The ELA is used to replace depositors fleeing the Greek banking system. The bank runs are increasing exponentially.This week 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 700 million plus payment to the IMF last Wednesday but with IMF reserve funds.  The funds are deferred to June 30.

3 u. If the ECB cuts off Greece’s ELA they would have very little money left to function. So far, they have decided not to cut the ELA but this weekend is the likely time to do it.

4. USA 10 year treasury bond at 2.31% early this morning. Thirty year rate well above 3% at 3.10% / yield curve flatten/foreshadowing recession.

 

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

(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)

“Calm Reigns” Everywhere As Greece Inches Closer To Default, China Crashes

In what is perhaps the most glaring instance of central bank intervention yet, Reuters today captured the market mood as follows: Calm ruled Europe’s stock and currency markets on Friday as Greece inched closer to a default later this month….the euro was down just 0.3 percent against the dollar and major European stock markets gained in early trade.” Why is Europe (and by extension US futures) so desperate to show green today even with a Greek default imminent? The same reason we explained back in January when we said the ECB and the Fed would do everything in their power to eliminate all Greek “negotiating” leverage which from day one was the attempt to create market contagion from Grexit. Unfortunately for Greece, the ECB’s QE intervened and blew a hole right through its plans, and now, it finds that not only do markets not care about the Greek contagion about which even Janet Yellen warned, but in the US hit all time highs!

The inverse, however, is certainly not true as ECB “sources” leak each and every day just how bad the Greek bank run is, and promptly put this information into the public domain in hopes of accelerating the already terminal bank run which unless halted will lead to capital controls and ultimately the fall of the Tsipras regime: precisely what the Troika has been after all along, as we also explained all the way back in February. Sure enough, just a few hours ago Reuters “sources” reported that after €2 billion exited the Greek financial system in the first three days of the week, on Thursday the outflow hit what may have been a record €1 billion in one day.

Varoufakis quickly slammed such rumors: “Regrettably, no discussion of our proposal took place within the Eurogroup. Even more regrettably, instead of that essential discussion, we observed pernicious ‘leaks’ to the press regarding Greece’s banking system.Rumors which have done their job, and have put the Greek financial system in a toxic spiral from which there is now no return absent total surrender by the government, or, of course, a last minute bailout by the Russia-China axis which would diametrically change the shape of things in Europe.

But we’ll cross that bridge when we get to it, especially since overnight China had other problems, and as noted earlier, had its stock market not only enter the third 10% correction in the past few weeks, but its stocks tumbled 6.4%!

A closer look at markets shows that stocks in Asia settled mixed, after the sentiment following a positive close Wall Street which  saw the NASDAQ Composite and Russell 2000 print fresh record highs, was offset by Greek debt concerns and amid reports out of China that the CSRC is planning trading risk management rules for brokerage firms. Despite the Shanghai Comp (-6.4%) entering technical correction phaseamid reports that the CSRC are planning implementing trading risk management rules for brokerage firms and the 25IPO’s which have occurred this week.Furthermore, analysts at JP Morgan noted that China’s stocks are a buying opportunity as the government will likely intervene should equities fall further, also noting that the most compelling trade is H shares. Meanwhile, the BoJ left their annual rise in monetary base unchanged in a 8-1 vote, with JPY taking little notice of the decision and the Nikkei 225 (+0.9%) ended the week in the green after breaking back above its 50 DMA to reclaim the 20,000 level.

As noted above, while Greece teeters, stocks in Europe are levitating: The sentiment was akin to the calm before the storm, after nothing was agreed at yesterday’s Eurogroup meeting with EU’s Tusk subsequently convening an emergency summit of Eurozone heads for 1800BST on Monday. Furthermore, multiple sources suggested that Greek Bank deposit outflows reached over EUR 1bln yesterday. This morning Greek PM Tsipras said that he is positive on Monday’s emergency Eurozone meeting, adding that there will be a solution that would allow Greece to return to growth. While EU’s Moscovici said that the EU is not looking for Greece to slash pensions, and reiterates that the ‘ball in Greece’s court’. The German Finance Ministry spokeswoman said that capital controls on Greece have not been discussed.

Still, stocks (Eurostoxx50 +0.8%) traded higher and were in part supported by the follow through price action out of the US, where both the NASDAQ Composite and Russell 2000 indices closed at record highs, though it is worth remembering that today sees number of options/futures contracts expiry which may skew the price action. Still, gains were led by the more defensive sectors such as health-care, reinforcing the fragile nature of this morning’s upside.

The cautious sentiment following yet another failure to agree to resolve the crisis in Greece yesterday evening as well as the technical head and shoulders observed in EUR/USD which saw the pair trend lower throughout the first half of the European trading session, while CHF also benefited from safe-haven flows. At the same time, the consequent bounce back by the USD  index (+0.4%) weighed on the commodity linked currencies such as AUD, which saw AUD/USD move back below the 50DMA and also the 100DMA lines.

Firmer USD weighed on the commodity complex, with WTI and spot gold trading lower and the precious metals trading below the 200DMA and in close proximity to the 100DMA line.

In summary: European shares remain higher, close to intraday highs, with the autos and travel & leisure sectors outperforming and basic resources, utilities underperforming. Meeting of finance officials to reach a deal over Greek aid ended in frustration, forcing leaders to call for an emergency summit for Monday. ECB plans to hold an emergency session of its Governing Council on Friday to discuss a deterioration in liquidity at Greek banks, three people familiar said. German airwave auction raises $5.7b to top 2010 sale. Bank of Japan leaves monetary policy unchanged as forecast. Shanghai Composite Index capped its worst weekly decline in seven years.

The French and Dutch markets are the best-performing larger bourses. The euro is weaker against the dollar. Japanese 10yr bond yields fall; Greek yields decline. Commodities decline, with copper, Brent crude underperforming and natural gas outperforming.

There is no macro events in the US, just the Fed’s Williams and Mester on the docket, which means many more Greek rumors and denials, lots of stop hunts – if yesterday is any indication, stocks should soar in the first few seconds of trading – and the usual OpEx “pin” manipulation.

