July 16/Greece and its probable GREXIT as EU folks do not have the stomach to fund them any more/

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold:  $1143.80 down $3.40  (comex closing time)

Silver $14.96 down 7 cents.

In the access market 5:15 pm

Gold $1145.17

Silver:  $15.02


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 10 notices filed for 50,000 oz.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 245.00 tonnes for a loss of 58 tonnes over that period.


In silver, the open interest rose by a huge 1258 contracts despite the fact that yesterday’s price was down by 16 cents.  The total silver OI continues to remain extremely high, with today’s reading at 186,974 contracts now at decade highs despite a record low price.  In ounces, the OI is represented by .935 billion oz or 132% 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. Today again, we had banker shortcovering.

In silver we had 10 notices served upon for 50,000 oz.


In gold, the total comex gold OI rests tonight at 470,720 for a gain of 8,036 contracts despite the fact that gold was down $6.10 yesterday. We had 0 notices filed for nil oz  today.


We lost 1.19 tonnes of  gold  tonnage  at the GLD /  thus the inventory rests tonight at 707.88 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. I am sure that 700 tonnes is the rock bottom inventory in gold.  Anything below this level is just paper and the bankers know that they cannot retrieve “paper gold” to send it onwards to China . In silver, we had no change in inventory at the SLV / Inventory now rests at 327.593 million oz.


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

1. Today, we had the open interest in silver rise by a huge 1,258 contracts to 186,974 despite the fact that  silver was down by 16 cents  yesterday. We again must have had some shortcovering by the bankers as they feared something was brewing in the silver arena but it was to no avail. The OI for gold rose by another 8,036 contracts up to 470,720 contracts as the price of gold was down by $6.10 yesterday. Something big is going on behind the scenes as both silver and gold are being accumulated.

(report Harvey)

2 Today, 10 important commentaries on Greece

(zero hedge, Bloomberg/Reuters/)

3.  Two big stories on oil today

(zero hedge)


4. Gold trading overnight

(Goldcore/Mark O’Byrne/)


(zero hedge)

5 Trading of equities/ New York

(zero hedge)

6  USA stories: Poor Philly Mfg index

7. Dave Kranzler IRD discusses the huge increase in gold OI

(Dave Kranzler/IRD)


Here are today’s comex results:


The total gold comex open interest rose by 8,036 contracts from 462,664 up to 470,720 despite gold being down $6.10 in price yesterday (at the comex close).  We are now in the next contract month of July and here the OI rose by zero contracts to 158 contracts. We had 0 notices filed yesterday and thus we gained 0 contracts or an additional nil ounces will stand in this non active delivery month of July. The next big delivery month is August and here the OI increased by 1,043 contracts up to 236,104.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 156,378. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was poor at 175,709 contracts. Today we had 0 notices filed for nil oz.


And now for the wild silver comex results. Silver OI rose by a huge 1258 contracts from 185,716 up to 186,974 despite the fact that the price of silver was down by 16 cents in price with respect to yesterday’s trading and now in total sympathy with gold. We continue to have our bankers pulling their hair out with respect to the continued high silver OI as the world senses something is brewing in the silver (and gold ) arena. The next delivery month is July and here the OI rose by 9 contracts up to 126. We had 1 notice served upon yesterday and thus we gained 10 contracts or an additional 50,000 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 rise by 2 contracts up to 175. The next major active delivery month is September and here the OI rose by 892 contracts to 127,681. The estimated volume today was  poor at 34,674 contracts (just comex sales during regular business hours). The confirmed volume yesterday (regular plus access market) came in at 38,437 contracts which is fair in volume.  We had 10 notices filed for 50,000 oz.

July initial standing

July 16.2015



Withdrawals from Dealers Inventory in oz    203.60 oz (Scotia)
Withdrawals from Customer Inventory in oz 1,607.50 oz  (Scotia)  50 kilobars
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 199.946 (HSBC)
No of oz served (contracts) today 0 contracts (nil oz)
No of oz to be served (notices) 158 contracts 15,800 oz
Total monthly oz gold served (contracts) so far this month 412 contracts(41,200 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   203.60 oz
Total accumulative withdrawal of gold from the Customer inventory this month 223,805.9   oz

Today, we had 1 dealer transaction

we had one dealer withdrawals


i) Out of Scotia:    203.60 oz

total Dealer withdrawals: 203.60  oz

we had 0 dealer deposits

total dealer deposit: zero
we had 1 customer withdrawal


i) out of Scotia: 1607.500 oz  (50 kilobars)

total customer withdrawal: 1607.500 oz

We had 1 customer deposit:

i) Into HSBC:

199.946 oz

Total customer deposit: 199.946 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 (412) x 100 oz  or 41,200 oz , to which we add the difference between the open interest for the front month of July (158) 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 (412) x 100 oz  or ounces + {OI for the front month (158) – the number of  notices served upon today (0) x 100 oz which equals 57,000  oz standing so far in this month of July (1.7729 tonnes of gold).

we gained 100 additional gold ounces standing in this non active delivery month of July..

Total dealer inventory 482,778.738 or 15.016 tonnes

Total gold inventory (dealer and customer) = 7,876,795.388 oz  or 245.00 tonnes

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 245.00 tonnes for a loss of 58 tonnes over that period.


And now for silver

July silver initial standings

July 16 2015:



Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 595,780.767  oz (CNT, Delaware)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory nil
No of oz served (contracts) 10 contract  (50,000 oz)
No of oz to be served (notices) 116 contracts (580,000 oz)
Total monthly oz silver served (contracts) 3277 contracts (16,385,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month nil
Total accumulative withdrawal  of silver from the Customer inventory this month 6,383,162.0 oz

Today, we had 0 deposits into the dealer account:

total dealer deposit: nil   oz

we had 0 dealer withdrawal:

total dealer withdrawal: nil  oz


We had 0 customer deposits:


total customer deposit: nil oz

We had 2 customer withdrawals:

i)Out of  CNT: 587,971.37 oz

ii) Out of Delaware:  7809.397 oz


total withdrawals from customer:  595,780.767  oz

we had 0  adjustments


Total dealer inventory: 58.96 million oz

Total of all silver inventory (dealer and customer) 178.408 million oz

The total number of notices filed today for the July contract month is represented by 10 contracts for 50,000 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 (3277) x 5,000 oz  = 16,385,000 oz to which we add the difference between the open interest for the front month of July (126) and the number of notices served upon today (10) x 5000 oz equals the number of ounces standing.

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

3277 (notices served so far) + { OI for front month of July (126) -number of notices served upon today (10} x 5000 oz ,= 16,965,000 oz of silver standing for the July contract month.

We gained 50,000 ounces standing in this active delivery month of July. .

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




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 16./we lost 1.19 tonnes of gold tonight/Inventory rests at 707.88 tonnes

July 15/no change in inventory/gold inventory rests tonight at 709.07 tonnes.

July 14.2015:no change in inventory/gold inventory rests at 709.07 tonnes

July 13.2015: a big inventory gain of 1.49 tonnes/Inventory rests tonight at 709.07 tonnes

July 10/ we had a big withdrawal of 2.07 tonnes of gold from the GLD/Inventory rests this weekend at 707.58 tonnes

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

July 16 GLD : 707.88 tonnes


And now for silver (SLV)

July 16./no change in silver inventory/rests tonight at 327.593 million oz

July 15./no change in silver inventory/rests tonight at 327.593 million oz/

July 14.2015: no change in silver inventory/rests tonight at 327.593 million oz.

July 13./an inventory gain of 1.051 million oz/Inventory rests at 327.593 million oz

july 10/no change in silver inventory at the SLV tonight/inventory 326.542 million oz/

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

July 16/2015:  tonight inventory rests at 327.593 million oz



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 9.9 percent to NAV usa funds and Negative 10.00% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 62.2%

Percentage of fund in silver:37.6%

cash .4%

( July 16/2015)

2. Sprott silver fund (PSLV): Premium to NAV rises to 2.21%!!!! NAV (July 16/2015) (silver must be in short supply)

3. Sprott gold fund (PHYS): premium to NAV rises to – .66% toNAV(July 16/2015

Note: Sprott silver trust back  into positive territory at  2.21%

Sprott physical gold trust is back into negative territory at -.66%

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.
* * * * *



And now for your overnight trading in gold and silver plus stories

on gold and silver issues:

(courtesy/Mark O’Byrne/Goldcore)

‘Plan B’ Needed As Euro One Recession Away From Implosion – David McWilliams

– Euro is one recession away from implosion – David McWilliams
– Mismanagement of euro “both laughable and terrifying”
– “When economic negotiations stop making economic sense, you should begin to question the motives of the EU”
– Germany is out of control
– Successful British exit will be model for other countries
– Euro membership is now conditional
– “Countries that don’t play ball with Germany will see their banking system used against their democratically elected politicians”
– Investors and savers need “PLAN B”

Europe’s next recession will “kill the euro” according to economist, writer and journalist David McWilliams.

David McWilliams at Ireland’s Banking Inquiry

McWilliams, who is among the best economics commentators from the only Anglophone nation in the euro – Ireland, warns that we only have a few months to plan an alternative to the disastrous consequences on peripheral nations of what he sees as German hegemony.

He describes the mismanagement of the euro currency as “both laughable and terrifying”.

Marathon negotiation sessions are not conducive to clear headed, rational decision making on the future of a nation or the eurozone. Indeed, it smacks of coercion.

He lambasts the suggestion offered that Greece could have a “temporary euro”, adding, “If the board and management of a public company dealt with problems like this, the share price would collapse. There is quite simply no corporate governance within the euro”.

David McWilliams believes that Germany is out control. France is no longer strong enough to offer a counterweight and Britain is happy to allow the circus to continue as they focus on potentially getting out of the EU.


He describes last weekends negotiations in Brussels as a “teutonic kangaroo court”. Should Britain successfully navigate its way out of the EU, other countries will likely follow rather than exist as provinces of Germany.

Norway and Switzerland have coped just as well from the outside as their EU neighbours.

He makes the obvious, though seldom heard assertion that “when economic negotiations stop making economic sense, you should begin to question the motives of the EU”.

Pointing to the plundering of Greek state assets to pay off creditors whilst forcing further austerity on the Greek people. Each previous round of austerity has caused the economy to contract further – thus forcing Greece into a debt trap from which it cannot escape. We believe this is a crucial point.

