feb 11/Huge rise in gold of $53.20 as all bourses tumble/Deutsche bank’s credit default swaps at highest ever level/also Credit Suisse/All European sovereign debt climb in credit risk/Sweden raises into NIRP to -0.5%/Cushing OK refining set to overflow/Supposed rumour of Saudi cuts in oil production cuts the Dow loss to only 250 points/The SEC is probing invoicing by Boeing, claiming fraud/

Gold:  $1,247.90 up $53.20    (comex closing time)

Silver 15.79 up 51 cents

In the access market 5:15 pm

Gold $1146.25

Silver: $15.77

 

Today was the second day of Janet Yellen’s Humphrey Hawkins testimony to the House and the Senate.  This was the first time that I can recall ever that gold/silver rose while Yellen was speaking.  Gold had its best advance in over 16 years.  Gold in 2001 advanced by over 50 dollars with the famous UK’s chancellor’s abyss story.

 

At the gold comex today, we had a good delivery day, registering 200 notices for 20,000 ounces. Silver saw 0 notices for nil oz.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 204.24 tonnes for a loss of 99 tonnes over that period.

In silver, the open interest fell by a huge 3,519 contracts down to 161,145. In ounces, the OI is still represented by .805 billion oz or 115% of annual global silver production (ex Russia ex China).

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

In gold, the total comex gold OI rose by 524 contracts to 411,357 contracts despite the fact that gold was down $3.00 with yesterday’s trading.

We had no change in gold inventory at the GLD,  / thus the inventory rests tonight at 702.03 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. Our 670 tonnes of rock bottom inventory in GLD gold has been broken. It looks to me that China has taken the last amounts of physical gold from the GLD. I guess the only place left for China to receive physical gold, after they deplete the GLD will be the FRBNY and the comex.   In silver,/we had another withdrawal in inventory of 619,000 oz and thus/Inventory rests at 308.380 million oz.

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

1. Today, we had the open interest in silver fall by 3519 contracts down to 161,145 as the price of silver was down 17 cents with yesterday’s trading.   The total OI for gold rose by 524 contracts to 411,357 contracts despite gold being down $3.00 in price from yesterday’s level.

(report Harvey)

2 a) Gold trading overnight, Goldcore

(Mark OByrne)

b) Gold trading from NY”

(zero hedge)

3. ASIAN AFFAIRS

 

i)  Late  WEDNESDAY night/ THURSDAY morning: Shanghai closed for the Chinese New Year (all week)  / Hang Sang closed badly by 742 points or 3.85% . The Nikkei was closed. The only bourse that was up was Australia’s all ordinaries. Chinese yuan (ONSHORE) closed 6.5710  and yet they still desire further devaluation throughout this year.   Oil lost  to 26.47 dollars per barrel for WTI and 30.35 for Brent. Stocks in Europe so far deeply in the red . Offshore yuan trades where it finished on Friday at 6.5600 yuan to the dollar vs 6.5710 for onshore yuan/

( zero hedge)

 

ii) Kyle Bass explains in simple language the problem facing China.  The country has 10 trillion USA equiv in GDP.  The country has debt (sovereign + corp+ household) of 34.5 trillion dollars.  No doubt that about 20% of that debt is non performing and with a recovery of 50%, then 3 trillion uSA will be lost and sovereign China will need to recapitalize their banks. Their entire reserves are 3.2 trillion which is made up of gold, USA dollars and Euros.

( CNBC/Kyle Bass)

 

EUROPEAN AFFAIRS

 

i) Something big is up!!  Deutsche bank’s credit default swaps are back to record highs. Credit default swaps are simply a bet on the survival of the bank itself.  Many belief that they are toast!!

( zero hedge)

ii) And then it is not just Deutsche bank, it is the entire European sovereign risk that is blowing out.  Sovereign Portugal has seen its bond yields rise over 200 basis points for the

past week.
( zero hedge)

iii) And now Credit Suisse’s credit default swaps are blowing out!!

(zero hedge)

iv) We brought this to your attention yesterday.  The EU are now probing the banks on SSA debt: how much more will  Deustche bank have to pay for their misdeeds:

( zero hedge)

v) This will be scary for many in the oil patch as one of the largest lenders to oil is BNP and they are exiting the reserve base lending oil business:

( zero hedge)
RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)it is getting quite dangerous in the northern section of Syria namely Aleppo. It was announced that the USA after flying in from Turkey bombed out 9 targets without discussing what they were.  It seems that two hospitals were hit. Saudi Arabia is ready to enter the fray and if they do, then prepare for World War iii.

( zero hedge)

 

ii) The rhetoric between Iran and Saudi Arabia is getting firece.  Iran is holding nothing back. If Saudi Arabia invades;  it will be suicide:

( zero hedge)
iii) Turkey says no to the EU refugee plan to resettle 250,000 refugees per year directly from Turkey.  They demand that Turkey is to close off the Aegean sea route to Greece. With the siege on Aleppo now, many Syrian are fleeing that city and the situation will get far worse
( zero hedge)

 

GLOBAL ISSUES

i) Sweden upon seeing its Swedish kroner rise in value, decided that it was best to increase its NIRP further, this time to -.5%.  The Swedish bank governor stated that his nation was not experiencing any inflation and with the higher kroner, their exports were suffering. Thus currency wars at its finest as we now are in a war in a race to the bottom of the currency ladder:( zero hedge)

 

OIL MARKETS

i)Last night:

Phillips 66 dumps crude on Cushing OK refiners.  As we have been pointing out to you on several occasions, Cushing has no refining space whatsoever.  This caused WTI price to fall into the 26 dollar handle and create conditions similar to a stock bloodbath.  We now have an oil bloodbath;

( zero hedge)

 

ii) This morning:

Oil is back to the 26 dollar handle after the Saudi Headlines

(courtesy zero hedge)

iii) More and more investors believe that Cushing Oklahoma refining will overflow:

( zero hedge)
iv)   a.Then late in the day:
The UAE supposedly speaking on behalf of Saudi Arabia states that OPEC is ready to cooperate on a cut in production.  We will see how long this story lasts:

(courtesy zero hedge)
iv  b. Then the Wall Street Journal comes out and states that the above story is bogus:

( Wall Street Journal/zero hedge)
v)An OPEC production cut is unlikely until the USA production declines by at least 1 million barrels per day.  Thus if they do a production cut it will accomplish nothing except a very short term increase in price
(courtesy Arthur Berman/OilPrice.com)
PHYSICAL MARKETS
i)Early last night, gold breaks the 1200 dollar barrier
(zero hedge)

ii)Now everybody is jumping on the bangwagon to buy gold

what a joke!!  All of the banks are massively short of gold and must cover.

( zero hedge)

 

iii)I did not know that Canada had any gold reserves.  They sold half of what they held  (1.3 tonnes) and now they have only 1.7 tonnes left.  Such morons!!
( Global News/GATA)

iv)The World Gold Council on gold demand

(Chris Powell/GATA)

 v) They are lining up around the block in London by gold today:
(Mike Krieger/GATA)
vi )Bill Holter’s paper tonight is a good one.  It is entitled:

KABOOM!!! Are you ready for reality?”

USA STORIES WHICH WILL INFLUENCE THE PRICE OF GOLD/SILVER

i)The carnage today in USA bank stocks and its bonds:

( zero hedge)

ii)Even though initial claims are now this week, Goldman warns that increases in the jobless will be forthcoming!

( zero hedge)

iii) Seems that the SEC is accusing Boeing of fraud:

( zero hedge)

iv) You will get a good laugh at the following.  Janet Yellen is the real source of the leak and everybody knows it. She has no authority whatsoever to prevent the handing over of documents from the FOMC transcripts.  This will be fun to follow in the upcoming few weeks:

(courtesy zero hedge)

Let us head over to the comex:

 

The total gold comex open interest rose to 411,357  for a gain of 524 contracts despite the fact that the price of gold was down $3.00 in price with respect to yesterday’s trading.   For the past two years, we have strangely witnessed two interesting developments with respect to the gold open interest:  1) total gold comex collapse in OI as we enter an active delivery month, and 2) a continual drop in the amount of gold standing in an active month.   Today, both scenarios were in order.  In February  the OI fell by 1096 contracts down to 961. We had 872 notices filed on yesterday, so we lost 224 contracts or an additional 22,400 oz will not stand for delivery as they were cash settled. The next non active delivery month of March saw its OI rise by 34 contracts up to 1855. After March, the active delivery month of April saw it’s OI rise by 480 contracts up to 294,073. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was 363,572 which is huge. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was poor at 176,295 contracts. The comex is in backwardation until June. 

 

Today we had 200 notices filed for 20,000 oz.
And now for the wild silver comex results. Silver OI fell by 3519 contracts from 164,664 down to 161,145 as the price of silver was down by 17 cents with respect to yesterday’s trading. The next non active delivery month of February saw its OI fall by 2 contracts down to 18. We had 4 notices filed on yesterday, so we gained 2 silver contracts or an additional 10,000 oz will stand in this non active month of February. The next big active contract month is March and here the OI fell by 9,218 contracts down to 80,938.  The volume on the comex today (just comex) came in at 93,323 , which is huge. The confirmed volume yesterday (comex + globex) was huge as well at 79,769. Silver is not in backwardation at the comex but is in backwardation in London.
 
We had 0 notices filed for nil oz.
 

Feb contract month:

INITIAL standings for FEBRUARY

Feb 11/2016

Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  nil oz
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz  nil
No of oz served (contracts) today 200 contracts
(20,000 oz)
No of oz to be served (notices) 761 contracts (76100 oz )
Total monthly oz gold served (contracts) so far this month  1918 contracts (191,800 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 503,410.8 oz
Today, we had 0 dealer transactions
total deposit: nil
We had 0  customer withdrawals
we had 0 customer deposit:

we had 0 adjustments.