Market Wrap

  • S&P 500 futures up 0.1% to 2116.7
  • Stoxx 600 up 1.1% to 388.5
  • US 10Yr yield down 2bps to 2.32%
  • German 10Yr yield down 3bps to 0.78%
  • MSCI Asia Pacific up 0.4% to 147
  • Gold spot down 0.1% to $1200.4/oz
  • 79.2% of Stoxx 600 members gain, 18.5% decline * Eurostoxx 50 +1.3%, FTSE 100 +0.5%, CAC 40 +1.3%, DAX +1.1%, IBEX +1.2%, FTSEMIB +1.2%, SMI +1%
  • Asian stocks rise with the ASX outperforming and the Shanghai Composite underperforming.
  • Nikkei 225 up 0.9%, Hang Seng up 0.2%, Kospi up 0.2%, Shanghai Composite down 6.4%, ASX up 1.3%, Sensex up 0.7%
  • Fidelity Offers to Take Colt Private for 570 Million Pounds
  • Euro down 0.48% to $1.1305
  • Dollar Index up 0.38% to 94.4
  • Italian 10Yr yield down 6bps to 2.24%
  • Spanish 10Yr yield down 5bps to 2.23%
  • French 10Yr yield down 5bps to 1.16%
  • S&P GSCI Index down 0.9% to 433.5
  • Brent Futures down 1.4% to $63.4/bbl, WTI Futures down 1.1% to $59.8/bbl
  • LME 3m Copper down 1.7% to $5659/MT
  • LME 3m Nickel down 0.7% to $12635/MT
  • Wheat futures down 0.5% to 491 USd/bu

Bullet Headline Summary from Bloomberg and RanSquawk

  • EUR trades lower after nothing was agreed at yesterday’s Eurogroup meeting with EU’s Tusk subsequently convening an emergency summit of Eurozone heads for 1800BST on Monday.
  • Deutsche Bank analysts state that capital controls in Greece are looking closer than ever, however the German Finance Ministry refuted those claims and said that capital controls have not been discussed.
  • Going forward, focus will be on the release of the latest CPI report out of Canada, impending update by Moody’s on Spanish sovereign debt rating and also ECOFIN meeting
  • Treasuries gain overnight, U.S. 10Y yield now ~8bps lower WTD, as concerns over potential Greek EU exit sends investors into lower risk assets; there are no U.S. economic data releases today.
  • The ECB plans to hold an emergency session of its Governing Council today to discuss a deterioration in liquidity at Greek banks, three people familiar with the matter said
  • Greek PM Tsipras insisted a deal to avert a default can be reached at an emergency summit of European leaders on Monday
  • With Greece on the brink of running out of money and at risk of reneging on its June 30 IMF repayments, Portugal is desperate  to make sure it doesn’t get dragged back into another debt crisis
  • Danish voters ousted the government of Prime Minister Helle Thorning-Schmidt and backed an opposition in which the anti- immigration Danish People’s Party emerged as the biggest force
  • European banks are heading to Asia for capital as new rules at home demand they sell more than $1 trillion of equity and subordinated debt to increase loss buffers
  • Chinese stocks tumbled, capping their worst week since the global financial crisis in 2008, amid mounting concern that the nation’s longest bull market has propelled valuations to unsustainable levels
  • Texas Governor Abbott signed a law last week to build a depository for its 5,600 bars of gold and repatriate it from the Federal Reserve in New York
  • S&p500 companies listed buybacks or dividends among the use of proceeds in $58 billion of bond deals in the past three months, the most on record, according to data compiled by Bloomberg and Sundial Capital Research
  • Sovereign 10Y bond yields lower, led by Greece (-49bps). Asian, European stocks gain, U.S. equity-index futures gain. Crude oil, copper, gold lower

 

DB’s Jim Reid completes the overnight event recap

 

It looks like it’ll be make or break week for Greece next week after yesterday’s Eurogroup stalemate resulted in an emergency EU Leaders summit being scheduled for Monday in Brussels. The fragility of deposit flight on Greek banks looks set to have hit new highs after the ECB also announced that it plans to hold an emergency session of its Governing Council concerning this today, just two days after raising the ELA cap and with Reuters headlines suggesting that deposit outflows amounted to around €2bn from Monday through Wednesday this week. Despite the Greece concerns, the more dovish tone out of the Fed on Wednesday – which was perhaps reinforced at the margin by yesterday’s inflation data – supported equity markets yesterday as the S&P 500 (+0.99%) and Dow (+1.00%) both enjoyed a better session, while the Stoxx 600 (+0.13%) and DAX (+1.11%) managed to pare earlier losses into the close.

The rhetoric was unsurprisingly negative following yesterday’s Eurogroup. With the IMF confirming that no grace period applies to the June 30th bundled repayments and subsequently resulting in default should it be missed, Eurogroup President Dijsselbloem summed up yesterday’s progress by saying that ‘regrettably, too little progress has been made’ and that ‘no agreement is in sight’. EC Council President Tusk urged that ‘it is now time to urgently discuss the situation of Greece at the highest political level’, while Dijsselbloem, when questioned if he could imagine Greece being forced out of the Euro, said that ‘the way it goes now we’re going in that direction’. Meanwhile, Greek finance minister Varoufakis warned that an ‘accident’ was drawing ‘dangerously close’. It’s now looking likely that the EU summit proposed for Monday will conclude with a take it or leave it offer as well as a formal deadline. In the mean time, with deposit flight from Greek banks under huge pressure, the ECB’s Coeure said that he was unsure if Greek banks would be open on Monday although this was seemingly downplayed by an EU official in headlines later on Bloomberg. Capital controls appear to be drawing ever closer with each passing day however.

So recapping the calendar now, an emergency ECB Governing Council meeting will be held today (scheduled for 11am GMT) to discuss the ELA cap. This will be followed by an EU Emergency Leaders Summit due 6pm GMT on Monday, while it’s possible that over the weekend we get another Eurogroup meeting to prepare the agenda. A Heads of State and Government Summit is then scheduled for 25th-26th June before IMF bundled payments due June 30th. Of course this timeline will be subject to what happens on Monday. It’s set up to be another jittery one for markets again next week however.

Markets yesterday appeared to shrug off Greece temporarily for the most part and take the lead from Wednesday’s FOMC. 10y Treasuries initially extended their move down in yield, falling around 4bps at the open before then paring most of the gains to finish slightly higher (+1.8bps) at 2.335%. The Dollar extended losses however with the Dollar index falling 0.27% and to the lowest level now since May 15th. Gold (+1.38%) had its strongest day for nearly 2 months, closing at $1202/oz. In terms of the data, yesterday’s May CPI print for the US showed a miss versus expectations at both the headline and the core, although in reality this benefited from rounding more than anything else. Unrounded, both headline (+0.4% mom vs. +0.5% expected) and core CPI (+0.1% mom vs. +0.2% expected) came in at +0.4445% and +0.1454% respectively and so a smaller miss than first anticipated. It was enough to bring the annualized rates down to 0.0% yoy and +1.7% yoy however.

Looking at the follow up in markets in Asia this morning, aside from further weakness in China, equity bourses are generally following the lead from the US. Indeed, the Nikkei (+0.77%), Hang Seng (+1.08%), Kospi (+0.63%) and ASX (+1.29%) are all up. It’s a different story in China however where the Shanghai Comp (-2.05%) and Shenzen (-2.55%) have taken a steep leg lower and are bordering now on a 10% correction from the June 12th highs. Elsewhere, 10y Treasuries are 2.1bps lower at 2.313% and Asia credit is around a basis point tighter. The BoJ has also kept its asset purchasing scheme unchanged at ¥80tn annually in its latest statement. The Bank said that inflation ‘appears to be rising on the whole from a somewhat longer term perspective’ while the board also said that the economy ‘has continued to recover moderately’.