While Germany have played a major role it in the subjugation of Greece it is worth asking who truly benefits from economic negotiations that have stopped making economic sense.

Could it be the large banks who, following a similar model imposed on countries in Latin America, Southeast Asia and Africa since the 1970’s, continue to extract wealth from the poorest people on earth? Has not almost every development in the EU in the past ten years served to consolidate the power of financial institutions at the expense of the citizenry?

McWilliams highlights the dramatic u-turn in policy where membership of the EU is now conditional.

When Mario Draghi initiated the “whatever-it-takes” mass purchase of bonds of peripheral nations the message was clear – the euro is forever. Now, however, countries must bend to Germany’s demands which are the demands of politicians who want to keep their electorate happy if they are to be re-elected.

“Countries that don’t play ball with Germany will see their banking system used against their democratically elected politicians. The banking system is the soft underbelly and the Germans are prepared to orchestrate bank runs in member states to get their way. This is not only new, it is outrageous.”

McWilliams writes that Irish policy makers need to focus on a Plan B and indeed all governments in the EU are likely considering a ‘Plan B’. Indeed, we know the pragmatic  Germans have done.

For example, if and when Germany’s economy overheats and rates need to rise, they will rise regardless of the capacity of the heavily indebted peripheral nations to deal with such rises. Mortgage holders in Ireland and throughout the EU would be crucified if the ECB rate moved anywhere near the historical norm of around 6%.

We share McWilliam’s lack of faith in the current political establishment, who McWilliams describes as Pharisees, to do anything of the sort. We advise clients and readers to make their own ‘Plan B’ – an investment and savings ‘Plan B’.

Reduce exposure to debt and risk assets and protect against a collapse of the euro by diversifying internationally and owning physical gold and silver bullion in the safest vaults in the safest jurisdictions in the world.

GoldCore has partnered with Global Macro 360 to offer GoldCore readers a discounted 6 month or yearly subscription membership to David McWilliam’s daily market insights. Follow Global Macro 360 for more in depth economic analysis on the global macro economy, including the gold price.

Click Here for your discounted subscription to Global Macro 360



Today’s AM LBMA Gold Price was USD 1,145.10, EUR 1,050.12 and GBP 732.79 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,154.75, EUR 1,047.58 and GBP 739.09  per ounce.

Gold in EUR – 5 Year

Yesterday, gold fell $5.90 to $1,149.30 an ounce and silver slipped $0.27 to $15.11 an ounce. Gold in Singapore for immediate delivery traded marginally lower as did gold bullion in Switzerland – dipping to below $1,144/oz.

The short term trend remains lower. Gold looks set for one last sell off and capitulation and the move lower yesterday and today may signal the start of that phase.

Good physical supply demand fundamentals and a very supportive macroeconomic backdrop are being ignored and the momentum driven and increasingly computer driven futures market is dominating and pushing prices lower again.

Concerns about a Fed interest rate increase are also weighing on the market. Although to an extent we would be surprised if that was not already priced into the gold market – as it has been very well flagged at this stage.

Silver for immediate delivery was 0.4 percent lower at $15.06 an ounce, dropping for a fourth day. Spot platinum fell 1.4 percent to $1,007.51 an ounce, while palladium fell 1 percent to $630.95 an ounce.

Breaking News and Research Here


(courtesy Dave Kranzler/IRD)
Dave Kranzler continues with yesterday’s theme on the huge rise in the gold OI at the comex:

Comex Paper Gold Open Interest Continues Its Vertical Ascent

 From sublime to ridiculousness there is only one step.  – Napoleon

The Fed is nothing but a mafia organization that took control of the United States starting in 1913 (Rory Hall, The Daily Coin).  In sheer defiance of all free market principles, the paper gold open interest on the Comex continues to move inversely to the price.

Yesterday the open interest in fraudulent paper gold futures open interest spiked up another 8,056 contracts to 470,720 contracts.   This added another 800,560 – 372 tonnes – ounces of paper gold to the Comex open interest, while the amount of gold “received” into Comex vaults increased by only 35,107 ozs.

Click image to enlarge:
COMEXGOLDRecall that Germany is trying to get back just 300 tonnes of gold from the Fed but has to wait seven years for this to happen.  But the Fed, through its agent bullion banks, can create more than 300 tonnes of paper gold in just one day (remember Bernanke’s magical electronic printing press).  Why won’t Germany just agree to hold paper gold?  Based on the business activity of the Comex, paper gold is perfect substitute for real gold.  Angela? Wolfgang?  Jens (Weidmann, head of the Bundesbank)?

The amount of fraudulent paper gold created by the banks yesterday is 165% of the total amount of gold that is being reported as “registered,” or available to be delivered.  No other commodity in the history of the world is allowed to operate with kind of paper to physical ratio.

The entire U.S. financial and economic system is nothing but one enormous fraudulent Ponzi scheme enabled by the complete takeover of the U.S. Government by corporate and banking interests  (see this podcast with John Titus on the Shadow of Truth for direct proof of my assertion).   The Comex is ultimate symbol of complete fraud and corruption that has completely engulfed the system.

Historically the level of open interest in gold and the price of gold have been highly correlated.  The last time the paper gold futures interest was as high as it is now was November 27, 2012.  The price of gold was $1741 per ounce.

The only conclusion that can be drawn is that the Federal Reserve, likely on orders from the BIS, is going to try and suffocate the price of gold.  The unintended consequence is the enormous drainage of gold from western vaults into the eastern hemisphere.  I suspect the bullion banks themselves are on the receiving end of that gold.

At some point the Comex itself will suffocate under the weight of paper gold.  The elitists will conjure some event of force majeure and the Comex will exercise its right to settle the paper with more paper, i.e. U.S. dollars.  At that point they may as well use drachmas…

Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked, ‘Account overdrawn.’  – “Ayn Rand, Atlas Shrugged”


(courtesy GATA)

Connecticut Public Radio program on gold includes GATA secretary


9p ET Wednesday, July 15, 2015

Dear Friend of GATA and Gold:

Connecticut Public Radio’s Colin McEnroe Show today discussed gold for 49 minutes, the participants including Matthew Hart, author of “Gold: The Race for the World’s Most Seductive Metal”; Kim Fisher, president and CEO of Mel Fisher’s Treasures in Key West, Florida, the company that located and salvaged the Spanish treasure ship Atocha; and your secretary/treasurer, who argued that gold is important now mainly as the primary target of central bank market rigging.

The program, introduced with a parody of doomsday-style advertising for gold bullion sales, can be heard at Connecticut Public Radio’s Internet site here:


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



(courtesy Turd Ferguson/Craig Hemke/TF Metals/GATA)

TF Metals Report: Another Comex oddity


4:30p ET Wednesday, July 15, 2015

Dear Friend of GATA and Gold:

The TF Metals Report’s Turd Ferguson today describes indications of surprisingly strong delivery claims for silver contracts on the New York Commodities Exchange, possibly an indication of tightness in supply. His commentary is headlined “Another Comex Oddity” and it’s posted at the TF Metals Report here:


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



(courtesy Simon Black/SovereignMan.com)

Debt Is The Barbarous Relic! Not Gold

Submitted by Simon Black via SovereignMan.com,

“The first form of culture,” wrote historian Will Durant, “is agriculture.”

And he was right. When human beings discovered 10,000 years ago that the soil would provide more food than they could possibly eat, this changed everything.

For the first time ever, early humans could actually work WITH nature and reliably control their food production.

They were no longer dependent on unpredictable wildlife or the dangers of the hunt.

Nor were they resigned to devouring an entire beast in one sitting, only to end up right back where they started– in search of their next meal.

Agriculture gave them the opportunity to produce far more than they could consume. And to easily save the surplus for a later time.

To save like this is completely natural. And by that I mean saving is part of nature.

Dogs bury their bones. Squirrels hoard nuts. Even plants set aside some excess solar energy for a rainy day by producing and storing sugar.

For us humans, agriculture was our earliest form of savings. And it was the key ingredient to civilization.

With a vast pool of food savings at his disposal, early man could put down roots and build societies without having to worry about where the next meal would come from.

It was this sense of savings that formed the dividing line between primitive man and civilized man.

This reminds me of that old criticism about gold being a “barbarous relic”.

John Maynard Keynes first coined the term when he denounced the gold standard, and Paul Krugman has echoed this sentiment in our own time.

Both men are champions of government spending and the inexhaustible creation of paper money.

It’s a curious statement, though, given that gold is an acknowledged form of savings.

Even governments and central banks around the world continue to hold gold as part of their official reserves.

Owning gold is saving, which by definition is civilized, i.e. NOT barbarous.

Debt, on the other hand, is the exact opposite. It is a lack of savings that shows a complete disregard for the future.

It is the modern equivalent of gorging on some wild beast with no thought to tomorrow’s meal… or in this case, no thought of tomorrow’s generation.

Debt is the barbarous relic. Not gold.

And governments are up to their eyeballs in it, continuing to engage in this primitive, uncivilized behavior with wanton abandon.

Don’t expect them to change their ways.

Our society awards our most respected prizes for intellectual achievement to faux-scientists who encourage these barbarous acts.

They create complex mathematical models, ‘proving’ why our Neanderthal governments should print more money, borrow more debt, and stage fake alien invasions to boost the economy.

No doubt future anthropologists will find this to be a curious and savage system.

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

1 Chinese yuan vs USA dollar/yuan weakens to 6.2094/Shanghai bourse green and Hang Sang: green

2 Nikkei closed up by 136.79   points or 0.67%

3. Europe stocks all in the green /USA dollar index up to 97.55/Euro down to 1.0894

3b Japan 10 year bond yield: falls to 44% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 124.01

3c Nikkei still just above 20,000

3d USA/Yen rate now just above the 124 barrier this morning

3e WTI 51.73 and Brent:  57.63

3f Gold down /Yen down

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

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

3h Oil 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 falls to .82 per cent. German bunds in negative yields from 4 years out.

Except Greece which sees its 2 year rate falls to 26.77%/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 falls to: 12.30%

3k Gold at 1144.00 dollars/silver $14.98

3l USA vs Russian rouble; (Russian rouble par in  roubles/dollar in value) 56.95,

3m oil into the 51 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 .9567 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0422 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 4 year German bund remains in negative territory with the 10 year moving closer to negativity at +.82%

3s The ELA is still frozen today at 88.6 billion euros.  The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”. Greece votes and agrees to more austerity even though 79% of the populace are against.