 

Here are the number of oz held by JPMorgan:

 JPMorgan has a total of 72,439.454 oz or 2.253 tonnes in its dealer or registered account.
***JPMorgan now has 634,557.764 or 19.737 tonnes in its customer account.
Today, 0 notices was issued from JPMorgan dealer account and 115 notices were issued from their client or customer account. The total of all issuance by all participants equates to 200 contract of which 0 notice was stopped (received) by JPMorgan dealer and 39 notices were stopped (received)  by JPMorgan customer account. 
 
To calculate the initial total number of gold ounces standing for the Jan contract month, we take the total number of notices filed so far for the month (1918) x 100 oz  or 191,800 oz , to which we  add the difference between the open interest for the front month of February (961 contracts) minus the number of notices served upon today (200) x 100 oz   x 100 oz per contract equals the number of ounces standing.
 
Thus the initial standings for gold for the February. contract month:
No of notices served so far (1918) x 100 oz  or ounces + {OI for the front month (961) minus the number of  notices served upon today (200) x 100 oz which equals 290,300 oz standing in this active delivery month of February ( 8.3328 tonnes)
 
we lost 224 contracts or an additional 22,400 oz will not stand for delivery
We thus have 8.3328 tonnes of gold standing and 7.5589 tonnes of registered gold for sale, waiting to serve upon those standing.  The bankers are still doing their best in cash settling as there is not enough registered gold to satisfy those that are standing.
Total dealer inventor 243,0189.740 or 7.5589
Total gold inventory (dealer and customer) =6,566,356.008 or 204.24 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 204.24 tonnes for a loss of 99 tonnes over that period. 
 
JPMorgan has only 21.99 tonnes of gold total (both dealer and customer)
end
 
 
And now for silver

FEBRUARY INITIAL standings/

feb 11/2016:

Silver
Ounces
Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory   629,924.580 oz

Brinks,Scotia

Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 946,049.750 oz,
(JPM,Delaware,
HSBC,)
No of oz served today (contracts) 0 contracts nil oz
No of oz to be served (notices) 18  contracts (90,000 oz)
Total monthly oz silver served (contracts) 120 contracts 600,000
Total accumulative withdrawal of silver from the Dealers inventory this month nil oz
Total accumulative withdrawal  of silver from the Customer inventory this month 6,471,280.0 oz

Today, we had 0 deposits into the dealer account: 

total dealer deposit;nil  oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

we had 3 customer deposits:

i) Into JPM: 579,238.130 oz

ii) Into Delaware:  7046.930 oz

iii) Into HSBC: 359,764.690 oz

 

total customer deposits: 946,049.750 oz

We had 2 customer withdrawals:
i) Out of Brinks:  579,238.130 oz
ii) Out of Scotia: 50,686.450 oz
 
 

total withdrawals from customer account 629,924.580   oz 

 we had 0 adjustments:

 

The total number of notices filed today for the February contract month is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in February., we take the total number of notices filed for the month so far at (120) x 5,000 oz  = 600,000 oz to which we add the difference between the open interest for the front month of February (18) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing
 
Thus the initial standings for silver for the February. contract month:
120 (notices served so far)x 5000 oz +(18{ OI for front month of February ) -number of notices served upon today (0)x 5000 oz   equals 690,000  of silver standing for the February. contract month.
 
we gained 10,000 oz or 2 additional silver contracts that will  stand in this non active delivery month of February.
Total dealer silver:  28.904 million
Total number of dealer and customer silver:   157.588 million oz
end
The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.There is now evidence that the GLD and SLV are paper settling on the comex.***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:i) demand from paper gold shareholders ii) demand from the bankers who then redeem for gold to send this gold onto China

And now the Gold inventory at the GLD:

Feb 11/no change in inventory/inventory rests at 702.03 tonnes

Feb 10/ a withdrawal of 1.49 tonnes of gold from the GLD/Inventory rests at 702.03 tonnes

Feb 9./a huge addition of 5.06 tonnes of gold into the GLD/Inventory rests at 703.52 tonnes/ (no doubt that this addition is paper gold/not physical/

Feb 8/no change in inventory/inventory rests at 698.46 tonnes

FEB 5/another massive 4.84 tonnes added to the GLD/Inventory rests at 698.46 tonnes/this is a paper gold addition and this vehicle is nothing but a fraud. There is no metal behind it.

FEB 4/another massive 8.03 tonnes added to the GLD/Inventory rests at 693.62 tonnes.

in a little over a week we have had 29.43 tonnes added to the GLD.  Judging from the backwardation of gold in London, it would be impossible to bring that quantity into the GLD. No doubt that the entry is a “paper” gold deposit.

Feb 3.2016: a massive 4.16 tonnes deposit of gold at the GLD/Inventory rests at 685.59 tonnes..  In a little over a week, we have had 21.42 tonnes enter the GLD. Without a doubt that this entry is paper gold.  It would be impossible to find 21 tonnes of physical gold and load the GLD.

Feb 2.2016: no changes in inventory at the GLD/inventory rests at 681.43 tonnes

Feb 1/a massive deposit of 12.20 tonnes of gold inventory/Inventory rests at 681.43

JAN 29/2016/no change in gold inventory at the GLD/Inventory rests at 669.23 tonnes

jAN 28/no changes in gold inventory at the GLD/Inventory rests at 669.23

jan 27/another huge addition of 5.06 tonnes of gold to GLD/Inventory rests at 669.23 tonnes /most likely the addition is a paper deposit and not real physical,especially with gold in backwardation in both London and the comex.

Jan 26.no change in gold inventory at the GLD/Inventory rests at 664.17 tonnes

 

Feb 11.2016:  inventory rests at 702.03 tonnes

 

Now the SLV:
feb 11/ a withdrawal of 619,000 oz/inventory rests at 308.380 million oz/
Feb 10/no change in inventory at the SLV/rests at 308.999 million oz/
Feb 9/no change in inventory at the SLV/Inventory rests at 308.999 million oz/
Feb 8/no change in inventory at the SLV/Inventory rests at 308.999 million oz
FEB 5/we had no change in silver inventory at the SLV/Inventory rests at 308.999 million oz
FEB 4/we had another small withdrawal of 381,000 oz of silver./inventory rests at 308.999 million oz
Feb 3.2016: a small withdrawal of 130,000 oz and this is probably to pay fees
Inventory rests at 309.380 million oz
Feb 2.2016: no changes in inventory at the SLV/inventory rests at 309.510 million oz/
Feb 1/no change in inventory at the SLV/Inventory rests at 309.510 million oz
JAN 29//we had another change in silver inventory/another withdrawal of 1.143 million oz of silver./inventory rests at 309.510 million oz
JAN 28/no changes in silver inventory at the SLV/Inventory rests at 310.653 million oz
Jan 27.2017: no changes to inventory/rests at 310.653 million oz
Jan 26.2016: a huge withdrawal of 953,000 oz/silver inventory rests tonight at 310.653 million oz
Feb 11.2016: Inventory 308.380 million oz.
1. Central Fund of Canada: traded at Negative 5.5 percent to NAV usa funds and Negative 6.4% to NAV for Cdn funds!!!!
Percentage of fund in gold 63.6%
Percentage of fund in silver:36.4%
cash .0%( feb 11.2016).
2. Sprott silver fund (PSLV): Premium to NAV rises to  +1.40%!!!! NAV (feb 11.2016) 
3. Sprott gold fund (PHYS): premium to NAV rises to- 0.47% to NAV feb 11/2016)
Note: Sprott silver trust back  into positive territory at +1.40%/Sprott physical gold trust is back into negative territory at -0.47%/Central fund of Canada’s is still in jail.
 
 
 

end

And now your overnight trading in gold, THURSDAY MORNING and also physical stories that may interest you:

Trading in gold and silver overnight in Asia and Europe
(COURTESY MARK O”BYRNE)
 

Gold Surges 3.2% To $1,241/oz As Deutsche Bank And Other Stocks Fall Sharply

 

Gold has surged over 3% today on increased safe haven demand as stocks and in particular bank stocks see sharp falls. German shares have nose dived again and German colossus Deutsche Bank has fallen over 8%.

gold_surges
Futures – 1 Day Relative Performance – Finviz.com

A host of negative factors sent investors fleeing riskier assets. Oil prices slid on inventory data and on concerns about slowing global growth as Federal Reserve Chair Janet Yellen warned of several risks facing the U.S. and Chinese economies, and the global economy.

 

Gold and Silver News and Commentary

Central banks and Chinese buyers helping to spur gold demand – Reuters

Flight to safety sends gold surging above $1,200 to 8-1/2 month highs after Yellen – Reuters

Indian gold demand to climb in 2016 as buyers seek safe haven – Reuters

Gold demand jumps as fear grips markets – Telegraph

Banks drag European shares down as investors seek safety in gold – Independent

VIDEO: JP MORGAN – Gold Rally Breaks the Bullion Downtrend – Bloomberg

VIDEO: I’ve never liked gold-but I do now: Trader – CNBC

Why Gold Has Been on a Tear in 2016 – Fortune

“It’s Probably Something” – Gold Surges Above $1200; USDJPY, Oil, Stocks Plunge – Zero Hedge

China is on a massive gold buying spree – CNN Money

Click here

 

LBMA Gold Prices

11 Feb: USD 1,223.25, EUR 1,080.80 and GBP 847.33 per ounce
10 Feb: USD 1,183.40, EUR 1,052.29 and GBP 816.56 per ounce
9 Feb: USD 1,188.90, EUR 1,061.90 and GBP 822.31 per ounce
8 Feb: USD 1,173.40, EUR 1,050.16 and GBP 810.44 per ounce
5 Feb: USD 1,158.50, EUR 1,035.58 and GBP 797.40 per ounce

 

GoldCore Note: Banks, economists, brokers, financial advisers and other experts did not see the first crisis coming in 2008 and they are not seeing it now.

A handful of people are warning about the risks and again they are largely being ignored. Investors and savers will again bear the brunt for the inability to look at the reality of the financial and economic challenges confronting us today.

