July 9/Silver OI drops despite silver’s rise yesterday indicates banker short covering/China states that any short sellers will go to jail/The Dow after rising 240 points in the morning, only closes up by 33 points/D Day for Greece on Sunday/ Looks like a GREXIT/

Good evening Ladies and Gentlemen:

First:  your quote of the day!!@

The Brits still have a sense of humour. This looks like a London Underground message board.

 

 

 

 

Here are the following closes for gold and silver today:

Gold:  $1162.90 down $0.40  (comex closing time)

Silver $15.35 up 20 cents.

 

In the access market 5:15 pm

Gold $1159.60

Silver: $15.40

 

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

At the gold comex today, we had a poor delivery day, registering 0 notices for nil ounces . Silver saw 38 notices filed for 190,000 oz.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 248.23 tonnes for a loss of 55 tonnes over that period.

In silver, the open interest fell by a considerable 5,431 contracts despite the fact that Wednesday’s price was up by 20 cents.  The total silver OI continues to remain extremely high, with today’s reading at 191,661 contracts now at decade highs despite a record low price.  In ounces, the OI is represented by .958 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.

In silver we had 38 notices served upon for 190,000 oz.

In gold, the total comex gold OI rests tonight at 453,498 for a gain of 1,353 contracts as gold was up $10.90 yesterday. We had 0 notices filed for nil 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 a huge addition in inventory at the SLV to the tune of 1.337 million oz/ Inventory now rests at 326.542 million oz.

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

1. Today, we had the open interest in silver fall by 5,431 contracts to 191,661 despite the fact that silver was up by 20 cents yesterday. We must have had considerable shortcovering by the bankers as they feared something was brewing in the silver arena. The OI for gold rose by another 1,353 contracts up to 453,498 contracts as the price of gold was up by $10.90  yesterday.

(report Harvey)

 

2 Today, 6 important commentaries on Greece

 

(zero hedge, Bloomberg/Deutsche bank/Reuters/Peter Cleppe)

 

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

(zero hedge)

4.USA data tonight; jobless report/skyrocketing back towards 300,000

(1 commentary)

 

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 very important commentary tonight is titled:

“An Indication of Global PPT Failure?”

9. Dave Kranzler and Craig Roberts deliver also a very important commentary:

“Are big banks using derivatives to suppress bullion prices?”

10.  Simon Black discusses Nigel Farage’s speech to the European Parliament where he states that the Euro experiment is one big failure and he likens the Euro to a “New Berlin Wall”

(Simon Black/Nigel Farage)

 

plus other important topics….

 

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 1,353 contracts from 452,145 up to 453,498 as gold was up $10.90 in price yesterday (at the comex close).  We are now in the next contract month of July and here the OI surprisingly fell by 95 contracts to 146 contracts. We had 100 notices filed yesterday and thus we gained 5 contracts or an additional 500 ounces will stand in this non active delivery month of July. The next big delivery month is August and here the OI fell by 9110 contracts down to 270,287. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 149,941. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was poor at 185,958 contracts. Today we had 0 notices filed for nil oz.

And now for the wild silver comex results. Silver OI fell by a huge 5,431 contracts from 197,092 down to 191,661 despite the fact that the price of silver was up by 20 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 as today we have in all probability a huge shortcovering by the bankers as they sensed something was brewing in the silver arena. The next delivery month is July and here the OI fell by 280 contracts down to 623. We had 294 notices served upon yesterday and thus we gained 14 contracts or an additional 70,000 ounces of silver will 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 fall by 94 contracts down to 169. The next major active delivery month is September and here the OI fall by a massive 6,108 contracts to 131,417.  The estimated volume today was excellent at 51,726 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 79,619 contracts which is huge in volume.  We had 38 notices filed for 190,000 oz

 

July initial standing

July 9.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz    nil
Withdrawals from Customer Inventory in oz 32.15 (1 kilobar)
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 1,611.98 oz (Brinks)
No of oz served (contracts) today 0 contracts (nil oz)
No of oz to be served (notices) 146 contracts 14,600 oz
Total monthly oz gold served (contracts) so far this month 410 contracts(41,000 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 80,487.3   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 1 customer withdrawal

i) Out of Manfra; 32.15 oz (1 kilobar)

 

 

 

total customer withdrawal: 32.15 oz

We had 1 customer deposits:

i) Into Brinks:  1611.98 oz

Total customer deposit: 1611.98 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 0 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account

 

To calculate the total number of gold ounces standing for the July contract month, we take the total number of notices filed so far for the month (410) x 100 oz  or 41,000 oz , to which we add the difference between the open interest for the front month of July (146) and the number of notices served upon today (0) x 100 oz equals the number of ounces standing.

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

No of notices served so far (410) x 100 oz  or ounces + {OI for the front month (146) – the number of  notices served upon today (0) x 100 oz which equals 55,600  oz standing so far in this month of July (1.729 tonnes of gold).

 

we gained an additional 500 oz of gold standing in this non active delivery month of July. somebody was badly in need of physical gold today.

Total dealer inventory 493,204.734 or 15.34 tonnes

Total gold inventory (dealer and customer) = 7,980,912.60 oz  or 248.23 tonnes

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 248.23 tonnes for a loss of 55 tonnes over that period.

 

 

end

And now for silver

July silver initial standings

July 9 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 92,527.15  oz (CNT,Scotia)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory nil
No of oz served (contracts) 38 contracts  (190,000 oz)
No of oz to be served (notices) 585 contracts (2,925,000 oz)
Total monthly oz silver served (contracts) 2745 contracts (13,725,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month nil
Total accumulative withdrawal  of silver from the Customer inventory this month 2,805,306.4 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 0 customer deposits:

total customer deposit: nil  oz

 

We had 2 customer withdrawals:

i) Out of CNT: 1,983.000 oz????  (exact weight???)

ii) Out of Scotia: 90,544.15 oz

 

 

 

total withdrawals from customer:  92,527.15   oz

 

we had 1 huge  adjustment

i) Out of CNT:

we had 1,186,143.09 oz of silver leave the dealer at CNT and this landed into the customer account of CNT

 

Total dealer inventory: 58.96 million oz

Total of all silver inventory (dealer and customer) 180.879 million oz

The total number of notices filed today for the July contract month is represented by 38 contracts for 190,000 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 (2745) x 5,000 oz  = 13,725,000 oz to which we add the difference between the open interest for the front month of July (623) and the number of notices served upon today (38) x 5000 oz equals the number of ounces standing.

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

2745 (notices served so far) + { OI for front month of July (623) -number of notices served upon today (38} x 5000 oz ,= 16,650,000 oz of silver standing for the July contract month.

We gained another 70,000 ounces standing in this active delivery month of July. Somebody, again, was in great need of physical silver today.

 

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

July 8/no change in gold inventory at the GLD/Inventory at 709.65 tonnes

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

 

 

 

July 9 GLD : 709.65 tonnes

 

end

 

And now for silver (SLV)

July 9/ a huge increase in inventory at the SLV of 1.337 million oz. Inventory rests tonight at 326.542 million oz

July 8/no change in inventory at the SLV/rests at 325.205

July 7/no change in inventory at the SLV/rests at 325.205 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

 

July 9/2015:  tonight inventory rests at 326.542 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 9.1 percent to NAV usa funds and Negative 9.4% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 62.3%

Percentage of fund in silver:37.4%

cash .3%

( July 9/2015)

2. Sprott silver fund (PSLV): Premium to NAV rises to 2.59%!!!! NAV (July 9/2015) (silver must be in short supply)

3. Sprott gold fund (PHYS): premium to NAV rises to – .38% toNAV(July 7/2015

Note: Sprott silver trust back  into positive territory at +2.59%

Sprott physical gold trust is back into negative territory at -.38%

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)

Growth of Chinese Margin Accounts Drove Bubble – Now Drives the Crash

– Restrictions on borrowing to speculate were eased in 2010
– Middle class savers gradually saturated the market trading on leverage
– Market crash began as government tried to reign in leverage in overheated markets
– Leverage amplified gains on the up-leg, amplifies losses on down-leg forcing further sell offs
– Policy u-turns could not halt crash

goldcore_chart2_09-07-15

Chinese markets bounced last night following drastic intervention by the state when it banned large players from selling their shares in listed companies – arresting the over 30% decline of the past four weeks.

By definition, a market ceases to be a market if selling is prohibited so it is far from clear at this point if the government can bring stability back into the system.

At the heart of the problem is the use of credit by “investors” to take up larger positions than they might have if they were gambling only with their savings. It was this trading on leverage which ignited the bubble and it is this same dynamic which is now applying downward force.

Until 2010 trading on leverage was tightly regulated in China – only those who could afford to lose could use it. Since that time, however, restrictions have been gradually eased although speculators still have to put up 50% of their own cash.

As momentum grew  more middle class speculators entered the market which led to the mania of the past twelve months. In that time the value of shares listed on stock markets more than doubled to $10 trillion. Bloomberg estimate that the surge was financed by $339 billion of new credit.

