July 7/Turmoil in Brussels/Greeks show up with no plan at all/they are given until Sunday to come up with a credible plan/

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold:  $1152.40 up $20.50  (comex closing time)

Silver $14.95 down 78 cents.

 

In the access market 5:15 pm

Gold $1154.50

Silver: $15.10

 

First, here is an outline of what will be discussed tonight:

At the gold comex today, we had a poor delivery day, registering 2 notices for 200 ounces . Silver saw 5 notices filed for 25,000 oz.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 248.19 tonnes for a loss of 55 tonnes over that period.

In silver, the open interest rose by only 133 contracts despite the fact that Monday’s price was up by 19 cents.  Again we must have had some short covering. The total silver OI continues to remain extremely high, with today’s reading at 196,022 contracts now at decade highs despite a record low price.  In ounces, the OI is represented by .979 billion 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. There can only be one answer as to how the OI of comex silver is now just under 1 billion oz coupled with a low price under 16.00 dollars:  sovereign China through proxies are the long and they have extremely deep pockets. This is the first time in almost two years that the open interest in an active delivery month did not collapse in number.

In silver we had 5 notices served upon for 25,000 oz.

In gold, the total comex gold OI rests tonight at 446,665 for a gain of 397 contracts as gold was up $9.90 on yesterday.  We had 2 notices filed for 200 oz  today.

We had no change in tonnage at the gold inventory at the GLD; thus the inventory rests tonight at 709.65 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. I am sure that 700 tonnes is the rock bottom inventory in gold.  Anything below this level is just paper and the bankers know that they cannot retrieve “paper gold” to send it onwards to China . In silver, we had no change in inventory at the SLV/ Inventory now rests at 325.205 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 133 contracts to 196,022 despite the fact that silver was up by 19 cents yesterday.  The OI for gold rose by another 397 contracts up to 446,665 contracts as the price of gold was up by $9.90 on yesterday.

(report Harvey)

 

2 Today, 11 important commentaries on Greece

 

(zero hedge, Reuters/Bloomberg,Armstrong/David Stockman/summers/Ambrose Evans Pritchard)

 

3. One commentaries on the collapse in the stock market in China

(zero hedge)

4.USA data tonight; Trade Deficit and a story on Obamacare.

 

5. Gold trading overnight

(Goldcore/Mark O’Byrne/)

6. Trading from Asia and Europe overnight

(zero hedge)

7. Trading of equities/ New York

(zero hedge)

8. Bill Holter’s commentary tonight is titled:

“Piece by piece or all at once?”

 

plus other important topics….

 

Just in case you missed this from yesterday, I am repeating it for you:

Before we begin, I just retrieved the data from the FRBNY for gold leaving this depository for safe havens abroad.

Data for May:

8103 – 8089 =  14 million dollars worth of gold left NY at a value of 42.22 per oz.

Thus 331,596.4 oz leaves or 10.314 tonnes

This is approximately what left last month. Since Germany is the only nation that have officially asked for repatriation, I am quite sure that the destination of this gold is Germany.

 

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 a tiny 397 contracts from 446,268 up to 446,665  as gold was up $9.90 in price yesterday (at the comex close).  We are now in the next contract month of July and here the OI surprisingly fell by 11 contracts to 163 contracts. We had 8 notices filed yesterday and thus we lost 3 contracts or an additional 300 ounces will not stand in this non active delivery month of July. The next big delivery month is August and here the OI fell by 2250 contracts down to 278,897. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was fair at 167,359 with the help from our criminal HFT traders. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was poor at 153,640 contracts. Today we had 8 notices filed for 800 oz.

And now for the wild silver comex results. Silver OI rose by a tiny 133 contracts from 195,889 down to 196,022 despite the fact that the price of silver up by 19 cents in price with respect to yesterday’s trading. We continue to have our bankers pulling their hair out with respect to the continued high silver OI. The next delivery month is July and here the OI fell by 193 contracts down to 516. We had 177 notices served upon yesterday and thus we lost 76 contracts or an additional 380,000 ounces of silver will not stand for delivery in this active month of July. This is the first time in quite some time that we have not lost any silver ounces standing immediately after first day notice. The August contract month saw it’s OI rise by 24 contracts up to 187. The next major active delivery month is September and here the OI fell by a small 421 contracts to 137,419.  The estimated volume today was excellent at 62,736 contracts (just comex sales during regular business hours) with mucho help from the HFT traders. The confirmed volume  yesterday (regular plus access market) came in at 42,481 contracts which is good in volume.  We had 5 notices filed for 25,000 oz

 

July initial standing

July 7.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz    nil
Withdrawals from Customer Inventory in oz 2039.153 HSBC,Manfra,Scotia)
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 2502.12 oz (Delaware,JPM)
No of oz served (contracts) today 2 contracts (200 oz)
No of oz to be served (notices) 161 contracts 16,100 oz
Total monthly oz gold served (contracts) so far this month 310 contracts(31,000 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil oz
Total accumulative withdrawal of gold from the Customer inventory this month 80,358.6   oz

 

 

Today, we had 0 dealer transactions

 

we had zero dealer withdrawals

total Dealer withdrawals: nil  oz

we had 0 dealer deposits

 

total dealer deposit: zero
we had 3 customer withdrawals

i) Out of Manfra; 128.60 oz (4 kilobars)

ii) Out of Scotia:  1607.500 oz (50 kilobars)

iii) Out of HSBC  303.053  oz

 

 

total customer withdrawal: 2039.153 oz

We had 2 customer deposits:

i) Into Delaware:  2199.067 oz

ii) Into JPMorgan: 303.053 oz

Total customer deposit: 2502.12 ounces

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 2 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account

 

To calculate the total number of gold ounces standing for the July contract month, we take the total number of notices filed so far for the month (310) x 100 oz  or 31,000 oz , to which we add the difference between the open interest for the front month of July (163) and the number of notices served upon today (2) x 100 oz equals the number of ounces standing.

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

No of notices served so far (310) x 100 oz  or ounces + {OI for the front month (163) – the number of  notices served upon today (2) x 100 oz which equals 47,100 oz standing so far in this month of July (1.465 tonnes of gold).

 

we lost an additional 300 oz of gold standing in this non active delivery month of July.

Total dealer inventory 522,283.742 or 16.24 tonnes

Total gold inventory (dealer and customer) = 7,979,429.220 oz  or 248.19 tonnes

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 248.19 tonnes for a loss of 55 tonnes over that period.

 

end

And now for silver

July silver initial standings

July 7 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 1,265,398.330  oz (HSBC,Brinks,Scotia)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory 599,902.97 oz (Scotia)
No of oz served (contracts) 5 contracts  (25,000 oz)
No of oz to be served (notices) 509 contracts (2,545,000 oz)
Total monthly oz silver served (contracts) 2413 contracts (12,065,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month nil
Total accumulative withdrawal  of silver from the Customer inventory this month 1,507,469.4 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 deposit:

i) Into Scotia:  599,902.97 oz

total customer deposit: 599,902.97  oz

 

We had 3 customer withdrawals:

i) Out of Brinks:  614,243.550 oz

ii) Out of HSBC: 50,175.37 oz

iii) Out of Scotia: 600,979.410 oz

 

 

total withdrawals from customer:  1,265,398.330   oz

 

we had 0  adjustments

 

Total dealer inventory: 60.146 million oz

Total of all silver inventory (dealer and customer) 182.142 million oz

The total number of notices filed today for the July contract month is represented by 5 contracts for 25,000 oz. To calculate the number of silver ounces that will stand for delivery in July, we take the total number of notices filed for the month so far at (2413) x 5,000 oz  = 12,065,000 oz to which we add the difference between the open interest for the front month of July (516) and the number of notices served upon today (5) x 5000 oz equals the number of ounces standing.

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

2413 (notices served so far) + { OI for front month of July (516) -number of notices served upon today (5} x 5000 oz ,= 14,610,000 oz of silver standing for the July contract month.

we lost 76 contracts or an additional 380,000 oz will not stand in this active delivery month of July.

 

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

http://www.harveyorgan.wordpress.comorhttp://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:

July 7/ no change in gold inventory at the GLD/Inventory at 709.65 tonnes

July 6/no change in gold inventory at the GLD/Inventory at 709.65 tonnes

July 2/we had a huge withdrawal of inventory to the tune of 1.79 tonnes/rests tonight at 709.65 tonnes

July 1.2015; no change in inventory/rests tonight at 711.44 tonnes

June 30/no change in inventory/rests tonight at 711.44 tonnes

June 29/no change in inventory/rests tonight at 711.44 tonnes

June 26./it did not take our bankers long to raid the GLD. Yesterday they added 6.86 tonnes and today, 1.75 tonnes of that was withdrawn/Inventory tonight rests at 711.44 tonnes.

June 25/a huge addition of 6.86 tones of  inventory at the GLD/Inventory rests tonight at 713..23 tonnes

June 24/ a good addition of.900 tonnes of gold into the GLD/Inventory rests at 706.37 tonnes

June 23/no change in gold inventory/rests tonight at 705.47 tonnes

June 22/ a huge increase of 3.27 tonnes of gold into GLD/Inventory tonight: 705.47 tonnes

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

 

 

July 7 GLD : 709.65 tonnes

 

end

 

And now for silver (SLV)

July 7/no change in inventory at the SLV/rests at 325.342 tonnes

July 6/we have a slight inventory withdrawal which no doubt paid fees. we lost 137,000 oz/Inventory rests tonight at 325.205 million oz

July 2/ no change in inventory at the SLV/rests tonight at 325.342 million oz

July 1/ we had an addition of 1,624,000 oz into the SLV inventory/rests tonight at 325.342 million oz

June 30/we lost another 621,000 oz of silver from the SLV/Inventory rests at 323.718 oz (somebody must be in great need of physical silver)

June 29/ a monstrous loss of 4.777 million oz of silver from the SLV/Inventory rests tonight at 324.339 million oz

June 26/today we had another addition of 198,000 of silver/Inventory rests at 329.116 million oz

June 25/ a huge increase of 1.242 million oz of silver into the SLV inventory/Inventory rests at 128.918 million oz

June 24/no change in inventory/rests tonight at 326.918 million oz

June 23/we had a small withdrawal of 956,000 oz/Inventory tonight rests at 326.918 million oz

June 22/ no change in silver inventory/327.874 million oz

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

 

July 7/2015:  tonight inventory rests at 325.205 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 9.3 percent to NAV usa funds and Negative 9.3% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.8%

Percentage of fund in silver:37.9%

cash .3%

( July 7/2015)

2. Sprott silver fund (PSLV): Premium to NAV rises to 2.68%!!!! NAV (July 7/2015) (silver must be in short supply)

3. Sprott gold fund (PHYS): premium to NAV rises to – .61% toNAV(July 7/2015

Note: Sprott silver trust back  into positive territory at +2.68%

Sprott physical gold trust is back into negative territory at -.61%

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 CentralGoldTrust (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

 

And now overnight trading in gold/silver from  Europe and Asia/plus physical stories that might interest you:

 

First:  Goldcore’s Mark O’Byrne

 

(courtesy Goldcore/Mark O’Byrne)

Faber: “Wake Up, People of the World! Greece Will Come to You …Very Soon”

– World is “over-indebted”, Mark Faber tells Bloomberg
– “Defaults will follow or they will have to create very high inflation rates”
– Greece will leave EU or Troika will take 50% “haircut”
– Leaving EU may be Greece’s best option
– Anti-Austerity groups in other countries will be bolstered by Greek defiance – may have negative impact on bonds
– Recent stock market weakness due to weak global economy rather than Greece
– Chinese economy weak, markets could fall further
– Central banks to use Greece and China as excuse to maintain loose policy
– Faber is long-time advocate of holding physical gold

goldcore_chart2_07-07-15

“Wake up, people of the world and investors! Greece will come to your neighbourhood very soon, maybe not this year but next year or whenever…because the world is over-indebted and defaults will follow or they’ll have to create very high inflation rates”.

This was Mark Faber’s message to Bloomberg viewers in an interview yesterday.

In the course of the interview the editor of the Gloom, Doom and Boom report said that if Greece were to leave the EU it would “suffer badly for a few months, maybe longer” due to a shortage in cash but that ultimately it might be in its interest to do so because they would be “basically debt free”. The economy would crash “but the economy has already plunged as a result of the measures and the over indebtedness they have”.

The alternative, as he sees it, is that the Troika will have to make a significant compromise. “Tsipras has proposed a haircut of something like 30%. I don’t think that’s enough, i think they will need a haircut of at least 50%”, he said. He believes that there should be debt forgiveness but the “bloated” Greek government needs to be trimmed or the problem will resurface in the future.