Diversification remains the key to weathering the second global financial crisis.

Mark OByrne
Published in Daily Market Update
 
 
 
end
 
 
Early last night:
 
(courtesy zero hedge)
 
 

“It’s Probably Something” – Gold Surges As $1200 Stops Taken Out; USDJPY Plunges

With US markets failing to hold on to today’s “Deutsche Bank” euphoric gains today despite, or rather due to Janet Yellen’s Congressional testimony, traders in mainland China remains locked out due to the Lunar New Year holiday, while Japan is mercifully taking a break – mercifully, because otherwise the Nikkei would be crashing. However, one market is back online as Hong Kong traders return to their desks to see carnage around the globe, and most importantly, are unable to hedge arbed exposure between China, Japan and the US.

So, with few options, they are buying the one asset that provides the best cover to central banks losing faith, demonstrated most vividly by the total failure of the BOJ, and as a result just as Yen soars above 113… with USDJPY down a stunning 10 handles from the post-NIRP highs…

 

.. and Gold has taken out the numerous $1,200 stops and is currently surging to levels not seen in almost a year.

What is causing this mad rush into gold is unclear, but… it’s probably something.

Meanwhile, as gold is soaring, its BOJ pair trade equivalent (as described in An Inside Look At The Shocking Role Of Gold In The “New Normal“) the USDJPY, just tumbled below 113 for the first time since 2014, and with no support levels until 110, this may just be the final straw not only for Kuroda but for the entire Abenomics house of hollow cards.

In any case, don’t expect the gold surge to last too long: our good friend, Benoit Gilson, manning the Bank of International Settlements’ gold and FX desk, will be on alert very shortly.

Away from currencies, WTI is also collapsing, to a $26 handle…

 

This broad-based flush has the feel of some HK hedge fund liquidation.

end

 

Now everybody is jumping on the bangwagon to buy gold

what a joke!!  All of the banks are massively short of gold and must cover.

(courtesy zero hedge)

 

Everyone Jumping On The Bandwagon: BofA Says To Stay Long Gold Until $1,375, “$1,550 A Possibility”

First it was Goldman confirming that when it comes to penning “investment theses”, all Wall Street knows how to do is jump on a momentum bandwagon, when it said overnight that  there’s scope for gold prices to “extend much higher over time.” Now it’s Bank of America’s turn.

Here is the latest chart magic from BofA’s technical strategist Paul Ciana:

Staying long gold

 

Gold prices are breaking above triple resistance forming a technical bottom and channel breakout. This projects gold higher to 1,315 and 1,375. The gap in the distribution on the left shows 1,550 is a possibility, though we are not making that our target at this point.

 

We remain long gold on a technical basis.

 

 

Normally, these recommendations would be enough to send gold plunging; however with gold soaring over $50 on the day, its biggest move since September 2013…

… despite bullish calls by not only Goldman and BofA but even Dennis Gartman, perhaps this time it’s different?

end
I did not know that we had any gold reserves.  They sold half of what they held  (1.3 tonnes) and now they have only 1.7 tonnes left.  Such morons!!
(courtesy Global News/GATA)

Canada sells nearly half its gold reserves, 1.3 tonnes — 1.7 tonnes remain

Submitted by cpowell on Thu, 2016-02-11 01:38. Section: 

By Monique Muise
Global News, Burnaby, British Columbia, Canada
Wednesday, February 10, 2016

The government of Canada sold nearly half its gold reserves in recent weeks, continuing a pattern of moving away from the precious metal as a government asset.

According to the International Monetary Fund’s International Financial Statistics, Canada held 3 tonnes of gold reserves as of late 2015.

The latest data, published last week, show the total Canadian gold reserves now stand at 1.7 tonnes. That’s just 0.1 per cent of the country’s total reserves, which also include foreign currency deposits and bonds. In comparison, the U.S. holds 8,133 tonnes of gold, while the United Kingdom weighs in at 310 tonnes.

The decision to sell came from Finance Minister Bill Morneau’s office. …

… For the remainder of the report:

http://globalnews.ca/news/2508940/canada-sells-nearly-half-of-all-its-go…

end

 

The World Gold Council on gold demand

(Chris Powell/GATA)

 

World Gold Council celebrates the obvious about gold demand

Submitted by cpowell on Thu, 2016-02-11 06:48. Section: 

The world discerns easily enough where gold demand comes from. Why doesn’t the World Gold Council ever attempt a report on gold supply trends? After all, that would require putting only a few more questions to certain governments and central banks.

* * *

Central Banks and Chinese Buyers Helping to Spur Gold Demand, World Gold Council Says

By Susan Fenton
Reuters
Thursday, February 11, 2015

LONDON — Buying by central banks as well as Chinese investors seeking protection from a weakening currency helped lift demand for gold in the final quarter of last year and the trend looks set to continue, the World Gold Council said today.

China remained the world’s biggest consumer of gold last year, ahead of India, with economic headwinds influencing purchasing, the WGC said in its annual “Gold Demand Trends” report. The WGC’s members include the world’s leading gold mining companies.

Chinese demand for gold coins surged 25 percent in the fourth quarter from a year earlier as consumers sought to protect their wealth after Beijing devalued the yuan currency. But stock market turmoil and a slowing economy knocked consumer sentiment and Chinese demand for gold for jewellery fell 3 percent from a year earlier, the WGC said. …

… For the remainder of the report:

http://www.reuters.com/article/gold-wgc-idUSL8N15P1WB

 

end

 

the following is music to my ears:

(courtesy Mike Krieger/GATA)

 

Lines Around The Block To Buy Gold In London; Banks Placing “Unusually Large Orders For Physical”

This is the best quarterly performance for Gold in 30 years…

 

And as Mike Krieger of Liberty Blitzkrieg blog details, physical demand is soaring…

First, let’s look at the improved fundamentals. Gold bugs will exasperatingly proclaim that fundamentals have been great for the past four years yet the price plunged anyway, so who cares about fundamentals? To this I would respond with two observations. First, large institutional investors and sovereign wealth funds have been anticipating a rate hike cycle for a very long time now. They didn’t know when, but they expected it. The fact that the gold bugs never believed this is irrelevant; what matters is that big money believed it, and it was perceived to be very gold negative. In their minds, this anticipated rate hike cycle would confirm that things were getting back to normal, and if things are normal you don’t need to own gold, right?

 

The problem is that this assumption is quickly being called into question. Sure the Fed hiked rates once, but it is starting to look more and more like a policy error. Meanwhile, other major central banks around the world are going in the opposite direction, toward negative rates. I am a huge believer in market psychology, and the psychology dominating the minds of most institutional investors over the past few years has been that things were slowly getting back to normal. This has weighed on institutional demand for gold in a big way, and been a meaningful factor in the bear market (manipulation aside). If this psychology shifts, the shift back into gold could be very meaningful.

 

While that backdrop is interesting in its own right, what may make the move into gold that much more explosive is the lack of alternative investments…

 

– From the February 3, 2016 post: GOLD – It’s Time to Pay Attention

What a difference a couple of weeks can make. The Telegraph is reporting the following:

BullionByPost, Britain’s biggest online gold dealer, said it has already taken record-day sales of £5.6m as traders pile into gold following fears the world is on the brink of another financial crisis.

 

Rob Halliday-Stein, founder and managing director of the Birmingham-based company, said takings today had already surpassed the firm’s previous one-day record of £4.4m in October 2014.

 

BullionByPost, which takes orders of up to £25,000 on the website but takes higher amounts over the phone, explained it had received a few hundred orders overnight and frantic numbers of phone calls this morning.

 

“The bullion market has been building with interest since the end of last year but this morning things have gone bananas,” said Mr Halliday-Stein. “Some London banks are placing unusually large orders for physical gold.”

 

London-based ATS Bullion added it had been inundated with orders for the past week. The firm has sold 4,000 gold bars and coins since February 1, a 40pc rise on the same period a year ago when it sold 1,500.

 

“It’s been crazy – it’s been the best week since 2012. We’ve had people queuing round the block,” said Michael Cooper of ATS Bullion, a family run firm that trades online and also from an outlet in the West End.

But that’s just part of the story. As reported by the World Gold Council, the buying really started to pick up in the fourth quarter, courtesy of the Chinese and central banks. Reuters notes:

Buying by central banks as well as Chinese investors seeking protection from a weakening currency helped lift demand for gold in the final quarter of last year and the trend looks set to continue, the World Gold Council said on Thursday.

 

Chinese demand for gold coins surged 25 percent in the fourth quarter from a year earlier as consumers sought to protect their wealth after Beijing devalued the yuan currency. But stock market turmoil and a slowing economy knocked consumer sentiment and Chinese demand for gold for jewelry fell 3 percent from a year earlier, WGC said.

 

Central banks have been buying gold to diversify their reserves away from the U.S. dollar and their purchases edged up to 588.4 tonnes last year, second only to a record high 625.5 tonnes in 2013, the report showed.

 

Central bank buying accelerated sharply in the second half of last year and jumped 25 percent in the fourth quarter, from a year earlier, as the need to diversify was reinforced by falling oil prices and reduced confidence in the global economy, WGC said.

 

Chinese demand for gold totaled 985 tonnes last year, followed by India on 849 tonnes. They accounted for nearly 45 percent of total global demand, with consumer demand up 2 percent and 1 percent respectively in those countries.

Think about the lack of gold buying from the U.S. relative to its global wealth and it becomes quite easy to see where the fuel for the next bull market will come from.

Meanwhile, on the supply side…

Global supply of gold fell 4 percent last year to 4,258 tonnes, partly because of slower mine production.

 

Mining companies have scaled back since 2013 in a bid to slash costs and mine production shrank in the fourth quarter of 2015, the first quarterly contraction since 2008, WGC said.

For related articles, see:

GOLD – It’s Time to Pay Attention

4 Mainstream Media Articles Mocking Gold That Should Make You Think

 

end

 

KABOOM!!! Are you ready for reality?