From the start of this year the government – seeing the emergence of another massive bubble – attempted to rein in margin trading by raising the minimum level of cash required and closing of loopholes that allowed speculation on higher margins. Then on June 12th, when the crash began, the government put a limit on the use of margin trading itself.

When trading on leverage, at the officially sanctioned 2:1 ratio, small time middle class speculators were making double the gains as the market rose encouraging them to take on further debt for speculation and encouraging those on the sidelines to get involved.

However, as the market has plummeted they have made double the losses causing them to liquidate positions, forcing stock prices down and further liquidations.

The Chinese government was forced to change policy again, easing margin requirements, to try to shield investors from margin calls and to kick-start the markets but it appears that many investors had already learned a very painful lesson and as the Chinese securities regulator said a “panic sentiment” had overwhelmed the market.

Speculating with borrowed money played a key role in the 2008 crisis which nearly collapsed the global economy. It would appear that the entire world is hopelessly addicted to debt. The global debt ponzi scheme grows ever more fragile and with the consequences of this crash – the evaporation of trillions of dollars worth of debt on China’s banking system – yet to be seen, we may be entering a new phase of crisis.


MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,162.10, EUR 1,053.96 and GBP 755.37 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,154.25, EUR 1,045.61 and GBP 749.46 per ounce.

Gold in USD - 5 Day

Gold climbed $3.00 or 0.26 percent yesterday to $1,158.80 an ounce. Silver rose $0.04 or 0.26 percent to $15.14 an ounce.

Gold in Singapore for immediate delivery was up 0.6 percent at $1,164.30 an ounce an ounce near the end of the day,  while gold in Switzerland was at $1,163.50 an ounce. U.S. gold futures for August delivery were off 60 cents an ounce at $1,162.90 an ounce.

The yellow metal touched $1,146.75 an ounce earlier earlier this week, only a few dollars from its low for the year, a key support level.

The release of the Fed minutes from the June 16-17 meeting showed that the central bank continues to falter with its plan to raise rates, in the wake of mixed economic data domestically and global market turbulence abroad.

UBS has slashed its price forecasts for both platinum and palladium this year because a decline in investor sentiment and a greater supply of the metals.

In late morning European trading gold is up 0.49 percent at $1,162.35 an ounce. Silver is up 1.59 percent at $15.35 an ounce and platinum is up 0.98 percent at $1,032.00 an ounce.

Breaking News and Research Here

end

Roberts and Kranzler: Are big banks using derivatives to suppress bullion prices?

Section:

By Paul Craig Roberts and Dave Kranzler
Wednesday, July 8, 2015

We have explained on a number of occasions how the Federal Reserve’s agents, the bullion banks (principally JPMorganChase, HSBC, and Scotia) sell uncovered shorts (“naked shorts”) on the Comex (gold futures market) to drive down an otherwise rising price of gold. By dumping so many uncovered short contracts into the futures market, an artificial increase in “paper gold” is created, and this increase in supply drives down the price.

This manipulation works because the hedge funds, the main purchasers of the short contracts, do not intend to take delivery of the gold represented by the contracts, settling instead in cash. This means that the banks that sold the uncovered contracts are never at risk from their inability to cover contracts in gold. At any given time, the amount of gold represented by the paper gold contracts (“open interest”) can exceed the actual amount of physical gold available for delivery, a situation that does not occur in other futures markets.

In other words, the gold and silver futures markets are not where people buy and sell gold and silver. These markets are where people speculate on price direction and where hedge funds use gold futures to hedge other bets according to the various mathematical formulas that they use. That bullion prices are determined in this paper, speculative market, and not in real physical markets where people sell and acquire physical bullion, is the reason the bullion banks can drive down the price of gold and silver even though the demand for the physical metal is rising. …

… For the remainder of the commentary:

http://www.paulcraigroberts.org/2015/07/08/big-banks-using-derivatives-s…

end

And now, Bill Holter with an extremely important piece:

 

(courtesy Bill Holter/Holter-Sinclair collaboration)

 

An Indication of Global PPT Failure?

Forget about Greece, they didn’t matter yesterday as the NYSE shut down for nearly four hours.  Greece does matter and certainly will matter in the weeks to come.  Before getting to yesterday’s very peculiar “glitch”, I do want to mention something quite humorous about Greece.  Ambrose Evans-Pritchard wrote yesterday the referendum actually backfired!  When Tsipras called for the referendum, he apparently expected a “yes” vote (and so did the banksters running the show!).  The “plan” was after the yes vote, Tsipras would hang his head and agree to more austerity and thus kick the can one more time.

The “cradle of democracy” threw an absolute monkey wrench in these plans!  How can Tsipras now do any deal with the Troika without being lynched in the public square?  One can only hope the Greeks stand up for themselves and not allow anyone to sell them out.  As I wrote Tuesday, I believe their best bet is to follow in an Icelandic model and default, start issuing the drachma at a fair exchange rate and exit the Eurozone.  In this manner they start over and have some very interesting trade opportunities from their east.  We will see what they choose and exactly how bad the fallout is shortly!

So what exactly happened yesterday with the New York Stock Exchange?  It was certainly a peculiar day because “glitches” turned up everywhere!  First it was United Airlines having to ground all of their flights, then both The Wall Street Journal and Zerohedge websites went down.  I also heard of many New York subway cars being halted.  Then of course the NYSE was halted for four hours.  Was all of this “coincidence”?  Or was it just “glitchy”?  Let’s call this scenario number one of what I believe are three possibilities.

Then we have scenario number two, yesterday was the result of Eastern cyber attacks.  The theory goes like this, China is angry because “we topped” and rolled their markets over in a crash like fashion.  Maybe yesterday was a test to see what they could actually do?  You may pooh pooh this if you will but it only took 15 minutes for the talking heads on CNBC to deny any scenario except the “glitch”.  It wasn’t China, it wasn’t a hack, it was not terrorism we were carefully told.  I personally have believed in the theory Mr. Putin would release some sort of “truth bomb” calling BS on various false flags, fraudulent dealings and the Western Ponzi scheme in general.  I still believe this will come as the U.S. looks surely to square off with Russia/China/(even ROW) at some point in the not to distant future.  I believe there is some merit to this scenario but let’s leave it at that for the moment and then revisit at the end.

Scenario number three seems to me to be the meatiest.  I spoke to Jim Sinclair while the market was in closure to see what his take was.  He immediately said to me; “it’s like if in a casino and everyone starts winning, mysteriously either the lights go out of someone pulls a fire alarm …no more gambling!  I think the PPT knew they were going to be overwhelmed, if this were the case and I was the chairman of the NYSE, I would run upstairs and pull the plug out of the wall.  …Problem solved …for now!”.

Let’s look at this a little closer.  There are without any doubt “plunge protection teams” all over the world.  In the U.S., it is by an executive order signed in 1988 by Ronald Reagan.  The Bank of Japan has openly said they buy everything including equities.  China, who has been having very serious (25%-42% drops in just 16 trading days) market problems.  In fact, it could be said China has already crashed.  They are making it illegal for institutions to sell, the PBOC has actively been in their markets and everything they have tried has not worked until today.  Then we have Europe and Mr. “we’ll do anything necessary” Draghi.  Strangely, even though he is a politician, this is something out of his mouth I believe.

That said, I have a question.  Is it possible that we are seeing a global PPT failure?  You see, the “fires” are no longer compartmentalized, they have jumped borders!  It is this “crossing of borders” I believe which is causing problems.  For example, if we look at currencies, what happens if both the ECB and the Fed are trying to support their own currencies, aren’t they actually trading against each other?  Another thing to ponder is this, if one market closes (yesterday it was China), will this bring “trapped sellers” into the next market that opens and thus on the shoulders of their plunge protection team?

My personal take on these three differing scenarios is the truth lies as a combination of numbers two and three, I guess I’m just too cynical to fall for the “glitch excuse”.  Whether you want to believe it or not, we (the U.S.) are at war with the East and desperately hanging on to the dollar remaining as king.  This has been going on for years, only now it is becoming obvious.  Would one country try to electronically harm another country financially?  Is the Pope Catholic?  I do believe there is something to yesterday being either a trial run or a test, maybe even a “shot across the bow”.  I also believe the plug was pulled on purpose.  Maybe it had to be or was forced, I do not know.  I do believe we are watching as the various PPT’s fail to hold the lines.  I’m pretty sure we will find the answers out and shortly.  The real answers may not be pleasant!

 

 

Standing watch,

Bill Holter

Holter-Sinclair collaboration

Comments welcome bholter@hotmail.com

end

 

And now your overnight trading in bourses, currencies, and interest rates from Europe and Asia:

 

1 Chinese yuan vs USA dollar/yuan strengthens to 6.2087/Shanghai bourse green and Hang Sang: green

2 Nikkei closed up by 117.86  points or 0.60%

3. Europe stocks all in the green /USA dollar index up to 96.51/Euro down to 1.1032

3b Japan 10 year bond yield:  rises to  45% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 121.39

3c Nikkei still just above 20,000

3d USA/Yen rate now just below the 122 barrier this morning

3e WTI 52.47 and Brent:  57.79

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 .69 per cent. German bunds in negative yields from 4 years out.