Bonds of weaker nations in Europe have weakened following the Greek referendum because it is believed anti-austerity groups in Spain, Italy and Portugal will be emboldened by the Greek display of defiance. “Greece may be the first country to actually oppose the measures imposed on them by the ECB, by the EU and also by the IMF and more countries may follow”. He points out that “where you have a borrower you also have a lender” and criticises the ECB’s reckless lending to Greece “partly to bail out its own banks”.

He also points out that he thinks recent stock market weakness is more a function of a weakening global economy, particularly in China, than events in Greece. Chinese markets have plunged over 30% since June 12th having doubled in the preceding year. Faber predicted a 40% correction prior to the crash and still holds that view. He believes export figures from its local trading partners into China indicate that Chinese economic growth is now around 4% – “but that’s the maximum”.

He believes that the Fed and the ECB will use the problems in Greece and China to delay raising rates and to print “even more money” respectively although he does not see their actions as having any benign effect on the real economy.

Marc Faber is a long-time advocate of owning physical gold which action he describes as being “your own central bank”. If his predictions are correct – that defaults and/or very high inflation are on the horizon globally an allocation to gold is academically proven to serve as vital financial insurance.

Must Read Guide: Gold Is A Safe Haven Asset

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,166.25, EUR 1,063.22 and GBP 752.10 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,164.25, EUR 1,053.43 and GBP 748.43 per ounce.

Gold in USD - 5 Day

Gold climbed $3.30 or 0.28 percent yesterday to $1,168.90 an ounce. Silver rose $0.04 or 0.26 percent to $15.69 an ounce.

Gold in Singapore for immediate delivery edged down 0.1 percent to $1,168 an ounce near the end of the day.

Gold remained firm in spite of the lack of strong safe haven bids despite the Greek “no” vote.

Greece will be given yet another chance to propose new reforms to their creditors today in Brussels.

A failure to meet an agreement means an exit from the euro.

German Chancellor Angela Merkel has stated that time is running out for the Greeks.

In late morning trading gold is down 0.35 percent at $1,165.23 an ounce. Silver is down 0.70 percent at $15.60 an ounce and platinum is also down 0.75 percent at $1,053.00 an ounce.

Breaking News and Research Here

end

 

Bloomberg ignores request to examine central bank intervention against gold

Section:

10:53p ET Monday, July 6, 2015

Dear Friend of GATA and Gold:

Neither Bloomberg News columnist Barry Ritholtz nor his editor, Mark Berley, has responded to your secretary/treasurer’s e-mail to them of last Wednesday, in response to Ritholtz’s latest commentary disparaging gold’s price performance, asking them to examine the documentation of surreptitious intervention in the gold market by central banks:

http://www.gata.org/node/15506

Indeed, tonight Bloomberg has followed with another report purporting to analyze the gold market without inquiring into the activity of the market’s biggest participants, central banks:

http://www.bloomberg.com/news/articles/2015-07-06/gold-gets-ignored-in-g…

These are simply not honest and honorable journalists but rather — and knowingly — regime propagandists and disinformation specialists. Put specific questions to them about specific documents and evidence and, like the government officials they serve, they clam up. We just have to keep confronting these impersonators. Eventually we’ll find one capable of shame.

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

 

 end
Makes perfect sense to me!!

US Mint Runs Out Of Silver On Same Day Price Of Silver Plunges To 2015 Lows

Average:

Tyler Durden's picture

In the aftermath of the latest breakout of the Greek crisis, Europeans across the continent, not just in Greece (even though with capital controls, potential deposit confiscation and currency devaluation they would have benefited by far the most), scrambled to buy physical gold and silver.

This is what the UK Royal Mint said a week ago, “During June, we experienced twice the expected demand for Sovereign bullion coins from our customers based in Greece.”

Other dealers had comparable experiences: “Most of our common gold coins are sold out,” Daniel Marburger, a director of Frankfurt-based CoinInvest.com, said by phone. “When people learned that the Greek banks will be closed, they started to think that it may not be such a bad idea to have some money in gold.”

GoldCore, which buys and sells bullion, reported coin and bar demand increased “significantly” on Monday. Sales to U.K. and Ireland today are about three times the average level for the past three Mondays, according to an e-mailed statement from the Dublin-based firm.

BullionVault, which operates the largest online physical gold trading platform, reported a jump in sales during the first half of this year, a sign of a broader increase.

Earlier today, we learned that the latest place that hit by the precious metal scramble was the US itself, when we learned that the US mint had suspended Silver Eagle sales as a result of a spike in demand, with our source advising that “all bullion distributors (like A-Mark, Dillon Gage, CNT, etc) were already raising premiums.”

And while the US Mint rarely issues press releases to confirm such adverse matters, moments ago this was confirmed by Bloomberg:

  • U.S. MINT SAYS 2015 AMERICAN EAGLE SILVER COINS SOLD OUT

When will the Mint restock and resume sales?

  • U.S. MINT PLANS TO RESUME SILVER COIN SALES IN TWO WEEKS

In other words, no orders until August.

And while the US mint halting sales of silver (or gold) during times of peak demand is nothing new, what is surprising is that as the chart below of monthly silver American Eagle sales, demand in recent months has hardly been off the charts.

Which makes one wonder: just what is the inventory buffer at the mint if a modest 1.6 million ounces of silver sold in one week can deplete the Mint’s planned holdings for one entire month.

And another question: in just what supply/demand universe does such an explicit confirmation of a surge in demand for silver result in a plunge in the price of spot silver to its lowest level of the year!?

One wonders if Citigroup, and its soaring silver derivative exposure, may have anything to do with this

end

(courtesy Bloomberg news/GATA)

Chinese trading suspensions freeze $1.4 trillion of shares amid rout

Section:

By Fox Hu
Bloomberg News
Tuesday, July 7, 2015

Chinese companies have found a guaranteed way to prevent investors from selling their shares: suspend trading.

Almost 200 stocks halted trading after the close on Monday, bringing the total number of suspensions to 745, or 26 percent of listed firms on mainland exchanges, according to data compiled by Bloomberg. Most of the halts are by companies listed in Shenzhen, which is dominated by smaller businesses.

The suspensions have locked up $1.4 trillion of shares, or 21 percent of China’s market capitalization, and are becoming increasingly popular as equity prices tumble. If not for the halts, a 28 percent plunge in the Shanghai Composite Index from its June 12 peak would probably be even deeper.

“Their main objective is to prevent share prices from slumping further amid a selling stampede,” said Chen Jiahe, a strategist at Cinda Securities Co. …

… For the remainder of the report:

http://www.bloomberg.com/news/articles/2015-07-07/chinese-trading-halts-.

end

 

(courtesy Dave Kranzler/IRD)

Dave Kranzler: Gold and silver are paper-slammed — Is the system collapsing?

Section:

12:04p ET Tuesday, July 7, 2015

Dear Friend of GATA and Gold:

Dave Kranzler of Investment Research Dynamics today notes the latest “paper slam” of monetary metals prices and wonders if the world financial system is collapsing.

Kranzler writes: “How is it that day after day gold and silver get smashed when the New York Comex floor trading opens? Does it seem odd that all of a sudden, nearly every day for the last four-plus years at 8:20 a.m. ET all the world decides to unload paper gold and silver positions?

“How is it at all possible that the prices of gold and silver are collapsing like this when China has imported a record amount of gold in the first half of 2015? China and India combined are importing more gold than is being produced on a daily basis. India is importing by far a record amount of physical silver. These countries require the physical delivery of the metal they buy. It’s not good enough for the bullion banks to offer free vault storage in London or New York. The misrepresentation of the true, intrinsic price of gold and silver by the New York and London paper markets is perhaps the greatest fraud in history.

“The criminality operating in the U.S. financial markets has become pervasive. The markets just ooze with unfettered theft and wealth confiscation. The government doesn’t just ‘look the other way.’ The government is the criminal cartel. …”

Kranzler’s commentary is headlined “Gold and Silver Are Paper-Slammed — Is the System Collapsing?” and it’s posted at the Investment Research Dynamics Internet site here:

http://investmentresearchdynamics.com/gold-and-silver-are-paper-slammed-…

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

end

(courtesy James Turk/Kingworldnews/GATA)

Don’t keep monetary metals in bank safe-deposit boxes, Turk warns

Section:

12:20p ET Tuesday, July 7, 2015

Dear Friend of GATA and Gold:

Government intervention in markets always makes things worse, GoldMoney founder and GATA consultant James Turk tells King World News today, adding that as the world financial system teeters, gold and silver owners better not be keeping their metal in bank safe-deposit boxes. An excerpt from Turk’s interview is posted at the KWN blog here:

http://kingworldnews.com/another-terrifying-global-collapse-is-imminent/

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

end

TF Metals Report: Commodity collapse

Section:

1:14p ET Tuesday, July 7, 2015

Dear Friend of GATA and Gold:

The TF Metals Report’s Turd Ferguson today attempts some technical analysis of the crash in commodity prices but qualifies it this way: “We keep repeating the mantra ‘there are no markets, just interventions,’ and, if that’s the case, maybe all my old tried-and-true methods are now obsolete.”

Ferguson adds: “In the end, if you still believe that the entire global market structure is a fraud with limited lifespan, then the ability to convert fiat and stack physical metal at these depressed paper prices is a gift, not a disaster.”

Of course it would be a much more valuable gift for people in their 20s and 30s than for people in their 60s and 70s. Indeed, for the latter group it could look more like another ripoff.

Ferguson’s commentary is headlined “Commodity Collapse” and it’s posted at the TF Metals Report here:

http://www.tfmetalsreport.com/blog/6974/commodity-collapse

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

end

 

(courtesy Bill Holter/Holter-Sinclair Collaboration)

 

Piece by piece or all at once?

 

The Greeks voted “no” and should be applauded for their valor!  Knowingly or not, their no vote has added extra cards to their hand.  They now have more options than they would have had with a yes vote.  In fact, Greece still has the only option they would have had with a yes vote (cut a deal for “more aid” and austerity), plus many other which pressure the lenders.  I must say, a “vote” coming from the cradle of democracy CONTRARY to what the banksters wanted is a breath of fresh air!
  Now what?  Greece basically can go down three very different roads.  They can use their “new freedom” to either negotiate new aid and restructuring, they can stay in the Eurozone while not paying on their debt and using a new drachma or, …they can go full Iceland!  Please understand this, no matter what they choose, their banking system is inedible toast and they cannot pay their debt service let alone the principal.  The bottom line is “someone” will have to eat the losses.  Whether it be the ECB itself, European banks or whomever, the debt will not be paid and someone, somewhere will have to “lose”.  Keep in mind this is happening while liquidity is already quite tight.
   It is  possible we could see some sort of deal where “the world is saved” and a violent short covering rally in everything ensues.  Should this occur, do not be fooled because nothing can, nor will be, fixed.  Can they buy a month or three months time with Greece?  Probably but as liquidity is drying up, accidents are more likely to happen.  Countering this thought process, Greece does also have an “out” should they decide to turn toward any help offered by Russia and China.  If this is the choice, I believe it’s a very good bet that rioting and even a coup may be “helped” from the shadows.  I won’t elaborate on this but should it appear Greece is moving away from the West, unrest of all sorts will surely be “stirred” up!
  Of their options available, I personally believe they should go “whole hog Iceland”.  What is best for Greece for the future would be to put a moratorium on payments and outright default.  They would then be forced to issue a new drachma to conduct commerce with.  I also believe they should leave the Eurozone and focus trade toward the East where their new drachma would be more likely to be accepted.  Greece would be forced to “start over” from ground zero, not a happy prospect but one where at least a foundation exists.  The “old” world order will not stand in the long run, it may fall apart piece by piece or all at once.
  The piece by piece scenario would include Portugal, then Spain, and then Italy (with France mixed in there) wanting to go down the same Greek road.  We very well may see national referendums becoming the new fad.  All of these countries will want some sort of relief from their debt as the numbers are clearly unsustainable.  Talk of the situation being contained is laughable.  So laughable, the whole system could go from “normal” to “over” in 48 hours in my opinion.
  Look around the world, China is now down 25+% in just over three weeks.  Europe, it’s currency and even the Union itself is in question …and the Federal Reserve needs to do something in the credibility department.  What I am saying is this, can the Fed really tighten ANYTHING in the current environment?  As I mentioned previously, liquidity is rapidly going away …in an over indebted system this is the most potent of poison!  As I see it, a massive dose of new QE will have to be administered just to keep the doors open.  Watch for this!
  Meanwhile, “we” look like idiots to those we have tried to help.  While the credit market is on the cusp of breakdown and full seizure, gold and silver prices got smashed again today.  Funny thing though, even though there has been so much “selling”, the U.S. Mint has apparently suspended sales of Silver Eagles!  I will ask the question again as I have before, if there is so much “selling” of silver, why can’t the Mint source it to sell?  It is their mandate!  It is the law (which matters not anymore)!
  Are we moving into a zone where COMEX prices will get hit further …while the mint sells nothing until August (if we even make it to August) …and then we see some sort of credit/financial/international event where force majeure is declared?  For whatever reason the Mint can conjure …can’t source metal …can’t keep up with demand …or whatever, a suspension of sales does not jibe with massive panic selling of “metal”.  Unless of course they say “we are suspending sales because there is no demand”.  I am sure a statement like this could be spun as Gospel truth!
  Folks, we stand on the verge of the global credit markets coming to a grinding halt.  In our current world, NOTHING that we consider “normal” will transact or transpire without credit.  Our lives will change literally overnight without credit.  We are about to live through a massive wildfire of credit values burning to the ground, gold and silver will still be standing when the smoke clears.  It is completely laughable to see gold and silver forced down when the fear of credit collapse is rising.  Mother Nature doesn’t work this way, central banks wish she did!  I hope you have the will to “see through it”, the coordinated efforts to support paper markets and suppress gold and silver have been truly impressive.  The currency of the biggest, most indebted and “brokest” issuer in the world is attracting safe haven bids.  I assure you, once control is lost and we go into all out panic, even those pulling the levers will be moving against their own central banks!
Standing watch,
Bill Holter
Holter-Sinclair collaboration
Comments welcome!  bholter@hotmail.com