4. USA 10 year treasury bond at 2.44% early this morning. Thirty year rate above 3% at 3.15% / yield curve flatten/foreshadowing recession.

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


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


Global Stocks Jump After Greeks Vote Themselves Into Even More Austerity

And so the 2015 season of the Greek drama is coming to a close following last night’s vote in Greek parliament to vote the country into even more austerity than was the case before Syriza was voted into power with promises of removing all austerity, even with Europe – which formally admits Greece is unsustainable in its current debt configuration – now terminally split on how to proceed, with Germany’s finmin still calling for a “temporary Grexit”, the IMF demanding massive debt haircuts, while the rest of Europe (and not so happy if one is Finnish or Dutch) just happy to kick the can for the third time.

The following tweet probably best captures the surreal nature of the “deal”:

Which means that nothing is really fixed, Greece will remain a pass-through vehicle for the Troika to pay into so it can repay itself, while the Greek economy continues to disintegrate, and this whole theater will repeat itself in X months, just with a different set of players.

For, stocks, however kicking the can is the best possible news as it means even more debt will be layered, which will force the ECB to keep rates at zero and/or negative for longer, and nowhere is this seen better than in European equities, currently at 6 week highs, and US futures, both of which are surging this morning with Europe in the green across the board: Eurostoxx 50 +1.2%, FTSE 100 +0.5%, CAC 40 +1.4%, DAX +1.5%, IBEX +1.3%, FTSEMIB +1.2%, SMI +1%.

European equities trade in the green (Euro Stoxx: +1.5%) as exporters outperform amid the weaker EUR. In company specific news, Bloomberg sources suggest Volkswagen’s (+2.4%) Audi abandoned their plans to sell 600,000 cars in China this year, seeing an immediate fall of 2.5% before paring much of this move due to the aforementioned EUR weakness and after data showed European car sales had their biggest jump in five and a half years.

Asian equities rose after the Greek parliament voted to pass the preliminary bailout reforms. Consequently, ASX 200 (+0.6%) extended its relief rally led by gains in financials . Nikkei 225 (+0.7%) was led by exporters benefitting from JPY weakness, coupled with positive sentiment in the region. Chinese stocks initially opened lower as margin debt trading fell for the first time this week, while the PBoC conducted its first net weekly drain since April, however prices recovered in continuation of the recent volatility seen in Chinese stock markets. JGB’s rose following a well-received 5-yr JGB auction which printed a higher than prior b/c.

Fixed income markets trade in modest negative territory amid the strength in equities, while Bunds underperform as France auctioned EUR 8bIn worth of bonds and Spain auctioned EUR 6.4bIn of bonds, with all bid/covers lower than previous.

Today sees a number of high profile earnings including Goldman Sachs, Citigroup and Google.

The EUR, which was kept afloat as a result of carry-trade unwinds and ECB support during the Greek drama, has seen weakness throughout the European morning to see EUR/USD reside at 6 week lows and briefly breaking below 1.0900 while EUR/GBP fell to fresh 8 year lows. This comes in the wake of yesterday’s Greek parliamentary vote, seeing the deal with creditors pass, to now be voted on by other Eurozone parliaments.

Naturally, sentiment this morning has been relatively bullish with regards to Greece despite Bloomberg sources suggesting that the ECB has not given a decision on emergency aid for Greek banks but favour seeing the cap remain on hold, with the sources also suggesting that Greece requested increase in ELA of EUR 1.5bIn. This comes as Bloomberg sources later noted that the Eurozone has provisionally agreed to a EUR 7bIn bridge loan for Greece, with Finland, who are traditionally against the idea of providing Greece more capital set to approve Greek bailout talks.

EUR weakness also comes after recent hawkish comments from both the Fed and BoE, with the ECB rate decision scheduled for later today with President Draghi due to give his press conference shortly after, while Eurozone CPI data today was in line with expectations.

Elsewhere, USD/JPY trades in close proximity to a large option expiry at today’s NY cut at 124.00 (USD 1.3bIn), with USD index heading into the North American crossover at trading near its highs (+0.2%) . Asian hours saw NZD underperform as participants reacted to the latest Fonterra GlobalDairyTrade auction, where prices declined to 6-year lows and New Zealand CPI printed softer than expected (0.4% vs. Exp. 0.5%), which allows further scope for the RBNZ to cut rates.

The metals complex has seen weakness today amid USD strength and concerns mounting regarding the Chinese economy , demonstrated most recently by Audi withdrawing their planned targets of selling 600,000 cars in the country. Platinum is the underperformer after breaking to fresh lows and trading at its lowest level since February 2009, with palladium at its lowest level since 2012. Energy markets saw WTI Aug’15 futures break above the USD 52.00 handle after yesterday saw bearish sentiment and analysts at Bank of America say that there is a possibility that Iran could increase oil production to 700K bpd next year after sanctions have been lifted.

Looking ahead, as well as ECB’s Draghi, today sees a continuation of Fed’s Yellen’s semi-annual testimony to congress and comments from BoE’s Carney as well as US weekly jobs data and Philadelphia Fed business outlook.

In summary: European shares remain higher with the autos and industrial sectors outperforming and oil & gas, utilities underperforming. EU said to agree in principle to EU7b Greece bridge loan after Greek government votes to approve bailout deal. European car sales rise in June in biggest gain in 5 1/2 years. New Zealand dollar falls to 6-year low. Puerto Rico says it failed to send money for bond payments. The Swedish and German markets are the best-performing larger bourses, U.K. the worst. The euro is weaker against the dollar. Greek 10yr bond yields fall; German yields increase. Commodities gain, with silver, gold underperforming and Brent crude outperforming. U.S. jobless claims, continuing claims, Bloomberg consumer comfort, net TIC flows, Bloomberg economic expectations, Philadelphia Fed index, NAHB housing market index due later.

Market Wrap

  • S&P 500 futures up 0.3% to 2111.3
  • Stoxx 600 up 1.3% to 405.3
  • US 10Yr yield up 3bps to 2.39%
  • German 10Yr yield up 3bps to 0.86%
  • MSCI Asia Pacific up 0.6% to 144.3
  • Gold spot down 0.4% to $1145/oz
  • Eurostoxx 50 +1.2%, FTSE 100 +0.5%, CAC 40 +1.4%, DAX +1.5%, IBEX +1.3%, FTSEMIB +1.2%, SMI +1%
  • Asian stocks rise with the Sensex outperforming and the Hang Seng underperforming; MSCI Asia Pacific up 0.6% to 144.3
  • Nikkei 225 up 0.7%, Hang Seng up 0.4%, Kospi up 0.7%, Shanghai Composite up 0.5%, ASX up 0.6%, Sensex up 0.9%
  • Euro down 0.53% to $1.0892
  • Dollar Index up 0.37% to 97.53
  • Italian 10Yr yield up 0bps to 2.01%
  • Spanish 10Yr yield down 0bps to 2.01%
  • French 10Yr yield up 2bps to 1.16%
  • S&P GSCI Index up 0.3% to 409
  • Brent Futures up 1% to $57.6/bbl, WTI Futures up 0.7% to $51.8/bbl
  • LME 3m Copper up 0.3% to $5550/MT
  • LME 3m Nickel up 0.7% to $11555/MT
  • Wheat futures down 0.3% to 565.3 USd/bu

Bulletin Headline Summary from Bloomberg and RanSquawk

  • EUR has seen weakness throughout the European morning to see EUR/USD reside at 6 week lows and briefly breaking below 1.0900 while EUR/GBP fell to fresh 8 year lows.
  • European equities trade in the green as exporters outperform amid the weaker EUR
  • Today sees the ECB rate decision, followed by Draghi’s press conference, the second half of Fed’s Yellen’s semi-annual testimony to congress and comments from BoE’s Carney, US weekly jobs data and Philadelphia Fed business outlook
  • Treasuries fall after Greek parliament last night passed new austerity measures, as euro-area finance ministers said to agree in principle to extend EU7b bridge loan to Greece.
  • Loan will come from EFSM and is due to be announced on Friday once national parliaments have voted on the bailout deal, according to an official who asked not to be named because the conversations were private
  • Tsipras will have to rebuild his government after more than a quarter of his own lawmakers rebelled against a bailout that he accepted to keep the country in the euro
  • Germany’s Schaeuble told Greece the only way it’ll get a debt reduction is to leave the euro and cast doubt on the country’s ability to even complete negotiations on a third bailout
  • ECB likely to keep ELA to Greek lenders on hold at current EU88.6b level on Thursday, people familiar with the discussions said, as political talks over the country’s bailout continue
  • ECB announces rate decision today at 7:45am, with Draghi press conference to follow at 8:30am; here are five things to listen for from Mario Draghi
  • Puerto Rico said one of its agencies didn’t provide funds needed to cover debt payments as the cash-strapped commonwealth reels from an escalating fiscal crisis
  • China’s frenzied stock market boom — which soured in second half of June — helped drive a surge in financial sector growth that underpinned the economy’s better-than-expected GDP
  • Sovereign 10Y bond yields mostly higher. Asian, European stocks gain, U.S. equity-index futures gain. Crude oil and copper higher, gold falls



DB’s Jim Reid completes the overnight summary

Yesterday saw one of the more tame semi-annual testimonies (vs expectations) from a Fed chair that I can remember. It was pretty consistent with her comments earlier in the month with the key message being that if the economy performs as they expect they’ll likely raise rates this year but that the future path of hikes will be gradual, especially if they act sooner. The trillion dollar question is whether the data will get them over the line. I personally still think a 2015 hike is unlikely but one has to respect the repeated rhetoric on the desire for a 2015 hike from the Fed themselves. It wouldn’t take much for them to pull the trigger. Whatever they do it’s probably useful for them to keep highlighting the potential for a 2015 lift-off to ensure risk premium stays in the market thus skimming the froth off various areas of the market. So its unlikely that their rhetoric will change much over the summer.