Except Greece which sees its 2 year rate rise  to 57.67%/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: 19.29%

3k Gold at 1162.50 dollars/silver $15.35

3l USA vs Russian rouble; (Russian rouble up 3/5 in  roubles/dollar in value) 56.81,

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 .9505 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0483 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 closer to negativity at +.63%

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 2.24% early this morning. Thirty year rate 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)

 

China Soars Most Since 2009 After Government Threatens Short Sellers With Arrest, Global Stocks Surge

Here is a brief sample of some of the measures the Chinese government and the PBOC have unleashed in just the past ten days to prop up the crashing market include:

  • a ban on major shareholders, corporate executives, directors from selling stock for 6 months
  • freezing more than half (1400 at last count per Bloomberg) of the listed companies from trading,
  • blocking fund redemptions, forcing companies to invest in the market,
  • halting IPOs,
  • reducing equity transaction fees,
  • providing daily bailouts to the margin lending authority,
  • reducing margin requirements,
  • boosting buybacks
  • endless propaganda by Beijing Bob.

The measures are summarized below.

But it wasn’t until last night’s first official threat to “malicious” (short) sellers that they face charges (i.e., arrest), as Xinhua reported yesterday:

[Ministry of Public Security in conjunction with the recent Commission investigation of malicious short stock and stock index clues ] correspondent was informed on the 9th morning , Vice Minister of Public Security Meng Qingfeng led to the Commission , in conjunction with the recent Commissioninvestigation of malicious short stock and stock index clues show regulatory authorities to the operation of heavy combat illegal activities.

… that the wall of Chinese intervention finally worked. For now.

And since this is all about one thing, the stock, market, it is worth noting that the Shanghai Composite Index had dropped as much as 3.8% to a 4 month low before the news that the cops were going to arrest anyone who used a wrong discount rate in their DCF, when everything suddenly took off, and the SHCOMP closed  a “Dramamine required” 5.8% higher, the biggest daily increase since March 2009!

“As China beefs up its efforts to rescue the market, with even the public security ministry involved, market sentiment is recovering slightly from a panicky stage earlier,” Shenyin Wanguo analyst Qian Qimin says by phone

This is how some other Chinese markets fared: CSI 300 +6.4% led by industrials, consumer staples; the Shenzhen Composite Index +3.8%; all ChiNext shrs trading today were limit up a day after virtually the entire market was locked limit down.

The best and briefest summary comes from China Southern Fund Management chief strategist Yang Delong, who said that the government efforts “hit the right spot.”  Well, yes, when you threaten to arrest sellers, it does tend to have a short-term effect. The only escalation from there is arresting anyone who doesn’t buy which in turn would promptly lead to this.

Elsehwere in Asia, the Nikkei 225 closed +0.60% after tumbling 3.2% earlier in the day, as the Chinese “anti-selling measures” spread and “inspired’ confidence, with the ASX 200 unchanged and weighed by materials as iron fell to a record low. Across the board equities did pull off worst levels as gains in Chinese stocks sparked an improvement in confidence, which also weighed on JGBs, with losses exacerbated by a weak 30-year JGB auction which drew the lowest b/c since 2004.

The Chinese gain promptly rippled through Europe as well, which now appears more focused on Asia than on Greece, and European shares rose most since July 1. Ironically, for all the talk of an imminent deal, overnight none other than famous Grexitologist, Citi’s Willem Buiter allowed us a 2011 deja vu when he joined JPM in saying that Greece’s exit from Eurozone is now the “base case” and most likely outcome, either via short-term exit in next few months or over next 1-3 years.

Curiously the Greek bond market seems to agree as can be seen by the price action in Greek 2 year bonds.

 

In any event the euphoria over Chinese central planners threatening with bodily harm in what is clearly one of the last steps before all control is lost, is enough to offset the unpleasant encroaching of reality. One wonders just what measures the US itself will take when faced with China’s bursting-bubble predicament.

For now, however, after US stocks tumbled yesterday just before the NYSE “unexpectedly” closed for nearly 4 hours a day after 70% of Chinese stocks were frozen from trading, futures right now are set for a 1% open.

Somehow we doubt the NYSE will break today.

Newsflow has been relatively light in today’s European session, thereby seeing equities (Euro Stoxx: 1.8%) take their lead from their Asian counterparts. In terms of US specific equity news, yesterday saw Alcoa officially kick off earning season after reporting Q2 Adj. EPS USD 0.19 vs. Exp. USD 0.22 and Q2 revenue USD 5.90bIn vs. Exp. USD 5.80bIn. Looking ahead to today, notable US earnings include Pepsi and Walgreens. With the state of play in Greece seeming to be on hold ahead of the weekend, Bunds have been relatively unmoved this morning, with fixed income markets seeing little price action and today’s only notable auction a US USD 13bIn 30yr bond auction.

FX markets have seen a reversal of yesterday’s moves in key pairs, with EUR and JPY weaker this morning, seeing USD/JPY retake 121.00 to the upside in an unwinding of safe haven flows after Chinese equities recovered some of yesterday’s losses. The USD has also seen a reversal of yesterday’s losses to trade higher this morning by around 0.2%.

Improved Chinese sentiment boosted the commodity complex with WTI (+0.73), Brent Crude (+0.59), with metals also  benefitting from the improved Chinese sentiment to rebound from recent weakness. This gold trading higher (+0.2%) as it bounced back from March 17th lows and copper (+0.9%) also benefitting after reaching its lowest level since 2009 yesterday. UBS have revised its avg. platinum price forecast for 2015 to USD 1160 /oz vs Prey. USD 1280 /oz and its Palladium avg. price forecast to USD 770 /oz vs Prey. USD850 /oz. UBS also lowered their long term Platinum price forecast to USD 1600 (RTRS).

Looking ahead, the rest of the day sees the BoE rate decision, US weekly jobs numbers and comments from Fed’s Kocherlakota, Brainard and George.

In summary: European shares extend gains, rise most since July 1, with autos, financials outperforming; U.S. equity futures rise along with gold, oil, dollar. Asian stocks rise most since June 23. Iberian, Italian, French stocks lead outperformers among European bourses; yields on Dutch, German, Greek, U.K. 10-yr bonds rise; Spanish, Portuguese yields fall. U.S. jobless claims, continuing claims, Bloomberg consumer comfort due later

Market Wrap

  • S&P 500 futures up 1% to 2059.3
  • Stoxx 600 up 1.5% to 378.6
  • US 10Yr yield up 5bps to 2.24%
  • German 10Yr yield up 2bps to 0.69%
  • MSCI Asia Pacific up 0.7% to 140.7
  • Gold spot up 0.3% to $1162.4/oz
  • Eurostoxx 50 +1.7%, FTSE 100 +1.1%, CAC 40 +1.7%, DAX +1.6%, IBEX +2%, FTSEMIB +1.7%, SMI +1%
  • Asian stocks rise with the Shanghai Composite outperforming; MSCI Asia Pacific up 0.7% to 140.7
  • Nikkei 225 up 0.6%, Hang Seng up 3.7%, Kospi up 0.6%, Shanghai Composite up 5.8%, ASX up 0%, Sensex down 0.4%
  • Euro down 0.39% to $1.1034
  • Dollar Index up 0.23% to 96.51
  • Italian 10Yr yield down 5bps to 2.17%
  • Spanish 10Yr yield down 6bps to 2.17%
  • French 10Yr yield down 0bps to 1.12%
  • S&P GSCI Index up 0.8% to 412.6
  • Brent Futures up 1.2% to $57.7/bbl, WTI Futures up 1.5% to $52.4/bbl
  • LME 3m Copper up 1% to $5577.5/MT
  • LME 3m Nickel up 2.6% to $11240/MT
  • Wheat futures up 0.6% to 581 USd/bu

Bulletin headline summary from RanSquawk and Bloomberg:

  • Chinese markets staged a relief rally to see the Shanghai Composite post its largest one day gain since 2009 following a slew of additional measures by Chinese officials to curb losses coupled with encouraging CPI data.
  • Improved Chinese sentiment boosts the commodity complex, with gold and copper coming off their multi month lows.
  • Today sees the BoE rate decision, US weekly job numbers, EIA NatGas Storage change, comments
    from Fed’s Kocherlakota, Brainard and George as well as earnings from Pepsi and Walgreens.
  • Treasuries decline amid gains in stocks and commodities, Greece headlines; week’s supply concludes with $13b 30Y bonds, WI 3.020% vs 3.138% in June.
  • The selloff in China’s stock markets halted after regulators late Wednesday banned major stockholders from selling stakes; more than half the country’s listed companies have been suspended from trading
  • Templeton Emerging Markets Group called the stock sale ban an act of “desperation”; UBS Wealth Management labels it “extreme”; Wells Fargo Funds Management says it just “postpones the inevitable”
  • China’s securities regulator suspended reviews of IPOs and other share sales, people familiar with the matter said
  • With a cacophony of voices predicting a possible exit of Greece from the currency, Tsipras has until Thursday midnight to present an economic plan that includes spending cuts in exchange for a new bailout
  • Merkel is doubtful he’ll deliver, and is now willing to accept a Greek exit, according to two govt officals familiar with her strategy who asked not to be named
  • Draghi suggested the Greek debt crisis is getting increasingly hard to fix, speaking hours before the ECB maintained its freeze on extra aid for the country’s banks
  • An agreement to curb Iran’s nuclear program could create a bonanza for U.S. defense contractors who already are benefiting as the Obama administration tries to assuage Israeli and Gulf Arab concerns by cutting deals for more than $6b in military hardware
  • Sovereign 10Y bond yields mostly higher; Greek 10Y yields 19.439%. Asian stocks mostly higher. European stocks  and U.S. equity-index futures fall. Crude oil, gold and copper higher

 

DB’s Jim Reid completes the overnight event summary

If anyone was under any illusions that we’re living in free global markets then China’s recent policy actions should be a reminder that we’re not and haven’t really been for several years. Global financial markets are not really operating under capitalism but then again I’m not really sure I know what you’d call the system we are currently living under.