 

end

 

And now overnight trading in equities, currencies interest rates and major stories from Asia and Europe:

 

1 Chinese yuan vs USA dollar/yuan weakens to 6.2098/Shanghai bourse red and Hang Sang: red

2 Nikkei closed up by 264.47  points or 1.31%

3. Europe stocks all in the red (hugely) /USA dollar index up to 96.85/Euro down to 1.0975

3b Japan 10 year bond yield:  falls to  45% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 122.50

3c Nikkei still just above 20,000

3d USA/Yen rate now just below the 123 barrier this morning

3e WTI 52.82 and Brent:  57.21

3f Gold down /Yen up

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund rises to .75 per cent. German bunds in negative yields from 4 years out.

Except Greece which sees its 2 year rate rise  to 49.63%/Greek stocks this morning: stock exchange closed again/ still expect continual bank runs on Greek banks /Greek default to the IMF in full force/

3j Greek 10 year bond yield rises to: 18.09%

3k Gold at 1166.00 dollars/silver $15.61

3l USA vs Russian rouble; (Russian rouble down 6/10 in  roubles/dollar in value) 57.53,

3m oil into the 52 dollar handle for WTI and 57 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 .9487 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0404 well below the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

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

3r the 3 year German bund remains in negative territory with the 10 year moving away from negativity at +.75%

3s The ELA is frozen now at 88.6 billion euros.  The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.

4. USA 10 year treasury bond at 2.23% early this morning. Thirty year rate just above 3% at 3.03% / yield curve flatten/foreshadowing recession.

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

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

When it comes to Greece, and Europe in general, “hope” continues to remain the driving strategy. As Bloomberg’s Richard Breslow summarizes this morning, “if you were looking for a word to describe the general feeling of equity markets today, you might well pick hopeful. U.S. equity futures opened higher and have been up all day. European bourses opened cautiously higher as they await word, any word, from the European finance ministers or more importantly, Chancellor Merkel. Equity markets will continue to be very reactive to European headlines, but so far, no news has been taken as a reason for hope.” Which incidentally, has been the general investment case for the past 6 years: “hope” that central banks know what they are doing.

Today’s latest Eurogroup meeting at which Greece is expected to somehow provide a new deal proposal that will re-engage the European finmins after Greece resoundingly said “Oxi” to the last, more permissive proposal, is just the latest indication that nothing else but hope remains.

We’ll know in hours if the hope was again in vain, because as the ECB quite clearly hinted yesterday, no deal and the ELA haircuts continue only the next time it will be a bail in, especially since overnight the ECB issued a new document where the debt monetizing bank quite amusing, decried the danger of moral hazard warning that the ELA could be {a threat to the financial independence of the NCB, for instance if ELA was not provided against sufficient collateral to safeguard such independence, an obvious concern about a possible breach of the monetary financing prohibition, or provision of ELA at overly generous conditions, which, in turn, could increase the risk of moral hazard on the side of financial institutions or responsible authorities.” One just has to laugh at the hypocrisy.

A place where there is no laughter this morning, and almost no hope was China where after rebounding modestly by a little over 2% yesterday, the massively propped Shanghai Composite dropped again, this time sliding -1.26%, with a far greater crash spared due to the rolling halt of trading of increasingly more stocks as the entire stock market is slowly but surely getting CYNKed as we warned last week.

It gets worse: as FT reports, sares on China’s benchmark index slid again on Tuesday, defying attempts by policy makers to halt the worst month-long fall in more than two decades. Since Monday’s close, more than 200 companies have halted trading in their shares, joining a growing number of businesses trying to shield themselves from the market tumble.

According to the Securities Times, 760 companies — more than a quarter of all A-share listed companies on the Shanghai and Shenzhen exchanges — had suspended trading in the past week. That has frozen $1.4tn worth of equity, according to Bloomberg calculations — about a fifth of China’s stock market value. The sell-off that began on June 12 has wiped roughly $3tn off the market, in the country’s steepest decline since 1992, according to data from Bloomberg.

And for those following technicals, the 200 DMA is fast approaching after which not all the firepower of the PBOC may prevent the biggest stock bubble of 2015 going not only red for the year but wiping out all 20 million new entrants.

It’s worth highlighting just how extreme the moves have been of late and the volatility in China equities was certainly no more evident than yesterday’s trading session where we saw intraday high-to-low ranges for the Shanghai Comp and Shenzhen Comp of 8.1% and 11.3% respectively. The Chinext index of smaller companies actually saw the range top 13%. In an eye-opening day of price action, the Shanghai Comp initially opened just over 7% higher following the measures over the weekend to attempt to stabilize equity markets. Within an hour that gain was halved before the bourse actually dipped into negative territory shortly after we went to print yesterday, only to then recover slightly into the close and finish +2.41%. The measures implemented over the weekend now feel like a distant afterthought. In the meantime the nations’ media has again tried to lend its support to calm nerves with the Securities Journal this morning suggesting that the Chinese economy has the basis of a long-term bull market, while yesterday’s People’s Daily reported a headline ‘Confidence is more precious than gold. That’s what Chinese investors need at this moment; confidence, not panic’.

China equities are still one of the better performing asset classes YTD, however a significant portion of these gains have now been wiped out with the moves of the last three weeks. At the June 12th high, the Shanghai Comp had risen +60% YTD. Those gains have now shrunk to +11% and so putting it behind the Nikkei and in-line with a number of European equity markets. The numbers are even more eye-popping with the Shenzhen which at one stage had risen +122% YTD, only to now be +36%. Quite amazing price action.

Meanwhile, Chinese companies traded in Hong Kong fell 20% from a May high, following mainland shares into a bear market. The Hang Seng China Enterprises Index sank 3.3 percent to 11,827.30 on Tuesday, led by Citic Securities Co. Haitong Securities Co., Citic Securities and China Railway Group Ltd. dropped the most on the H share gauge during the period, posting declines of at least 37 percent. The city’s benchmark Hang Seng Index entered a correction on Monday, sliding 11 percent from its April peak.

“It’s not easy for the market to regain confidence, and until that happens Hong Kong may remain under pressure,” said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities Ltd. “We need to see whether China’s policies can support the mainland shares.”

So far the answer is no.

Away from China, Asian equities rebounded from yesterday’s sell-off ahead of today’s Eurogroup meeting. Nikkei 225 (+1.3%) and ASX 200 (+1.9%) rose with latter bolstered by gains seen in industrials. JGB’s rose 16 ticks with support seen heading into the CPI JGB bond auction.

European equities have started the session on tentative footing (Euro Stoxx: -0.1%) after yesterday’s sharp losses as participants await the Eurogroup meeting and Euro summit later today (1200BST/0600CDT and 1700BST/1100CDT respectively). Price action has been driven by equity specific news flow this morning with many participants awaiting the aforementioned meeting of Greek creditors.

Yesterday saw sources indicate that the ECB increased its haircuts on Greek collateral for ELA to 45% and refuse a request from the Greek central bank to increase the ELA by EUR 3b1n, thereby toughening terms of its support to Greek banks by eliminating the buffer available. This has contributed towards Bunds outperforming their US counterpart this morning, with the German benchmark higher by over 75 ticks as the Greece saga continues with no sign of a deal as of yet.

In FX, the Greenback (USD Index: +0.6%) has strengthened this morning as a result of EUR/USD price action, with the pair weaker by around 80 pips on the back of yesterday’s ELA news, while participants await the aforementioned European meetings later today.

This USD strength has in turn weighed on GBP/USD, to see the pair reside in negative territory despite mixed UK Manufacturing (-0.6% vs. Exp. 0.1%) and Industrial Production (0.4% vs. Exp. -0.2%) seeing an uptick in the pair. Of note, Bank of America analysts note that short USD positioning by HF and RM accounts is close to matching last year’s highs, highlighting the scope for long USD positions to increase.

Commodity linked currencies are trading weaker across the board today, with the focus on the growing concerns over the economic slowdown in China, as the PBOC and other regulatory bodies continue to try to prop-up the stock market. Overnight, the RBA decided to keep rates unchanged at 2.00% as expected, adding that further deprecation is needed in AUD and that monetary policy needs remains supportive, while CAD weakness linked to pre-positioning ahead of the next week’s BoC decision, with expectations growing for the bank to turn more dovish.

Despite the weakness in commodity currencies, the energy complex has seen a bout of strength during today’s session in a mild rebound following the worst slide in prices since February. Meanwhile, Gold traded lower overnight as some of yesterday’s safe haven gains were ebbed away by the strength in the USD. Elsewhere, Copper fell to a 5 month low and Dalian iron ore futures fell to a 3 month low as growth concerns in China continue to weigh on commodities.

Looking ahead, as well as the aforementioned European meetings, today sees US Trade Balance, JOLTS Job Openings and API crude oil inventories.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • USD (+0.5%) has strengthened this morning as a result of EUR/USD price action, with the pair weaker by around 80 pips on the back of yesterday’s ELA news.
  • Commodity linked currencies are trading weaker across the board today, with the focus on the growing concerns over the economic slowdown in China, as the PBOC and other regulatory bodies continue to try to prop-up the stock market.
  • European equities have started the session on tentative footing after yesterday’s sharp losses as participants await the Eurogroup meeting and Euro summit later today.
  • Treasuries gain led by 5Y and 7Y notes as Greece and China’s efforts to combat stock rout remain in focus; week’s supply begins today with $24b 3Y, WI 0.95% vs. 1.125% in June.
  • Tsipras is heading to Brussels in a last-ditch effort to secure a rescue and keep Greece in the euro region; Merkel said yesterday that “time is running out”
  • ECB yday maintained Greek ELA ceiling to Wednesday, raised collateral haircuts; Greece is scheduled to sell 26-week bills tomorrow; refinance EU2b in bills on July 10
  • Foreign investors are selling Shanghai shares at a record pace as China steps up government intervention to combat a stock- market rout that many analysts say was inevitable
  • Chinese companies traded in Hong Kong fell 20% from a May high, following mainland shares into a bear market
  • German Vice-Chancellor Sigmar Gabriel said in interview with Stern that it was “naive” to accept Greece into euro and cutting Greece’s debt load without prior economic policy changes won’t restore sustainable public finances
  • While fresh ECB aid is needed to keep Greek banks ticking, injections of capital from shareholders, bondholders or even customers’ savings may be inevitable, according to a person with direct knowledge of discussions on lenders
  • 50% of respondents in a French poll want Greece to leave the euro, with 7% supporting total cancellation of Greek debt, 22% partial cancellation, 55% extension of maturities without cancellation
  • More stimulus efforts can be expected from China’s government as President Xi Jinping seeks to keep the collapse from devouring the savings of tens of millions of Chinese investors — a constituency larger than the Communist Party — and from potentially setting off social unrest
  • World powers and Iran are on the verge of missing another deadline in Vienna, where diplomats are in a 10th straight day of talks seeking an accord over the Islamic Republic’s nuclear program
  • Sovereign 10Y bond yields mostly lower; Greek 10Y yields 18.265%. Asian stocks mostly lower; Shanghai falls 1.3%, Shenzen down 5.3%. European stocks mixed. U.S. equity-index futures gain. Crude oil gains, WTI and Brent remain below $60/bbl; gold and copper lower

 

DB’s Jim Reid completes the overnight event summary

I was never a great chess player but we are currently in a classic stalemate. I don’t think it lasts long but both sides in the Greece impasse had reason to be comfortable yesterday. Although Tsipras has been politically emboldened by his impressive victory, one can’t help think that the Europeans’ tough stance was enhanced yesterday by another subdued market reaction to the chaos. Italian, Spanish and Portuguese 10 year yields were ‘only’ 14bp, 16bp and 24bp wider respectively. Clearly not positive but to re-use our phrase from last week we’re in ‘controlled risk-off’ mode. Equities moved in a similar vein with the DAX and CAC ‘only’ off -1.52% and -2.01% respectively. The Italian FTSE MIB was -4.03% but it’s still up +13.62% YTD so hardly a panic. Credit is generally watching in relative calm at proceedings with very few clients having much interest in testing what would probably be very bad liquidity.