As well as reiterating that all meetings remain live, Yellen also said that policy will remain ‘highly accommodative for quite some time’ and that the she would be willing to hold a press briefing should liftoff occur at a meeting with no scheduled press conference (October and January for example). With regards to references of Greece and China, there was very little on the whole. Yellen acknowledged the concerns around both but did not appear overly concerned in terms of the impact on the US economy. Price action largely reflected the overall tame nature of the testimony. The Dollar did firm with the DXY ending +0.51% while 10y Treasuries initially spiked a modest 2.5bps higher, only then to change tact and march lower into the close with yields eventually finishing 4.9bps lower at 2.353%. In terms of Fed Funds contracts, the Dec15 contract was unchanged at 0.285%, Dec16 3bps lower at 0.965% and Dec17 4.5bps lower at 1.650% with Bloomberg reporting that futures markets are showing a 33% chance the Fed will raise rates in September and a 65% chance by December, up from 31% and down from 66% respectively on Tuesday. So little reaction on the whole. Both the S&P 500 (-0.07%) and Dow (-0.02%) sold off into the close meanwhile as energy stocks in particular dragged the market down after WTI (-3.07%) and Brent (-2.50%) dropped on the latest rising US supply data.

In fact it was a fairly busy day for Fedspeak yesterday. As well as Fed Chair Yellen, we also heard from San Francisco Fed President Williams (voter) who said that the September meeting ‘would be a very plausible time’ to start liftoff. Williams also said that ‘there’s a good chance we’ll overshoot’ the Fed’s 2% inflation goal by the end of 2016 but that wouldn’t be an issue in his mind, however Williams did warn that the ‘strengthening of the dollar’ has greater policy implications. Kansas City Fed President George (non-voter) was consistent with much of the other rhetoric yesterday, saying that the Fed should begin to think about liftoff without narrowing down her timeframe. Finally Cleveland Fed President Mester (non-voter) said that the economy can handle an increase in rates and that the risks from Greece are not big enough to change her outlook.

Onto Greece now, as largely expected late last night we heard that Greek parliament approved the proposals agreed upon by PM Tsipras and the Creditors. The bill was passed by a majority of 229 votes (out of 300 seats), with 64 against, 6 abstaining and 1 failing to show. More importantly however, of the 149 Syriza MP’s, 32 voted against and 6 abstained resulting in 38 Syriza MPs objecting the proposals, at the top end of the expected range (30-40). Finance Minister Tsakalotos responded to the vote saying that it ‘was a decision which will be a burden for me for the rest of my life’ and that ‘I don’t know if we did the right thing but I know we did something to which there was no alternative’. Several high-profile Syriza MP’s were amongst those to go against the conditions including Varoufakis, Energy Minister Lafazanis and Deputy Labour Minister Stratoulis. Attention now turns to what will likely be a political reshuffle given the Syriza dissenters, with a minority government a possibility. According to Reuters, a conference call between Eurozone Finance Ministers is scheduled for this morning, while parliamentary approval processes are now expected to take place across Europe (yesterday France approved the proposals) including the Bundestag on Friday. The reaction function from the ECB with regards to ELA will now also be closely watched at today’s meeting.

Looking at how markets have reacted in Asia this morning, it’s been a relatively constructive start across the board for Asian bourses led by China which has rebounded off a weak start and yesterday’s decline with the Shanghai Comp (+0.99%), Shenzhen (+1.93%) and CSI 300 (+1.34%) all moving higher. The Hang Seng (+0.03%) is a touch higher while the Nikkei (+0.55%), Kospi (+0.57%) and ASX (+0.44%) are all higher in trading this morning. S&P 500 futures are around +0.3% while 10y Treasuries are +2bps at 2.372%. The Euro is around -0.1% with minimal reaction to the vote. Asia credit is around a basis point tighter while oil has bounced back with both WTI and Brent up 1% this morning.

Back to markets yesterday, European equity markets closed modestly firmer reversing a slightly softer start ahead of the Greek parliament vote. The Stoxx 600 (+0.43%), DAX (+0.20%), CAC (+0.29%), IBEX (+0.69%) and FTSE MIB (+1.28%) all finished up, while 10y Bund yields declined steadily over the course of the day, eventually closing 6.1bps lower at 0.826%. In the periphery Italy (-6.3bps), Spain (-7.5bps) and Portugal (-5.4bps) all moved lower. On the data front, French CPI was softer than expected for June (-0.1% vs. 0.0% expected) although the annualized rate remained unchanged at +0.3 yoy. Closer to home in the UK and following fairly hawkish BoE rhetoric this week, we got some slightly softer May employment numbers yesterday with the unemployment rate ticking up one-tenth to 5.6% and average weekly earnings rising less than expected to +3.2% yoy (vs. +3.3% expected), although the trend in the latter still remains supportive. In a choppy session 10y Gilt yields ended 0.7bps lower at 2.115% while Sterling was fairly unmoved (+0.02%).
Data flow in the US yesterday was largely better than expected. June PPI was a beat at both the headline (+0.4% mom vs. +0.2% expected) and core (+0.3% vs. +0.1% expected) although annual figures continue to remain low (-0.7% yoy and +0.8% yoy respectively). Industrial production was firmer than expected for June (+0.3% mom vs. +0.2% expected) and the highest monthly increase this year. Manufacturing production was disappointing (0.0% mom vs. +0.1% expected) although the July NY Fed manufacturing index was more encouraging (3.86 vs. 3.00 expected), rebounding off a weaker June reading. Finally capacity utilization saw a modest increase to 78.4% (vs. 78.1%) from 78.2% in May.

Staying across the pond, the Bank of Canada yesterday cut rates for the second time this year after cutting by 25bps to 0.5% (market expectations was largely split 50/50 for a cut vs. hold). The move was supported by a relatively decent downgrade to growth from the BoC, cutting its 2015 GDP forecast to 1.1% from 1.9% and 2016 to 2.3% from 2.5% while also suggesting that Q2 growth likely contracted. The Canadian Dollar yesterday ended nearly 1.5% lower versus the USD on the back of the move.

Onto today’s calendar now. As well as further headlines concerning Greece and the political developments, the ECB meeting, Euro area CPI (final June reading) and trade data will be the highlights this morning. Over in the US this afternoon, Fed Chair Yellen is due to speak once again at the Semi-Annual Testimony, this time in front of the Senate while data wise this afternoon in the US we’ve got initial jobless claims, Philadelphia Fed business outlook and NAHB housing market index all due. Citigroup, Goldman Sachs, Google, eBay and Schlumberger are the corporate earnings highlights.


Greece votes and affirms more austerity:

Last night

(courtesy zero hedge)

July 5: Greek Independence Day; July 15: Greek In Dependence Day

The Greek parliament just voted, in a 229 for and 64against landslide, in favor of the bailout-offer-you-cannot-refuse (as opposed to facing up to the pain imminently and suffering through a Grexit) implicitly giving up their sovereignty and sending their “No” voting citizenry what we are sure will only be a deeper economic depression…


As Bloomberg reports,

A majority of 229 Greek lawmakers voted in favor of bill which includes prior actions demanded by creditors for a bailout agreement that the govt has applied for, Parliament Speaker says.


64 lawmakers voted against bill, 6 abstained, in Greece’s 300-seat chamber


Bill titled “urgent measures for the negotiation and signing of an agreement with the European Stability Mechanism”


38 lawmakers of governing Syriza party, including former finance minister Yanis Varoufakis, former deputy Finance Minister Nadia Valavani, and Energy Minister Panagiotis Lafazanis didn’t support bill


Out of 149 Syriza MPs, 32 voted against bill, 6 abstained, 1 didn’t show up

More to the point, with 38 defections, Syriza has now officially lost its majority and a cabinet reshuffle is imminent as the drama goes on.

And as noted:

But the biggest surprise of the night was that the former finance minister and Tsipras’ right-hand man, Yanis Varoufakis, voted against the bailout.

And his Energy Minister (who also voted No)…


In summary – this just happened:

And because all the algos know is to buy when the elites get their way, S and P futures are rallying:



The Eurogroup agrees to a 7 Billion euro bridge loan obtained from the 28 country EU.  Countries that are not part of the monetary union will be compensated if losses occur:


(courtesy zero hedge)

Eurogroup Agrees To €7 Billion Bridge Loan So Greece Can Repay Troika; No ELA Increase On Deck

Back in February, when the ill-fated Greek attempt to renegotiate its existing bailout (instead culminating with a new, €86 billion bailout program 5 months later) was launched, Eurogroup chief Jeroen Dijsselbloem rejected a request for a short-term financing agreement to keep the country afloat while it renegotiates the terms of its bailout program.We don’t do bridge loans”, Dijsselbloem told reporters in The Hague, when asked about Greece’s request. Turns out we do after all.

After last night’s full capitulation vote by Greece which will push its debt beyond 200% just so the insolvent nation can repay its creditors, the next step would be of course finding a funding solution until the terms of the full ESM bailout are ironed out. Which means, coming up with a bridge loan just so Greece has the funds to repay its default to the IMF now amounting about €2 billion as well as the ECB’s €3.5 billion payment on Monday.

Sure enough, moments ago Bloomberg reported that Euro-area finance ministers agreed in principle to extend a €7 billion($7.6 billion) bridge loan to Greece, citing an official familiar with the decision. The loan is due to be announced tomorrow once technical details are sorted and national parliaments vote on the bailout deal, the official said, and since this loan has to be funded ahead of the ECB’s maturity, this is one deadline the Eurogroup will keep.

Furthermore, with the sanctity of the ECB’s balance sheet in question it meant that even one of the staunchest opponents to a 3rd Greek bailout, Finland, would have to promptly fall in line, and so it did:


Meanwhile, if Greece had hoped that just by voting through yet another “deal” which it has no credible way of adhering to it would immediately get an ELA increase from the ECB, it was sorely mistaken.

As Bloomberg also reports, the ECB met earlier today to review the Greek ELA and while it hasn’t yet announced a decision, the current opinion in the ECB’s Governing Council favors keeping the cap on Emergency Liquidity Assistance for Greece on hold at the current 88.6 billion euros, people familiar with the matter say.

As a result, the ECB’s Executive Board recommended the limit stay in place, one person says even though the Greek central bank asked for an increase of 1.5 billion euros, two people say.

In other words, the Greek capital controls will remain for far longer even after Greek funding as a pass-through vehicle, whereby the Troika pays Greece so it can repay the Troika (although with the IMF on its way out, it will soon be the Dvoika).