Aside from the inflation data it was a reasonably strong day for data flow in the US. Initial jobless claims (267k vs. 277k expected) fell 13k to bring the four-week average down to 277k. Real average weekly earnings remained unchanged at +2.3% yoy, while the June reading for the Philadelphia Fed business outlook rose 8.5pts to 15.2 (vs. 8.0 expected). Finally the Conference Board’s leading indicator was up +0.7% mom (vs. +0.4 expected), although that’s supported by strong building permits data for last month which we previously noted was probably benefiting from a tax incentive and is likely to return to more normalized levels.

European markets certainly appeared to be supported by the better sentiment in the US session. Having traded in negative territory for most of the day, equity markets pared losses although it appeared that some mid-morning Greece headlines concerning funding extensions also helped. Greek equities actually closed a touch higher (+0.37%) while 10y yields fell 9.3bps to 13.03%. Yields fell across most of Europe yesterday in fact. 10y yields in Spain (-5.1bps), Italy (-2.1bps) and Portugal (-5.3bps) all moved down, while Bunds finished just the 0.1bps lower at 0.805%. The only notable data release came out of the UK where retail sales (+0.2% mom vs. -0.2% expected) helped support a stronger day for the Pound (+0.30%), rising for the fifth consecutive session against the Dollar to a seven-month high at $1.588.

There was more Central Bank focus in Europe yesterday. The Swiss National Bank kept the deposit rate at a record low, with SNB’s Jordan providing a slightly more upbeat tone for the outlook and upgrading the bank’s inflation forecast modestly for the remainder over the year. In Norway we saw the Norges Bank, as expected, cut its deposit rate to a record low 1%. The outlook continued to remain dovish with a statement from the Central Bank saying that the rate may be reduced further in the course of autumn. Updating our list we’ve now got 52 Central Banks who have eased so far this year.

In terms of today’s calendar it’s pretty quiet for the most part with just German PPI and UK public sector net borrowing data due this morning while in the US there are no data releases expected. The Fed’s Mester and Williams speaking will be important in the context of the first Fedspeak post FOMC. The focus is set to remain on Greece however starting with the ECB’s emergency ELA meeting.

 

end

Late last night:

Over 1 billion euros were removed from the Greek banking system and another 1 billion euros is expected to leave today.  With this huge removal of deposit funds, the Greek banking sector has no choice but to call for the banks to close on Monday.  Varoufakis is angry and calls the actions of the Troika pernicious:

(courtesy zero hedge)

Troika Exploits Greek Bank Run As Varoufakis Slams “Pernicious” Banking Sector “Leaks”

As expected, no progress was made between Greek FinMin Yanis Varoufakis and EU finance ministers at Thursday’s Eurogroup meeting in Luxembourg. Varoufakiswarned his counterparts that Europe was very close to “accepting” a Greek “accident”, something the FinMin said EU officials have a “moral duty” to avoid before “uncontrollable events” occur. Varoufakis also implicitly accused the troika of attempting to incite a bank run. 

While it wasn’t entirely clear what Varoufakis meant by “uncontrollable events,” it seems likely he’s referencing the fact that while politicians may be able to push back their own self-imposed deadlines as many times as they wish even to the point of rendering the entire effort “ridiculous”, — to use German Vice Chancellor and Economy Minister Sigmar Gabriel’s words — the reality on the ground in Greece is that the economy is collapsing on itself and deposit flight is now running above at €750 million euros each day. Put simply: an acute crisis of confidence among the Greek populace now risks plunging the country into a state of emergency. 

In an attempt to address the quickly deteriorating situation, Brussels looks set to impose capital controls as early as this weekend and has scheduled an emergency summit on Monday. EU finance ministers will reportedly hold another meeting ahead of the summit. WSJ has more:

Eurozone leaders will try to clinch a deal on Greece’s flailing bailout at a hastily called crisis summit Monday, after finance ministers failed again to bridge the gap between Athens and its lenders.

 

The summit—eight days before Greece’s eurozone rescue runs out—will be one of the last chances to avert the specter of further economic meltdown for Greece and a messy exit from the eurozone.

 

After five months of fraught negotiations, “it is time to urgently discuss the situation of Greece at the highest political level,” said Donald Tusk, who presides over meetings of European leaders.

 

Christine Lagarde, managing director of the International Monetary Fund, said the extra meeting was necessary “to restore a dialogue with adults in the room.”

 

French Finance Minister Michel Sapin said Friday that eurozone finance ministers would meet again ahead of Monday’s summit.

 

“A summit like this is prepared by finance ministers so there will be a Eurogroup meeting to prepare,” he said.

 

Greek budget data released Thursday showed the toll the economic uncertainty is taking on state revenues. Budget income in May fell 24% short of the monthly target mainly due to a drop in taxes paid by companies, the finance ministry said.

 

Amid the standoff, many countries are now openly preparing for a Greek default and departure from the currency union.

For his part, Austrian finance minister Hans Schelling isn’t optimistic and only hopes Austrians visiting Greece won’t find that the ATMs have gone dark on Monday.

Via Bloomberg:

“Taking this to the political level the way Greece did is a very double-edged sword because all decisions in the end are taken in the Eurogroup”

 

“Calling a summit which possibly can’t be prepared because there are no decisions over the weekend may not be very fruitful”

 

Schelling says he assumes Austrian tourists will be able to withdraw money from Greek cash machines on Monday. “We will have to discuss with our leaders what positions have to be taken.”

 

“The finance ministers are acting on the basis of the memorandum of understanding. The finance ministers are acting on the basis of the decision taken in February”

 

“Certain flexibility was built in there. This flexibility isn’t accepted by Greece. We can’t take any more steps, the ball is entirely in Greece’s court.”

Indeed, waiting until Monday will be too late for the Greek banking sector. Depositors pulled more than €1 billion from banks on Thursday alone, prompting Greek banking officials to request an additional €3 billion in ELA allowances on the heels of Wednesday’s €1.1 billion cap increase.

The ECB’s governing council met Friday to consider the request. Regardless of the outcome, Greek banks may not be able to open on Monday according to governing council member Benoît Coeuré, whose opinion on the matter was ‘leaked’ by people close to the discussions. Yanis Varoufakis believes — and we have suggested this on a number of occasions over the past several months — that the troika is effectively colluding to incite a bank run in an effort to force Syriza into the types of concessions which will strip the party of its mandate and transform Tsipras into a pandering technocrat reminiscent of his predecessors. “Regrettably, no discussion of our proposal took place within the Eurogroup. Even more regrettably, instead of that essential discussion, we observed pernicious ‘leaks’ to the press regarding Greece’s banking system,” the FinMin told Bloomberg.

Supporting the assessment that the institutions are exploiting the situation in the Greek banking system is Credit Agricole who says the ECB could decide to tie future ELA increases to a reform deal, a move which would represent the first concerted effort on the part of the central bank to assist the EU and the IMF in applying political pressure on Alexis Tsipras and Syriza, proving that the ECB, like the BIS from which it was born, is far from an apolitical institution. Credit Agricole also notes that Thursday’s pro-euro protests in Athens prove that Europe’s strategy of politicizing the debt negotiations is starting to bear fruit:

A potential statement today by ECB that makes any future ELA contingent on a reform deal could add to pressure on Greek govt, Valentin Marinov, head of G10 FX strategy at Credit Agricole, writes in client note.