All-in-all hardly a scenario for the Europeans to scurry around reviewing their stance. Indeed after Europe closed the ECB announced it was maintaining current levels of ELA, but was increasing haircuts on Greek bank ELA collateral. The haircut amounts were not disclosed so it’s impossible to know the consequences (ie whether it takes Greek banks close to being technically insolvent) but as a minimum it seems to be a gesture to increase pressure on the Greeks. The ECB will likely wait until after today’s Euro leaders summit before contemplating accelerating things further.

We should find out at the leader’s summit what the European preconditions are (if at all) for a re-start of negotiations. DB’s George Saravelos thinks that they will be tough. For example the start of talks on a new ESM program requires Bundestag ratification before negotiations can begin. George thinks it unlikely that Merkel concedes to this unless PM Tsipras essentially commits upfront to a similar package from the last round of negotiations. Once the summit is over, the ball will once again be back in Tsipras’ court and as George remarks, the entire process will be back where we left it two weeks’ ago, the only difference being the massive pressure on the Greek economy. At the end of the day it might be this, the continued capital controls and ongoing bank closures that means Tsipras’ post referendum honeymoon is unsustainable.

Ahead of the summit and in a meeting between German Chancellor Merkel and French President Hollande, Merkel reiterated that the ‘door for talks remains open’ but that ‘time is running out’ and that it will be ‘very important’ for Tsipras to present a plan for moving forward at today’s summit. Hollande largely echoed those views, saying that ‘the door is open to discussions’ and that ‘it’s up to the government of Tsipras to make serious credible proposals’. Elsewhere, having been quoted on ORF TV after the US close, Governing Council Member Nowotny suggested that a bridge loan to Greece under certain preconditions before an ESM program is agreed is a possibility. Nowotny did also downplay any hopes of reaching an accord with Greece this week.

Meanwhile, shortly after we went to print yesterday we got the news that the now former Greek Finance Minister Varoufakis has resigned. His replacement was announced as Euclid Tsakalotos who is generally seen as more moderate in his views (certainly relative to Varoufakis) and in any case has been involved in leading negotiations for the last few months. An important move by Tsipras perhaps in trying to show a credible commitment to get negotiations back underway.

So what would we have to talk about if it wasn’t for Greece? Well quite a lot actually, we’d have Yellen’s semi-annual testimony next week to get excited about, we’d have US earnings season (Alcoa kicks us off tomorrow), the mini-crash and huge volatility in Chinese equities and also the recent slump in oil.

Well Chinese equity markets are doing their best to grab some of the attention away from Greece again this morning with the Shanghai Comp (-3.19%) and Shenzhen (-5.59%) taking yet another steep leg lower. Amazingly, the Shenzhen is now nearly 14% off early Monday’s high while the Shanghai Comp is 8% off these highs.

It’s worth highlighting just how extreme the moves have been of late and the volatility in China equities was certainly no more evident than yesterday’s trading session where we saw intraday high-to-low ranges for the Shanghai Comp and Shenzhen Comp of 8.1% and 11.3% respectively. The Chinext index of smaller companies actually saw the range top 13%. In an eye-opening day of price action, the Shanghai Comp initially opened just over 7% higher following the measures over the weekend to attempt to stabilize equity markets. Within an hour that gain was halved before the bourse actually dipped into negative territory shortly after we went to print yesterday, only to then recover slightly into the close and finish +2.41%. The measures implemented over the weekend now feel like a distant afterthought. In the meantime the nations’ media has again tried to lend its support to calm nerves with the Securities Journal this morning suggesting that the Chinese economy has the basis of a long-term bull market, while yesterday’s People’s Daily reported a headline ‘Confidence is more precious than gold. That’s what Chinese investors need at this moment; confidence, not panic’.

We highlighted yesterday that China equities have still been one of the better performing asset classes YTD, however a significant portion of these gains have now been wiped out with the moves of the last three weeks. At the June 12th high, the Shanghai Comp had risen +60% YTD. Those gains have now shrunk to +11% and so putting it behind the Nikkei and in-line with a number of European equity markets. The numbers are even more eye-popping with the Shenzhen which at one stage had risen +122% YTD, only to now be +36%. Quite amazing price action.

Looking at markets elsewhere in Asia this morning, aside from the steep moves in China it’s a mixed picture across other markets in the region. The Nikkei (+1.18%) and ASX (+1.64%) have both firmed, while the Hang Seng (-1.17%) and the Kospi (-1.06%) are trading down. Asia credit is unchanged while 10y Treasuries have moved 1.3bps wider.

Moving on, July hasn’t been a kind month for the oil market so far and yesterday was no exception after we saw Brent (-6.27%) and WTI (-7.73%) tumble to $56.54/bbl and $52.53/bbl respectively. The slump for WTI in particular was the biggest one-day decline since November 28th last year, while the intraday move in Brent was only topped by the sharp downturn on March 4th this year. Yesterday’s slump appeared to be a combination of three factors. Along with the heightened tension around Greece and extreme volatility in China, talks between Iran and world powers on a nuclear deal which could see sanctions lifted on the nation also played a part. Yesterday’s moves have now seen WTI and Brent decline over 11% this month so far and taking them now to -0.90% and -1.38% YTD respectively.

So although Greece is dominating a lot of the market direction at present, it’s probably not so much of a coincidence that the sell-off in oil has also coincided with Fed Funds contracts trading at or near their lows for the year so far with the move perhaps softening the inflation outlook again. Indeed yesterday we saw the Dec15 contract fall 1.5bps to 0.275%, a fresh low for the year. Dec16 (-7.5bps) and Dec17 (-11bps) contracts also took a steep leg lower to 0.955% and 1.630% respectively, the former now also at a fresh YTD low and the latter just 15bps off the early February lows.

In terms of the remainder of the price action yesterday, it was a fairly decent performance for US equities yesterday given the Greek news and with a sell-off in energy stocks adding to the pressure. The S&P 500 finished -0.39% at the close, paring an initially weaker opening. 10y Treasuries ended 9.7bps lower in yield at 2.286% while the Dollar index ended up +0.19%. There wasn’t a whole lot to take away from yesterday’s data. There was no change to the final revision of the June services PMI at 54.8, meaning the composite stayed at 54.6 which was down 1.4pts from the May reading. ISM non-manufacturing for the same month rose 0.3pts to a below market 56.0 (vs. 56.4 expected) reading while the labour market conditions index printed below consensus (0.8 vs. 2.0 expected). In the European timezone we saw an above market German factory orders print for May, albeit weak at -0.2% mom (vs. -0.4% expected). Elsewhere the Euro area Sentix investor confidence reading rose 1.4pts to 18.5 (vs. 15.0 expected).

Looking at today’s calendar now, events with Greece and specifically the Euro Leaders Summit tonight is set to be the focus for much of the market. Aside from that, data wise in Europe this morning we’ve got German industrial production, French trade data and UK industrial and manufacturing production readings to look forward to. In the US this afternoon we get an important input into Q2 GDP with the May trade balance reading, while JOLTS job openings and the IBD/TIPP economic optimism print are also due.

end
Last night’s trading in China:  another bad session!!
(courtesy zero hedge)

Chinese Stocks Open Down Hard, “VIX” Hits Record High, “Nasdaq” Down 40% From Highs

Despite all the hopes and prayers of illiterate farmers everywhere, Chinese stocks refuse to hold a bid and down 3-4% at the open amid suspension of around 160 individual securities. In the pre-open to open, Shanghai Composite is down 3.2%, Shenzhen is off 3.5%, and China’s Nasdaq – ChiNext is down 3.8%. This leaves ChiNext down over 40% from its highs as the cost of insuring downside in Chinese stocks explodes to record highs. As China goes through the 1929 playbook to save its ‘market’, it appears “momentum” has shifted.

  • *SHANGHAI MARGIN DEBT BALANCE DECLINES FOR RECORD ELEVENTH DAY
  • *HKEX DROPS AS MUCH AS 4.2%, FALLING FOR 8TH STRAIGHT SESSION

Not a good start to the day…

 

Some context for the moves…

 

As we noted prerviously – psychology has shifted…every government-driven ramp is sold into by as many retail locals and foreign professionals as possible… and remember the local professionals are now stuck with losses as they are not allowed to sell.

Which explains why downside vol costs explode…(if you’re not allowed to sell stocks… what’s your next move?)

 

As Blomberg reports,

The cost of options protecting against a 10 percent drop in the ETF was 11.5 points more than calls betting on a 10 percent increase on Monday, according to three-month data compiled by Bloomberg. The price relationship known as skew climbed to 11.8 points last week, the highest since the ETF started in November 2013.

 

For Aberdeen Asset Management’s Nicholas Yeo, China needs to let fundamentals govern its stock market, not state directives.

 

“International investors are skeptical that all the government measures are short-term, cosmetic,” said Yeo, the Hong Kong-based head of Chinese equities at Aberdeen Asset, which oversees about $491 billion worldwide. “If you want it to be a proper market, there should be less interference.”

1929 Deja vu all over again…

 

“The more resources authorities commit to propping up the stock market, the more they ratchet up the potential fall-out risks should the market continue to collapse,” said Andrew Wood, an analyst at BMI Research. “This could give rise to a crisis of confidence in the authorities’ ability to support both the stock market and the real economy.”

And with 888 stocks down and only 29 up – PBOC is gonna need a bigger boat fund

*  *  *

On the bright side – though we are not sure of that – it seems the twice burned Chinese are greatly rotating their newly lost equity wealth back into real estate…Via ForexLive:

Preliminary results from the China Household Finance Survey

  • 31.5% of respondents plan to reduce their stock holdings
  • 12.3% said they plan to increase their stock holdings
  • Remaining saying they do not plan to change their holdings
  • For Q2 4.8% of stock investors bought homes, compared with 2.3% recorded in Q1
  • Of those who bought property, 70% came from households that have made money in the stock market.

The China Household Finance Survey is a quarterly survey carried out by researchers at Southwestern University of Finance and Economics in Chengdu.

*  *  *

Will they never learn?

 

end

Now, we will highlight key Greek stories.

First Graham Summers:

 

Graham Summers tells the real reason Greece matters.

(courtesy Graham Summers/Phoenix Research Capital)

The Greek drama continues.

 

The process thus far has been along the following lines:

 

1)   Greek Prime Minister Alexis Tsipras states publicly that he is confident that a deal will be met because Greece is willing to compromise.

 

2)   Tsipras then refuses to compromise behind closed doors with EU officials.

 

3)   Tsipras tells the media and Greek citizenry that the EU is evil and is attempting to enslave Greece.

 

This process has been maintained for over five years now. This only further illustrates one of my central themes: everything in Europe is about politics.

 

Europe as a whole is socialist in nature. You will never hear a discussion of “how involved should the Government be in the economy?” in most of Europe; it is just assumed that the Government should always be involved a large degree.

 

The question is whether it should be a lot (the public sector accounts for 30% of jobs in Germany) or almost entirely (the public sector accounts for 56% of jobs in France).

 

When more than one in three people are employed by the public sector in one form or another, everything is driven by politics.

 

The best example of this, of course, is Greece.

 

Greece has been and remains a fiscal basket-case for three simple reasons:

 

1)   The Government attempts to employ as many people as possible even if it makes absolutely no sense to expand the Government workforce.

 

2)   The Government pays WAY above what the work requires (on average public sector wages are 150% of private sector wages and most employees receive pensions equal to 92% of their salary at retirement).

 

3)   Greek culture not only embraces, but celebrates tax evasion (so there is little Government revenue to finance all those overpaid bureaucrats).

 

The level of fiscal insanity goes above and beyond anything you’re likely to see.

 

Consider the Greek metro system. It takes in €80 million in annual ticket sales… and spends over €500 million in salaries.

 

There is a word for an entity that spends over SIX times its annual revenues on employee salaries… it’s bankrupt.

 

This sort of scam is endemic in Greece. Anyone from pastry chefs to hairdressers and other services-based sectors can retire at age 50 and receive a pension equal to 95% of their salary.