A simplistic analysis of the problems over the last couple of decades is that bubbles are repeatedly being inflated by policy action and then never allowed to deflate properly when they turn. Whether that be a huge Greek government debt pile that the authorities have been too scared to see default over the last few years or whether that be a Chinese equity market in apparent free-fall, there is a link. These and numerous other examples in recent years leaves huge sub-optimal resource allocation issues throughout the global economy and a need for more and more stimulus to retain stability. To be fair China is only doing what the West did a few years ago when they banned the shorting of things like various company equities and sovereign CDS. However China does seem to be raising the bar in terms of intervention techniques. One such example came yesterday after the China close with the news that the China Securities Regulatory Commission has banned major shareholders (with stakes of more than 5%), corporate executive and directors from selling stakes in listed companies for six months. A truly breathtaking initiative.

For us the China situation is more potentially worrying than Greece for global markets but overall it fits with our view of intervention and high liquidity being needed across the globe for many years to come. Don’t be surprised by more Chinese major policy initiatives over the coming days. If Greece does go towards the exit door, expect the ECB to further aggressively intervene.

Looking at the follow through this morning, there’s been more volatility but there are perhaps some signs of the various measures of the last couple days having an effect with the Shanghai Comp (+1.30%), Shenzhen (+2.93%) and CSI 300 (+2.43%) currently in positive territory. The Shanghai Comp in particular initially opened nearly 4% lower only to then swing to a 2.5% gain in the space of an hour before then settling down. According to Bloomberg over 1400 companies are still suspended from trading on the mainland exchanges. Data for the region was almost overshadowed with so much of the focus on the equity moves. However, China’s CPI print for June showed a modest +0.2% rise to 1.4% yoy and was slightly above market expectations. PPI continues to remain under pressure however, with the June reading moving even lower to -4.8% yoy (vs. -4.6% expected) from -4.6%.

As we discussed over the last few days, the sell-off in China has also had a knock on impact on parts of the commodity market. Although rebounding slightly yesterday, Copper had struck a 9-year low on Tuesday, falling as much as 18% off the highs of early May. Iron ore has been another casualty of the sell-off with the commodity falling over 30% from the highs in June (including a 10% crash yesterday) which has had a knock on effect on Australian mining names in particular.

Returning to other markets this morning, the Hang Seng (+3.43%) is benefiting from the rebound in China but it’s a relatively weak session elsewhere with the Nikkei (-1.28%), Kospi (-0.08%) and ASX (-0.39%) all down. S&P 500 futures are around half a percent higher while 10y Treasury yields have moved up 3.4bps.

Over to the latest on Greece. Yesterday we learnt that Greece has submitted a request for a 3-year bailout program from the ESM as had been widely expected. In the letter, the Greek government said that it would detail a ‘comprehensive and specific reform agenda’ by today. There were some suggestions that the letter carried some softer language, including rhetoric around softer demands for debt restructuring however it will be the finalized list of reforms from the Greek side which will ultimately decide which direction we head over the weekend. Outside of the news of the formal loan request, a European Parliament session yesterday which included Greek PM Tsipras was said to have been stormy and led by more defiant rhetoric out of Tsipras. Elsewhere we also heard that Greek banks will stay closed through Monday and extend capital controls in light of Sunday’s summit, while the ECB also kept the ELA cap unchanged.

The subject of Greece was also a focus in the FOMC minutes with the text showing that ‘many participants expressed concern that a failure of Greece and its official creditors to resolve their differences could result in disruptions in financial markets in the euro area, with possible spillover effects on the US. Clearly a lot has happened since the last FOMC meeting last month with regards to Greece. We did however get a hint as to the current Fed thinking through San Francisco Fed President and voting member Williams. The Fed official played down a lot of the concern however, saying that the risks emanating from Greece are ‘unlikely to overturn the otherwise strong fundamentals’ of the US economy and that the economic impact on the global economy remained an ‘unlikely tail risk’. Williams also said that the ECB has the ‘means and will’ to limit the fallout.
The remainder of the minutes offered few surprises on the whole. Officials saw ‘economic conditions as continuing to approach those consistent with warranting’ a start to the normalization process, with members agreeing to make decisions on the target fed funds rate on a meeting-by-meeting basis while there was also some mention of members seeing room for additional progress in reducing labour market slack.

As well as his more conservative comments around Greece, the Fed’s Williams reiterated his forecast for 2015 liftoff and didn’t change his expectation of two hikes this year, saying that ‘every FOMC meeting is on the table’. Williams also noted that the employment goals ‘is in sight’ while there is ‘still some way to go on inflation’. Elsewhere and with regards to China, Williams said that he is ‘a lot less concerned’ about China’s near term outlook, while optimistic that they have the ‘will and the leeway to take the necessary policy actions’.

There was little in the way of market reaction following the minutes. Treasury yields had already declined in the run up and the 10y benchmark eventually closed 6.6bps lower at 2.193%. Fed Funds contracts took another leg lower with the Dec 15 (-1bp), Dec 16 (-4bps) and Dec 17 (-5bps) contracts falling to 0.245%, 0.885% and 1.550% respectively with the latter now creeping in on the YTD lows in yield. We still think the Fed won’t hike in 2015 but market pricing is increasingly reflecting this possibility. Elsewhere, US equities had a weaker session with the S&P 500 falling 1.67% while the NYSE halted trading for over 3 hours following a technical malfunction. Oil markets were mixed with Brent (+0.35%) a touch higher but WTI (-1.30%) sliding now for the fifth consecutive session while Gold finished +0.27%. Consumer credit data for May came in below expectations at $16.1bn (vs. $18.5bn expected) but we did see a near $1bn upward revision to April’s print to $21.4bn. Elsewhere, Alcoa unofficially kicked off earnings season (reporting after the closing bell) in the US with a miss. The earnings calendar is set to kick into gear next week when we see the US banks reporting so along with Greece, China, and the Fed (Yellen’s semi-annual testimony) there’ll be plenty to keep an eye on.

Closer to home yesterday, the impact from the turmoil in Chinese equities appeared to be relatively short lived in European markets as the Stoxx 600 (+0.04%), DAX (+0.66%) and CAC (+0.75%) all finished up, while peripheral markets largely outperformed with the IBEX and FTSE MIB +0.81% and +2.64% respectively. With markets swinging once again back to hope of progress in Greece, peripheral yields moved tighter with Italy (-5.0bps), Spain (-3.6bps) and Portugal (-12.2bps) all having a decent day. 10y Bunds moved 2.9bps higher to 0.669% while Greek yields surged wider, led by the 2y (+241bps) part of the curve.

Over in the UK, DB’s George Buckley noted that yesterday’s Budget (the first by an all-Conservative government since the late-1990’s) was long on measures. George summarised that what was announced amounted to a significant increase in tax-take/spending outlays for the Treasury, but it is important to see this for what it is. George believes that rather than a meaningful tightening in fiscal policy, we should view this as a ‘fleshing out’ of the austerity envelope that has already been announced and as a result George believes that this has little impact on when the BoE will begin to raise rates, with May 2016 still favored. 10y Gilts closed +5.9bps higher yesterday at 1.891%.

In terms of the day ahead, Greece and China will likely attract the bulk of the headlines again. Data wise in the European timezone this morning we’ve got German trade data due as well as the UK BoE decision at midday. Its quiet this afternoon in the US with just initial jobless claims due, although the Fed’s Kocherlakota, Brainard and George are all due to speak today.

 

end

 

Late last night,  Initially we had panic in China as the Chinese police now vow to arrest malicious short sellers.  Stocks still down badly! but recover on central bank intervention:

 

(courtesy zero hedge)

Utter Desperation: Chinese Police Vow To Arrest “Malicious Short Sellers”

In what can only be described as total and utter desperation, China’s Public Security Ministry and China Securities Regulatory Commission are discussing a plan to take action against “hostile short sellers”… (via Google Translate)

[ Ministry of Public Security in conjunction with the recent Commission investigation of malicious short stock and stock index clues ] correspondent was informed on the 9th morning , Vice Minister of Public Security Meng Qingfeng led to the Commission , in conjunction with the recent Commissioninvestigation of malicious short stock and stock index clues show regulatory authorities to the operation of heavy combat illegal activities .