And without any substantial money circulating through the Greek economy, it means that Greek GDP will likely have a double digit decline pushing the country even deeper into depression while its banks, unable to collect on loan payments, will see their NPLs rise at a rate of 1% per day until not only is there no Greek economy, but no Greek banking system either.

But at least Greece still has the euro.



It sure looks like the Germans are tired of funding Greece. Schaeuble states that a GREXIT is their preferred route:

(courtesy zero hedge)


Greece May Not Get Bailout, Grexit “The Better Way”, Schaeuble Says

Last Saturday, the EU finance ministers who gathered in Brussels in a last ditch effort to keep Greece in the eurozone were forced to confront a rather inconvenient truth. A bailout for Athens would likely cost nearly €80 billion, far more than the €53 billion figure mentioned in the draft proposal submitted by Alexis Tsipras two days earlier. The revised figure included a €25 billion provision for the recapitalization of Greece’s ailing banking sector. A day earlier, we warned that the banks would need at least €10 billion and likely more – “don’t tell Merkel”, we warned.

Judging by the date on a document that began to circulate once the finance ministers began to voice their consternation at the larger figure, Germany had already assessed the possibility that the cost of a potential third program for the Greeks was likely to climb prompting the finance ministry to prepare a document outlining two alternative options for Athens. One of these options was a 5-year Greek “time-out” from the eurozone. Initially (and by “initially” we mean for perhaps a few hours after the document was first distributed) the “time-out” idea was written off as simply another manifestation of Wolfgang Schaeuble’s frustration, but by Sunday it was clear that the idea was no laughing matter – indeed, had the bloc’s sleep deprived leaders not inked a ludicrous agreement at 6am in the morning, the “soft” Grexit scenario might already be well underway.

Now that reports from both the IMF and the European Commission on Greece’s debt sustainability are public, the world is well aware that no one, anywhere, truly believes the Greeks will ever be able to return to economic prosperity if they are forced to labor under their current debt load. In short: a “re-profiling” is necessary. And while the Germans might be compelled to consider some manner of rescheduling, both Merkel and Schaeuble have made it clear that an outright “haircut” is out of the question – unless of course the Greeks would agree to, as we put it earlier this week, “get the hell out.” Here’s Reuters:

German Finance Minister Wolfgang Schaeuble questioned whether Greece will ever get a third bailout programme on Thursday, a day after the Greek parliament passed a package of stringent measures required to open negotiations on financial aid.


He said he would submit a request to Germany’s parliament to vote on opening the talks and said passing the reforms was an “important step”, but it would be hard to make Greece’s debt sustainable without writing some of it off, an idea Berlin considers to be illegal.


Greece is seeking up to 86 billion euros in a third rescue package in return for tougher austerity measures and structural reforms.


“We will now see in the negotiations whether there is even a way to get to a new programme taking into account (Greece’s) financing needs, which have risen incredibly,” he told Deutschlandfunk radio on Thursday.


The International Monetary Fund is leading calls for a deep reduction in Greece’s debt but Germany, the biggest contributor to the euro zone’s bailout funds, has ruled one out.


Schaeuble, a member of the centre-right Christian Democrats, the party of Chancellor Angela Merkel where there is strong resistance to a new bailout for Greece, said such a step would not be compatible with membership of the currency union.

And more from Bloomberg:

German Finance Minister Wolfgang Schaeuble says on Deutschlandfunk German radio it’s unclear how sustainability of Greek public debt can be achieved without debt forgiveness, which is banned as long as the country is a euro member.


“Many economists, including in Greece, doubt that Greece’s problems — listen to what the International Monetary Fund is saying — can be solved without a real haircut.”


“A real haircut, that’s undisputed, is incompatible with membership in the currency union.”


Temporary Greek exit from euro region may be “the better way” because it would allow haircut, provided Greece agrees to such a step


Given Greek financing needs, “we’ll see in the negotiations if there’s even a way to arrive at a program”


“I don’t know, nobody knows, at the moment how this is supposed to work without a haircut and everybody knows that a haircut is incompatible with euro membership. That’s the situation.”

Yes, “that’s the situation.” Greece’s debt is completely unsustainable and “nobody knows” how the proposed third program is “supposed to work” without an upfront haircut, which is flat out illegal. But one way it could work, Schaeuble suggests, is for Greece to pursue the “time-out” option which the FinMin apparently believes is still feasible even after Wednesday’s Greek parliament vote.

Meanwhile, it’s still possible the IMF walks away from the deal if Germany doesn’t agree to restructure Greece’s debt. Consider for instance the following comments from Christine Lagarde (via WSJ):

“What I very much hope is that we can all keep to a very tight timetable and we can respond to a challenge that is colossal. I have some hope, as… I understand that there were some more positive noises toward that principle of debt restructuring out of Germany in the past few hours.”

And from another “senior” IMF official:

“[The EU’s commitment to restructuring] is not very concrete [and is] somewhat weak. We have made it very clear that before we go to the board, we need a concrete and ambitious solution to this debt problem.”

The irony of course is that if the IMF walks, Germany would likely walk as well, as Europe has long maintained that IMF participation is a prerequisite for a third program and the Fund is expected to contribute heavily to the new package. So in short: if Germany balks on debt relief the IMF walks, and if the IMF walks, Germany walks, which for Schaeuble means that perhaps Greece should just spare everyone the walking and walk first. “This would perhaps be the better way for Greece,” the FinMin said Thursday.

Late this morning, surprisingly the ECB raised the ELA by 900 million euros.  The Central Bank of Greece asked for 1.9 billion euros.  This money will last about 4 days:
(courtesy zero hedge)

ECB Raises Greek ELA By €900 Million

The biggest unknown in today’s ECB Q&A was whether Mario Draghi would agree to raise the Greek ELA, and moments ago we go the answer:


Specifically, Draghi said that “The decision to raise ELA again today is symmetrical to the decision we took a few days ago to freeze ELA.

And as to how much:


So now the question becomes on what day will the Greek banks reopen, and what will be the popular response: will the population rush to deposit the money they have pulled out, or vice versa, will this opportunity to withdraw even more be promptly consumed.



ECB Joins IMF In Call For Greek Debt Cut, Schaeuble Shoots It Down (Again)

Now the ECB has joined forces with the IMF in a call for a debt cut.

The Germans state in simple language:  NEIN

(courtesy zero hedge)

Despite earlier commenting that Greek debt sustainability is hard without a write off, German FinMin Schaeuble just told German lawmakers bluntly that there will be no Greek debt cut. What is problematic for Merkel and her minions is that Mario Draghi just confirmed what The IMF has been ‘secretly’ leaking – that it is “uncontroversial that Greek debt relief is necessary.” As this confusion reigns, The Eurogroup has issued a statement “welcoming the adoption by the Greek parliament” of the measures imposed upon the Greek people to drive them further into depression.

The Eurogroup issues a statement – pleased that The Greeks will suffer some more for the cash they get…

The Eurogroup welcomes the adoption by the Greek Parliament of all the commitments specified in the Euro Summit statement of 12 July. On the basis of a positive assessment by the institutions, which concluded that the authorities have implemented the first set of four measures in a timely and overall satisfactory manner and which confirmed that the Euro Summit statement has been included in the preamble to the implementing law adopted by the Greek parliament, we reached today a decision to grant in principle a 3-year ESM stability support to Greece, subject to the completion of relevant national procedures.


Upon the completion of the relevant national procedures and the formal decision by the ESM Board of Governors expected by the end of this week, the institutions would be entrusted with the task of swiftly negotiating a Memorandum of Understanding (MoU) detailing the policy conditionality attached to the financial assistance facility.


The Eurogroup calls on the Greek authorities to swiftly adopt the second set of measures by 22 July as foreseen in the Euro Summit statement, and update the legislation related to the first set of measures consistent with the recommendations made by the institutions in their compliance report.

So further austerity drives Greece deeper into depression and so ECB President Draghi says…


Pretty clearlt agreeing with The IMF’s recommendations.

But Schaeuble says “Nein”

German Finance Minister Wolfgang Schaeuble told a closed-door meeting of parliament’s Budget Committee in Berlin that European rules don’t allow a cut in the face value of Greek sovereign debt, according to Eckhardt Rehberg, a lawmaker on the committee from Chancellor Angela Merkel’s Christian Democratic Union.

*  *  *

But apart from that – thanks to a €900 million ELA extension – everything is awesome in Greece (and therefore Europe).

Now the fun will begin as the Greek banks will open on Monday.
The big question:  will they redeposit their cash or will they take out more money.  My bet:  the Greek citizens will be lining up for blocks to remove their money;
(courtesy zero hedge)


Greek Banks To Reopen On Monday, But Do Greeks Have Any Faith Left In Their Banks?

It was less than three weeks ago that, in the aftermath of the surprising announcement of the Greek referendum and the even more surprising cap on the ECB’s now clearly conditional ELA, the world was greeted to massive lines of Greeks waiting at ATMs where they were allowed to withdraw only €60 per day. Following the Greek capitulation, whose sole directive was recovering access to locked up bank funds, hopes were that Greek banks would promptly reopen, and now, according to a Greek senior banker cited by Reuters we know just when that will happen: Monday.

Reuters reports that “Greek banks will reopen on Monday, a senior banker told Reuters after the European Central Bank decided to increase emergency funding.”

Banks have been closed since June 29 after Athens imposed capital controls. “They will open on Monday,” the banker said.


The ECB on Thursday increased the cap on emergency funding Greek lenders can draw from the domestic central bank by 900 million euros.


A ministerial decision on the bank holiday is expected to be released later on Thursday.


A government-appointed commission responsible for vetting capital outflows since controls were imposed said it had approved applications worth 819.9 million euros until July 13.
let me pop it up real quick

As Mario Draghi observed earlier today, Greek savers withdrew a whopping €8.1 billion in June, or about 6% of the entire deposit base, or about a quarter billion per day. Even under capital controls withdrawals continued at a pace of just under €100 million per day.

So what everyone is wondering is whether the events of the past 24 hours restored confidence in a banking system which, from the perspective of the ECB, was borderline insolvent three weeks ago, and is suddenly only “solvent” this morning because the Greeks voted the way the ECB strongly “hinted.”

If confidence has not been restored, and if Greeks continue to withdraw their savings, the new ELA increase should be sufficient to last about 4-5 days (or even less depending on how much residual panic there still is) before the new ELA cap is hit and has to be increased.