 

Hopefully you have read between the lines of my writings over the last few weeks and felt the urgency of the situation.  Markets all over the world are coming apart at the seams and “control” is rapidly being lost.  I would like to mention, over the years there has been one “rule” never broken.  Almost ALWAYS, whenever the president of the U.S. speaks, or whenever the Fed meets and issues a policy statement …or whenever the Chairman of the Fed speaks …”control” is at its greatest.
What have we seen this time?  Janet Yellen testified yesterday and is doing so again today.  The markets have come unglued.  In particular, gold is now up $56 dollars for the largest gain since 2009 http://www.telegraph.co.uk/finance/personalfinance/investing/gold/12151847/Market-panic-pushes-gold-buying-to-highest-level-since-financial-crisis.html  .  Mrs. Yellen is now out of her league as many of her comments are not making sense and are actually contradictory of what she may have just said.
  For example, her prepared remarks speak of tightening rates at future meetings.  She was asked “is the Fed out of bullets” and she goes into the talk about negative rates.  “Negative rates” are NOT ammunition.  Negative rates are outright panic and desperation.  I would also mention, the Fed has been at zero percent rates for 6-7 years, any lower rates (negative) are at this point the only plan B.  But Mrs. Yellen said yesterday (and probably again today) the Fed does not know the “legality” of negative rates.  How is this even possible?  They have had all these years to research negative rates …yet to this day she doesn’t know if it is even legal?  I would also add, Mrs. Yellen is so clueless she does not understand their rate hike was the spark that lit this thing up in the first place.  Please don’t get me wrong, the fire was going to start somewhere, I just didn’t think the Fed would be the one striking the match!
  Folks, let me put this into plain speak for you.  If to this day the Fed does not know if negative rates (which has been a potential topic for well over two years) are legal, does this mean there is no plan “B”?  Actually, does this mean there HAS BEEN no plan B all along???  Legal or not legal, were the Fed to move to negative rates, a “run” on everything will occur.  A run on the banks and a run on the currency and thus a RUN ON THE CENTRAL BANK ITSELF!  The big problem is this, the dollar is the lynchpin “reserve” currency for the entire world, what would it say if we had to move to negative rates …because NOTHING ELSE WORKED? 
Of course, negative rates are a hypothetical at this point.  I say “hypothetical” because the markets must be open in order to even try this “plan B”.  You can now completely forget about technical levels for anything and everything as fundamentals are trumping everything.  In case you do not understand what I am saying here, the fundamentals of “BROKE IS BROKE” will trump buying the dips, selling the rallies blah blah blah.  We are at the point where “trust” is breaking down and “get me out” at any price is beginning to take over. 
  Much of the selling is being forced.  As I wrote three or four weeks back, this is a margin call which is now self propelled in motion.  Sales to meet margin calls are further depressing asset prices and creating yet more calls in a reinforcing and now a continuous negative loop.  As I mentioned above, “control” is being broken and with it the thought process “the government will never let it happen” is also being broken.  As everything financial is “levered” or done with borrowed money, how much larger are the actual losses to “equity” and how much longer can it go until we see trading defaults?  This I believe accounts for gold’s huge move today.  Gold cannot “default” and default is exactly where the entire system is headed.  You are now getting the answer to your question of where capital will flee once REAL FEAR begins because the levers don’t work anymore!
Let me finish with this, you are watching the system implode upon itself.  At a time when liquidity on a global basis is very tight, a global margin call (created by the Fed) is being issued.  They have started a process in motion that will not be stopped.  The morning will soon come when markets simply cannot meet the call and will not open.  At this point, credit of all sorts will freeze up.  The stark reality that has been hidden for so long by so many “tricks” will finally hit the world square between the eyes like a 2×4!  As we have tried to guide you for so long, the “day of reality” is arriving and the “reality” is truly ugly.  Are you ready for reality?
Standing watch,
Bill Holter
Holter-Sinclair collaboration
Comments welcome!  bholter@hotmail.com
 

And now your overnight THURSDAY  morning trades in bourses, currencies and interest rate from Asia and Europe:

1 Chinese yuan vs USA dollar/yuan FLAT to 6.5710 / Shanghai bourse: CLOSED/CHINA’S NEW YEAR ALL WEEK / hang CLOSED DOWN 742 POINTS OR 3.85%

2 Nikkei closed 

3. Europe stocks all in the RED /USA dollar index down to 95.60/Euro up to 1.1319

3b Japan 10 year bond yield: rises  TO +.022    !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 114.95

3c Nikkei now well below 18,000

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

3e WTI:: 26.68  and Brent: 30.34

3f Gold UP  /Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund falls  to 0.204%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate rise to 14.71%/: 

3j Greek 10 year bond yield rise to  : 10.75%  (yield curve deeply  inverted)

3k Gold at $1233.80/silver $15.55 (7:45 am est) 

3l USA vs Russian rouble; (Russian rouble down 47/100 in  roubles/dollar) 79.73

3m oil into the 26 dollar handle for WTI and 30 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/expect a huge devaluation imminently from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning 0.9732 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1013 well above 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 on criminal charges/arrests 10 traders for Euribor manipulation

3r the 8 year German bund now  in negative territory with the 10 year falls to  + .204%/German 8 year rate negative%!!!

3s The Greece ELA at  71.5 billion euros,

The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.  Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 1.57% early this morning. Thirty year rate  at 2.41% /POLICY ERROR)

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

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

 

Markets Around The World Are Crashing; Gold Soars

Yesterday morning, when musing on the day’s key event namely Yellen’s congressional testimony, we dismissed the most recent bout of European bank euphoria which we said “will be brief if not validated by concrete actions, because while central banks have the luxury of jawboning, commercial banks are actually burning through funds – rapidly at that – and don’t have the luxury of hoping for the best while doing nothing.” This morning DB has wiped out all of yesterday’s gain.

As for Yellen’s testimony, we said that “she can send stocks reeling with one word out of place” – the word in question being not what she said but what she didn’t say, in this case not being dovish enough and thus supportive enough of risk. And the consequence is there for all to see as soon as their trading terminal boots up: everything is crashing (with the exception of China which is on holiday, and Japan which was mercifully closed yesterday). Here are the highlights:

  • S&P 500 futures down 1.8% to 1814
  • Stoxx 600 down 3.4% to 304
  • FTSE 100 down 2.6% to 5525
  • DAX down 2.9% to 8760
  • German 10Yr yield down 7bps to 0.18%
  • MSCI Asia Pacific up 0.1% to 117
  • Hang Seng down 3.8% to 18546
  • S&P/ASX 200 up 1% to 4821
  • US 10-yr yield down 5bps to 1.62%
  • Dollar Index down 0.42% to 95.49
  • WTI Crude futures down 2.9% to $26.65
  • Brent Futures down 1.7% to $30.31
  • Gold spot up 1.9% to $1,220
  • Silver spot up 1.5% to $15.50

It all started in Hong Kong where as we reported last night, the Hang Seng Index plunged 3.9%, catching up with the week’s selloff as the market reopened from a holiday, and capping its worst Lunar New Year start since 1994.

Japan’s Nikkei Stock Average and China’s Shanghai Composite Index were both closed, but investors continued to pile into the yen, as virtually every carry trade has fallen apart in the past month. As a result, the dollar was down 1.8% against the yen at ¥111.28 after sliding below 111 briefly, a massive gain of nearly 300 pips in the past 24 hours, sending the Yen to the lowest level since October 2014 when Kuroda expanded QE.

 

In the first 9 days of this month, the Yen has risen 985 pips: That is biggest advance, in pip terms, since Oct. 1998; that month, the currency rose 1,563 pips from 130.03 to 114.40 over nine trading days ended Oct. 19. Elsewhere, the euro was up 0.4% against the dollar at $1.1325, its highest since October.

It wasn’t just FX: European stocks slid toward their lowest since September 2013 and U.S. futures indicated equities will open nearly 2% and put the recent support level of 1812 in danger of being breached.

Among the key European movers was Societe Generale which tumbled 12% after reporting that quarterly profit missed estimates as earnings at the investment bank fell and it set aside provisions for potential legal costs.  Elsewhere, Rio Tinto Group slipped 4.1% as it scrapped its progressive dividend policy and set out new spending cuts.

“Financial markets are repricing for a global growth slowdown,” said Tim Condon, head of Asian research at ING Groep NV in Singapore. “Expectations that monetary policy would be able to do much have diminished considerably.”

Just as troubling is that Swedish shares slid and the OMX Stockholm 30 Index dropped 3.% despite Sweden’s central bank going even deeper into NIRP, cutting its interest rate from -0.35% to -0.5%, lower than the expected -0.45%. The yen leaped to its highest in more than a year. Major sovereign bond markets rallied, pushing U.K. gilt yields to a record low. Gold rose beyond $1,200 an ounce, while U.S. oil traded below $27 a barrel.

This is troubling, because as Bloomberg notes, “signals by central banks from Europe to Japan that additional stimulus is at the ready are failing to ease investor concern that global growth will keep slowing.” This means that it is no longer just a joke that central banks are losing credibility: judging by the markets’ reaction it is all too real. To this point, yesterday we wondered if Yellen will make bad news good news again. She has failed:

“Over the last few years when we got bad news, equity markets would rally because they would interpret this as potential for central banks to go more dovish,” said Mohit Kumar, head of rates strategy at Credit Agricole SA’s corporate and investment bank unit in London. “Now that correlation is shifting to bad news is actually bad news. Investors are concerned over central banks’ policy options given the market is driven by factors over which they have little or no control over.”

Imagine that: investors investing without a central bank to hold their hand.

Among other things crashing: bond yields – the 10Year plunged to 1.62%, the lowest level since May 2013 as the entire treasury complex prepares for NIRP.

Not everything was crashing however: as central planners lost control, the dull, boring yellow metal known as gold was up about 4% overnight and was trading at $1240 moments ago, well above the level it hit when the Fed ended QE3, and outperforming every asset class in that time period.