Which in English means…

However, it appears thety are going to need to do more…

*  *  *

Just one question: Will the police also arrest the brokers who allowed their clients to lever up to extremes with no awareness of risk, encouraged by the government, buying the stocks of companies that make plastic umbrellas at x-thousand P/E multiples?

*  *  *

 

 

As we detailed earlier, China is a $hitshow again…

With more than half of Chinese stocks halted or suspended, traders are scrambling to hedge the potential vacuum under prices when (or if) they ever open again. With options limited to non-existent in China, ETFs around the world are under pressure (with significant discounts to NAV everywhere). The cost of protecting against significant downside is now at its highest on recordand the skew (difference between optimists and pessimists) has never been higher… This ‘protection’ has seemingly relieved some of the vicious cycle selling as yet another round of financing to backfill liquidity holes in broker balance sheets, but Chinese stock futures are trading 2-3% lower in the pre-open(less than might be expected as much driven by margin hike forced unwinds as much as sentiment).

  • *CHINA’S CSI 300 STOCK-INDEX FUTURES FALL 2.9% TO 3,363
  • *CHINA’S SHANGHAI COMPOSITE INDEX SET TO OPEN 2.1% LOWER

 

Pushing CSI-300 Index into the red for 2015…

 

 

*  *  *

But have no fear…

Another day, another round of liquidity poured into the leverage black hole…

  • *CHINA SEC. FINANCE AIMS TO OFFER LIQUIDITY TO FUND COS.: CSRC
  • *PBOC TO INJECT 35B YUAN WITH 7-DAY REVERSE REPOS: TRADER

And the politburo is getting serious!!

  • *CHINA CBRC SUPPORTS BANKS TO COOPERATION WITH CHINA SEC FIN
  • *CBRC ENCOURAGES BANKS TO COOPERATE WITH CHINA SEC. FINANCE
  • *CBRC ENCOURAGES BANKS TO OFFER FINANCING TO CHINA SEC. FINANCE
  • *CHINA CBRC TO SUPPORT STABLE STOCK MARKET DEVELOPMENT
  • *CBRC ENCOURAGES BANKS TO ADJUST LOANS TERMS WITH STK COLLATERAL
  • *CHINA CBRC ENCOURAGES BANKS TO HELP FINANCE STK REPURCHASES

Next come the orders on pain of death!!??

And then there’s this…

  • *HAITONG SECURITIES SLUMPS 16.6% IN H.K. AFTER SHR BUYBACK PLAN

That’s not what is supposed to happen!!!

But traders have been extremely active in their hedging…

Crash risk has never been more expensive…

 

While At-the-Money Vol has spiked to 4-year highs…

 

Overnight saw Flash Crash come to China…

Selling pressure is heavy on the ETFs with all major China ETFs trading well below their NAV (ASHR 4.6% below!!)

And if you thought it was time to BTFD… consider this…

Chinese stocks are still extremely rich relative to the rest of the world.

*  *  *

We have one simple question.

How do say “unleash the Bullard” in Chinese?

Charts: Bloomberg

 

end

 

China must stop the sellers from selling stock or else it is all over:

(courtesy zero hedge)

Why China Has No Choice But To Arrest The Sellers

After dozens of separate interventions, manipulations, and central-planning machinations over the past three weeks,China resorted to threats overnight when it called for the arrest of “hostile short sellers.” The reason they went full Orwell, this is the great loss of ‘wealth’ in China’s history…

 

 

China’s $2 trillion loss in 17 days is the equivalent of 1 India, or…

In other words, China has to stop the bleeding before it loses another India… or the socially-unrest citizenry will demand gambling returns elsewhere or, absent hope, demand change…

 

end

And now, on to the Greek crisis:

 

 

Greece will continue to shut markets through to July 13.

(Courtesy Bloomberg/John Detrixhe)

Greece Shuts Markets Through July 13 as Officials Debate Bailout

Greece extended the closure of its stock exchange and electronic bond market again as officials attempt to pull together a plan to unlock European bailout funds.

Mutual fund redemptions and clearing and settlement on the Greek exchange were also suspended, according to a notice on the Hellenic Capital Market Commission’s website. Equity trading has been closed since June 29.

The government extended capital controls through Monday, and Prime Minister Alexis Tsipras has until midnight Thursday to present the leaders of other euro-zone countries with a plan that includes spending cuts, in exchange for a bailout.

More than six European leaders have made clear this is Greece’s last chance. A failure to find a compromise may force the continent’s most-indebted country to leave the euro.

An exchange-traded fund listed in the U.S. is the only route available for Greek stock speculators. A similar fund listed in Europe has been suspended since last week.

 

end

 

Here is Pieter Cleppe with his view that a GREXIT is the most likely outcome by Sunday:

 

(courtesy Peter Cleppe/European Leadership Network)

 

Why Grexit Is The Most Likely Outcome

Submitted by Pieter Cleppe, initially published on theEuropean Leadership Network

Why Grexit is the most likely outcome

Ahead of Greece’s referendum on a bailout plan in early July, EU decision makers, including Eurogroup Chairman Jeroen Dijsselbloem, warned a “no” vote might lead to Greece’s exit from the Euro. After Greece’s overwhelming “no”, and Eurozone leaders’ latest ultimatums, there are a number of factors that indicate that “Grexit” may indeed be the most likely outcome.

1. Greece is already in default to the IMF

Last week, Greece defaulted on its obligations to the IMF, even if we technically would need to say it was put in“arrears”. Greece is the first developed country to do so. Currently, the Greek banking system is dependent on the ECB allowing the Greek Central Bank to issue loans to Greek banks through a scheme called Emergency Liquidity Assistance (ELA). As the name suggests, this funding can only be provided to deal with liquidity problems, so it cannot prop up insolvent banks. Greek banks are intimately linked with the insolvent Greek state, meaning they are insolvent themselves, meaning in turn that the ECB would need to cut off funding.

The necessary two thirds majority needed within the ECB Governing Council to block the Greek Central Bank from creating euros to lend to Greek banks under ELA hasn’t been reached so far. As a result, the ECB has had to come up with all kinds of excuses, the latest being that it will only cut off ELA funding for Greek banks in case there is “no prospect of a deal”. The ECB’s excuses are likely to run out soon, especially if the Greek government defaults on payments to the ECB on 20 July. This week, the ECB restrained ELA a little more, but it’s expected to provide ELA funding at least until Sunday. Political cover would be needed for any further actions though.

Greek pensioners are meanwhile standing at the gates. A logical outcome would be for the Greek government to pay them in “IOUs” or in a parallel currency, which could be used to pay for government services, for example health care, something which the outgoing Greek Finance Minister already suggested.

Another problem is that Greek banks will be running out of actual physical bank notes, possibly by the end of this week. Closing banks is bad enough, but closing ATMs is a recipe for chaos. It would force the Greek government to print Drachmas, while uncertainty would reign during the transition period.

2. Greece and the rest of the Eurozone are further apart than ever

Given that Greece’s finance gap will only have grown bigger as a result of the economic damage inflicted by capital controls, Greek politicians likely will need to accept even more “austerity” than was on offer before the talks with creditors broke down. German Chancellor Merkelstressed earlier this week that Greek measures will have to “go beyond” what was demanded by the creditors before the referendum. How likely is this to happen in the face of the massive “no” vote? Costas Lapavitsas, the leader of the radical wing of Syriza, already warned that “the referendum has its own dynamic. People will revolt if [Tsipras] comes back from Brussels with a shoddy compromise.” Some Greek analysts think Tsipras doesn’t actually want a deal.

It must be said that the so-called “austerity” was always more a synonym for monstrous tax hikes than for actual spending cuts. One of the recent Greek government’s proposals, for example, was to unleash 2.69 billion euros in tax hikes on the Greek private sector this year – perhaps hoping the money wouldn’t be raised anyway – while only cutting spending on “pensions” (which more than often seems to mean the pension administration, not actual pension payouts)– by 60 million euros.

There is still a chance that Greece will back down completely in the next few days, giving up its demand for debt restructuring, which Merkel has called “out of the question”. The result of this would be that Greece would enter a new European Stability Mechanism (ESM) programme. So far however, it looks like the Greek government hasn’t come up with detailed proposals, apart from a general request for ESM support.

It’s therefore more likely that the EU Summit this Sunday decides to exclude the country from the Eurozone and provide funds to make the transition to Drachma through the so-called “Balance of Payments” facility for non-euro states which has been used for Romania, Hungary and Latvia. The invitation of all EU member states to this Summit is already a sign that Grexit is likely, given that they would be needed to sign off on this scenario. In any case, whatever happens next, the fact that EU Commission President Juncker declared that “We have a Grexit scenario, prepared in detail” proves for the first time that the euro adoption is not irreversible.