 

Suffice to say, the Government payouts are extreme.

 

Unfortunately, Greek taxpayers don’t want to fund it. Greece has a population of 12 million. Less than 5,000 of these individuals report taxable income of more than €90,000.

 

Put it this way, less than 0.01% of the Greek population claims it makes more than €90,000 per year in salary.This for a country that has over 60,000 individuals with investments of over €1 million… and those area simply the individuals willing to admit it!

 

The effort that goes into this subterfuge is staggering. In 2010, the Greek tax authorities began using satellite imagery to target Athens homes with swimming pools (a sign of wealth). Only 324 Greeks claim to have such homes in Athens. The satellite study found nearly 17,000 homes with pools before an enterprising Greek began selling pool covers that look like a normal lawn.

 

Simply put, in Greece we have a bloated bureaucracy that pays exorbitant salaries and pensions in a culture that goes to great lengths to hide its wealth/pay taxes.

 

Greece however is not the REAL issue for Europe. The REAL issue concerns the derivatives trades that are backed by Greek debt.

 

Modern financial theory dictates that sovereign bonds are the most “risk free” assets in the financial system (equity, municipal bond, corporate bonds, and the like are all below sovereign bonds in terms of risk profile). The reason for this is because it is far more likely for a company to go belly up than a country.

 

Because of this, the entire Western financial system has sovereign bonds (US Treasuries, German Bunds, Japanese sovereign bonds, etc.) as the senior most asset pledged as collateral for hundreds of trillions of Dollars’ worth of trades.

 

The global derivatives market is roughly $700 trillion in size. That’s over TEN TIMES the world’s GDP. And sovereign bonds… including even bonds from bankrupt countries such as Greece… are one of, if not the primary collateral underlying all of these trades.

 

Greece is not the real issue for Europe. The entire Greek debt market is about €345 billion in size. So we’re not talking about a massive amount of collateral… though the turmoil this country has caused in the last three years gives a sense of the importance of the issue.

 

Spain, by comparison has over €1.0 trillion in debt outstanding… and Italy has €2.6 trillion. These bonds are backstopping tens of trillions of Euros’ worth of derivatives trades. A haircut on them would trigger systemic failure in Europe.

 

In short, the EU’s worst nightmare is a debt haircut or debt forgiveness for Greece because it opens the door to Spain or Italy asking for similar deals down the road.

 

And that’s when you’re talking about REAL systemic risk.

 

It’s coming…

 

end

 

Martin Armstrong’s plan to rejuvenate Greece. It is credible:

1.No income taxes.  The state will live on VAT and other licence fees

(this will bring back Greeks to start businesses.  As they become more profitable they will hire other Greeks and the economy will then flourish)

2. Cut government spending.  Privatize many public avenues.

3. Change all euros in bank accounts to Drachmas and the value will be 2 to one. At 50% value, speculators will be less likely to attack the currency.

4. Repudiate their external foreign debt.(or suspend it)

 

(courtesy Martin Armstrong/ArmstrongEconomics.com)

There is Only One Way Out For Greece

Submitted by Martin Armstrong via ArmstrongEconomics.com,

Brussels has been dead wrong. The stupid idea that the euro will bring stability and peace, as it was sold from the outset, has migrated to European domination as if this were “Game of Thrones”. Those in power have misread history, almost at every possible level. The assumption that the D-marks’ strength was a good thing that would transfer to the euro has failed because they failed to comprehend the backdrop to the D-mark.

LongBranchNJ-DepressionScrip

Germany moved opposite of the USA toward extreme austerity and conservative economics because of its experience with hyperinflation. The USA moved toward stimulation because of the austerity policies that created the Great Depression, which led to a shortage of money, and many cities had to issue their own currency just to function. The federal government thought, like Brussels today, that they had to up the confidence in the bond market and that called for raising taxes and cutting spending at the expense of the people. The same thinking process has played out numerous times throughout history. Our problem is that no one ever asks – Hey, did someone try this before? Did it work? This is why history repeats – we do ZERO research when it comes to economics. It is all hype and self-interest.

 

1000 drachma

 

Greece should immediately begin to print drachma.By no means has the introduction of a new currency been a walk in the park. There is always a learning curve, as in the case of East Germany’s adoption of the Deutsche mark, the Czech-Slovak divorce of 1993, and the creation of the euro itself . However, the bulk of transactions today are electronic, meaning we are dealing with an accounting issue more than anything. The euro existed electronically BEFORE it became printed money; Greece should do the same right now.

 

ExecutiveOrder-Gold-Confiscation

 

The difference concerning East Germany and others was the fact that there was no history. This is more akin to the 1933 devaluation of the dollar by FDR whereby an executive order reneged on promises to pay prior debt in gold. This would be similar. The new drachma should be issued at two-per euro, only because the people will think the drachma should be worth less than a euro based on pride. If the new drachma is issued at par, the speculators will sell, assuming it will decline. Issue it at 50% and you will eventually see the opposite trend emerge once people see the contagion begin to spread.

Brussels already cut off the banks in Greece. All accounts in Greece should be electronically switched to drachmas. Begin to issue printed drachma for small change. The umbilical cord to Brussels must be cut immediately for Greece to stand on its own. You cannot negotiate with people who will not change their view of the world, for their own self-interest will cloud their perspective.

All EXTERNAL debt should be suspended. Any future resolution of debt should be reduced by 50% to account for the overvaluation of prior debt, thanks to the euro, and any interest previously paid should be deducted from the total loan.

All income tax should be abolished and the only taxation should be indirect. A close examination of the cost of government should be carried out and as many aspects of government as possible should be privatized and put out for bid. For example, motor vehicle and police agencies can privatize, eliminating pensions paid by the government. The size of government must be addressed, or Greece will risk civil war between government workers and private citizens.

Eliminating the income tax is critical and desperately needed for job creation. Small business must be profitable to begin to creating jobs and those who had to leave, whom are the nations’ brightest, will return. Bring your best talent home and build an economy.

London Agreement signed Aug 1953

Eliminating the debt is critical. Some 20 nations forgave all debt for Germany after World War II.The London Agreement on German External Debts, also known as the London Debt Agreement, was a debt relief treaty between the Federal Republic of Germany and its creditor nations that concluded August 8, 1953.

London Agreement 1953

The London Debt Agreement covered a number of different types of German debt, both public and private, from before and after World War II. Some of them arose directly out of the efforts to finance the reparations system, while others reflect extensive lending, mostly by U.S. investors to German firms and governments. Those who forgave German debt: Belgium, Canada, Denmark, France, Great Britain, Greece, Iran, Ireland, Italy, Liechtenstein, Luxembourg, Norway, Pakistan, Spain, Sweden, Switzerland, South Africa, the United States, Yugoslavia, and others. The total amount under negotiation was 16 billion marks of debt, a result of the Treaty of Versailles after World War I, a debt that went unpaid during the 1930s that Germany decided to repay to restore its reputation. This was money owed to government and private banks in the U.S., France, and Britain. Another 16 billion marks represented postwar loans by the USA. Under the London Debts Agreement of 1953, the repayable amount was reduced by 50% to about 15 billion marks and stretched out over 30 years, and compared to the fast-growing German economy were of minor impact.

Therefore, what enabled Germany to rise from the ashes is a successful model. Greece too must be debt free. End federal borrowing, suspend all debt, and do not accept any more bailouts from Brussels.

end

Early this morning, the Latvian ECB board member states that an introduction of an alternative currency i.e. the drachma is realistic

 

(courtesy zero hedge)

ECB Board Member Says Introduction Of Another Greek Currency “Most Realistic Scenario”

ECB Governing Council member and Latvian central bank chief Ilmars Rimsevics — who earlier leaked that the ECB’s new haircut on ELA for Greece will mean the ailing banking sector must now post “a third” more collateral — says the most “realistic scenario” is now for Greece to introduce “another currency.”

  • ECB’S RIMSEVICS SAYS INTRODUCTION OF ANOTHER CURRENCY IN GREECE IS MOST REALISTIC SCENARIO, MAY BE ONE LESS EURO ZONE MEMBER IN FUTURE

Rimsevics also says Sunday’s referendum outcome means Greeks have effectively “voted themselves out of the eurozone.” Here’s more, via Bloomberg:

“The Greek nation has been brave and has voted itself out of the euro zone,” Ilmars Rimsevics, governor of the Bank of Latvia and ECB Governing Council member, says in an interview with Latvian state radio. Latvian central bank governor and ECB member Greece has voted itself out of the euro zone after a referendum on Sunday when Greeks overwhelmingly rejected bailout terms proposed by international creditors, Latvia’s central bank governor and ECB member.

 

 

“We see that one country that has not fulfilled its promises, that has not done the necessary home work, some day they could be outside the euro zone and that means that the euro zone together could be stronger.”

 

As a reminder, here is Credit Suisse’s take on the prospects for the introduction of a new “devaluation mechanism”:

We again want to be clear: “leaving EMU” is not a policy choice and, if enforced by referendum, materially reduces Greece’s freedom of action. Introducing a new currency is a pipe dream and the likely result is a broken financial system reliant on a neighbor’s currency (the euro) and banking system. 

 

If the result of the Greek referendum is a “No” and the situation is not immediately remedied (which we would not expect), the Greek people will probably have taken the opportunity to illustrate how illusory the whole idea of “exit” actually is. How that unfolds determines whether the situation systematizes immediately. This is because the choice is not “do you accept the core’s terms your government has rejected?” Rather, it is “do you want Greek banks to function independently?” and, de facto, do you want to be able to use the cash machine tomorrow? This is the nature of “Grexit”; it is not a choice to circulate a shiny new devaluation mechanism, it is a decision to reject the (local, to begin with) financial system and start again. 

 

We have always pointed out that the new “currency” mismatches involved in any attempt to exit the euro would be so “toxic” for the banking system as to make it not a practical alternative. It is certainly not a way to avoid default. Rather, an attempt to exit is a way to default, at the expense of making that default systemic and so more costly. We are seeing this right now, with anecdotes of large dislocations and the reality of a closed banking system.

 

 

And here is a bit more color from Barclays:

 
 

How long Greece can stay in the euro without a financial assistance programme will depend on the ECB’s willingness to continue to provide liquidity to its banking sector and the consequence of a default on the bonds held by the ECB in its SMP portfolio on 20 July. If there is no agreement on a programme, the ECB will shut down ELA no later than 20 July. Banks will then not only be illiquid but would then turn insolvent. As a result, the lack of financing would trigger a collapse of the Greek economy. This situation could not last more than a few days, beyond which the Greek government would have to decide to take back the control over the central bank of Greece and force it to provide liquidity support to Greek banks, therefore printing de facto another currency. This would clearly be a violation of the Treaty and would certainly put Greece outside the monetary union. 

After a potentially prolonged period of issuing EUR IOUs to preserve the country’s limited supply, Greece would eventually have to issue its own currency, a “new Greek drachma” (“NGD”). We think the NGD will depreciate sharply on creation given the high degree of economic, policy and institutional disarray. Greece’s real effective exchange rate is undervalued relative to its long-term average including EMU; but it is about 6% (0.6 standard deviations) overvalued relative to its pre-EMU average (see Figure 2). However, post-exit depreciation is likely to be an order of magnitude (or more) greater. First, an overshoot would be likely due to uncertainty over fair value. Second, we would expect that any Greek exit would be accompanied by a default or standstill on all existing external obligations, limiting Greece’s access to capital markets and attaching a large risk premium to all government-issued liabilities, including currency. Third, private sector external obligations that could not be redenominated would balloon in NGD terms as the currency depreciated, accentuating onshore demand for hard currency. 

 

end
Supposedly the new Greek Finance Minister arrived in Belgium empty handed.  However they may submit a new proposal by Wednesday.
(Eventually they stated that they will submit by tomorrow night)
(courtesy zero hedge)

New Greek FinMin Arrives In Belgium “Empty-Handed”, Will Submit New Proposal “Maybe” On Wednesday

At this point it is unclear who wants Grexit more: the ECB or Greece.

With today’s Eurogroup conference called explicitly to discuss a “new” Greek proposal moments ago we learned that the Greek delegation arrived at a meeting of finance ministers without a fresh proposal to secure its place in the eurozone. As a reminder, according to the FT, this was Greece’s “final chance to present a new reform plan to its eurozone partners” even though their willingness to accommodate it has all but evaporated following Greece’s emphatic rejection of previous bailout terms in Sunday’s referendum.

So what is Greece’s plan? Reuters reports that “Greece will submit a new aid proposal to European creditors “maybe” on Wednesday, a senior eurozone official said, with Athens’ European partners convening in Brussels for emergency talks. “They say they will submit a new request and outline of proposals maybe tomorrow.”