Also surging are peripheral European yields, most notably in Portugal and Greece both overf 30 bps wider, as suddenly 7 years of financial dirt kicked under the rug thanks to central bank jawboning and futile actions, re-emerges for all to see, and to be reminded thatnothing was ever fixed!

In short, the market is threatening Yellen with a crash ahead of her 2nd testimony today this time before the Senate. We doubt she will comply, so the market will just have to try harder.

Here are the top news from overnight:

  • Yellen Suggests Fed May Delay Rate Rises, Not Abandon Them: Fed chair non-committal on possible use of negative rates
  • Assessing Yellen’s Warning That Markets Pose a Threat to Economy: Bear markets usually come ~9 months before recessions
  • Mylan Slumps, Meda Soars on $7.2 Billion ‘Wealth Destroying’ Bid: Price represents a 92% premium to Meda’s close on Wednesday
  • Sanders Raises $7.1 Million After New Hampshire Win: comes after Tuesday’s victory speech declaration that he was “going to hold a fundraiser right here, right now, across America”
  • Clinton Reassesses Campaign With Thursday Debate Next Test: New Hampshire margin for Sanders puts Clinton on defensive
  • Twitter Troubles Deepen as Lack of User Growth Threatens Sales: Dorsey says making product easier to use is top priority
  • Amazon to Repurchase as Much as $5 Billion of Its Own Shares: co. commented in filing yday
  • U.K. Bond Yield Drops to Record-Low as Investors Seek Safety: U.K. plans to auction 30-year securities later Thursday
  • Swedish Central Bank Unleashes More Stimulus After Krona Warning: Sees scope to cut repo rate further
  • ‘Brexit’ Vote Is Clouding U.K.’s Growth Outlook, CBI Says: Business lobby downgrades 2016 growth forecast to 2.3%
  • Gold Soars Above $1,200 as Fed Chief Signals Go-Slow on Rates: set for 9th gain in 10 days on Fed chief’s remarks
  • Oil Above $55 Is a Long-Term Inevitability, Maersk CEO Says: sees global demand pushing oil price higher over time
  • Worst Still Ahead for Mining Industry After Losing $1.4 Trillion: This year looks even worse for an industry decimated by the commodities slump
  • SocGen Slumps as Quarterly Profit Hurt by Securities Drop: Bank says ROE target for this year of 10% is ‘unconfirmed’
  • As Zika Spreads, an Unexpected Winner in Brazil’s Mosquito War: Scandal-plagued leader Rousseff seeks unity to fight virus

In today’s closer look at regional markets, we start in Asia, where equities traded broadly in negative territory amid the soft lead on Wall Street, coupled with the persistent credit risk fears adding to the risk-off sentiment. As such, the iTraxx Asia index ex Japan, an index tracking the value of CDS’s in Asia, widened by 6bps to the highest level since Aug’13. The Hang Seng (-3.9%) returned from its elongated break to play catch up with the recent global equity and oil rout, consequently energy names were the notable laggard. While South Korea had also entered the fray as the Kospi (-2.5%) slipped amid the rising geopolitical tensions with North Korea after launching a satellite into space. ASX 200 (+1.0%) bucked the trend with stocks supported by a slew of strong earnings. As a reminder, Japanese markets were closed due to National Foundation Day.

Top Asian News

  • Hong Kong Stocks Fall in Worst Start to Lunar New Year Since ’94: Global equity rout deepens during 3-day trading break
  • Bass Says China Bank Losses May Top 400% of Subprime Crisis: Hedge fund manager says 10% asset loss would cut equity by $3.5t
  • Rio Will Cut Dividend After Metals Rout Sees Profit Tumble: World’s 2nd-biggest mining co. to reduce spending by another $3b
  • Billionaire’s Fund Sees India Extending Bear-Market Losses: Hedge fund awaits further 10% drop in values to turn bullish
  • SBI’s Profit Growth Slows to Four-Year Low on Bad Loan Surge: Provisions for bad loans almost double in the December quarter
  • North Korea to Shut Industrial Park, Freeze South Korean Assets: To expel South Korean personnel from Gaeseong complex

In Europe we have so far seen the most volatile day of what has been a very rocky 2016. Risk off sentiment is extremely apparent across asset class, with equities seeing a significant sell off so far today. Euro Stoxx 50 is lower by around 3.0% this morning, with financials and energy names the most significant underperformers as has been the case throughout the last 6 weeks. Financials have been weighed on by SocGen (-12.4%) who have suffered significantly in the wake of their earnings, while Deutsche Bank’s woes have not been forgotten (-5.7%), with the iTraxx Sub Financials index widening this morning by around 36bps, suggesting a rise in financials’ CDS. The heightened fear has also seen significant gains in fixed income, with Bunds higher by around 100 ticks so far today, while UK 10-year Gilt yields dropped to a record low this morning.

European Top News

  • Glencore Copper Production Falls as Franco to Buy Metals Stream: 4Q zinc production fell 18%, coal declined 17%
  • Zurich Insurance Quarterly Loss Misses Estimates on Claims: Company expects to miss its return-on-equity target for year
  • Total’s Earnings Beat Estimates on Oil Production, Refining: Co. maintains dividend, offers payout in new stock
  • Adidas Sees Higher Profit After 2015 Earnings Beat Estimates: Raises sales, profit outlook for this year
  • BG Group Trades Final Time Before Merger: To delist from exchanges on Feb. 15 as Shell takes over; BG’s value has grown ninefold since company’s creation in 1997
  • Mediobanca Second-Quarter Profit Declines on One-Time Charges: Fiscal 2Q profit falls 24%
  • Nokia Earnings Increase on Cost Focus as Sales Fall Short: Projects 2016 “headwinds” as demand slows
  • Publicis Sales Rise on Digital, North American Business: CEO Maurice Levy forecasts ‘modest’ growth this year
  • Rio Will Cut Dividend After Metals Rout Sees Profit Tumble: To reduce spending by another $3 billion
  • Natixis Buys Stake in U.S. Boutique as CEO Seeks Advisory Growth: To acquire 51% of Peter J. Solomon

In FX, the dominant move as noted above was the USD/JPY sell off, which has impacted on all the major currency pairs. This has contributed to the risk off theme, with stock markets in Europe in the red again and US futures pointing to a 5th consecutive day of losses. From the mid 112.00’s, the spot JPY rate was slammed through the 111.00’s to print 110.99, with no sign of the MoF or BoJ. Cross/JPY rates were dragged lower, with EUR/JPY trading through the key 126.00 level, but with limited momentum through here as EUR/USD rallied to new recent highs just above 1.1350. No such tempering in GBP and AUD, though the former JPY rate held 160.00 despite a heavy turnaround in Cable. EUR/GBP posted new highs through .7850. AUD/USD losses through .7000 contributed to sub 80.00 (and 79.00) in AUD/JPY. USD/CAD has tested 1.4000, but holds off the figure as yet.

WTI and Brent crude futures have ticked lower in European trade with WTI Mar’16 futures notably breaking below the USD 27.00 level, near 12 year lows despite the headline figure released in yesterday’s DoE inventories showing a surprise drawdown . However, some analysts have noted that Cushing OK crude inventories showed a surprise build, and the market is ready to pounce on any signs that the glut is expanding.

Gold has benefited from safe haven bids in Asian and European trade and is over USD 25.00/oz higher on the session, at its highest level since May 2015. The World Gold Council have noted that the upward trend in gold looks set to continue as buying by central banks and Chinese investors will bolster prices. Analysts have noted that the following year could see a surge of M&A activity, as gold miners have plenty of liquidity with surging gold prices and diversified miners look to offload assets, due to softness in industrial metals.

Turning to the day ahead, we get the latest weekly initial jobless claims data due in the US. The focus will again be on Fed Chair Yellen when she is due to speak in front of the Senate at 10am. Her prepared remarks will mirror what she said yesterday so the focus will be on the Q&A: for the sake of the market she better be much more dovish.

Bulletin Headline Summary from Bloomberg and RanSquawk

  • Today has seen the most volatile day of what has been a very rocky 2016, risk off sentiment is extremely apparent across asset class
  • The FX markets have been dominated by the USD/JPY sell off, which has impacted on all the major currency pairs
  • Looking ahead: highlights include: Fed’s Yellen appear before Senate, weekly jobs data and earnings from PepsiCo
  • Treasuries higher in overnight trading as European equity markets plunge, WIT oil drops below $27 a barrel; Treasury to sell $15b U.S. 30Y notes, WI 2.465% vs 2.905% in January, lowest 30Y auction stop since 2.880% in August 2015.
  • Financial markets are signaling that investors have lost faith in policy makers’ ability to support the global economy. European stocks slid toward their lowest since September 2013 and U.S. futures indicated equities will open lower
  • Sweden’s central bank lowered its key interest rate even further below zero to -0.5% and said it’s prepared to use its full toolbox of measures as it battles to revive inflation and keep the krona from appreciating
  • European banks and insurers’ subordinated credit risk rose to the highest since March 2013 after disappointing earnings at Societe Generale and Zurich Insurance Group renewed concerns about financial companies’ profits; Societe Generale, France’s second-largest bank by market value, posted fourth-quarter profit that missed analysts’ estimates as earnings at the investment bank dropped and it set aside provisions for potential legal costs. The shares plunged
  • With populist and anti-EU forces surging across the region, should David Cameron leave next week’s European Union summit with a deal to overhaul the terms of Britain’s membership, many of his counterparts will dig out their own wishlists
  • Kyle Bass, the hedge fund manager who successfully bet against mortgages during the subprime crisis, said China’s banking system may see losses of more than four times those suffered by U.S. banks during the last crisis
  • The world is so awash with crude, the boss of BP Plc said people will be filling their “swimming pools” with it by the end of the year
  • Sovereign 10Y bond yields mostly lower, Greece (+31bp), Portugal (+31bp) higher; European stocks plunge, Asian markets mostly closed for holiday, Hang Seng drops; U.S. equity-index futures fall. Crude oil drops, copper, gold rise

US Event Calendar

  • 8:30am: Initial Jobless Claims, Feb. 6., est. 280k (prior 285k); Continuing Claims, Jan. 30, est. 2.245m (prior 2.255m)
  • 8:45am: Bloomberg Feb. United States Economic Survey
  • 9:45am: Bloomberg Consumer Comfort, Feb. 7 (prior 44.2)
  • 1:00pm: U.S. to sell $15b 30Y bonds
  • Central Banks
  • 10:00am: Fed’s Yellen testifies to Senate committee
  • 5:30pm: Reserve Bank of Australia’s Stevens testifies in Parliament
 

DB’s Jim Reid concludes the overnight wrap

Looking at the latest in Asia this morning, markets in Korea and Hong Kong are open for the first time this week, although are largely playing catch up with the big falls that we’ve seen for risk assets in that time. The Hang Seng is currently down a steep -4.03% while the Kospi has dropped -2.97%. Mainland China exchanges are still closed although the Hang Seng China Enterprises Index (HSCEI) is down nearly 5%. Markets in Japan are closed for a public holiday. There’s better news in Australia where the ASX is currently +0.95%, although the Aus iTraxx index is 4bps wider as we go to print. US equity market futures are weaker while Gold has surged above $1,200.