3. Capital controls are notoriously hard to unwind

According to official Greek data , there was still almost 120 billion euros deposited in Greek banks before capital controls were announced. If Greek banks were to reopen, few might trust they wouldn’t close again soon, potentially causing a run. As the ECB is unlikely to provide enough ELA funding for banks to open without a deal, and a deal itself still seemingly unlikely, the government in Athens will have to seriously consider printing its own currency should it ever want to open its banks again.

4. The “no” vote protects the Eurozone’s politicians from looking like they pushed Greece out

In the event of a Grexit, prepare for more blame games between Greece and the rest of the Eurozone. Now that the Greek people have sent a powerful signal that they desire a full-blown “transfer-union”, which is not on offer, it will be much harder to blame Eurozone politicians for refusing more transfers than the ones already conducted, through the ECB and bailout loans with low interest rates.

How might Grexit playout?

Eurozone countries could fly in periodical shipments of euro bank notes until the end of summer, in order to avoid a risk of social breakdown. This special “transition bailout” – possibly financed by future cuts to EU subsidies for Greece – could be decided, as a means of raising hopes for an orderly transition to the Drachma. There is also an alternative scenario in which Greece – after having defaulted and restructured its banks – uses the euro but doesn’t enjoy the cheap money from the ECB, like Montenegro.

This would give Greece an incentive to stay in the EU – and NATO – and to play along when it is legally relegated to the “euro derogation” (the status of Bulgaria, Sweden and Poland) i.e. obliged to join the eurozone in the future. The fact that German Finance Minister Schäuble mentioned ahead of the referendum that a Greek “no” may lead to a “temporary” Grexit may refer to this potential scenario. The IMF and European Parliament President Schulz have been making noises about “IMF assistance” and “humanitarian aid”.

It looks like this is finally it.

 

end

Draghi is not looking too optimistic if there will be a Greek solution:

(courtesy zero hedge)

 

Draghi Voices “Unprecedented Doubt” Greek Solution Will Be Found: Complete Greek Overnight Summary

In an odd escalation over the Grexit fiasco, where Greece is now expected to provide yet another detailed reform proposal today by midnight at the very latest, it was the one man whose decision will make or break the Eurozone when (if) he decides to impose even more ELA collateral haircuts (or yank ELA entirely) forcing Greece to Grexit by imposing its own currency (since there is no legal mechanism to kick a nation out of the new Berlin Wall) that made some surprisingly candid comments on the fate of the Greek negotiations.

According to Reuters, ECB president Mario Draghi voiced “unprecedented doubts about the chances of rescuing Greece from bankruptcy as Greek Prime Minister Alexis Tsipras was due to put forward last-ditch reform proposals on Thursday.”

Citing Italian daily Il Sole 24 Ore, Reuters reports that Draghi said “he was not sure a solution would be found for Greece and he did not believe Russia would come to Athens’ rescue.

Asked if a deal to save Greece could be wrapped up, Draghi told the paper as he was boarding a plane in Brussels on Wednesday: “I don’t know, this time it’s really difficult.”

Asked if he expected Russian President Vladimir Putin to help Greece, Draghi said: “I don’t believe so, I don’t see it as a real risk … and then, they don’t have money themselves.”

What is surprising is that these quite conclusive statements come from a person who rarely speaks in definitive terms (unless it is July 2012). “The usually discreet central banker was speaking after an emergency euro zone summit on Tuesday gave Greece five days to come up with a credible plan to repair its public finances and reform its economy or face an economic meltdown and possible exit from Europe’s common currency.”

What is just as surprising, is that just like the Troika has now split, perhaps terminally, between the IMF as an international “public” creditor and Germany as the dominant power of Europe, so the ECB is now also caught in the crossfire with this time the Bundesbank accusing the ECB of keeping Greek banks on artificial life support and who said earlier today that “it was up to governments, not the central bank, to provide any aid to Athens.”

“Central banks need to show where their limits lie,” he told an audience in Frankfurt. “It needs to be crystal clear that responsibility for further developments in Greece … lies with the Greek government and the countries providing assistance – not the ECB Governing Council.”

So the axes are becoming even more clear: US/IMF/Italy/France and now the ECB against… Germany. Suddenly we are hit by a distinct wave of deja vu.

* * *

So with this latent conflict getting stronger, here are some other key Greece-related events that have taken place overnight as we await the Greek government’s official proposal of this Sunday’s “final, final, final” deadline.

While hardly notable, it is worth noting that the man who had already exiled Greece from the Eurozone in 2011 only to recant, just did it all over again, when overnight Citi’s Willem “gold-expert” Buiter piggybacked on JPM’s call and made Grexit his base case: “We are changing our view and now believe that Grexit – Greece’s exit from the Eurozone – is the most likely outcome, either via a short-term exit (next few months) or over the next 1-3 years. The proximate drivers of our change of view are the announcement of the referendum, the imposition of capital controls and the emphatic NO outcome in the referendum. Background factors are the weakness of the economy, and the seeming inability of Greece and the creditors to reach a deal that contains both the substantial structural reforms and debt relief that Greece needs to stay in the euro.”

Precisely as laid out in this post yesterday.

Also we learned that as the government was negotiating, the Greek economy was, expectedly, collapsing: Greek consumer prices fell by 2.2 percent year-on-year in June, with the annual pace of deflation accelerating from the previous month, data from the country’s statistics service showed on Thursday. Greece’s EU-harmonised deflation rate slowed, showing prices fell by 1.1 percent in June from a 1.4 percent decline in May. Analysts polled by Reuters were projecting a decline of 1.6 percent.

There was an amusing diversion, however, when the Greek statistics agency ELSTAT said on Thursday that Greece’s jobless rate fell to 25.6 percent in April from an upwardly revised 25.8 percent rate in the previous month. Perhaps they too figured out how the US Bureau of Labor Statistics “does it.”

But as noted previously, it will be all about the Greek proposal which is due by midnight: good luck to Tsipras to come up with something that makes both the Troika and the Greek population, which voted 60% against the last, less harsh one, happy.

And here is the rest of the key events that have taken place in the past few hours via Reuters:

  • 1014 – European Commission President Jean-Claude Juncker will meet members of Greece’s opposition parties on Thursday and Friday in Brussels as all sides seek a weekend deal to avert a Greek bankruptcy, a Commission spokesman says.
  • 1009 – The head of the European Council, Donald Tusk, says the EU’s national parliaments have to be persuaded to vote in favour of helping Greece if European leaders reach a good agreement on Sunday. Tusk says a deal on debt should be part of the agreement.
  • 1005 – Bulgarian Economy Minister Bozhidar Lukarski is quoted as saying Greek-owned banks in the Balkan country are “under controls” to prevent funds being sent to Greece. More than a fifth of Bulgaria’s banks are Greek-owned.
  • 0944 – Irish Finance Minister Michael Noonan says he sees a better than 50 percent chance of Greece reaching a deal with its creditors by a weekend deadline following a “distinct change of mood” in recent days.
  • 0852 – Eurogroup chief Jeroen Dijsselbloem has no plans to withdraw his re-election bid, his spokesman says. Dijsselbloem, who is also the Dutch finance minister, is seeking another 2.5 year term in a race against Spaniard Luis de Guindos. He represents European creditors in the negotiations with Greece.
  • 0830 – The chief executive officer of Greece’s natural gas company, DEPA, says the utility can guarantee the unobstructed supply of gas supplies in the country.
  • 0745 – Greek Energy Minister Panagiotis Lafazanis, leader of the far-left flank of the ruling Syriza party, says he expects an aid deal with creditors “soon” but he opposes a third bailout with tough austerity measures that would stifle growth.
 

end

 

The following gives you an idea of the fractured nature inside the Syriza party.  The Leftist energy minister has it correct as he lays out the plan for a 2 billion euro Russian Gas project.  Tsipras, of course is afraid that the west will not give him any bailout money if he courts Russia and China:

(courtesy zero hedge)

 

“Greece Is No One’s Hostage”: Leftist Energy Minister Lays Out €2 Billion Russian Gas Project

The prospect of a so-called “Russian pivot” by Greece still hangs over Angela Merkel’s head.

The conflict in Ukraine and the attendant economic sanctions imposed on the Kremlin combined with the EU’s anti-trust proceedings against Gazprom have raised the geopolitical stakes of a Grexit. Merkel has repeatedly warned that the consequences of Greece exiting the eurozone go far beyond short-term financial turmoil and political contagion (e.g. the spread of the Syriza “germ”).

And Vladimir Putin is acutely aware of the opportunity.

“Just because Greece is debt-ridden, this does not mean it is bound hand and foot, and has no independent foreign policy,” Putin said earlier this year, as tensions between Athens and Brussels intensified.