 

Creditors’ strategy may be paying off as ‘yday there was the first mass anti-govt protests in Athens.

 

Mkts in Europe could start panicking if deadlock persist into next week and June 30 deadline draws near.

 

EUR expected to come under sustained downside pressure if no resolution by Monday and fears of Greek default and capital controls escalate next week.

So, as we wait to see if the ECB will drop all pretenses of being an apolitical body that concerns itself only with matters of promoting financial stability and as we look anxiously to see if Friday’s deposit flight will once again top €1 billion virtually assuring that Greek banks will not be able to open the doors come Monday morning, we leave you with a summary of where it all stands courtesy of Deutsche Bank’s Jim Reid:
The rhetoric was unsurprisingly negative following yesterday’s Eurogroup. With the IMF confirming that no grace period applies to the June 30th bundled repayments and subsequently resulting in default should it be missed, Eurogroup President Dijsselbloem summed up yesterday’s progress by saying that ‘regrettably, too little progress has been made’ and that ‘no agreement is in sight’. EC Council President Tusk urged that ‘it is now time to urgently discuss the situation of Greece at the highest political level’, while Dijsselbloem, when questioned if he could imagine Greece being forced out of the Euro, said that ‘the way it goes now we’re going in that direction’. Meanwhile, Greek finance minister Varoufakis warned that an ‘accident’ was drawing ‘dangerously close’. It’s now looking likely that the EU summit proposed for Monday will conclude with a take it or leave it offer as well as a formal deadline. In the mean time, with deposit flight from Greek banks under huge pressure, the ECB’s Coeure said that he was unsure if Greek banks would be open on Monday although this was seemingly downplayed by an EU official in headlines later on Bloomberg. Capital controls appear to be drawing ever closer with each passing day however. So recapping the calendar now, an emergency ECB Governing Council meeting will be held today (scheduled for 11am GMT) to discuss the ELA cap. This will be followed by an EU Emergency Leaders Summit due 6pm GMT on Monday, while it’s possible that over the weekend we get another Eurogroup meeting to prepare the agenda. A Heads of State and Government Summit is then scheduled for 25th-26th June before IMF bundled payments due June 30th. Of course this timeline will be subject to what happens on Monday. It’s set up to be another jittery one for markets again next week however.
 
end

Early this morning, the ECB gives another 1.8 billion euros of ELA. The central bank of Greece requested 3 billion euros and received far less than they asked for.  Not only that but yesterday, over 1 billion euros were removed from the Greek banking sector:

(courtesy zero hedge)

ECB Gives Greek Banks Barely Enough Cash To Cover One Day’s Bank Run

Yesterday evening, after what had been a dramatic surge in the Greek bank run which has resulted in over €3 billion in cash withdrawn through Thursday night, the Greek central bank requested an emergency cash dispensation from the ECB under the country’s Emergency Liquidity Assistance program, just one day after the ECB granted the latest €1.1 billion expansion in the ELA. Rarlier today, in an unscheduled session, the ECB did as requested, however it granted Greece far less than the amount it sought, and according to MarketNews reports, the ECB gave Greece just €1.8 billion in addition funds.

This means that Greek deposits have declined by over €5 billion in the past 7 days alone, as indicated by the surge in the ELA from €80.7 billion on June 10 to €85.9 billion currently.

Worse, as Reuters reported moments ago, on Friday alone there was another €1.2 billion in deposit outflows which means that the entire ELA increase has already been used up, and Greece is again facing the abyss.

Finally, the one question on everyone’s mind, can Greek deposits hit parity with total ELA as we hypothesized a week ago? The answer – no. As the following chart shows, Greece currently has about €95 billion in ELA eligibility and just around €120 BN in deposits left.

Which means that even the “well-meaning” ECB can handle at most 7-8 days more of deposit outflows before it shuts off the Greek ELA account and capital controls are finally imposed leading to the next, far more unpleasant phase of the Greek drama.

end

 

Unbelievable:  Greek government bonds are not crashing because they are not trading at all.  Not one bond…

(courtesy zero hedge)

Why Greek Government Bonds Are Not Crashing (Spoiler Alert: There’s NO Trading)

A glance at a chart of 5Y Greek Govvies shows the last trade at a 16% yield, well below the worst 20% yields – suggesting yet another storm in a teacup as “markets know best.” However, this is entirely wrong! Greek government bond trading has stopped… 5Y bonds have not traded since April 24th. In fact given current equity levels, 5Y yields would be closer to 22% – as bad they have been ever. The entire fixed income market in Greece has died with CDS liquidity having collapsed and only sporadic longer-dated bonds trading.

 

As ekathimerini reports,

Investors have not traded Greek government bonds on the HDAT electronic platform for almost a month as the country struggles to reach a vital cash-for-reform deal with its creditors, data from Greece’s central bank showed on Friday.

 

The data shows not a single bond has been traded since May 20, in a sign investors have moved to the sidelines, lacking the appetite to buy what is currently considered one of the riskiest assets in the world.

 

In what is widely billed as another last-ditch attempt to break the deadlock, euro zone leaders will hold an emergency summit on Monday evening on Greece, where bank withdrawals have accelerated and government revenues slumped.

 

In May and April only 4 million euros worth of bonds have been traded, compared with 63 million euros in March, 241 million in February and 560 million in January.

 

About 10.4 billion euros were traded in 2014.

 

Greek government bonds trade mostly over the counter, but the data from HDAT is a proxy for total volumes, traders say.

 

The last barren period of this length on HDAT was just before Greece’s debt restructuring in March 2012. From September 2011 to February 2012 only 7 million euros of Greek bonds changed hands.

Given the relationship with stocks, it is probably a good thing that bonds stopped trading and therefore do not FIX the losses mark-to-market on bank balance sheets

 

And as Bloomberg reports, it got worse this week

None of the government’s bonds traded publicly last week nor derivatives insuring them, according to data from the Bank of Greece and the Depository Trust & Clearing Corp.

Greek bank bonds are trading sporadically… indicating significant weakness

 

And CDS imply an 80%-plus probability of default (given standard recovery assumptions)…

Even as liquidity has entirely disappeared…

 

Charts: Bloomberg

end
Get a load of this>>> The IMF trains Greek journalists in Washington to that they could spin a favourable tale on the Troika’s efforts to “save” Greece:
so much for freedom of the press…
(courtesy zero hedge)

The IMF “Trained” Greek Journalists In Washington To Spin Stories In Favor Of Troika

Submitted by AlexRPT via RedPillTimes.com,

In what can only be described as a shocking testimony, Greece’s former representative to the IMF, Panagiotis Roumeliotis, in front of the special parliamentary committee on the Greek debt, said that several Greek journalists were “trained” in Washington D.C. in order to support the positions of the IMF and the European Commission in Greek media.