Moving on. As we highlighted at the top, yesterday saw the 2s10s Treasury yield curve go below 100bps for first time since December 2007. After spiking as high as 1.772% in early trading, the benchmark 10y yield tumbled into the close, eventually finishing over 5bps lower on the day at 1.668% and just off the 12-month lows. 2y yields finished unchanged at 0.686% meaning the spread of 98bps is the lowest since the 6th December 2007. This is one of our favourite lead indicators of the business and default cycle and the flattening that has occurred in recent years is one of the reasons we think credit conditions have been tightening for a few quarters now and why our default models have been showing a continued pick-up in defaults into 2017-2018. To be fair the last four recessions have not started until the yield curve (2s10s) has inverted. We’re still some way off that but the fact that we’re at the flattest for over 8 years is a warning sign.

There was finally some good news to report for European equity markets yesterday as the Stoxx 600 (+1.87%) benefited from a financials-led (Banks +4.42%) rebound to close up for the first time this month. Having been heavily hit in recent days the IBEX (+2.73%) and FTSE MIB (+5.03%) finally got some much needed relief. European credit indices also had a better day although did finish well off their tights. The iTraxx senior and sub-financials indices ended up 5bps and 13bps tighter respectively which helped Main in particular close nearly 2.5bps tighter, although the index had been closer to 8bps tighter pre-Yellen.

Staying with credit, our US credit strategists published their latest note earlier this week (Chickens Come Home to Roost, 8 Feb 2016) wherein they construct a proprietary dataset to forecast expected US default rates. The team uses index transition data to capture all forms of default – bankruptcies, out-of-court restructurings and distressed exchanges – to build a robust market-based dataset that is more detailed, precise and timely than that available from ratings agencies. The most striking revelation of the data is that DM HY commodity names appear to already be in a full cycle, with issuer-weighted default rates at 15.9% (14.9% par).

Assuming that commodity defaults rise to 20% for the year ahead and that ex-commodity defaults hold steady at 4% as they forecast, the overall default rate for DM USD HY (Commodity weight: ~20%) would hit 7.2% – magnitudes higher than the 1.85% default rate seen last year! Rising credit pressures across a spectrum of non-commodity industries and downward pressure on recovery rates in energy bonds should only serve to further compound already apparent risks.

Wrapping up, yesterday’s economic data was focused on what was a pretty soft set of industrial production reports in Europe. Data for France (-1.6% mom vs. +0.3% expected), Italy (-0.7% mom vs. +0.3% expected) and the UK (-1.1% mom vs. -0.1% expected) all missed relative to expectations, while manufacturing reports for France and the UK were also soft for the month of December.

Turning to the day ahead, there’s not alot for us to report with no economic data of note due out in Europe and just the latest weekly initial jobless claims data due in the US this afternoon. Instead the focus will again be on Fed Chair Yellen when she is due to speak in front of the Senate at 3pm GMT. Her prepared remarks could mirror what she said yesterday so the focus will be on the Q&A. Away from this we’ll also get the Riksbank’s latest monetary policy announcement where current economist expectations are for another cut in the main policy rate deeper into negative territory (10bps cut to -0.45%). Earnings wise today we have 20 S&P 500 companies set to report including AIG and PepsiCo.

 

end

 

and then this from JPMorgan on events this morning throughout the globe:

(courtesy JPMorgan/Adam Crisafulli)

JPMorgan: “It’s Hard To Imagine An Uglier Morning”

Here is this morning’s market update from JPM’s Adam Crisafulli

It’s hard to imagine an uglier morning. The two things markets hate most right now (neg. central bank rates and bad bank headlines) occurred overnight as the Riksbank dropped its rate further into neg. territory and SocGen put up bad earnings/guidance.

The combination of those two events, coupled w/very fragile sentiment, extreme risk aversion(a function of enormous P&L destruction YTD), Yellen’s testimony (which wasn’t sufficiently dovish or concerned about financial market volatility from the perspective of markets), and CSCO’s cautious macro commentary, are weighing very hard on equities so far Thurs morning.

The main Eurozone indices (SX5E and SXXP) are both down “3% today, “6% WTD, and —16% YTD. The SX7P Eurozone bank index is off >5% today, —10% WTD, and nearly 30% YTD.

Ironically, some of the worst carnage in months is occurring while China is shut and the Yuan has been rallying (the CNH has been creeping higher over the last few days, albeit on very thin volumes).

Trying to divine the end of the rout is difficult given the globe is in the midst of a series of tightly intertwined, self-reinforcing, and correlated trades and narratives (i.e. oil slumps and drags inflation down with it which prompts CBs to ratchet up accommodation which sinks banks which crushes general market sentiment and the overall price declines tighten financial market conditions and scares corporate execs and actual economic activity begins to deteriorate).

A lot of the price action feels very forced and perfunctory but that doesn’t make it any less real or painful.

end

 

Let us begin:

 

ASIAN AFFAIRS

 

Late  WEDNESDAY night/ THURSDAY morning: Shanghai closed for the Chinese New Year (all week)  / Hang Sang closed badly by 742 points or 3.85% . The Nikkei was closed. The only bourse that was up was Australia’s all ordinaries. Chinese yuan (ONSHORE) closed 6.5710  and yet they still desire further devaluation throughout this year.   Oil lost  to 26.47 dollars per barrel for WTI and 30.35 for Brent. Stocks in Europe so far deeply in the red . Offshore yuan trades where it finished on Friday at 6.5600 yuan to the dollar vs 6.5710 for onshore yuan/

 

Early this morning: after the USA dollar/Japanese Yen crashed into the 110 level  (Yen screaming higher), the Bank of Japan intervened to drive the cross back to the 112 level!
(courtesy zero hedge)

Bank Of Japan Intervention Sends USDJPY Soaring

Just like two days ago, when for the first time since 2011 the BOJ intervened directly in the USDJPY market, moments ago Kuroda’s trading desk once again decided to sell a boatload of Yen, with the key carry pair trading at 111.25 and threatening to take out the 110 support, in the process sending the USDJPY higher by 175 pips in a matter of seconds to just above 113.

This is what the targeted move in JPY futures looked like courtesy of Nanex:

The move quickly filtered through to all other asset classes:

  • QUICK JUMP IN YEN, DOLLAR; S&P FUTURES PARE LOSS TO 32PTS

However, just like last time the BOJ’s direct intervention – seen as a last ditch effort when all else fails – the impact is already fading and traders are already counting down how long until the BOJ’s attempt to pull a PBOC is fully faded.

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Kyle Bass explains in simple language the problem facing China.  The country has 10 trillion USA equiv in GDP.  The country has debt (sovereign + corp+ household) of 34.5 trillion dollars.  No doubt that about 20% of that debt is non performing and with a recovery of 50%, then 3 trillion uSA will be lost and sovereign China will need to recapitalize their banks. Their entire reserves are 3.2 trillion which is made up of gold, USA dollars and Euros.

 

(courtesy CNBC)

 

Bass: China banks may lose 5 times US banks’ subprime losses in credit crisis

1 Hour AgoCNBC.com

Kyle Bass

Mark Neuling | CNBC

A Chinese credit crisis would see the country’s banks rack up losses 400 percent larger than those run up by U.S. banks during the subprime mortgage crisis, storied hedge fund manager Kyle Bass said in a letter to investors.

“Similar to the U.S. banking system in its approach to the Global Financial Crisis (GFC), China’s banking system has increasingly pursued excessive leverage, regulatory arbitrage, and irresponsible risk taking,” Bass, the founder of Dallas-based Hayman Capital, wrote in the letter dated Wednesday.

“Banking system losses – which could exceed 400 percent of the U.S. banking losses incurred during the subprime crisis – are starting to accelerate.”

China’s banking system has grown to $34.5 trillion in assets over the past 10 years, from a base of $3 trillion, wrote Bass, who is famed as one of the few major investors to correctly call the U.S. subprime housing collapse that kicked off the 2008 global financial crisis.

“Chinese banks will lose approximately $3.5 trillion of equity if China’s banking system loses 10 percent of assets. Historically, China has lost far in excess of 10 percent of assets during a non-performing loan cycle,” he wrote. He noted that U.S. banks lost around $650 billion of their equity throughout the global financial crisis.

Kyle Bass

Mark Neuling | CNBC
Kyle Bass

A Chinese credit crisis would see the country’s banks rack up losses 400 percent larger than those run up by U.S. banks during the subprime mortgage crisis, storied hedge fund manager Kyle Bass said in a letter to investors.