The prospect of a BRICS loan aside, any Russian aid to Greece will likely be connected to Gazprom’s Turkish Stream pipeline project which we’ve discussed in great detail in the past. Here’s a brief recap:

Greece has received what The New York Times recently described as “dueling sales pitches” on two proposed natural gas pipelines. One proposal comes from Russia, where the Kremlin is keen to use the tumultuous negotiations between Athens and creditors to advance Moscow’s energy and geopolitical interests. Moscow hopes to essentially buy Athens’ participation in the Turkish Stream pipeline which, as a reminder, will allow Russia to bypass Bulgaria by piping gas through Turkey, then through Greece, Serbia, and Hungary straight to the Austrian central hub. The US proposal involves The Southern Gas Corridor, a project aimed at “improving the diversity of the EU’s energy supply” — in other words, it’s an attempt to help break Gazprom’s stranglehold. Essentially, the corridor will allow the EU to tap into Caspian gas via a series of connecting pipelines running from Azerbaijan to Italy.

 


Greek Energy Minister Panagiotis Lafazanis does not view the deals as mutually exclusive and as such, proceeded to ink an MOU with Russia for the Greek portion of the Turkish Stream line on June 18 in St. Petersburg.

On Thursday, Lafazanis mapped out the details of the deal in a speech FT says may serve to aggravate PM Alexis Tsipras’ attempts to strike a deal in Brussels this weekend. Here’s more:

Greece has mapped out details of a landmark €2bn gas project with Russia, a scheme that could stir tensions with Brussels just as Athens seeks a third bail-out.

 

Panayiotis Lafazanis, the firebrand leftist energy minister, presented the project to Greek energy executives on Thursday in a defiant speech, vowing that Athens would not be pushed around by EU institutions, writes Christian Oliver.

 

EU policymakers are concerned that Russia could take advantage of the crisis to pull Greece deeper into its orbit and pipeline politics is critical to relations between the two nations.

 

Athens and Moscow say their new project, the so-called South European Pipeline, will bring 47 billion cubic metres of Gazprom’s gas into Europe by 2018. Mr Lafazanis promised that it would create 20,000 much needed jobs in Greece.

 

This promised deal with Russia is a sharp rebuke to Brussels, which wants to reduce dependence on Gazprom and argues that southeastern Europe should diversify its supply by prioritising gas from Azerbaijan.

Lafazanis also took the opportunity to make it clear that Syriza’s Left Platform (which he leads) will not allow Tsipras to squander Greece’s historic “Oxi” vote by accepting a deal that effectively negates the referendum:

“Greece is no-one’s hostage. The Greek people’s No vote, and I am referring to all of the people, is not going to become a humiliating Yes.”

 


It certainly looks as though the PM will face an uphill battle in convincing party hardliners to accept an unpopular deal, making it even more likely that Grexit will effectively begin on Monday, paving the way for the “other guys” to step in with a rescue plan.

end

 

This arrived late this afternoon.  Surprisingly Greece is offering a “compromise” proposal and pension cuts are not on the list as well as that huge VAT on hotels in the Greek islands.  I have my doubts if there will be any agreement tomorrow or Sunday:

(courtesy zero hedge)

 

 

Greek “Compromise” Proposal Leaked, And There May Be A Problem

Moments ago MarketNews reported that during today’s “marathon governmental meeting” in which Greek PM Alexis Tsipras sat down with his party to hammer out and complete the “compromise” Greek proposal to be sent to the Troika before midnight, the prime minister told his ministers that he was “ready for compromises,” suggesting he was willing to clash with the ultra-left part his party, Syriza.

So far so good, and perhaps indeed suggestive of a big step down. The problem emerges upon a closer read of the proposal, which is clearly not nearly “capitulatory” enough.

Recall that earlier today BofA’ Chief European Economist Gilles Moec, accurately, said that only a “complete capitulation” by Tsipras would get Germany to agree to the Greek proposal.

However, as presented by MNI, the proposal is anything but: according to the draft

  • The 30% discount in VAT for most islands is maintained but it excludes the so called “big” islands which get the biggest percentage of tourist reservations.
  • The draft keeps the VAT for hotels to 13% but raises the Value Added Tax for the food industry to 23% which was a creditors’ demand.
  • The governmental commitment to freeze early retirements remains.

The biggest surprise is once again in the biggest hurdle:pensions. Recall that as we accurately predicted two weeks ago, it was the government’s unwillingness to directly cut pensions that led to the IMF refusing to even negotiate the Greek proposal.

As a further reminder, this is what IMF’s chief economistOlivier Blanchard said almost a month ago on the topic:

Why insist on pensions? Pensions and wages account for about 75% of primary spending; the other 25% have already been cut to the bone.  Pension expenditures account for over 16% of GDP, and transfers from the budget to the pension system are close to 10% of GDP.  We believe a reduction of pension expenditures of 1% of GDP (out of 16%) is needed, and that it can be done while protecting the poorest pensioners

Fast forward to today when MNI reports that “there are no pension cuts in the draft of the proposal.”

And if recent experience is indicative, this likely means that the Troika will once again refuse to move on with the draft.

Tsirpas is said to make a roundabout compromise by boosting the pensioners’ contribution to the health sector which is “raised from 4% to 6% which could be regarded as an indirect way of reducing pensions.” Alas, it was the creditors’ very explicit demand that pensions see direct cuts. And this is missing from the Greek proposal.

In an attempt to mollify Merkel, the draft goes on to mention that the collective bargaining agreement would be discussed within a year, compared with the government’s pre-election announcements that the law would be passed imminently, and it also puts higher taxes to the shipping industry, higher incomers and gambling and highlights the need for a debt relief.

But the key hurdle remains: Germany no longer trusts Greek promises of a boost to revenues, i.e., speedier or more aggressive tax collections, and instead demands spending be slashed which by definition means that pensions have to see substantial and haircuts.

So far this is absent from the Greek proposal.

There is also the possibility that this is merely an MNI trial balloon to gauge market sentiment at what is currently contained in the draft, and judging by the market swoon in the past few minutes, it would indeed be seen as insufficient.

Which means that if Tsipras is serious and indeed hopes to reach a compromise, he will have to propose even more draconian austerity measures and spending cuts – recall that Germany made it very clear that any existing proposal would be far harsher than what was on the table when Tsipras called the referendum – in the next few hours before the midnight deadline which is fast approaching.

The biggest problem for Greece, it goes without saying, is that at this point Greece simply can not afford another turn of the proposal: by the time the Troika comes back with its alternative, which Greece then has to debate and respond to, it will be Sunday or even Monday. And by then both the local banking system, as well as Greece itself, will have crossed what Europe swears is the final, finaldeadline.

Unless, of course, this was Tsipras’ intention all along.

 

end

 

Deutsche bank provides a chart to illustrate the various scenarios that might present itself with respect to Greece and a possible GREXIT

 

(courtesy zero hedge/Deutsche bank)

What Happens Next In Greece (In 2 Simple Charts)

Over the course of six painful months, negotiations between Athens and Brussels have produced innumerable “deadlines”, “ultimatums”, and “last chance” summits, none of which have produced a lasting deal or a Grexit. In fact, until the deposit outflows started to accelerate and Greek PM Alexis Tsipras took the dramatic step of putting creditors’ proposal to a popular vote, many observers were beginning to lose interest, perhaps believing that the farce might just continue indefinitely.

This Sunday however, is being billed as the day; the deadline to end all deadlines and the very last chance for Athens to remain in the EMU. Meanwhile, pressure on Tsipras — who, according to The Telegraph,likely thought he would be drinking beer with Varoufakis over quiet lunches by now — is building from both sides, with far-left Energy Minister Panagiotis Lafazanis swearing that the “referendum ‘no’ vote is not going to become a humiliating ‘yes'”, and Germany showing few signs of weakness. The intractable nature of the situation was brought into sharp relief earlier when MNI describedTsipras’ “new” proposal which, by all appearances, looks as though it will be unacceptable to Germany and to the harlinders within Syriza.

In an effort to help cut through the confusion, we you bring you the following two graphics which shed some light on what lies ahead regardless of what transpires between now and Monday.

From Deutsche Bank:

From Bloomberg:

end

You must see the following 4 minute video as my favourite politician

Nigel Farage basically states that the Euro project has been one complete failure.  He calls the Euro as the “New Berlin Wall”

(courtesy Simon Black/Nigel Farage)

 

Nigel Farage Destroys EU Group-Think: “There’s A New Berlin Wall… And It’s Called The Euro”

Submitted by Simon Black via Sovereign Man blog,

Standing before the European Parliament yesterday, it took Nigel Farage just four minutes to completely destroy every argument supporting the Eurozone.

A few years back when he spoke at one of our Sovereign Man events in Santiago, he anticipated everything that we’re seeing right now.

Today it’s not nearly as controversial to say that the Eurozone experiment has failed. Anyone aware of what’s happening in Greece should say the same. But very few people really understand why.

As Nigel explains in the video below, right from the start, the system was never intended to help the Greek people.

Greece entering the euro was great for Goldman Sachs. But terrible for Greeks. It chained the country to a system in which it didn’t belong.

And what about all the bailout money that’s been thrown at Greece in the time since?

None of it actually went to the Greek people. It went to bail out the French, German, and Italian banks who own Greek debt.

Sure, social welfare drags an economy underwater. But corporate welfare is what really drowns it.