Roumeliotis testified that…

“The IMF trained” greek journalists so that “Greek journalists can promote the positions of the IMF and the European Commission in Greek media.”

According to Roumeliotis, the seminars and training classes took place in Washington D.C., as well as various sessions taking place in Greece.

Roumeliotis refused to disclose the names of the journalists involved, in what can only be described as overt and excessive western propaganda, bordering on illegal actions undertaken by the IMF and European Commission given the state of Greece’s debt burden.

Parliament President and head of the committee, Zoe Konstantopoulou, noted that the committee investigating Greece’s debt would seek to discover the names of the journalists that took part in Washington’s training sessions.

Roumeliotis noted that when he was in Washington D.C. he accidentally met with Greek journalists who told him that they were invited to attend seminars on the function of the IMF. He said that the committee can ask the organization’s Director of Communications Department, Gerry Rice, for a list of journalists’ names who attended such seminars in D.C.

Konstantopoulou adopted the proposal and appointed a committee member to draft a formal request to the IMF…

“In Greece, certain individuals who work for the mass media were contracted to conceal the fact that the Greek debt was not sustainable.”

Roumeliotis further testified that IMF head…

“Christine Lagarde and other high officials at the IMF contacted me before my testimony before the committee to remind me that members of the IMF are immune from prosecution.”

Konstantopoulou named television journalist Yiannis Pretenteris as one of the journalists attending the IMF classes. According to Konstantopoulou, the popular Greek journalist admitted in his book that he attended the IMF seminars.

Roumeliotis noted that many journalists fell victim to the IMF’s misinformation campaign, and that the omission of the fact that the debt was not sustainable was detrimental to public interest.

Roumeliotis went on to say that several economists and university professors also attempted to convince the public that the debt was sustainable…adding that he puts them in the same category as the journalists.

Who is Panagiotis Roumeliotis: A Greek economist, academic, banker and politician who served as Minister of National Economy, Minister of Commerce, Member of the European Parliament for PASOK and as Greece’s representative at the International Monetary Fund.

 

end

This is unbelievable:  the IMF states that it will continue to fund Ukraine even on a default.

(courtesy zero hedge)

IMF Humiliates Greece, Repeats It Will Keep Funding Ukraine Even If It Defaults

One week ago, we were stunned to learn just how low the political organization that is the mostly US-taxpayer funded IMF has stooped when, a day after its negotiators demonstratively stormed out of the Greek negotiations with “creditors”,  Hermes’ ambassador-at-large Christine Lagarde said that the IMF “could lend to Ukraine even if Ukraine determines it cannot service its debt.”

In other words, as Greece struggles to avoid a default to the IMF on debt which was incurred just so German banks can remain solvent and dump trillions in non-performing loans to US hedge funds and Greek exposure, and which would result in the collapse in the living standards of an entire nation (only for a few years before an Iceland-recovery takes place, one which Greece would already be enjoying had it defaulted in 2010 as we said it should), and as the “criminal” IMF does everything in its power to subjugate an entire nation, or else let it founder, the IMF told Soros’ BFFs over in Kiev, that no matter if they default to its private creditors (in fact please do since Russia is among them), the IMF would keep the debt spigot flowing.

Courtesy of the US taxpayer of course.

Fast forward one week when, with Greece one step closer to a full-blown financial collapse, the IMF comes out and tell Ukraine – which already passed a law allowing it to impose a debt moratorium at any moment – not to worry, that even in a default it will keep providing unlimited funds. From Reuters:

 
 

Ukraine’s efforts to strike a debt restructuring deal with its creditors will allow the International Monetary Fund to continue to support the country even if the talks are not successful, the head of the IMF said on Friday.

 

“I … welcome the government’s continued efforts to reach a collaborative agreement with all creditors,” IMF Managing Director Christine Lagarde said in a statement. This is important since this means that the Fund will be able to continue to support Ukraine through its Lending-into-Arrears Policy even in the event that a negotiated agreement with creditors in line with the program cannot be reached in a timely manner.

We will pass comment on this latest grand IMF hypocrisy and ask if Greece would rather be in Kiev’s place which at the behest of “Western” leaders, it sold, liquidated, and otherwise “lost” all of its gold. Or, like Ukraine, Athens is willing to part with its $4 billion in gold just to appease the Troika as it sells all of its 112.5 tons of official gold to unknown buyers. A transaction which would buy Greece about 3-6 months of can kicking and a few stray smiles from Chrstine Lagarde.

 end

Long lineup at ATMs as everybody is preparing for a bank holiday.

To me I am shocked that so many have still left their money in the banks. The question will be whether the 100,000 euro insured limit will hold.  If it doesn’t I could see another storming of the Bastille

(courtesy zero hedge)

“Bank Holiday” Preparations Begin In Greece, Lines Form At Athens ATMs

The writing has been on the wall for quite sometime.

Deposit flight from Greece’s ailing banking sector has been running north of €500 million per day this week as the threat of capital controls casts a pall over the Greek government’s efforts to reassure the public and head off a terminal bank run.

Sparking a panic has been the most powerful tool at the troika’s disposal to bring PM Alexis Tsipras to the negotiating table and forcing Syriza to either concede to pension cuts and a VAT hike or risk social and political upheaval in the face of dark ATMs and public protests – we said this first in February and finally even the Greek government realized just what game Europe is playing.

Until now, Greeks had taken the barrage of headlines in stride with a stoic fortitude that would impress Marcus Aurelius but now, it appears as though the ‘institutions’ might have finally broken their spirits.

Earlier today, the ECB agreed to lift the ELA cap by just €1.8 billion, far less than Greek banking officials had requested and probably just barely enough to cover Friday’s withdrawals. And so, as Europe’s “Lehman Weekend” may finally be kicking off, the ATM lines are officially forming as Greeks prepare to be ‘Cyprus’d’ and as the country stares into “template” oblivion.

What is perhaps more shocking is that anyone still had money in Greek banks at all…

More ATM line photos from Corriere:

Source

And in yet another sign that the next week may be the beginning of the end, Cyrpus is preparing for a bank “holiday” in Greece:

Bank of Cyprus, Cyprus’s largest lender, is preparing for an extended bank holiday in Greece as continuing deposits outflows may force authorities to take this type of step and impose capital controls.

 

“We are preparing to facilitate our customers with operations in Greece with additional liquidity,” a Bank of Cyprus source with knowledge of the situation said on condition of anonymity. “This is something we don’t want to see happening”.

 

The source said that in recent days the bank saw an increase in deposits inflows, both from Cypriot and Greek depositors, amounting “hundreds of million euros”.

 

Reuters reported on Thursday that European Central Bank Executive Board member Benoit Coeure told euro area’s finance ministers that he was not sure whether Greek bank will be able to open on Monday.

 

The Bank of Cyprus source also said that the bank cannot be ruled out that a bank holiday in Greece could also affect the Cypriot banking system via the units of Greek banks operating on the island in the form of deposits outflows.