But another question is what happens if Greek banks burn through all the ELA eligible collateral. Recall that the ECB also increased the haircut on Greek collateral and with good reason: with the economy grinding to a halt, paying their loans was the last thing on any Greek’s mind suggesting non-performing loans held at Greek banks soared, along the lines of what the IMF suggested.

So the ECB suddenly faces a real test: did its actions provoke a terminal loss of faith in the Greek banks, or is there still some hope in fiat left. If the answer is no, and if the deposit outflows continue, this may prove to be the shortest “rescue” in European history.

Come Monday, will these people be lining up to re-deposit the money they pulled three weeks ago, or will they take the opportunity to withdraw all they have?



In this commentary we see how the ELA has now increased to around 90 billion euros.  We know that the total deposits are now well under 120 billion euros.  Today the ECB states that they are on the hook for 130 billion euros. We also know that the total “equity” of the ECB is 94 billion euros and thus a default will wipe out the reserves at the central bank and thus a major call for funds from the 19 countries less one country Greece:

(courtesy zero hedge)

How The ECB Took Over Greek Banks, In One Chart

Earlier this week, when we reported that as part of the just passed latest Greek austerity package which open the way for the third Greek bailout, “one of the preconditions imposed on Greece for a deal is that it signs into law European rules that would put euro zone authorities at the ECB and in Brussels, rather than Athens, in charge of identifying and closing or breaking up sick banks.”

As Reuters added, “this in turn could lead to a shake-up of the sector that could see some banks close, with losses pushed onto bondholders and possibly even large depositors. In such circumstances, there would be little that Athens could do to prevent this.

That was merely the political aspect of Greek handing over its sovereignty, which also meant granting control of Greek banks to the ECB.

Earlier today, Draghi also confirmed the far more practical one. First, as we learned, Greek ELA was increased by another €900 million to just shy of €90 billion.


But more importantly, Draghi also stated that total ECB exposure to Greece (i.e., its banks) now stands at a total of €130 billion which includes various EFSF and other claims. Putting this in context, total Greek deposits were at about €120 billion at the last optimistic estimate, and likely well lower now.

In other words, as the chart below shows, when it comes to the entire Greek financial system, the ECB is now in full control with its “support” of banks at least €10 billion more than total Greek deposits.


Incidentally, the latest total exposure to Greece is about €30 billion more than the entire capital and reserves of the Eurosystem, but that is a topic for another day…

Which brings us back to the original question: for all his pompous rhetoric, Mario Draghi showed that when it comes to determining the political fate of a nation, he will not hesitate to force capital controls. So it will be up to Greek depositors now, for whom the question is simple: will they trust the “goodwill” of the ECB ever again – sure Draghi got his way, and is allowing a modest increase in bank withdrawals once capital controls are lifted, but what happens if Greece again votes in an anti-austerity party when the next inevitable elections take place, and specifically: how long before the ECB once again freezes Greek ELA so no more deposit withdrawals will be allowed.

For the answer, look at what Greeks will doing when banks reopen: will the lines be to deposit cash… or to withdraw it. If the latter, then nothing has really changed and the ECB will be forced to keep raising its ELA until such time as it caps it once more, or all Greek deposits are withdrawn and the ECB no longer has any leverage over Greece.

Graham Summers explains in simple language why germany would prefer a GREXIT instead of debt forgiveness.  This of course assumes that once Greece is outside of the EU, it will still honour its debt.  I do not think it would.
(courtesy Graham Summers/Phoenix Capital Research)

Why Germany Would Prefer a “Grexit” to Debt Forgiveness

Stocks are soaring today because Greece agreed to another austerity program. However, all this really means is that negotiations can begin for another Greek bailout. The bailout itself is at least 4 weeks away assuming that everyone can agree on everything.


The next steps are:


1)   Germany’s parliament must issue a mandate giving Chancellor Angela Merkel the right to negotiate a new bailout deal with Greece.


2)   Finland’s, the Netherland’s, Slovania’s, Estonia’s, and Austria’s Parliaments also must agree to let their Finance Ministers negotiate a new deal with Greece.


3)   EU Finance Ministers must negotiate a new bailout deal with Greece.


4)   Germany’s parliament must sign off on the new deal.


5)   Greece must accept the deal.


Anyone who claims a deal is within sight is out of his or her mind. This process will take weeks if not months to complete… assuming it even occurs. Indeed, there are numerous issues any of which could derail the whole process.


The most important development is that both the IMF and the ECB have floated the idea of debt forgiveness. This is the first REAL solution that could reduce Greece’s debt load… but it is completely impractical in that it sets the stage for potential debt forgiveness deals for Spain, Italy and possibly even France down the road.


All of those countries will come knocking asking for help at some point. The fact is that their Debt to GDP levels have soared since the EU nearly collapsed in 2012.


Spain’s Debt to GDP has risen from 69% to 98%. Italy’s Debt to GDP has risen from 116% to 132%. France’s has risen from 85% to 95%.


This is why German political leaders such as Finance Minister, Wolfgang Schauble, are warming to the idea of a “Grexit”… because as painful as that might be, kicking out a problem country is a more appealing template for future negotiations with problem countries than debt forgiveness.


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


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


EU banks as a whole are leveraged at 26-to-1. At these leverage levels, even a 4% drop in asset prices wipes out ALL of your capital. And any haircut of Greek, Spanish, Italian and French debt would be a lot more than 4%.


Remember, at the end of the day, it’s all about the big banks’ derivative exposure, NOTHING else. This is what has driven every Central Bank action since 2008. And it’s what will drive Europe’s future negotiations for a 3rdGreek Bailout.


The reality is that the issues that caused 2008 (excessive leverage, toxic derivatives) were not solved. If anything they have worsened. And today, most Central banks are sporting leverage ratios well above those that took Lehman Brothers down.


Another Crisis is coming. And it will feature entire countries going bust, not just a few banks.



Greek banks are getting hammered as now many believe shareholders and  bond holders will be wiped out, and most likely some depositors will receive a “haircut”
(courtesy zero hedge)

Greek Banks Just Became A “Strong Sell” At Any Price

Earlier today we asked “why this is happening” pointing to the stock price of the trading ADRs of the National Bank of Greece which unlike the broader market, are not swept in today’s euphoria. We now may have the answer, and the distressed hedge funds that invested in Greek assets in recent months hoping for another “make whole” bailout may not like it.

According to the WSJ, even as Greek banks, severely depleted of cash and eligible collateral they can post with the ECB, stand to fight another day (and potentially face more withdrawals as soon as the Greek banks reopen supposedly on Monday) thanks to another €900 million liquidity infusion, investors in Greek bank shares will be less lucky: “to ensure a new bailout, investors in the country’s banks faced the prospect of their holdings being “wiped out” under the terms of a €25 billion recapitalization plan.”

WSJ notes that “major investors including Fairfax Financial Holdings and Wellington Management Group decided to increase their stakes in Greek banks in recent months, according to data from the Athens Stock Exchange.” Which may not have been wise, because citing an analysis by Barclays’ François Cabau “bank shareholders and creditors are at risk of significant losses.”

It goes on to note that “any new recapitalization of the banks is likely to hit shareholders and certain bondholders under a new set of European regulations—the Bank Recovery and Resolution Directive—enacted at the beginning of the year.”

And since Greek banks are woefully undercapitalized and there is already a danger of depositor bail-ins, all securities that are below the depositor claim in the cap structure will have to be impaired, as in wiped out:


“To avoid imposing losses on depositors and senior bondholders at the Greek banks, shareholders will likely be “wiped out” under the European Stability Mechanism recapitalization, according to Alberto Gallo, head of macro credit research at Royal Bank of Scotland.”

According to the BRRD directive, shareholders “should be severely diluted or wiped out” under a ‘bail-in’ which aims to stabilize a failing bank without the need for bailout by public funds. However, Greece has yet to pass these regulations into law, although it is set to vote on doing so in the coming days.

Incidentally, this is as reported previously, when we noted that as part of the Third bailout Greece will cede control of its insolvent banks to the ECB, with the existing equity almost certainly wiped out:

Greek banks are currently closed and have little capacity to absorb losses when they reopen. Markus Allenspach, head of fixed income research at Swiss bank Julius Baer, said the banks’ capital buffer is of poor quality, and that shareholder “equity will also be written down.”

This becomes all the more obvious when observing that the ECB itself is now the single biggest stakeholder in the Greek banking system, with some €130 billion in claims, well above the total amount of deposits, suggesting that any other Greek bank liabilities are now almost certainly null and void.

Yet even as Greek banks saw their stock prices tumble over the past several months due to concerns of sovereign default and bank failure, others dipped their toe in Greek bank shares: “Past troubles haven’t put all investors off the Greek banking sector. Analysis of data from the Athens Stock Exchange over the past few months reveals some blue-chip investors who raised their stakes…”

In April 2014 Fairfax Financial Holdings, the Canadian investor led by Prem Watsa, invested €400 million into Eurobank following a capital raise, which equated to a 8.7% stake in the bank. The bank’s share price has steadily fallen. Nevertheless, Fairfax upped its stake to 12.9% in early May this year. Today, this stake is worth around €265 million. Fairfax declined to comment.


Capital Group also invested just over €550 million in last year’s capital raise by Eurobank, around 13% in the bank. At the beginning of 2015 the asset manager began to sell down its stake. By June 26, the last day before markets closed, this had fallen to 5.6%, worth around €115 million. A Capital Group spokesman didn’t respond to requests for comment.


At the beginning of the year The Capital Group also held a 3.3% stake in Piraeus Bank, then worth around €200 million. But by the end of the first quarter, the U.S. investor cut its position to below the reporting threshold on the Athens Stock Exchange. Piraeus’s share price had fallen 64% over the first quarter.


Wellington Management Group held a 1.7% stake in Piraeus as of March 23, worth around €40 million. Wellington has held on to the stake. A spokeswoman declined to comment.


Other well-known investors have also chosen to stick it out. Hedge fund Paulson & Co holds a 2.1% stake in Piraeus, a position first taken out in late April 2014, worth €243 million. It is now worth €51 million. A spokesman for Paulson & Co declined to comment.


U.S. asset manager Dimensional Fund Advisors, which holds a small $6 million position in Piraeus Bank, said: “Our fully diversified approach to investing means we have exposure to a wide range of securities across markets and asset classes, including stocks like Piraeus.”