In other words, the bluffing past the deadline tactics adopted by Varoufakis remain. The question is whether Greece has any time left at this point. As a reminder, yesterday we reported that according to a Balyasny managing direct, “We now have another 48 hours of calm before things really start happening”, adding that the “situation could then break down as banks stay closed, ATMs will run out of cash Tuesday or Wednesday, uncertainty grows and rioting possible.

So even if Greece cobbles some last minute deal together, one which will likely be prohibitive and have even more adverse terms resulting in public anger, many wonder: is it far too late now?

end

Before an announcement that Greece will submit a plan, European bond yields skyrocketed.  (They came down once Greece stated that they will submit a plan)

 

(courtesy zero hedge)

Greece “Uncontained” – European Bond Yields Are Soaring; Is Portugal Next?

Who’s next?

European bond risk is anything but “contained” as GGB 10Y Yields top 18%…

 

The answer appears to be – Portugal!

 

Charts: Bloomberg

 

end

A very short meeting.  Greece offered nothing, the Disselboom statement never followed.

(courtesy zero hedge)

Beware Greeks Bearing Nothing: Eurogroup Ends, Dijsselbloem Statement To Follow

In one of the shorter Eurogroup meetings in recent history, the Greeks came bearing nothing and today’s “final, final, final” “last chance for a deal” conference ended just after 2 hours in.

The Greeks may come back tomorrow bearing a new proposal but at this point it is rather clear what the endgame is. In a few moments expect Diesel-BOOM to explain why nothing got done again, and why it’s on the Greeks if the Eurozone dominoes…

 

… start falling next.

end

 

A very important commentary from David Stockman tonight.

He offered Greece his advice:

1, Nationalize the banks

2.Remove the head of the Central Bank of Greece with someone friendly to the government

3. Refuse to heed to any notion of paying the ECB with now deficit collateral on their advance of 120 billion euros ELA. In other words stiff the ECB

4.As we highlighted to you yesterday, print massive amounts of TEN EURO PAPER notes until the metal melts. Pay off pensions and owings with this paper money.

5. This will cause massive pandemonium in the peripheral European bond market causing yields to rise and this in turn will blow up the big derivative banks.

a must read…

(courtesy David Stockman/zero hedge)

It Is NOT Priced-In, Stupid!

Submitted by David Stockman via Contra Corner blog,

Among all the mindless blather served up by the talking heads of bubblevision is the recurrent claim that “its all priced-in”. That is, there is no danger of a serious market correction because anything which might imply trouble ahead—-such as weak domestic growth, stalling world trade or Grexit——is already embodied in stock market prices.

Yep, those soaring averages are already fully risk-adjusted!

So the “oxi” that came screaming unexpectedly out of Greece Sunday evening will undoubtedly be explained away before the NYSE closes on Monday. Nothing to see here, it will be argued. Today’s plunge is just another opportunity for those who get it to “buy-the-dip”.

And they might well be right in the very short-run. But this time the outbreak of volatility is different. This time the dip buyers will be carried out on their shields.

Here’s why. The whole priced-in meme presumes that nothing has really changed in the financial markets during the last three decades. The latter is still just the timeless machinery of capitalist price discovery at work. Traders and investors in their tens-of-thousands are purportedly diligently engaged in sifting, sorting, dissecting and discounting the massive, continuous flows of incoming information that bears on future corporate profits and the present value thereof.

That presumption is dead wrong. The age of Keynesian central banking has destroyed all the essential elements upon which vibrant, honest price discovery depends. These include short-sellers which insure disciplined two-way markets; carry costs which are high enough to discourage rampant leveraged speculation; money market uncertainty that is palpable enough to inhibit massive yield curve arbitrage; option costs which are burdensome enough to deny fast money gamblers access to cheap downside portfolio insurance; and flexible, mobilized interest rates which enable imbalances of supply and demand for investable funds to be decisively cleared.

Not one of these conditions any longer exists. The shorts are dead, money markets interest rates are pegged and frozen, downside puts are practically free and carry trade gambling is biblical in extent and magnitude.

So a vibrant market of atomized competition in the gathering and assessment of information relevant to the honest pricing of financial assets has been replaced by what amounts to caribou soccer. That is, the game that six-year old boys and girls play when the chase the soccer ball around the field in one concentrated, squealing pack.

The soccer ball in this instance, alas, is the central banks. Until Sunday the herd of speculators was in full rampage chasing the liquidity, word clouds and promises of free money and market “puts” with blind, unflinching confidence.

The only thing in this utterly broken “market” which was really priced-in, therefore, was an unshakeable confidence that any disturbance to the upward march of asset prices would be quickly, decisively and reliably countermanded by central bank action. But now an altogether different kind of disturbance has erupted. It is one that does not emanate from short-term “price action” of the market or an unexpected macroeconomic hiccup or lend itself to another central bank hat trick.

Instead, the Greferendum amounts to a giant fracture in the apparatus of state power on which the entire rotten regime of financialization is anchored. That is, falsified financial prices, massive, fraudulent monetization of the public debt and egregious and continuous bailouts of private speculator losses, mistakes and reckless gambling sprees.

What has transpired in a relative heartbeat is that one of the four central banks of the world that matter is suddenly on the ropes. In the hours and days ahead, the ECB will be battered by desperate actions emanating from Athens, as it struggles with a violent meltdown of its banking and payments system; and it will be simultaneously stymied and paralyzed by an outbreak of public confusion, contention and recrimination among the politicians and apparatchiks who run the machinery of the Eurozone and ECB superstate.

Yes, the Fed will reconfirm its hundreds of billions of dollar swap lines with the ECB, and the BOJ and the Peoples Printing Press of China will redouble their efforts to prop-up their own faltering stock markets and to contain the “contagion” emanating from the Eurozone.

But this time there is a decent chance that even the concerted central banks of the world will not be able to contain the panic. That’s because the blind confidence of the caribou soccer players will be sorely tested by the possibility that the ECB will be exposed as impotent in the face of a cascading crisis in the euro debt markets.

Here are the tells. If the Syriza government has any sense it will nationalize the Greek banking system immediately; replace the head of the Greek central bank with a pliant ally; refuse to heed any ECB call for collection of the dubious collateral that stands behind its $120 billion in ELA and other advances; and print ten euro notes until the plates on the Greek central bank’s printing presses literally melts-down.

If the Greeks seize their banking system and monetary machinery from their ECB suzerains in this manner—- out of desperate need to stop the asphyxiation of their economy—– those actions will trigger, in turn, pandemonium in the PIIGS bond markets. From there it would be only a short step to an existential crisis in Frankfurt and unprecedented, fractious conflict between Berlin, Paris, Rome and Madrid.

Either all of the Eurozone governments fall in line almost instantly in favor of a massive up-sizing of the ECBs bond buying campaign to stop the run on peripheral bond markets, or the Draghi “whatever it takes” miracle will be obliterated in a selling stampede that will expose the naked truth. Namely, that the whole thing since mid-2012 was a front-runners con job in which the ECB temporarily rented speculator balance sheets in order to prime the PIIGS bond buying pump, thereby luring the infinitely stupid and gullible managers of bank, insurance and mutual fund portfolios into loading up on the drastically over-valued public debt of the Eurozone’s fiscal cripples.

Needless to say, there is likely to emerge a flurry of leaks and trial balloons from the desperate precincts of Brussels, Berlin and Frankfurt. These will be designed to encourage the Greeks to leave their banking system hostage to “cooperation” with their paymasters, and to persuade traders that Draghi has been greenlighted to buy up the PIIGS debt hand-over-fist——-and to do so without regard to the pro-rata capital key under which the current program is straight-jacketed.

But that assumes that the Germans, Dutch and Finns capitulate to an open-ended and frenzied bond-buying campaign that would make the BOJ’s current madness look tame by comparison. Yet if they do, its only a matter of time before the euro goes into a terminal tail-spin. And if they don’t, collapsing euro debt prices will infect the entire global bond market in a tidal wave of contagion.

 

Either way, its not priced-in. That’s been the real stupid trade all along.

 

 end

 

 

Late in the day we receive this news which averted a Greek banking collapse.  They know await the Tsipras plan:

(courtesy Bloomberg)

Greek Collapse Averted for Now as EU Leaders Await Tsipras Plan

Greece sidestepped an immediate collision with creditors by promising new economic reform proposals as German Chancellor Angela Merkel warned that “only a few days” are left to reach a deal.

Euro-area finance chiefs will discuss Greece’s request on a conference call Wednesday morning when the country’s banking system will remain shuttered for an eighth business day. The renewed contacts offer the European Central Bank a justification for not pulling the plug on Greek banks.

With the diplomatic initiative staving off disaster at least for a few more days, Greece’s tactics provoked a range of reactions before a Brussels summit, with Merkel saying “the path we have to take isn’t possible without reforms.” Dutch Prime Minister Mark Rutte pronounced himself “somber,” while French President Francois Hollande called on his colleagues to move quickly to show “both responsibility and solidarity.”

Shortages of medicine are turning Greece’s fiscal crisis into a humanitarian one with Russia sizing up the country as a potential ally inside the European Union, highlighting the consequences of shutting off funding to Europe’s most debt-stricken nation that go far beyond the economic stakes.

European bond markets — except for Greece — rallied today as fears of a sudden Greek exit from the euro zone receded. Exactly how much time Greece has bought won’t be clear until the summit ends. There are already tentative plans for another summit Sunday, according to three European officials.

The yield on Spain’s benchmark 10-year bond fell 11 basis points to 2.26 percent Tuesday. That’s down from a one-year closing high of 2.4 percent in June.

Greece’s day-to-day struggle for financial survival risks hitting the wall on July 20, when the government redeems 3.5 billion euros ($3.8 billion) of bonds held by the ECB. The central bank is the only thing standing between Greece and economic ruin after the government let its aid program lapse.

First Step

Greek Prime Minister Alexis Tsipras met Merkel, French President Francois Hollande and European Commission President Jean-Claude Juncker before Tuesday evening’s summit of euro leaders after finance ministers had sketched out a road map toward a possible third medium-term aid program.

“The first step will be to ask the institutions to assess the financial situation in Greece — financing needs, debt sustainability — and then we will have another Eurogroup to decide whether we will formally start the talks,” Dutch Finance Minister Jeroen Dijsselbloem said after leading the ministers’ meeting.

Greece’s presentation on Wednesday will map out the common ground for an accord that includes an arrangement to settle financing through the end of the month, a Greek official said in Athens on condition of anonymity.

Tsakalotous attended his first Eurogroup – and was photographed carrying handwritten notes in English.

New Greek Finance Minister Euclid Tsakalotos (right) was introduced to his new Eurogroup colleagues.
Photographer: John Thys/AFP/Getty Images
His handwritten notes prompted speculation as to their meaning.
Photographer: John Thys/AFP/Getty Images

Finance ministers welcomed the appointment of Euclid Tsakalotos as Greek finance minister. Tsakalotos took over from Yanis Varoufakis, the combative motorcycle-riding professor-turned-minister who left office after Sunday’s anti-austerity referendum saying “I shall wear the creditors’ loathing with pride.”

Ad Hoc Deals

Whether Varoufakis’s departure translates into progress at the bargaining table will depend on Tsipras, who shored up his domestic position and claimed to gain leverage over the creditors by staging the anti-austerity referendum and winning it by an 61.3 percent vote.

“If there’s nothing on the table, it means Tsipras isn’t capable of honoring the desire of the Greek people to stay in the euro zone,” Belgian Prime Minister Charles Michel said.

Finance ministers bandied about technical solutions, with Austria’s Hans Joerg Schelling saying there are “a number of variants” for getting Greece through the next few weeks, such as using untapped funds or striking ad hoc deals similar to the first aid package in 2010.

Bridge financing, in turn, would hinge on Greece moving toward a two- to three-year borrowing deal which would require it to stomach many of the economic reforms that Tsipras’s left-leaning Syriza party has resisted since coming to power in January.

 

end

 

Well, whatever proposal was seen by the Euro gang probably was not to their liking as Greece faces a Euro exit by Sunday:

(courtesy Bloomberg)

Greece Faces Euro Exit Unless Tsipras Bows to Demands by Sunday

European leaders set a Sunday deadline to rescue Greece, saying otherwise they’ll take the unprecedented step of propelling the country out of the euro.

At a summit in Brussels Greece’s anti-austerity government was given five days to make new economic reform proposals that could earn another aid package and save it from financial ruin.

“We have only a few days left to find a solution,” German Chancellor Angela Merkel told reporters late Tuesday after euro-area leaders met in Brussels. She conceded that she is “not especially optimistic.”

Sunday now looms as one of the most critical days in modern European history, potentially splintering a currency that was meant to last forever and throwing more than a half-century of economic and political integration into reverse.