 

The source was not in position to name the amount in additional liquidity the bank will need in the case of a bank holiday in Greece nor the number of its customers that would be affected.

 

“In that case, a bank holiday in Greece could also prompt Cypriot authorities to also impose a bank holiday in Cyprus,” the Bank of Cyprus source said.

 

Finance minister Harris Georgiades who was talking on state radio CyBC today said that the units of Greek banks operating in Cyprus are not affected by what is happening in the cash-strapped country.

 

“There are in Cyprus banks of Greek ownership,” he said in reference to ?lpha Bank Cyprus Ltd, Eurobank Cyprus Ltd, National Bank of Greece (Cyprus) Ltd and Piraeus Bank (Cyprus) Ltd.

 

“I want to clarify that they are Cypriot banks with a Cypriot licence, their own capital and capital adequacy, important liquidity with no exposure to Greece or to the Greek government or banks,” he said. “The fact that the shareholder is a Greek bank is not making any difference. What makes a difference in a positive way is the stability in and the confidence to Cyprus and its financial system which is internationally acknowledged”.

Interestingly, it appears someone got a hard tap on the shoulder because the above has now been removed. Here’s a link to the cached version which was also captured by another local publication.

And the swissy is bid.

The only remaining question is whether today’s deposit bleed will be dramatic enough to force Brussels – or Athens for that matter under pressure by the local banks – into implementing capital controls over the weekend.

end
The following commentary from Graham Summers is very accurate and important for all of us to understand.
Prior to Greek bailout NO 2 (2012), the ECB swapped with the French and German banks huge sums of bonds in return for freshly minted euros.  These banks also used the Greek bonds as Tier one capital to leverage huge amounts of trading, probably to the tune of 24 times the initial collateral.  The problem occurs on a default by Greece.  Why? Those bonds must be reswapped back to the banks. It would not be fair to stick the losses on taxpayers when those bonds were bank losses and not taxpayer losses.  The losses will be somewhere north of 230 billion euros.  On top of that, there is a 100 x derivative credit default swap bet on Greece.  So together with currency losses, the banks could end up losing over 3 to 5 trillion euros breaking the entire financial system in one blow. This is why the Greek situation is extremely important and it is the reason I continually highlight the major issues
(courtesy Graham Summers/Phoenix Research Capital)

Oil related stories

Low Oil Prices Prompt Statoil To Cut Even More Jobs

 

Submitted by Andy Tully via Oilprice.com,

Once more Statoil is reducing its richest asset – employees – in order to keep financial losses to a minimum because of low oil prices. It will eliminate up to 1,500 full-time jobs and 500 temporary consultant positions by the end of 2016.

“We regret the need for further reductions,” Statoil Chief Operating Officer Anders Opedal said June 16, “but the improvements are necessary to strengthen Statoil’s competitiveness and secure our future value creation.

The goal is to save $1.7 billion per year beginning in 2016 under a cost-savings plan drawn up in 2013. Its original goal was merely to corral spending, which had risen gradually during the previous decade. The company saw a stronger need to save after the price of oil collapsed beginning in late June 2014.
And while Statoil is maintaining its dividend for shareholders, it is reducing capital spending by 10 percent to about $18 billion for 2015 alone.

So far, Statoil – two-thirds of which is owned by the government of Norway – has postponed and even abandoned energy exploration projects in its effort to save money, and has eliminated the jobs of 1,340 full-time employees and 995 consultants since the end of 2013.

Now the company will go further, eliminating between 1,100 and 1,500 full-time positions and 525 consultant jobs, or about 7 percent of its remaining workforce. More specific numbers won’t be available until sometime this fall.

Statoil’s workers are among the highest paid in the energy industry, even at a time when the company’s chief product, Brent oil, has plunged in value by $50 per barrel.

In a statement, Statoil said the layoffs so far have been mutually agreed upon by both the company and the affected employees, and that it hopes to keep it that way. “We have so far solved the workforce surplus through voluntary measures,” it said, “and maintain the ambition to conduct the people process over the next 18 months without forced measures.”

Statoil also appears not to be ready to acquire smaller companies that may be struggling, as Royal Dutch Shell did in buying BG Group. Eldar Saetre, Statoil’s CEO, said in an interview published June 9 in the Financial Times that such acquisitions are too expensive.

“There is really nothing cheap out there, no big bargains to be made,” Saetre said. “The big transformation stuff is challenging.”

Norway’s government agrees. “It’s natural and necessary that Statoil, as the biggest company on the Norwegian shelf and a large international player, must adapt to a new cost situation, like the industry as a whole,” Petroleum and Energy Minister Tord Lien said in an e-mail.

Nevertheless, Oslo has cautioned that such cost-cutting must not interfere with the efforts by the country’s energy industry to get the most out of its existing oil and gas fields and initiate new, profitable projects.

 
end
Crude slides as the total USA rig counts declines by the smallest since December 2014:
(courtesy zero hedge)

Crude Slides As US Total Rig Count Decline Smallest Since December

Total rig count dropped 2 this week to 857. This is the smallest decline in rig count since Decmeber 5th 2014.

  • *U.S. OIL RIG COUNT DOWN 4 TO 631, BAKER HUGHES SAYS

 

 

But Production remains at record highs…

 

Charts:Bloomberg

Your more important currency crosses early Friday morning:

Euro/USA 1.1297 down .0074

USA/JAPAN YEN 123.14 up .136

GBP/USA 1.5847 up .0031

USA/CAN 1.2242 up .0016

This morning in Europe, the Euro fell by a considerable 74 basis points, trading now just below the 1.13 level at 1.1297; 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.

In Japan Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31. The yen continues to trade in yoyo fashion as this morning it settled down again in Japan by 14 basis points and trading just above the 123 level to 123.14 yen to the dollar.

The pound was again well down this morning as it now trades just above the 1.58 level at 1.5847, still very worried about the health of Barclay’s Bank and the FX/precious metals criminal investigation/Dec 12 a new separate criminal investigation on gold, silver and oil manipulation.

The Canadian dollar is down by 16 basis points at 1.2242 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 1.0489 to the Euro, trading well below 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  183.42  points or 0.92%

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

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: $1199.95

silver:$16.13

Early Friday morning USA 10 year bond yield: 2.31% !!! down 2 in basis points from Thursday night and it is trading just at resistance at 2.27-2.32% and no doubt still setting off massive derivative losses.

USA dollar index early Friday morning: 94.44 up 44 cents from Thursday’s close. (Resistance will be at a DXY of 100)

This ends the early morning numbers, Friday morning

 

And now for your closing numbers for Friday:

 

Closing Portuguese 10 year bond yield: 3.05%  down 6 in basis points from Thursday ( still very ominous)

Closing Japanese 10 year bond yield: .43% !!! down 2 in basis points from Thursday/very ominous/central bank intervention

Your closing Spanish 10 year government bond, Friday, down 1 point in yield ( still very ominous)

Spanish 10 year bond yield: 2.27% !!!!!!