Among the investors we find a familiar name: “The Norwegian sovereign-wealth fund, which holds a combined stake of just over €50 million in Alpha Bank and Eurobank Ergasias, said in a statement that “We’re assessing the most probable outcomes and how to act given different scenarios. Currently we’re observing the situation and waiting to see how this unfolds.”

As a reminder it was the Norwegian sovereign-wealth fund that back in 2010 had a few quasi-legendary words of advise to investors in the New Normal:

Norway says its long-term perspective will protect it from losses. “One could say we are investing for infinity,” Johnsen said in an Aug. 27 interview. “It is important when you look at the time scope of the fund and the investments that there should be a portion of active management.”

Back then Norway was talking about its bond investment which was promptly haircut as part of the Second Greek bailout. It may be about to suffer “infinity” for the second time in just 2 years.

Others decided not to wait for “infinity” to arrive and instead opted to sell. “Investors including the Dutch national pension fund, Franklin Templeton, TIAA-CREFF, and emerging market hedge fund Charlemagne Capital,have all ditched their stakes in Greek banks in months before markets froze in late June, according to people familiar with the situation.

But it’s not just US hedge funds that stand to lose on their “Bernanke Put”, the state of Greece itself is also facing losses:

The Greek state already owns sizable chunks of the major banks following a recapitalization in 2013. Existing shareholders were given warrants by the government to buy back their stakes; the share prices have, however, continued to collapse following the bailout.

Last but not least, the Greeks themselves, perhaps in an attempt to avoid holding cash in the bank, decided to gamble it all on another ECB bail out:

One trader at Eurobank said speculative investors, including a number of Greek retail investors and high net worth investors, picked up stocks in Greek banks.

They got the “bail” part right, they just were completely wrong on the “out.”

Which is why even as an “unsustainable” Greece meanders day to day with yet another capital infusion to avoid a sovereign default, its insolvent banks just became the first casualty of reality.

However, they may not be the only ones: recall that bank depositors are nothing more than unsecured creditors. If and when the reality of the Greek economic collapse is fully tabulated (as the IMF appears to have finally done) it won’t be just the equity that is wiped out – depositors themselves face the risk of creeping haircuts to their “liabilities.”

Which is why we doubt that Greek savers will rush to put their money in the banks, and why we think Draghi is taking a huge gamble by putting even more ELA into Greek banks just before the same banks will announce at any possible moment they are forced to liquidate existing shareholders. The popular outcry against the banking system once a bail in is confirmed, even if it does not involve depositors initially, will send shock waves through society and rekindle the bank run once more.

Ironically, the one thing that would help preserve confidence in the Greek banking system, is more transparency about the “performing” nature of Greek bank loans: if this amount has hit 50% (or more) on the total €210 billion of loans, then depositor haircuts become virtually inevitable – anything well below that and there would still be a modest cushion before bail-ins have to go up in the cap structure.

Which is also why we fear no transparency will be forthcoming and why we expect that people may be fooled once again into believing their savings are, well, safe only to find out the hard way they are anything but – a hard lesson that investors in insolvent Greek banks are about to learn first hand.

And with today’s last word on Greece:
(courtesy Pieter Cleppe/VocalInternational.com)

Why A Third Greek Bailout Is A Bad Idea

Submitted by Pieter Cleppe via VocalInternational.com,

Last Sunday, Eurozone countries submitted yet another ultimatum to Greece: implement a whole round of reforms, from eliminating early retirement over scrapping exemptions from sales tax to opening shops on Sunday, and we’ll start negotiations on providing a new bailout of possibly €86bn from the European Stability Mechanism (ESM), the Eurozone’s bailout scheme, which will carry yet another series of strings attached. Here are four reasons why this whole thing is just a bad idea.

  1. The previous two bailouts have failed. Why try more of the same?

Today, Greek debt to GDP has reached 180%, an all time high. It should come as no surprised that an overindebted country’s economy will shrink when it is being burdened with even more debt. This happened from 2010 on, when the country received “emergency loans” amounting to an estimated 240 billion euro, both from Eurozone countries and the IMF. At the instigation of former French IMF chief Dominique Strauss-Kahn, the IMF violated its own principles by not allowing Greece to default on major international banks before granting it a loan. It now is facing heavy losses, after Greece has already defaulted twice on an IMF payment now or is “in arrears”, in IMF-lingo. Also the “no-bailout rule” in the EU Treaty was violated.

It’s true that this therefore was a bailout of major international banks who had been lending to Greece, as we have pointed out back then with Open Europe. Still also Greece profited, as someone else really paid back part of the funds which they had been enjoying previously.

Greece hasn’t properly implemented all the measures it promised take. The IMF has stated that “only 5 of 12 planned IMF reviews under the current program were completed, and only one has been completed since mid-2013, because of the failure to implement reforms”. Greece did restore some competitiveness, but would probably have benefited more if it had reformed more. Still, many of the measures from these bailout programmes, including the newly proposed one, involve tax hikes. How this can drive economic growth in a country already crippled with debt is anyone’s guess.

  1. It’s toxic to intervene deeply into the political decisions of another country

Greece was never really forced to join the euro, given that it didn’t comply with the entry requirements in the first place. It is also free to leave the Eurozone, as the newly proposed deal for Greece looks like an invitation for the country to do so. Isn’t then all the criticism towards Germany and the other Eurozone states of having the temerity to attach some strings to providing another €86bn in  taxpayers’ money a bit rich?

Yes it is, and we should also blame the Greek government for inviting foreign intervention by applying for yet another bailout, but that doesn’t take away the fact that this is the recipe for radicalizing public opinion. When a large majority of Greeks, 61%, rejects a set of conditions attached to a possible new bailout in a referendum, surely should rather be not to seek a new bailout, and seekGrexit, instead of seeking one with even more stringent proposals? Former Greek Finance Minister Yanis Varoufakis has warned that the Greek fascist “Golden Dawn” party could “inherit the mantle of the anti-austerity drive, tragically”, now that the hard left Syriza formation has basically backed down to foreign demands. We shouldn’t ignore this danger.

  1. More transfers and common Eurozone decision making leads to conflict

Whereas until now the Greek crisis mainly soured relations between Germany and Greece, luckily mostly between its politicians and media, it has now lead to anopen split between Germany and France, with the latter pushing for more money for Greece and the former openly suggesting “Grexit”. A country like Belgium, infamous for its tensions between the Germanic and Francophone part of the country, which only four years ago led to the inability to form a new federal government for one and a half year, should be sufficient proof that a lack of common “public opinion”, “demos” or “culture” can hugely complicate and even toxify decision making.

Regardless of whether the more “ordoliberal” Germanics or the “socialist” Southern Europeans are right or wrong: given the intensity of the criticism of the conditions suggested by Germany for the new Greek bailout, one can only wonder how big the tensions would be in case the Eurozone would further centralize power and increase the size of the transfers. Still the so-called Five Presidents’ Report” written by the heads of the EU institutions is proposing just that. You wouldn’t expect them to suggest anything else, but does this make sense to anyone outside of the EU bubble?

  1. Propping up the Eurozone endangers the EU

The Franco-German tensions we’re witnessing are very problematic. The EU really is built on a grand diplomatic deal between these two countries and the core of the EU project really is about reducing trade barriers, thereby securing lasting peace through trade in Europe. Everything else the EU has undertaken depends on the legitimacy it has obtained due to the success of removing trade barriers: from good projects, as the passport- free zone Schengen or the free movement of people, to questionable projects, as the common currency, the ever growing set of burdensome regulations or the wasteful 1 trillion euroEU Budget, to vanity projects, as the invisible EU Diplomatic Service. Now the most unsuccessful side-project of the EU, the common currency, may one daytroublethe EU. EU-critical protest partiesmanaged to gain almost one third of the vote in least year’s EP elections, up from only one fifth in 2009. Apart from perhaps migration, the euro has without much doubt been the prominent factor in their success.

As Finland’s Foreign Minister Timo Soini said this week about the idea of a third Greek bailout round: “the Finnish public can’t understand that this is allowed to continue”.

Can anyone else?

Oil related stories:

WTI Tumbles Back To A $50 Handle On Iran, Default, And Cushing Build Fears

Having surged on Tuesday when the Iran “deal” was confirmed and tumbled yesterday despite inventory draws and production decreases, WTI crude is re-slumping back to a $50 handle this morning as traders cite more Iran concerns (flattening the curve) and a Genscape report that indicates inventory builds at Cushing once again…


It appears the algos have been turned upside down…


As we noted previously, worries over Shale Oil company indebtedness are resurging…

“The energy sector of the high-yield market continues to be a silo of misery,” Margie Patel with Wells Capital Management, told Bloomberg telephone interview. “If we stay near these levels, marginal high-cost producers won’t be able to survive.”


Bonds due in 2020 for Energy XXI, a driller in Louisiana, are now trading at 84.5 cents on the dollar, and Oklahoma-based SandRidge has seen its debt fall to 87 cents on the dollar.


The markets will get a clearer picture as second quarter earnings season arrives, as indebted shale companies provide some clues into their ongoing struggles.


However, the outlook moving forward may be gloomier than whatever they report in the second quarter.

Charts: bloomberg


Here Comes The Oil Glut: First Iranian Oil Tanker Sets Sail

Amid what is being reported as worrying discrepancies between the U.S. and Iranian interpretations of what had been agreed, an Iranian supertanker with 2 million barrels of oil is on its way to Asia after sitting in Iranian waters for months, likely to be the first vessel holding floating excess stocks to sail after the nuclear deal.



As David Sheppard (@OilSheppard) explains,

  • Vessel is the Starla from Iran’s NITC. Loaded at Iran’s Kharg Island terminal just over a month ago before going dark  
  • Appeared labelled as sailing to Iraq’s Basrah on June 8 – a smuggling tactic UK insurers have warned of in past  
  • Starla now listed as sailing to Singapore – which doesn’t have a waiver from US to take any Iranian oil  
  • If this is Iran (tanker owned by NTIC) sending message would be very interesting.
  • Tanker was in floating storage/off radar for month 
  • So interesting that Iran oil sailing to country that US does NOT allow to import Iran oil

*  *  *


Smugglers? Or Iran sending a message?