“Similar to the U.S. banking system in its approach to the Global Financial Crisis (GFC), China’s banking system has increasingly pursued excessive leverage, regulatory arbitrage, and irresponsible risk taking,” Bass, the founder of Dallas-based Hayman Capital, wrote in the letter dated Wednesday.

“Banking system losses – which could exceed 400 percent of the U.S. banking losses incurred during the subprime crisis – are starting to accelerate.”

China’s banking system has grown to $34.5 trillion in assets over the past 10 years, from a base of $3 trillion, wrote Bass, who is famed as one of the few major investors to correctly call the U.S. subprime housing collapse that kicked off the 2008 global financial crisis.

“Chinese banks will lose approximately $3.5 trillion of equity if China’s banking system loses 10 percent of assets. Historically, China has lost far in excess of 10 percent of assets during a non-performing loan cycle,” he wrote. He noted that U.S. banks lost around $650 billion of their equity throughout the global financial crisis.

The letter said that the Bank for International Settlements estimated that Chinese banking system losses from the 1998-2001 non-performing loan cycle exceeded 30 percent of gross domestic product (GDP).

“We expect losses in this cycle to exceed prior cycles. Remember, 30 percent of Chinese GDP approaches $3.6 trillion today,” he warned.

Bass wrote that he expected the massive losses to force Beijing to recapitalize Chinese banks and sharply devalue the yuan.

“China will likely have to print in excess of $10 trillion worth of yuan to recapitalize its banking system,” he said.

The hedge fund manager didn’t return an email sent outside office hours requesting comment on the investor letter, which the Wall Street Journal reported was his first in two years.

—By CNBC.Com’s Leslie Shaffer; Follow her on Twitter@LeslieShaffer1

 

end
EUROPEAN AFFAIRS
Something big is up!!  Deutsche bank’s credit default swaps are back to record highs.
Credit default swaps are simply a bet on the survival of the bank itself.  Many belief that they are toast!!
(courtesy zero hedge)

Deutsche Bank Is Back: 5 Year Sub CDS Soar To Record High

“Worse than Lehman” is how one European bond market trader described the carnage this week as the brief respite that ECB monetization and debt-buyback rumors provided yesterday have morphed into utter destruction this morning. European (and US) banks are a sea of contagious red with Deutsche Bank the tip of the collapse spear. Credit risk on Deutsche has exploded this morning with Sub CDS trading up 85bps to a record high 540bps… eerily reminiscent of the pre-Lehman bankruptcy week in 2008.

Time to panic now?

 

We’ve seen this kind of stress before for a financial institution…

 

and it did not end well…

end
And then it is not just Deutsche bank, it is the entire European sovereign risk that is blowing out.  Sovereign Portugal has seen its bond yields rise over 200 basis points for the
past week.
(courtesy zero hedge)

European Sovereign Risk Soars As Systemic Fears Mount

“Whatever it takes” is not enough, it would appear as the fragility and interconnectedness forced upon the European banking/sovereign finance ponzi has rapidly come home to roost for Draghi and his followers. Peripheral bond risk has flipped from “hold your nose” buys to panic sells with Portugal risk exploding 200bps in the last week. As the European banking system’s credit risk rises 2012-crisis-like, it seems belief in a bigger bazooka is fading fast.

It’s not just Deutsche Bank…

 

Smashing European Peripheral risk higher…

end
And now Credit Suisse’s credit default swaps are blowing out!!
(zero hedge)

It’s Not Just Deutsche Bank…

While broad-based contagion from Deustche Bank’s disintegration is clear in European, US, and Asian bank risk, there is another major financial institution whose counterparty risk concerns just went vertical…

Credit Suisse…

With the stock at 27-year lows, it appears investors are seriously questioning Chief Executive Officer Tidjane Thiam’s restructuring plans.

 end
This will be scary for many in the oil patch as one of the largest lenders to oil is BNP and they are exiting the reserve base lending oil business:
(courtesy zero hedge)

BNP Pulls Plug On US Energy Sector, Will Exit RBL Lending

Back in 2012, BNP Paribas exited the North American reserve-based lending market, when it sold its RBL unit to Wells in an effort to shore up its balance sheet amid the turmoil generated by the eurozone debt crisis.

A little over two years later, in the fall of 2014, BNP got back into the RBL game in the US. That probably wasn’t a good idea.

Just a few months after the bank jumped back in, the Saudis moved to bankrupt the US shale complex and it’s been all downhill from there with crude plunging and America’s cash flow negative producers careening towards insolvency.

We’ve been warning since early last year that it was just a matter of time before banks start to shrink the borrowing bases of uneconomic producers’ credit facilities. In other words, with the door to the HY market now slammed shut as spreads blow out and investors panic, the last lifeline for many in the O&G space is about to be cut, as no bank wants to be caught flat-footed if things get as bad as many people think they will.

On Thursday, we learn that BNP is now set to exit the RBL market for the second time in five years.

“BNP Paribas is reining back lending to the US energy sector, potentially tightening a squeeze for cash-strapped producers struggling with the collapse in oil prices,” FT reports. “The Paris-based bank is pulling out of the business of reserve-based lending, a vital source of liquidity for many oil and gas companies with big capital needs and irregular cash flows.”

“Given the current environment in the oil and gas market and the poor outlook for future fundamentals in the short to medium term, BNP Paribas has had to make adjustments to some of its businesses and has decided to stop the redevelopment of its reserve-based lending business,” the bank said, in a statement.

BNP will continue to service existing clients, but its exit from new business is a rather inauspicious move. Indeed, it suggests that when credit lines are reassessed again in April, we’re likely to see further cuts. “During the previous round of ‘redeterminations’ last autumn, banks cut limits for most customers between 10 and 20 per cent,” FT continues. That’s likely to be the case again in two months, Wells CFO John Shrewsberry said this week at an industry conference in Florida.

As a reminder, virtually the entire sector is cash flow negative. Without access to credit lines, everyone goes belly up. Of course with crude at $27, no one wants the assets the companies have pledged as collateral. As we outlined three weeks ago, some oil and gas drillers’ assets are only fetching a fraction of what they owe at auction.

Amusingly, banks are cutting their own throats by shrinking the credit facilities. That is, you don’t necessarily want to bankrupt someone who owes you a lot of money, especially when you won’t be able to recover much by selling off the collateral.

But alas, there’s really no choice at this juncture. There’s no end in sight to the oil market malaise with Iran ramping up production and a recalcitrant Saudi Arabia dug in for a long war of attrition.

We anxiously await the next bank to pull the RBL plug and we’re even more anxious to find out just how much the banks have provisioned for the losses that are sure to pile up rapidly once the entire sector loses access to its revolvers.

As a reminder, America’s long list of cash flow negative producers are sitting on $325 billion in debt.

Average:
We brought this to your attention yesterday.  The EU are now probing the banks on SSA debt: how much more will  Deustche bank have to pay for their misdeeds:
(courtesy zero hedge)

Agency Bond Rigging Probe Expands As Europe Grills Banks On SSA Debt

One thing that became abundantly clear in the wake of the financial crisis was that everything – and we do mean everything – was being manipulated by Wall Street’s biggest and most systemically important financial institutions.

First we learned that the most important benchmark rate on the planet was nothing more than a tool submitters used to inflate the value of their traders’ books, something we flagged way back in 2009.

Subsequently, all manner of rigging and fixing was discovered across markets from gold, to FX, to ISDAfix. Although chat logs clearly show that there are scores of people who should probably be in jail for conspiring to manipulate markets, the vast majority of those responsible got off scot-free with the notable exception of poor Tom Hayes who was sentenced to 14 years for allegedly serving as the ringleader of a group that colluded to fix LIBOR.

We even found out that banks were rigging the UST market by conspiring to keep the spread between the when issued price and the price at auction as wide as possible.

In short, if it can be manipulated, you can bet Wall Street is manipulating it – or at least they were, until they got caught.

In most cases, the fines leveled against the banks by regulators as punishment for the above are paltry and amount to slaps on the wrist, but when you’re facing a liquidity crunch, just about the last thing you need is to be forced into handing over a few more billion to the government. That’s precisely the situation facing Deutsche Bank, which late last month reported its first annual loss since the crisis along with abysmal quarterly results that have caused the market to question whether Europe’s largest lender may be in trouble.

The reason we bring all of this up is because on Wednesday, we found out that the EU Commission has opened a preliminary investigation into the $1.5 trillion SSA market.

The commission’s powerful competition department has sent questionnaires to a number of market participants as part of an early-stage probe into possible manipulation of the price of supranational, subsovereign and agency debt,” FT reports. “This market covers a diverse range of debt issuers including organisations such as the European Bank for Reconstruction and Development and regional borrowers like Germany’s Länder. A common feature is that the bonds often have a form of implicit or explicit state guarantee.”

FT goes on to note that the DOJ is also probing the SSA market and reminds us that several London-based traders at Crédit Agricole, Nomura and Credit Suisse have already been put on leave.

In a rerun of the various other cases of manipulation by the world’s foremost financial institutions, officials say a “complex cartel” of bankers acting badly may have moved to rig prices.  “The Justice Department investigation has focused on activity by London-based traders in the debt instruments,” Bloomberg writes, adding that “the U.S. prosecutor and the FCA are both looking at whether traders at different banks coordinated decisions on who would offer price quotes to potential buyers and sellers.

As a reminder, some of these bonds are eligible for the ECB’s €1.1 trillion QE program.

And while Deutsche Bank doesn’t appear to be at the top of the list when it comes to who the DOJ and Britain’s FSA are looking at in connection with the alleged rigging, don’t be at all surprised if the bank lands in the European Commission’s crosshairs.

Remember, Deutsche is expected to shell out another $3.6 billion for litigation in 2016. Stay tuned to discover whether that number will grow as a result of Europe’s SSA inquiry.

The EU dished out €1.7 billion in fines in connection with the LIBOR scandal and is still looking into banks’ role in manipulating precious metals and FX.