“We have a Grexit scenario prepared in detail,” European Commission President Jean-Claude Juncker said, using the shorthand for expulsion from the now 19-nation currency area.

With shortages of medicine turning Greece’s fiscal crisis into a humanitarian one and Russia sizing up the country as a potential ally inside the European Union, the consequences of shutting off funding to Europe’s most debt-stricken nation go far beyond the narrow economic stakes.

The ECB is the only thing standing between Greece and the economic abyss after the government let its aid program lapse.

Greek banks, shut since July 3, are running out of paper money for automatic teller machines, and are relying on emergency loans from the ECB to avoid collapse.

“Our inability to find agreement may lead to the bankruptcy of Greece and the insolvency of its banking system,” European Union President Donald Tusk said. “If someone has any illusions that it will not be so, they are naive.”

end

 

Then late tonight:  it looks like the Greeks must adopt the David Stockman plan (above)

Merkel Mocks Greece And The Referendum: There Is Money, But The Deal Is Much Harsher Now (And No Debt Haircut)

Another day came and went with no breakthrough in negotiations between Athens and Brussels as new Greek FinMin Euclid Tsakalotos reportedly showed up to Tuesday’s Eurogroup with nothing to discuss.

With the ECB tightening the screws on Greek banks and the German finance ministry as well as German lawmakers tightening the screws on Angela Merkel, the Chancellor is drawing a hard line toward the Greeks in the face of calls for debt writedowns from the IMF, Greek PM Alexis Tsipras and the Greek people.

  • MERKEL SAYS IF GREEK REFORM PROPOSALS ARE SATISFACTORY AND PRIOR  ACTIONS TAKEN, SHORT-TERM FINANCE CAN BE PROVIDED: RTRS
  • MERKEL SAYS SHORT-TERM GREEK FIX HINGES ON LONG-TERM PROPOSALS
  • MERKEL SAYS GREECE NEEDS MULTI-YEAR PROGRAM
  • MERKEL: GREEK PROPOSALS HAVE TO GO BEYOND WHAT BAILOUT INSTITUTIONS DEMANDED BEFORE REFERENDUM
  • MERKEL SAYS GREECE WILL NEED STRONGER MEASURES TO PLUG FINANCING GAP BECAUSE OF ECONOMIC DETERIORATION
  • MERKEL: EU TO DEAL WITH GREEK DEBT BURDEN AT END OF PROCESS
  • MERKEL SAYS EURO LEADERS DIDN’T DISCUSS AID PACKAGE SIZE
  • MERKEL SAYS SHE ISN’T ‘ESPECIALLY OPTIMISTIC’ ABOUT GREECE
  • MERKEL RULES OUT DEBT ‘HAIRCUT’
  • MERKEL SAYS ECB BRIEFING SIGNALED GREECE NEEDS SUNDAY DECISION

More from Reuters:

German Chancellor Angela Merkel said on Tuesday she hoped to have sufficient reform proposals from Greece this week to be able to ask the German parliament to approve negotiations on a new long-term aid programme for Athens.

 

She said all 28 European Union leaders would meet next Sunday to discuss support for Greece provided Prime Minister Alexis Tsipras put forward detailed reform proposals along with a loan request by Thursday that were considered satisfactory.

 

If the reform list was adequate and Greece took some prior actions to enact first measures, Merkel said she was sure that short-term finance could be provided to help Athens over its immediate funding needs.

In other words, Merkel just told the Greeks yes, there is some money, but forget debt haircut, and the new deal is far harsher than what was on the table because the Greek economy is now imploding. Also, the deal will be 2-3 years at least to start, so even more austerity is on the table. So to all those who voted “Oxi”, if you want your deposits unlocked well… tough.

The headlines keep coming hot and heavy, in which we find that Europe now thinks it is Greece’s god:

  • MALTA’S MUSCAT SAYS `SUNDAY IS JUDGMENT DAY’

More ultimatums of course:

  • JUNCKER SAYS HE CAN’T EXCLUDE GREXIT
  • JUNCKER: EU COMMISSION HAS GREXIT SCENARIO PREPARED IN DETAIL

And just so it is clear who is calling the shots, here is Juncker explaining:

  • JUNCKER: LAST MOMENT FOR GREEK GOVT WILL BE MONDAY MORNING

What happens then?

And just in case Greece decides to disobey, Europe is ready to treat Greece as an African nation:

  • JUNCKER: EU COMMISSION HAS HUMANITARIAN PLAN FOR GREECE IF NEED

The only good news for Greece, which was just clearly reduced to a vassal nation state of Europe, is that Merkel did not demand Tsipras’ head on a silver platter.

end
The real story behind the scenes as discussed by Ambrose Evans-Pritchard.  The important points are highlighted in red:
(courtesy Ambrose Evans Pritchard)

Europe is blowing itself apart over Greece – and nobody seems able to stop it

Prime Minister Alexis Tsipras never expected to win Sunday’s referendum. He is now trapped and hurtling towards Grexit

Like a tragedy from Euripides, the long struggle between Greece and Europe’s creditor powers is reaching a cataclysmic end that nobody planned, nobody seems able to escape, and that threatens to shatter the greater European order in the process.

Greek premier Alexis Tsipras never expected to win Sunday’s referendum on EMU bail-out terms, let alone to preside over a blazing national revolt against foreign control.

He called the snap vote with the expectation – and intention – of losing it. The plan was to put up a good fight, accept honourable defeat, and hand over the keys of the Maximos Mansion, leaving it to others to implement the June 25 “ultimatum” and suffer the opprobrium.

This ultimatum came as a shock to the Greek cabinet. They thought they were on the cusp of a deal, bad though it was. Mr Tsipras had already made the decision to acquiesce to austerity demands, recognizing that Syriza had failed to bring about a debtors’ cartel of southern EMU states and had seriously misjudged the mood across the eurozone.

Instead they were confronted with a text from the creditors that upped the ante, demanding a rise in VAT on tourist hotels from 7pc (de facto) to 23pc at a single stroke.

Creditors insisted on further pension cuts of 1pc of GDP by next year and a phase out of welfare assistance (EKAS) for poorer pensioners, even though pensions have already been cut by 44pc.

They insisted on fiscal tightening equal to 2pc of GDP in an economy reeling from six years of depression and devastating hysteresis. They offered no debt relief. The Europeans intervened behind the scenes to suppress a report by the International Monetary Fund validating Greece’s claim that its debt is “unsustainable”. The IMF concluded that the country not only needs a 30pc haircut to restore viability, but also €52bn of fresh money to claw its way out of crisis.

http://cloud.highcharts.com/embed/adakiq

They rejected Greek plans to work with the OECD on market reforms, and with the International Labour Organisation on collective bargaining laws. They stuck rigidly to their script, refusing to recognise in any way that their own Dickensian prescriptions have been discredited by economists from across the world.

“They just didn’t want us to sign. They had already decided to push us out,” said the now-departed finance minister Yanis Varoufakis.

So Syriza called the referendum. To their consternation, they won, igniting the great Greek revolt of 2015, the moment when the people finally issued a primal scream, daubed their war paint, and formed the hoplite phalanx.

Mr Tsipras is now trapped by his success. “The referendum has its own dynamic. People will revolt if he comes back from Brussels with a shoddy compromise,” said Costas Lapavitsas, a Syriza MP.

“Tsipras doesn’t want to take the path of Grexit, but I think he realizes that this is now what lies straight ahead of him,” he said.

Alexis Tsipras arrives in Brussels for an emergency summit after his referendum

What should have been a celebration on Sunday night turned into a wake. Mr Tsipras was depressed, dissecting all the errors that Syriza has made since taking power in January, talking into the early hours.

The prime minister was reportedly told that the time had come to choose, either he should seize on the momentum of the 61pc landslide vote, and take the fight to the Eurogroup, or yield to the creditor demands – and give up the volatile Mr Varoufakis in the process as a token of good faith.

“They just didn’t want us to sign. They had already decided to push us out”
Yanis Varoufakis

Everybody knew what a fight would mean. The inner cabinet had discussed the details a week earlier at a tense meeting after the European Central Bank refused to increase liquidity (ELA) to the Greek banking system, forcing Syriza to impose capital controls.

It was a triple plan. They would “requisition” the Bank of Greece and sack the governor under emergency national laws. The estimated €17bn of reserves still stashed away in various branches of the central bank would be seized.

They would issue parallel liquidity and California-style IOUs denominated in euros to keep the banking system afloat, backed by an appeal to the European Court of Justice to throw the other side off balance, all the while asserting Greece’s full legal rights as a member of the eurozone. If the creditors forced Grexit, they – not Greece – would be acting illegally, with implications for tort contracts in London, New York and even Frankfurt.

They would impose a haircut on €27bn of Greek bonds held by the ECB, and deemed “odious debt” by some since the original purchases were undertaken by the ECB to save French and German banks, forestalling a market debt restructuring that would otherwise have happened.

The fight to end Greece’s Great Euro Depression

“They were trying to strangle us into submission, and this is how we would retaliate,” said one cabinet minister. Mr Tsipras rejected the plan. It was too dangerous. But a week later, that is exactly what he may have to do, unless he prefers to accept a forced return to the drachma.

Syriza has been in utter disarray for 36 hours. On Tuesday, the Greek side turned up for a make-or-break summit in Brussels with no plans at all, even though Germany and its allies warned them at the outset that this is their last chance to avert ejection.

The new finance minister, Euclid Tsakalotos, vaguely offered to come up with something by Wednesday, almost certainly a rejigged version of plans that the creditors have already rejected.

Events are now spinning out of control. The banks remain shut. The ECB has maintained its liquidity freeze, and through its inaction is asphyxiating the banking system.

Factories are shutting down across the country as stocks of raw materials run out and containers full of vitally-needed imports clog up Greek ports. Companies cannot pay their suppliers because external transfers are blocked. Private scrip currencies are starting to appear as firms retreat to semi-barter outside the banking system.

“We have to put our little egos, in my case a very large ego, away, and deal with situation we face”
Jean-Claude Juncker

Yet if Greece is in turmoil, so is Europe. The entire leadership of the eurozone warned before the referendum that a “No” vote would lead to ejection from the euro, never supposing that they might have to face exactly this.

Jean-Claude Juncker, the European Commission’s chief, had the wit to make light of his retreat. “We have to put our little egos, in my case a very large ego, away, and deal with situation we face,” he said.

France’s prime minister, Manuel Valls said Grexit and the rupture of monetary union must be prevented as the highest strategic imperative. “We cannot let Greece leave the eurozone. Nobody can say today what the political consequences would be, what would be the reaction of the Greek people,” he said.

French leaders are working in concert with the White House. Washington is bringing its immense diplomatic power to bear, calling openly on the EU to put “Greece on a path toward debt sustainability” and sort out the festering problem once and for all.

The Franco-American push is backed by Italy’s Matteo Renzi, who said the eurozone has to go back to the drawing board and rethink its whole austerity doctrine after the democratic revolt in Greece. He too now backs debt relief for Greece.

(L-R) European Central Bank President Mario Draghi, French President Francois Hollande, Spanish Prime Minister Mariano Rajoy, Greek Prime Minister Alexis Tsipras and Italian Prime Minister Matteo Renzi take part in a euro zone EU leaders emergency summitGreek Prime Minister Alexis Tsipras and Italian Matteo Renzi take part in a eurozone EU leaders emergency summit  Photo: Reuters

Yet 15 of the 18 governments now sitting in judgment on Greece either back Germany’s uncompromising stand, or are leaning towards Grexit in one form or another. The Germans are already thinking beyond Grexit, discussing plans for humanitarian aide and balance of payments support for the drachma.

Mark Rutte, the Dutch premier, spoke for many in insisting that the eurozone must uphold discipline, whatever the financial consequences. “I am at the table here today to ensure that the integrity, the cohesion, the underlying principles of the single currency are protected. It is up to the Greek government to come up with far-reaching proposals. If they don’t do that, then I think it will be over quickly,” he said.

The two sides are talking past each other, clinging to long-entrenched narratives, no longer willing to question their own assumptions. The result could be costly. RBS puts the direct financial losses for the eurozone from a Greek default at €227bn, compared with €140bn if they bite the bullet on an IMF-style debt restructuring.

In pics: the human cost of Greece’s debt crisis

But that is a detail compared with the damage to the European political project and the Nato alliance if Greece is thrown to wolves against the strenuous objections of France, Italy and the US.

It is hard to imagine what would remain of Franco-German condominium. Washington might start to turn its back on Nato in disgust, leaving Germany and the Baltic states to fend for themselves against Vladimir Putin’s Russia, a condign punishment for such loss of strategic vision in Greece.