Your early morning currency, and interest rate moves


Euro/USA 1.0894 down .0043

USA/JAPAN YEN 124.01 up .103

GBP/USA 1.5620 down .0004

USA/CAN 1.2940 up .0011

This morning in Europe, the Euro fell again by a considerable 43 basis points, trading now just below the 1.09 level at 1.0894; 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 10 basis points and trading just above the 124 level to 124.01 yen to the dollar.

The pound was down  this morning by 4 basis points as it now trades well above the 1.56 level at 1.5620, 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 in the toilet again by 11 basis points at 1.2940 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 136.79 points or 0.67%

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

2/ Asian bourses all 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 green/


Gold very early morning trading: $1144.35



Early Thursday morning USA 10 year bond yield: 2.38% !!! up 3 in basis points from Wednesday night and it is trading well above  resistance at 2.27-2.32%

USA dollar index early Thursday morning: 97.55 up 38 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: 2.68%  down 1 in basis points from Wednesday

Closing Japanese 10 year bond yield: .45% !!! down 1 in basis points from Wednesday/still very ominous

Your closing Spanish 10 year government bond, Thursday, down 3 in basis points

Spanish 10 year bond yield: 1.98% !!!!!!

Your Thursday closing Italian 10 year bond yield: 1.99% down 1 in basis points from Tuesday: (very ominous)

trading 1 basis point higher than Spain.



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

Euro/USA: 1.0878 down .0059 ( Euro down 59 basis points)

USA/Japan: 124.13 down  .217 ( yen down 22 basis points)

Great Britain/USA: 1.5608 down .0017 (Pound down 17 basis points)

USA/Canada: 1.2961 up .0032 (Can dollar up 32 basis points)

The euro fell considerably today. It settled down 59 basis points against the dollar to 1.0878 as the dollar traded  northbound  today against all the various major currencies. The yen was down by 22 basis points and closing well above the 124 cross at 124.13. The British pound was down a tiny 17 basis points, closing at 1.5608. The Canadian dollar went back into the toilet by another 32 basis points closing at 1.2961.

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: 2.36% up 1 in basis point from Wednesday// (well above the resistance level of 2.27-2.32%)/ominous

Your closing USA dollar index:

97.64 up 48 cents on the day


European and Dow Jones stock index closes:

England FTSE up 42.70 points or 0.63%

Paris CAC up 74.26 points or 1.47%

German Dax up 177.10 points or 1.53%

Spain’s Ibex up 174.90 points or 1.54%

Italian FTSE-MIB up 390.39 or 1.69%


The Dow up 70.08  or 0.39%

Nasdaq; up 64.24 or 1.26%


OIL: WTI 51.01 !!!!!!!


Closing USA/Russian rouble cross: 56.90  up 5/100 roubles per dollar on the day


And now for your more important USA stories.

Your closing numbers from New York

Nasdaq Soars To Record High With Biggest Rally Since October’s “Bullard” Bounce

Artist’s imprerssion of Nasdaq trader’s reaction to the greek deal this week (forward to 45 seconds in…and feel the anticipation)

Stock went up… some more than others… as Futures show gapped up on the Greek vote – kept squeezing into the US open and then diverged with Nasdaq melting up…


Cash indices all gapped higher at the open but from that squeeze – there was major divergence (Dow Industrials and Trannies actually lower)


On the week, the Nasdaq is now up over 3.25%…


In summary…

*  *  *

The last few days saw the biggest short-squeeze in 5 months…


Which is helping The Nasdaq to its biggest 6-day run since October’s Bullard ramp…


And then there’s this massively free-cash-flow negative idiot-maker…


One more good reason why stocks just keep surging… JPY carry is back on now that Grexit event risk has been ‘removed’ from carry traders risks… fun-durr-mentals


VIXnado…back at an 11 handle!!


as The backwardation unwinds to the steepest in 2 months…


Bonds continued their rally with 30Y leading the way…


As it appears the Moar QE trade is back in full swing…


FX markets continued to be dominated by a plunge in EUR and JPY…


Commodities were mixed with copper limping higher as PMs leaked a little more and crude tumbled…



Crude continues to tumble back to a $50 handle as Iran and default fears mount…


Charts: Bloomberg

Bonus Chart: VXX hits its 347th Record Low……


The big Philly Fed bounce from last month completely reversed. Employment tumbles:

(courtesy Philly Fed Mfg index/zero hedge0

Philly Fed “Bounce” Plunges To 2015 Lows, Employment Tumbles

After June’s hope-strewn dead-cat-bounce, Philly Fed has plunged back to the lows of the year. Printing 5.7, missing expectations of 12.0, this is the biggest miss since January. It appears the weakness in Q1 (and Q2) and now Q3 was more than just weather… or port closures… as the employment index plunged to its lowest since January.


Not the post-weather bounce everyone called for…




Meanwhile hope remains…

Most of the survey’s broad indicators of future growth edged slightly higher this month. The future general activity index increased 2 pointsto its highest reading since January. The future index for new orders increased 1 point, while the future shipments index fell 6 points, after reaching a 10-month high in June.


The future employment index was essentially unchanged compared with last month. More than 31 percent of the firms expect expansion in their workforce over the next six months, while 9 percent expect a reduction.

or maybe it’s just more delusion.

Charts: Bloomberg


Jobless claims retreat a bit:

(courtesy BLS/zero hedge)

Initial Jobless Claims ‘Weakening Trend’ Hits 3-Month Highs

Following last week’s spike in initial jobless claims, this week saw a modest pull back to 281k (slightly better than the 285k expectations) but hovering at the average for the year, notably confirming that post-QE3 we have seen the improving trend in claims cease. The smoother 4-week average rose to 282k – the highest in almost 3 months.



Charts: bloomberg


Dave Kranzler on the criminality at the USA FED;

(courtesy Dave Kranzler IRD)

SoT Ep 43 – John Titus: The Fed And The Greece-ification Of America

The more I learn, the more I realize that the Fed is nothing but a criminal enterprise, that the guys at the top know it.  Everyone within breathing distance of top slots at the NY Fed is a criminal. Remember, the NY Fed shares space with the Exchange Stabilization Fund/Working Group on Financial Markets even though the latter is formally part of the Treasury.   –  John Titus, one conclusion from reading the 2009 FOMC transcripts

The only difference between Greece and the United States is that the United States can unilaterally print its own money – money that enables unlimited Government funding and allows the big banks to remain solvent.  The actual process of money printing and debt creation is implemented by the Federal Reserve and the Too Big To Fail Banks that operate as agents of the Fed.

John Titus is in the process of producing a video about the criminality of the Federal Reserve and its member banks.  His researched is derived from reading several of the transcripts from the 2009 FOMC meetings during the early stages of the QE programs. While the “minutes” of the Fed meeting – released three weeks after an FOMC meeting – summarize the FOMC’s policy stance, the transcripts are the most detailed record of FOMC meeting proceedings.  The release of the transcripts is delayed for five years.

 What comes out loud and clear from the transcripts is that not everybody is on board with policy decisions.  For example the purchase of mortgage-backed assets.  There’s lot of uneasiness among Fed members but ultimately they all go along with the plan. I’ve read a lot of transcripts – probably thousands – and what comes out of the Fed transcripts is that the plan has been decided on beforehand. The FOMC meetings are only there to hand down that plan, to discuss the plan, to discuss how to implement the plan and to prop up the idea that FOMC meetings are some sort of democratic process.  –  John Titus

I asserted in 2003 that the elitists running this country would hold the system up with printed money until they have swept every last crumb of middle class wealth off the table and into their own pockets.  “Middle class” for this purpose is defined as anyone who does not have enough cash laying around and the appropriate connections to buy their own Congressman.  The cut-off level of wealth for this is probably about $100 million in non-real estate wealth.

I always thought that the means to accomplish this was money printing and devaluation of the currency.  But true extraction mechanism is debt.   Banks and bankers create debt and make it readily available to their victims. It’s no different that dealing heroin. Get your target addicted and then keep selling it to the victim until it dies.

The bankers gained economic and political control in 1913 when the Fed was founded. Ever since then, there’s been a gradual transfer of wealth from the 99.9% to the .1%. There’s also been a slow, methodical dismantling  of the Constitution and Rule of Law.   In fact the Fed, the big banks and the big corporations have successfully pulled off a de facto coup d’etat of the U.S. Government.

I don’t consider the U.S. Government to be a sovereign Government because if you look at the sovereign function that a Government performs – money printing for instance – we’ve outsourced that to private banks (the Fed is a private bank). There are hardly any sovereign functions left in the U.S. that are performed by the Government.  – John Titus

Once the middle class ran of out real income to continue buying “things” – like houses, cars and consumption gadgets – the banks began to make debt readily available.  Ever since Nixon closed the gold window, thereby completely removing real money from our economic system, the level of debt has increased at an increasing rate every decade.   Over the last decade the total amount of debt in our system – public and private – has gone parabolic.

Even worse, the system of Rule of Law has been usurped by “Rule of Man.”  The elitists running the system are outright criminals who are immune from prosecution.  Think about it:  Eric Holder as Attorney General -the chief prosecutor in the country – stated that “some banks are too big to prosecute;”  the CEOs of the five big banks collectively admitted to committing felonies, yet none were prosecuted;  the leading candidate to be the next President – for now – has openly committed felonies and treason.   These people and corporations are above the law.

While John Titus is still in the process of researching the 2009 Fed transcripts for his video, he’s already concluded that the Fed is a criminal organization that is orchestrating the takeover of this country and is enabling the process of complete wealth extraction from the middle to class:

The basic point of the video is that the Fed will give as much money as the TBTF banks need in order to stay solvent and pay bonuses.  The Fed will also do whatever it takes to remove worthless assets, infected by criminal fraud, from big bank balance sheets.  The Fed is also monetizing U.S. debt, which it knew as soon as QE started.  

The Fed does these things knowing full well that these acts come at the direct expense of the economy. The logical outcome is what’s happening in Greece, where the powers that be insist that debt–which they know to be wholly fraudulent and which cannot be repaid–be paid back, with blood money if necessary.  The mere existence of TBTF banks is inconsistent with any number of things, including the Rule of Law and national and individual sovereignty.

The chief enabler of the Greece-ification of the U.S. is, without question, the Federal Reserves and the psychopaths running it…Our choice is stark: We can hang them for treason, or they will kill us. That process formally began with the 2008 bailouts. – John Titus



Well that about does it for tonight,

I will see you Monday night.







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