Since the crisis, the country’s debt to GDP has gone from 100% to 180%. Tensions have skyrocketed, and the Greek people are suffering.

(Last night Zerohedge published footage of Greek people on the island of Lesvos raiding a food truck. Shocking.)

They are the ones that now have to bear the burden of a stagnant economy, capital controls, and inflation.

None of these measures have worked. And just watch as Nigel destroys this dangerous euro groupthink in four minutes.

 
end

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

 

 

Euro/USA 1.1032 down .0039

USA/JAPAN YEN 121.39 up .515

GBP/USA 1.5367 up .0002

USA/CAN 1.2728 down .0002

This morning in Europe, the Euro fell by a considerable 39 basis points, trading now just above the 1.10 level at 1.1032; 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.

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 52 basis points and trading just below the 122 level to 121.39 yen to the dollar.

The pound was up slightly this morning by 2 basis points as it now trades just below the 1.54 level at 1.5367, still very worried about the health of Barclay’s Bank and the FX/precious metals criminal investigation/Dec 12 a new separate criminal investigation on gold, silver and oil manipulation.

The Canadian dollar is up slightly by 2 basis points at 1.2728 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 117.86 points or 0.60%

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

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

Gold very early morning trading: $1162.50

silver:$15.35

Early Thursday morning USA 10 year bond yield: 2.24% !!! up 3 in basis points from Wednesday night and it is trading just below  resistance at 2.27-2.32%

USA dollar index early Thursday morning: 96.51 up 29 cents from Wednesday’s close. (Resistance will be at a DXY of 100)

 

This ends the early morning numbers, Thursday morning

And now for your closing numbers for Thursday:

 

Closing Portuguese 10 year bond yield: 2.92%  down 10 in basis points from Wednesday

Closing Japanese 10 year bond yield: .45% !!! up 3 in basis points from Wednesday/still very ominous

Your closing Spanish 10 year government bond, Thursday, down 5 in basis points

Spanish 10 year bond yield: 2.17% !!!!!!

Your Wednesday closing Italian 10 year bond yield: 2.18% down 4 in basis points from Wednesday: (very ominous)

trading 1 basis point higher than Spain.

 

IMPORTANT CURRENCY CLOSES FOR TODAY

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

 

Euro/USA: 1.1024 down .0046 ( Euro down 46 basis points)

USA/Japan: 121.31 up  0.424 ( yen down 42 basis points)

Great Britain/USA: 1.5377 up .0012 (Pound up 12 basis points)

USA/Canada: 1.2714 down .0016 (Can dollar up 16 basis points)

The euro fell by a fair amount today. It settled down 46 basis points against the dollar to 1.1024 as the dollar traded in all directions today against most of the various major currencies. The yen was down by 42 basis points and closing well above the 121 cross at 121.31. The British pound gained back some ground today, 12 basis points, closing at 1.5377. The Canadian dollar gained some more ground against the USA dollar, 12 basis points closing at 1.2714.

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: 2.31% up 10 in basis point from Thursday// (slightly above the resistance level of 2.27-2.32%)/

Your closing USA dollar index:

96.51 up 30 cents on the day

.

European and Dow Jones stock index closes:

 

England FTSE up 90.93 points or 1.40%

Paris CAC up 118.20 points or 2.55%

German Dax up 249.11 points or 2.32%

Spain’s Ibex up 276/10 points or 2.65%

Italian FTSE-MIB up 756.12 or 3.51%

 

The Dow up 33.20  or 0.19%

Nasdaq; up 12.64 or 0.26%

 

OIL: WTI 52.80 !!!!!!!

Brent:58.58!!!

 

Closing USA/Russian rouble cross: 57.29  up 3/10  rouble per dollar on the day

end

 

And now for your more important USA stories.

 

NY trading for today:

Bonds Thumped, Stocks Pump-n-Dump’d As Grexit Fear Tops China Cheer

Today summed up…

https://vine.co/v/enhjKXxjPrT/embed/simple

What started out so well… ended not so well… Some Malicious People Sold!!!

 

Because today’s rally was predicated on this!!!!

Cash indices opened at the highs of the day and never looked back as the algos lifted The Dow green for the week for a few seconds of stop running… CNBC’s Kelly Evans seriously said “We are finishing off the hghs today”…!!

 

On the week, Nasdaq is worst…

 

It’s called Central Planning for a reason – crucially every attempt was made to keep S&P above 2055.93 (200DMA) and Dow above 17695 (200DMA) – IT FAILED!!!

 

AAPL appeared to mini flash crash late on with very heavy volume (maybe China weakness and iWatch disaster is weighing?)… and had an ugly day… AAPL is nearing its 200DMA at 118.72

 

 

Greek stock ETFs ramped today as did European stocks (thanks to SNB’s helping hand) but Greek bonds traded for the first time in 2 weeks and it was ugkly…

 

Something snapped at the US Open – The dollar rallied and US Stocks and Bonds were dumped…

 

Treasuries were sold from the close last night and the dumping accelerated as US opened and once again after the weak 30Y auction… This was the 2nd worst day for 30Y yields since Nov 2013…+13bps

 

The USDollar flatlined through Asia then dipped and ripped on Europe’s open…

 

As yet again SNB smashed swissy lower, buying USDs and enabling the ramp…

 

Despite the dollar strength, commodities all gained on the day…

 

Charts: Bloomberg

Bonus Chart: It’s different for now…

end

 

Initial jobless claims spike again to near 300,000 as the economy in the USA is sputtering.

 

(courtesy BLS/zero hedge)

 

Initial Jobless Claims Spike To Highest Since Feb, Near Crucial 300k Level

Initial jobless claims have surged almost 30k in the last 2 weeks and are nearing the Maginot Line of 300k (printing 297k vs 285k exp).  This is the worst claims print since mid-Feb and well above the levels that occurred at the end of QE3. Of course, apologists will note that there are likely holiday distortions in this data. At the same time, continuing claims continue to rise quite notably, now at their highest since mid-March having missed expectations for the last 7 weeks.

 

The trend has clearly shifted.

 

But continuing claims have seriously changed regime…

 

Charts: Bloomberg

end
Dave Kranzler, on the New York stock exchange outage for 4 hours yesterday and turmoil in the global markets:
(courtesy Dave Kranzler/IRD)

SoT Market Update: “We’re Fighting Evil”

It’s depressing to know our entire world is this corrupt – Rory Hall, Shadow of Truth

The brown stuff is starting to hit the fan blades.  The trading was suspended on the NYSE this morning right about the time the entire stock market was about to go off a cliff.

UntitledOn Monday one of the primary HFT Electronic Communication Networks “broke” in the middle of a big sell-off in stocks in response to the “NO” vote in Greece. Interestingly, when the stock market did a “U-turn” yesterday resulting in about a 40 point swing in the S&P 500 and a 400 point swing in the Dow, none of the major HFT ECN’s seemed to have any issues.

But, the fact that they had to unplug the entire NYSE today tells us how desperate they are to keep the market propped up in the face of rampant sell programs hitting the market.

Two things are inevitable:  1) at some point money managers running large pension portfolios, hedge funds and mutual funds have to regard their fiduciary duty to their investors and get rid of their historically overvalued stock positions – this will cause a major sell-off in the market because the ONLY buyer is the Federal Reserve;  2)  at some point the elitists will prevent widespread selling by declaring market “holidays” and lowering redemption “gates” on mutual funds – in other words implement capital controls. Both of those two events are fait accompli.

The cause of this week’s market turmoil – at least on the surface – is the Greece situation. Paul Craig Roberts published an article yesterday in which is noted that the IMF’s statement about Greece released a couple days ago signals to us that the U.S. is flexing its muscles on this situation, which means a resolution to this crisis will occur which keeps Greece in the EU.  Apparently the “front-office” neo-con-in-chief, Victoria Nuland, was recently visiting Tsirpas to exert undo influence on his decision-making process.

But there’s more going on behind the curtain that hides the real Wall Street and DC than just Greece. When the report hit the tape that Tsirpas caved in and begged for mercy from the Troika, the stock market bounced briefly and then sold off even more. The fact that they couldn’t prop up the stock market with most of it closed on a week in which the majority of market players are still at the beach in the Hamptons reflects bigger problems occurring behind the scenes than Greece.

Finally, as most of you are aware, the U.S. mint declared “force majeure” on its legal requirement to produce enough silver eagles to meet demand and suspended sales at least until the beginning of August.  In simple terms:  the U.S. mint is out of silver and the Comex is out of silver that it can hypothecate to the mint.

We are starting to see the collateral damage and unintended consequences of unfettered Government/Central Bank intervention in the markets and in world affairs.  Domestically, the U.S. has been terminally infected with rampant criminality and corruption. Internationally, the neocon-fueled U.S. Government has become a despised tyrant working furiously to exert it rapidly waning authority on global affairs.

I know Rory prays everyday that I’m wrong, but my instinct tells me that Victoria Nuland and her neoconservative band of scumbags who control U.S. foreign policy will eventually resort to flinging nukes at that which they can not control…

Well that about does it for tonight

 

I will see you Friday night

Harvey

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5 comments

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