Mr Lapavitsas said Europe’s own survival as civilisational force in the world is what is really at stake. “Europe has not show much wisdom over the last century. It launched two world wars and had to be saved by the Americans,” he said

“Now with the creation of monetary union it has acted with such foolishness, and created such a disaster, that it is putting the very union in doubt, and this time there will be no saviour. It is the last throw of the dice for Europe,” he said.

 

end

(courtesy Peter Cooper/Arabian Money/Bill Gross/Janus capital)

This is the ‘eye of the hurricane’ warns Bill Gross

Posted on 06 July 2015 with no comments from readers

Bill Gross of Janus Capital spoke with Bloomberg Television’s Erik Schatzker and Guy Johnson about Greece’s debt. On whether he is surprised by the calm reaction of the markets, he said: ‘Yes, I am surprised…It appears that we’re in the eye of the hurricane. I do not believe that this situation really is calm.’

On the probability of a Greek exit from the Euro, Mr. Gross said: ‘I think it is, 70 to 80 per cent. And again it depends upon whether the Germans are willing to concede that perhaps austerity to the extent that they have enforced it in Greece, and to the extent that restructuring or debt write-offs are a necessity in the next few weeks, which will be hard to agree upon with all the EU members. It’s a German-led decision.’

Posted on 06 July 2015

Your important early morning currencies/interest rates and bourses results overnight:

 

 

Euro/USA 1.0975 down .0072

USA/JAPAN YEN 122.50 down .163

GBP/USA 1.5459 down .0139

USA/CAN 1.2714 up .0052

This morning in Europe, the Euro fell by a considerable 72 basis points, trading now just above the 1.09 level at 1.0975; 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, an imminent  default of Greece and the Ukraine, rising peripheral bond yields and today crumbling courses throughout Europe.

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 16 basis points and trading just below the 123 level to 122.50 yen to the dollar.

The pound was down badly this morning as it now trades just below the 1.55 level at 1.5459, 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 again well down by 52  basis points at 1.2714 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).

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 264.47  points or 1.31%

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

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

Gold very early morning trading: $1166.00

silver:$15.62

Early Tuesday morning USA 10 year bond yield: 2.23% !!! down 6 in basis points from Monday night and it is trading just below  resistance at 2.27-2.32% and no doubt still setting off massive derivative losses.

USA dollar index early Tuesday morning: 96.85 up 60 cents from Monday’s close. (Resistance will be at a DXY of 100)

 

This ends the early morning numbers, Tuesday morning

And now for your closing numbers for Tuesday:

 

Closing Portuguese 10 year bond yield: 3.14%  down 5 in basis points from Monday (  very ominous/and dangerous with an accident waiting to happen)

Closing Japanese 10 year bond yield: .46% !!! down 2 in basis points from Monday/still very ominous

Your closing Spanish 10 year government bond, Tuesday, down 11 in basis points  ( very ominous)

Spanish 10 year bond yield: 2.26% !!!!!!

Your Tuesday closing Italian 10 year bond yield: 2.27% down 12 in basis points from Monday: (very ominous)

trading 1 basis point higher than Spain.

 

IMPORTANT CURRENCY CLOSES FOR TODAY

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

 

Euro/USA: 1.1026 down .0019 ( Euro down 19 basis points)

USA/Japan: 122.60 down  0.074 ( yen up 7 basis points)

Great Britain/USA: 1.5471 down .0126 (Pound down 126 basis points)

USA/Canada: 1.2690 down .0029 (Can dollar down 29 basis points)

The euro fell by a fair amount today. It settled down 19 basis points against the dollar to 1.1026 as the dollar traded northbound today against most of the various major currencies. The yen was up by 7 basis points and closing well below the 123 cross at 122.60. The British pound lost huge  ground today, 126 basis points, closing at 1.5471. The Canadian dollar some more  ground against the USA dollar, 29 basis points closing at 1.2690.

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 3 in basis point from Monday// (at the resistance level of 2.27-2.32%)/

Your closing USA dollar index:

96.77 up 48 cents on the day

.

European and Dow Jones stock index closes:

 

England FTSE down 103.47 points or 1.58%

Paris CAC down 106.90 points or 2.27%

German Dax down  213.85 points or 1.96%

Spain’s Ibex down 194.10 points or 1.84%

Italian FTSE-MIB down 642.24 or 2.97%

 

The Dow up 93.33  or 0.53%

Nasdaq; up 5.52 or 0.11%

 

OIL: WTI 52.77 !!!!!!!

Brent:57.25!!!!

 

Closing USA/Russian rouble cross: 56.63  up 1/10  rouble per dollar on the day

end

 

And now for your more important USA stories.

 

NY trading for today:

Dow Swings 670 Points In V-Shaped-Hope-Recovery Despite Commodity Carnage

Dude….

*  *  *

This happened… Remember Greece doesn’t matter…

 

The Dow dropped 350 points from its overnight highs to stop almost perfectly at the close of Europe (1130ET) and then abruptly rallied a stunning 320 points back…

 

The S&P tested Sunday night’s lows and the 200DMA before exploding higher…

 

Who could have seen that coming?

 

On the day, cash indices reversed perfectly on Europe’s close…

 

Leaving stocks mixed on the week, with Nasdaq underperforming…

 

Bear in mind that Greek stocks did not partake in the idiocy… but once US stocks astrted to roll, Greece caught up (so now we are seeing US equities lead Greek stocks fundamentally higher!!!)

 

As US Stocks ramp was all EURJPY-driven once again (just like yesterday)

 

Note that post-Tsipras’ “Greferendum” announcement, Bonds remain the big winners…

 

Treasury yields plunged early as shorts squeezed and safety was bid but once Europe closed… sell sell sell…

 

The US Dollar collapsed into the close as EURUSD surged (for now good reason) and as we noted above EURJPY was running stocks today…

 

It’s pretty clear what (or who) was helping things along…

 

Commodity prices plunged early on (led by crude and silver)

Oil prices carnaged early on, then bounced after EIA data suggested higher demand and chatter that the Irtan deal talks were falling apart (and Europe’s close)…

 

As a reminder, shale stocks have been collapsing since Einhorn tried to bury PXD… (but they all v-shape recovered today)

 

 

Charts: Bloomberg

end

We now get word that insurance rates will rise between 20 and 40% next year.

so much for the affordability of Obamacare:

(courtesy zero hedge)

Obamacare Sticker Shock Arrives: Insurance Premiums To Soar 20-40%

Two months ago, we outlined why the CPI-boosting Affordable Care Act is on the verge of bankrupting that all important driver of the US economic growth engine — the American consumer.

Put simply, inflation in medical care services costs hadn’t yet reared its ugly head because many insurers were as yet unable to gauge the full base-effect impact of Obamacare on their P&L. That, we said, was about to change: “After finally digesting the true cost of Obamacare, any recent insurance prime hikes will seem like a walk in the park compared to what is coming.

 

Sure enough, insurers have now taken a close look at exactly how much socialized medicine is costing them.

Not surprisingly, the picture isn’t pretty.

In some cases, forecasters grossly underestimated the number of claims they would likely receive, and indeed, even a PhD economist can tell you that when the amount going out for claims is greater than the amount coming in via premiums, there’s a problem with the model and because staunching the outflow is effectively now forbidden, something has to give on the receivables side of the equation which means dramatically higher premiums.

NY Times has the story:

Health insurance companies around the country are seeking rate increases of 20 percent to 40 percent or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected. Federal officials say they are determined to see that the requests are scaled back.

 

Blue Cross and Blue Shield plans — market leaders in many states — are seeking rate increases that average 23 percent in Illinois, 25 percent in North Carolina, 31 percent in Oklahoma, 36 percent in Tennessee and 54 percent in Minnesota, according to documents posted online by the federal government and state insurance commissioners and interviews with insurance executives.

 

 

The Oregon insurance commissioner, Laura N. Cali, has just approved 2016 rate increases for companies that cover more than 220,000 people. Moda Health Plan, which has the largest enrollment in the state, received a 25 percent increase, and the second-largest plan, LifeWise, received a 33 percent increase.

 

Jesse Ellis O’Brien, a health advocate at the Oregon State Public Interest Research Group, said: “Rate increases will be bigger in 2016 than they have been for years and years and will have a profound effect on consumers here. Some may start wondering if insurance is affordable or if it’s worth the money.”

 

The rate requests, from some of the more popular health plans, suggest that insurance markets are still adjusting to shock waves set off by the Affordable Care Act.

 

Blue Cross and Blue Shield of New Mexico has requested rate increases averaging 51 percent for its 33,000 members. The proposal elicited tart online comments from consumers.

“This rate increase is ridiculous,” one subscriber wrote on the website of the New Mexico insurance superintendent.

 

In their submissions to federal and state regulators, insurers cite several reasons for big rate increases. These include the needs of consumers, some of whom were previously uninsured; the high cost of specialty drugs; and a policy adopted by the Obama administration in late 2013 that allowed some people to keep insurance that did not meet new federal standards.

 

“Our enrollees generated 24 percent more claims than we thought they would when we set our 2014 rates,” said Nathan T. Johns, the chief financial officer of Arches Health Plan, which covers about one-fourth of the people who bought insurance through the federal exchange in Utah. As a result, the company said, it collected premiums of $39.7 million and had claims of $56.3 million in 2014. It has requested rate increases averaging 45 percent for 2016.

 

The rate requests are the first to reflect a full year of experience with the new insurance exchanges and federal standards that require insurers to accept all applicants, without charging higher prices because of a person’s illness or disability.

There you go. Precisely as we said, the ACA and of course the ballooning cost of new drugs proxied by Janet Yellen’s “stretched” biotech sector mean manidtorily insured Americans will now be charged more. Much more.

But do not despair because where there’s an Obama there’s always “hope”. And on that note, we’ll leave you with the following, from the President:

If insurance regulators “do their job, my expectation is that [rates hikes] will come in significantly lower than what’s being requested.”

end
The USA economy is not doing too good as the Trad deficit widens. Both imports and exports tumble:
(courtesy zero hedge)

US Trade Deficit Widens In May As Exports Tumble Most In 3 Months

The US trade deficit increased from $40.7 bn to $41.8bn, slightly lower than expected. Impoorts fell a mere 0.1% (despite a record amount of imported auto parts) but exports fell 0.8% (driven by a decline in Aircraft sales), nudging GDP expectations lower. The trade deficit with China rose notably and exports to Europe dropped.

  • *MAY IMPORTS FALL 0.1% TO $230.5 BLN ON OIL, CAPITAL GOODS
  • *U.S. MAY EXPORTS DECLINE 0.8% TO $188.6 BLN ON AIRCRAFT
  • *U.S. IMPORTED A RECORD $29.5 BLN IN AUTOS, PARTS IN MAY

 

 

Exports

  • Exports of goods and services decreased $1.5 billion, or 0.8 percent, in May to $188.6 billion.
  • Exports of goods decreased $1.6 billion and exports of services increased $0.1 billion.
  • The decrease in exports of goods mainly reflected a decrease in capital goods ($2.4 billion). An increase in industrial supplies and materials ($0.8 billion) was partly offsetting.
  • The increase in exports of services mainly reflected an increase in other business services ($0.1 billion), which includes research and development services; professional and management services; and technical, trade-related and other services.

Imports

  • Imports of goods and services decreased $0.3 billion, or 0.1 percent, in May to $230.5 billion.
  • Imports of goods decreased $0.4 billion and imports of services increased $0.1 billion.
  • The decrease in imports of goods mainly reflected decreases in capital goods ($0.8 billion) and in industrial supplies and materials ($0.6 billion). An increase in automotive vehicles, parts, and engines ($0.8 billion) was partly offsetting.
  • The increase in imports of services mainly reflected an increase in transport ($0.1 billion), which includes freight and port services and passenger fares.

Goods by geographic area (seasonally adjusted, Census basis)

  • The goods deficit with China increased from $27.5 billion in April to $30.6 billion in May. Exports decreased $0.7 billion to $9.6 billion and imports increased $2.4 billion to $40.2 billion.
  • The goods deficit with the European Union increased from $11.9 billion in April to $13.4 billion in May. Exports decreased $1.0 billion to $22.6 billion and imports increased $0.4 billion to $36.0 billion.
  • The goods surplus with South and Central America increased from $3.0 billion in April to $4.2 billion in May. Exports increased $0.8 billion to $13.7 billion and imports decreased $0.4 billion to $9.5 billion.

 

Charts: Bloomberg

end

 

Well that about does it for tonight

 

I will see you Wednesday night

Harvey

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2 comments

  1. […] JULY 7/TURMOIL IN BRUSSELS/GREEKS SHOW UP WITH NO PLAN AT ALL/THEY ARE GIVEN UNTIL SUNDAY TO COME UP… […]

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