Your Friday closing Italian 10 year bond yield: 2.28% down 1 in basis points from Thursday: (very ominous)

trading 1 basis point higher than Spain.

 

IMPORTANT CURRENCY CLOSES FOR TODAY

 

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

 

Euro/USA: 1.1343 down .0028 ( Euro down 28 basis points)

USA/Japan: 122.69 down  .308 ( yen up 31 basis points)

Great Britain/USA: 1.5872 down .0006 (Pound down 6 basis points)

USA/Canada: 1.2269 up .0041 (Can dollar down 41 basis points)

The euro fell by a tiny bit today. It settled down 28 basis points against the dollar to 1.1343 as the dollar traded aimlessly today against all the various major currencies. The yen was up by 31 basis points and closing well below the 123 cross at 122.69. The British pound lost some ground today, 6 basis points, closing at 1.5872. The Canadian dollar lost some ground against the USA dollar, 41 basis points closing at 1.2269.

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 8 in basis point from Thursday// (just below  the resistance level of 2.27-2.32%)/ and ominous

Your closing USA dollar index:

94.15 up 15 cents on the day

.

European and Dow Jones stock index closes:

England FTSE up 2.57 points or 0.04%

Paris CAC up 11.89 points or 0.25%

German Dax down  60.20 points or 0.54%

Spain’s Ibex up 72.40 points or 0.67%

Italian FTSE-MIB up 239.35 or 1.07%

 

The Dow down 101.56  or 0.56%

Nasdaq; up 15.95 or 0.31%

 

OIL: WTI 58.40 !!!!!!!

Brent:62.91!!!!

 

Closing USA/Russian rouble cross: 53.13  up 1/4  roubles per dollar on the day

 

end

 

And now for your more important USA stories.

 

NY trading for today:

Bonds & Bullion Beat Stocks As Fed Frenzy Fades

Do not worry… “it’s contained”

 

From The FOMC Statement, Gold is 1st, Bonds 2nd, and Stocks 3rd…

 

WEAK CLOSE>

Trannies remain the big squeeze post-FOMC winner but Dow is the laggard…

 

On the week, however, Trannies lagged and ended the week red (down 4 of the last 5 weeks) as Small Caps (dominated by Biotech ‘no brainers’) led the pop…

 

Biotechs were up over 5% this week – the best week since Oct 2014 (up 7.25% from the lows of the week)

 

VIX ended the week unch…

 

Treasury yields ripped lower today and on the week the entire curve is lower led by a 17bps collapsd in 5y (among the biggest this year)…

 

The USDollar roundtripped on the day as late-day buying pressure for Swissy pushed it lower (but ended down 1.2% for the 3rd week in a row

 

Copper and Crude monkey-hammered on the day leaving gold and silver higher on the week…

 

Remember it’s OPEX (Quad Witching)

h/t@NorthmanTrader

*  *  *

While stocks leaked today, the real Grexit fears are evident in Swissy…

 

European VIX…

 

and Bitcoin… (biggest week since January)

 

With that in mind, we leave you with this thought for the weekend and Monday’s bank opening in Greece…

 

Charts: Bloomberg

Bonus Chart: Moar Flash Crashery…

 end
I like using Caterpillar results as they are a good indicator of global demand.  Retail sales at Cat. are falling badly:
(courtesy Caterpillar, zero hedge)

For Caterpillar, The Second Great Depression Has Never Been Worse

When one strips away all the “double seasonal adjustments”, all the non-GAAP masking tape, all the pro-forma addbacks, all the constant brainwashing propaganda where if one excludes all the bad things are great, and certainly the $22 trillion in central bank liquidity injections to keep crony capitalism as we know it alive in what is now a 7-year-old attempt to restore the post-crash confidence (which is failing thanks to the $57 trillion in debt added since then) what is one left with?

Well, the monthly retail sales of Caterpillar is a good place to start. Because far from confirming a “recovery” or ever stagnation, one look at the ongoing destruction in end demand for products of this industrial and heavy-machinery bellwether confirms nothing short of the second great depression.

And while in the past few months there had been some hope that the US was indeed decoupling from the rest of the world following a 5% Y/Y increase in retail sales in April, the tumble in May to just 1% for North America indicates that contrary to hopes that the US may pull the rest of the world up from its epic slump, it is the rest of the world (where China just posted a 17% drop in demand, while Latin America cratered by -50%) that is succeeding in dragging the US down into an upcoming global recession.

 

Actually did we say recession? That was the 19 month period following the Great Financial Crisis. The current interval, in which CAT retail sales have dropped for an unprecedented 30 months in a row (!) at an average monthly pace of -10% suggests that, when stripping away all the endless veneer and propaganda, there is nothing short of a Second Great Depression just below the surface.

Source: Caterpillar

California Has Never Experienced A Water Crisis Of This Magnitude – And The Worst Is Yet To Come

Submitted by Michael Snyder via The Economic Collapse blog,

Things have never been this dry for this long in the recorded history of the state of California, and this has created an unprecedented water crisis.  At this point, 1,900 wells have already gone completely dry in California, and some communities are not receiving any more water at all.  As you read this article, 100 percent of the state is in some stage of drought, and there has been so little precipitation this year that some young children have never actually seen rain.

This is already the worst multi-year drought in the history of the state of California, but this may only be just the beginning.  Scientists tell us that the amount of rain that California received during the 20th century was highly unusual.  In fact, they tell us that it was the wettest century for the state in at least 1000 years.

Now that things are returning to “normal”, the state is completely and total unprepared for it.  California has never experienced a water crisis of this magnitude, and other states in the western half of the nation are starting to really suffer as well.  In the end, we could very well be headed for the worst water crisis this country has ever seen.

When I said that some communities in California are not receiving any more water, I was not exaggerating.  Just consider the following excerpt from one recent news report

The community of Mountain House is days away from having no water at all after the state cut off its only water source.

 

Anthony Gordon saves drinking water just in case, even though he never thought it would come to this.

 

“My wife thinks I’m nuts. I have like 500 gallons of drinking water stored in my home,” he said.

 

The upscale community of Mountain House, west of Tracy, is days away from having no water. It’s not just about lawns—there may not be a drop for the 15,000 residents to drink.

So what are those people going to do?

And what is this going to do to the property values in that area?

Who in the world is going to want to buy a home that does not have running water coming to it?

Other communities throughout the state are pumping groundwater like crazy in a desperate attempt to continue with business as usual.  In fact, it is being projected that groundwater will account for almost all water used in the entire state by the end of this year

Underground aquifers supply 35 percent of the water used by humans worldwide. Demand is even greater in times of drought. Rain-starved California is currently tapping aquifers for 60 percent of its water use as its rivers and above-ground reservoirs dry up, a steep increase from the usual 40 percent. Some expect water from aquifers will account for virtually every drop of the state’s fresh water supply by year end.

But of course this creates a huge problem.  When the groundwater is gone, it is gone for good.  Those aquifers took centuries to fill up, and now they are being drained at a staggering rate.  In some parts of the state, aquifers are being drained so fast that it is causing thousands of square miles of land to sink

Californians have been draining water so rapidly from underground aquifers that tens of thousands of square miles of land reportedly are sinking — so drastically that the shifting surface is starting to destroy bridges and crack highways across the state, according to a recent report by the Center for Investigative Reporting.

So what is the solution?

Some of my readers have suggested that desalination is the answer.  But the truth is that desalination is very expensive and it is really bad for the environment.  The following comes from a recent Natural News article

For those who are saying, “There’s no water problem in California! It has the entire Pacific Ocean right next door!”, you need to look into the catastrophic environmental destruction tied to ocean water desalination.

 

Not only does desalination use fossil fuels which emit the very same carbon emissions that the California government insists caused the drought in the first place, the desalination process itself pollutes the ocean with high concentration salt brine that kills marine ecosystems and destroys ocean life along the California coastline.

 

And that’s on top of all the Fukushima radiation that’s already causing a marine ecosystem collapse in many areas of the coast. Add more salt brine to the mix and you get a state where rich, self-entitled Hollywood celebrities demand their lush, green lawns at the expense of ocean life, climate change and the global ecosystem. If that happens, California will lose all credibility as a “green” state, and its wealthiest residents will be living an ecological lie.

Others have suggested that California can solve their water problems using “toilet to tap” technology

Potable water reuse – or converting sewage effluent to heavily-treated, purified drinking water – is receiving renewed attention in California in the midst of the state’s four-year drought.

 

According to a report by the Los Angeles Times, “California water managers and environmentalists” are pushing the idea of recycled sewage water. Yet past efforts in the state to employ similar systems have stalled, as opponents have dubbed the concept “toilet to tap.”

How would you feel about that?

Would you be willing to have your family drink water that came from the toilets of your neighbors?

I don’t think that I could do that.

But something has to be done.  It is not just the state of California that is experiencing a major water crisis.  All over the world, underground aquifers are being drained rapidly.  In fact, according to the Washington Post, 21 out of the 37 largest aquifers in the world “have passed their sustainability tipping points”…

The world’s largest underground aquifers – a source of fresh water for hundreds of millions of people — are being depleted at alarming rates, according to new NASA satellite data that provides the most detailed picture yet of vital water reserves hidden under the Earth’s surface.

 

Twenty-one of the world’s 37 largest aquifers — in locations from India and China to the United States and France — have passed their sustainability tipping points, meaning more water was removed than replaced during the decade-long study period, researchers announced Tuesday. Thirteen aquifers declined at rates that put them into the most troubled category. The researchers said this indicated a long-term problem that’s likely to worsen as reliance on aquifers grows.

Sadly, this is just the beginning.  There is a reason why experts refer to fresh water as “the new oil”. Without fresh water, none of us can survive.  But we are very quickly getting to the point where there simply won’t be enough of it for everyone on the planet.

As for the state of California, it was once a desert and now it is turning back into a desert As I mentioned earlier, the 20th century was the wettest century that part of North America had seen in at least 1000 years.  During that time, we built enormous cities all over the Southwest that currently support millions upon millions of people.  But now we are learning that those cities are not sustainable.

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Let us wrap up this week, with this offering from Greg Hunter:
(courtesy Greg Hunter/USAWatchdog)

 

CA Drought Worst Ever, Greek Debt Crisis Latest, Fed Cannot Raise Rates, Secret Trade Deal Advances-WNW 195

4_jpgBy Greg Hunter’s USAWatchdog.com(6.19.15 

A picture is worth a thousand words, and here is a picture of an unfolding calamity in California.  Check out the latest drought map of the state.  Almost 100% of the state is in severe drought conditions.  Many parts of the West are also experiencing drought, but California is ground-zero.  This is a huge food growing region, and the state has just started restricting water to agriculture.  This is a vast problem not only for the U.S., but the entire world, and there is no end in sight. California is a state with a population of nearly 40 million people.  Some towns have been cut off, and some people are starting to store drinking water in their homes.  This could spark a humanitarian crisis and a financial crisis.  You cannot live or do business without ample supplies of water.  California has a GDP of $2.2 trillion.  Agriculture alone is $46 billion a year.  Failure of California business would be a financial failure for the U.S.  It is only projected to get worse.  Is this a black swan hiding in plain sight?   Might I remind you that in March, NASA said California had about one year’s worth of water before it runs out.  So, we are t-minus 9 months and counting.

The Greek debt crisis got kicked into a higher gear and is speeding for default and disaster.  Technically, I think the Greeks have already defaulted long ago because they are borrowing more and more money to pay their debts.  This week, the Greek politicians said debt owed to the EU was“illegal and illegitimate.”  They cannot and will not pay the money back.  The only question remains is when does the default become official.  It’s reported the Greek’s have run on the banks there, and they do not know if they will open on Monday.  Will someone like the Federal Reserve step in and buy some time.  Greece is a NATO country, and it just signed a gas pipeline deal with Russia.  It’s getting complicated.  Will someone like the Federal Reserve step in and buy some time?  Does the EU cough up the remaining 7.2 billion euro loan package to kick the can towards the cliff?  Who knows, but end it will sooner than later.

The Federal Reserve will not be raising rates, and it has reduced the growth estimates it had.  Gregory Mannarino says, “The Fed cannot and will not be raising rates because it can’t.”  He points to recent so-called core inflation rates just announced of .1%.  Of course, it’s much higher than that, but Mannarino says the Fed is only worried about the “core rate.”  There is no growth and if the Fed raised rates, it would implode the economy.  And yet, the mainstream press says“Fed on track to raise rates this fall.”  IMF Head Christine Lagarde just publicly scolded the Fed and told them “not to raise rates” because the economy was too weak.  Then you have this out earlier in the week from the same USA Today that says “Bonds haven status gets shaky.” Meanwhile, the AP reports in the same week “Economists don’t fear rise in rates.”  Really??  Maybe someone should tell that to Christine Lagarde and the entire bond market the raising interest rates are not going to be a problem—NOT.

Looks like the GOP got a win in the secret trade deal.  The House narrowly passed part of the trade deal.  It is the so-called Trade Promotion Authority, or TPA.  Republican Congressman Paul Ryan said, “The TPA is a process and not an agreement.”  Of course, he did not say and none of the other mainstream media (MSM) don’t think a secret trade deal is a problem.  Ryan also said the TPA is “more accountable and more transparent.”   Yes, “more transparent” that’s why it is being done in secret.  Congressmen and Senators have to go into a room alone and read hundreds of pages.  It is illegal for the public to see the deal until it is passed.  There is an old saying, and that is “evil is done in the dark and good is done in the light.”  This is being done in the dark.

Join Greg Hunter as he analyzes these stories and more in the Weekly News Wrap-Up.

 

end

 

Well that is all for today

I will see you Monday night

Harvey

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One comment

  1. […] JUNE 19/WE AWAIT A BANKING HOLIDAY SET FOR MONDAY IN GREECE/RUSSIA DUMPS DOLLARS FOR GOLD/ […]

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