 

end

 

 

RUSSIAN AND MIDDLE EASTERN AFFAIRS

 

 

it is getting quite dangerous in the northern section of Syria namely Aleppo. It was announced that the USA after flying in from Turkey bombed out 9 targets without discussing what they were.  It seems that two hospitals were hit. Saudi Arabia is ready to enter the fray and if they do, then prepare for World War iii.

(courtesy zero hedge)

 

Saudi Arabia Makes “Final” Decision To Send Troops To Syria As US, Russia Spar Over Aleppo Strikes

As you might have heard, the opposition in Syria is in serious trouble.

Last summer, Bashar al-Assad’s army was on the ropes, as the SAA fought a multi-front war against a dizzying array of rebel forces including ISIS. Then Quds commander Qassem Soleimani went to Russia. After that, everything changed.

As of September 30 the Russian air force began flying combat missions from Latakia, rolling back rebel gains and paving the way for a Hezbollah ground offensive. Once Moscow had stopped the bleeding for the SAA (both figuratively and literally), Iran called up Shiite militias from Iraq who, alongside Hassan Nasrallah’s forces, pushed north towards Aleppo.

Now, the city is surrounded and the rebels are cut off from their supply line to Turkey. In short: it’s just a matter of time before the opposition is routed.

So much for President Obama’s “Russia will get itself into a quagmire” line.

The only thing that can save the rebels at this juncture is a direct intervention by the groups’ Sunni benefactors including Saudi Arabia, the UAE, Qatar, and Turkey.

That, or an intervention by the US.

Both the Saudis and the Turkey have hinted at ground invasions over the past two weeks and just this morning, a sokesman saidRiyadh’s decision to send in troops was “final.”

But direct interventions are tricky. Russia has never denied it intends to bolster Syrian government forces against the rebels, all of whom Moscow deems “terrorists.” On the other hand, Washington, Riyadh, Doha, and Ankara cling to the notion that while they don’t support Assad, they’re primary goal is to fight ISIS. Well ISIS is in Raqqa, which is nowhere near Aleppo, meaning there’s no way to help the rebels out in their fight against the Russians, Iranians, and Hezbollah under the guise of battling Islamic State.

Against that backdrop we found it interesting that Moscow and Washington are now delivering conflicting accounts of airstrikes in Aleppo on Wednesday. The Pentagon, without specifying what time the strikes allegedly took place, says Russia destroyed the city’s two main hospitals.

Defence Ministry spokesman Igor Konashenkov notes that Warren didn’t provide either hospitals’ coordinates, or the time of the airstrikes, or sources of information. “Absolutely nothing,” he said, describing Warren’s report.

The Kremlin, on the other hand, says US warplanes conducted strikes at 1355 Moscow time. “Two U.S. Air Force A-10 attack aircraft entered Syrian airspace from Turkish territory,” Konashenkov said in a statement. “Reaching Aleppo by the most direct path, they made strikes against objects in the city.”

“Only aviation of the anti-ISIS coalition flew over the city yesterday,” he added.

“When asked on Wednesday whether the U.S.-led coalition could do more to help rebels in Aleppo or improve access for humanitarian aid to the city, Pentagon spokesman Colonel Steve Warren said that the coalition’s focus remained on fighting Islamic State,” Reuters wrote on Thursday. The group is “virtually non-existent in that part of Syria,” Warren said.

Right. Which makes you wonder what two US Air Force A-10 attack planes were doing bombing in and around Aleppo. Is the US set to conduct airstrikes in support of the rebels, thus marking a fresh and exceptionally dangerous escalation of hostilities in the country?

As for what exactly it was that the US warplanes struck, Konashenkov will have to get back to us. He’s too busy winning a war to care right now:

“I’m going to be honest with you: we did not have enough time to clarify what exactly those nine objects bombed out by US planes in Aleppo yesterday were. We will look more carefully.”

*  *  *

Below, find excerpts from “Will Russian Victories In Syria Spark A Regional War?” by Yaroslav Trofimov as originally published in WSJ

Defying U.S. predictions of a quagmire in Syria, Russia is achieving strategic victories there with this month’s Aleppo offensive. The question now is whether this is a turning point that hastens the five-year war’s end or the trigger for a counter-escalation that will drag other regional countries into the conflict.

Few expect that Moscow’s main target—the moderate rebels backed by Turkey, Saudi Arabia and the U.S.—would now be forced settle the conflict on the Kremlin’s, and Syrian President Bashar al-Assad’s, terms.

“Their victory in Aleppo is not the end of the war. It’s the beginning of a new war,” said Moncef Marzouki, who served in 2011-14 as the president of Tunisia, the nation that kicked off the Arab Spring, and who recently visited the Turkish-Syrian border. “Now, everybody would intervene.”

To be sure, Turkey and Saudi Arabia have few easy options to counter Russian military might in Syria. But because of national pride—and internal politics—neither can really afford to have the rebel cause in which they have invested so much wiped out by Moscow and its Iranian allies.

While the Obama administration has long been determined to minimize U.S. involvement there, for Turkey and Saudi Arabia the prospect of Syria falling under the sway of Russia and Iran would be a national-security catastrophe.

“The whole situation, not just for Turkey but for the entire Middle East, would be reshaped. The Western influence will fade away. The question is: Can we accept Russia, and the Iranians, calling the tune in the region?” said Umit Pamir, a former Turkish ambassador to NATO and the United Nations.

 

 

end
The rhetoric between Iran and Saudi Arabia is getting firece.  Iran is holding nothing back. If Saudi Arabia invades;  it will be suicide:
(courtesy zero hedge)

Iran Holds Nothing Back: “It’s A Suicide Mission That Will Have A Very Dark End”

Earlier today we reported that Saudi Arabia has made a “final” decision to invade Syria.

Of course they won’t use the term “invade.” They’ll say the same thing the US says, which is that they need to send in a limited number of ground troops to help fight ISIS.

The timing of the announcement quite clearly suggests that the Saudis are going to try and shore up the rebels who are facing imminent defeat at Aleppo where Hezbollah, backed by Russian airstrikes, is about to overrun the opposition.

That outcome is unacceptable for the Saudis, who have been funding and supplying the Sunni opposition in Syria for years. For Turkey, it’s pretty much the same story. How Riyadh and Ankara plan to assist the rebels while maintaining the narrative that they’re only in the country to fight Islamic State is an open question, but one thing is for sure: it’s do or die time. In the most literal sense of the phrase. “Publicly, Saudi Arabia, the UAE and Bahrain are calling for troops to be deployed as part of the US-led international coalition already ranged against Isis,” FT wrote, earlier this week. “But regional observers say the moves are cover for an intervention to help the Syrian rebels.”

“If Saudi and Turkish forces were deployed at Syria’s northwestern border crossings with Turkey, for example, they would be inside Russia’s operational theatre,” The Times continues. “This would be a total nightmare for the US,” said analyst Aaron Stein, of the Atlantic Council in Washington. “What happens if Russia kills a Turk? They would be killing a Nato member.”

Yes, a “total nightmare” for the US and to let one Iranian military source tell it, a “total nightmare” for the Saudis as well. Read below to see what Tehran thinks about Riyadh’s chances of securing a desirable outcome in Syria (note the reference to Saudi Arabia and Islamic State’s shared ideology):

*  *  *

Via Al-Monitor quoting unnamed Iranian military personnel:

It’s a joke. We couldn’t wish [for] more than that. If they can do it, then let them do it — but talking militarily, this is not easy for a country already facing defeat in another war, in Yemen, where after almost one year they have failed in achieving any real victory.”

“The Saudis might really take part in this war. Such a decision might come from the rulers of the kingdom without taking into consideration the capabilities of their troops, and here is where the tragedy would occur. They are not well-trained for such terrain. I’m not sure if they sorted out the supply routes they would use — this is assuming that they would only fight [IS] — but it’s obvious they [want to] implement their agenda, after their proxies failed.

“This would mean a regional war. Mistakes can’t be tolerated, especially with the tension mounting around the region. It’s not about Iranians, but about all troops on the ground fighting with the Syrian army. How would the Syrian army deal with a foreign country on its soil, without its permission, and maybe aiming [guns] at them? That would be an occupation force. Can the Saudis control their army? Who can guarantee that some of them might not defect and join [IS]? They have the same ideology and they hold the same beliefs, and many of them are already connected [to IS].”

The Saudis are simply putting themselves in a very weird position that might have a very dark end. The worst thing is that the implications aren’t only going to affect the region, but world peace.”

*  *  *

end
Turkey says no to the EU refugee plan to resettle 250,000 refugees per year directly from Turkey.  They demand that Turkey is to close off the Aegean sea route to Greece. With the siege on Aleppo now, many Syrian are fleeing that city and the situation will get far worse
(courtesy zero hedge)

“Forget It”: Turkey Throws Up On EU Refugee “Plan” As NATO Sends Ships To Nab “People Smugglers”

“Forget it.”

That’s Turkish ambassador to the EU Selim Yenel’s message to Europe in response to a Dutch plan that would resettle 250,000 refugees per year directly from Turkey if Ankara can manage to close off the Aegean sea route to Greece.

Turkey is of course a key chokepoint for migrants fleeing Syria and the situation is expected to worsen materially going forward as Hezbollah and Russia advance on Aleppo, the country’s second-largest city where the opposition is making what amounts to a last stand against Moscow’s air force and Hassan Nasrallah’s advancing army. This was the scene at the border last week:

“If Turkey is not engaged, not committed and doesn’t start to deliver … it will be very difficult to manage the situation,” Dimitris Avramopoulos, the EU commissioner in charge of migration said. “If they really want, they can do the job on the ground.”

Not so, says Yenel.

It’s unacceptable and it’s not feasible,” he said, deriding the Dutch plan. Effectively, the EU wants Turkey to let in the all of the refugees fleeing Aleppo ahead of what will likely be a direct assault on the city in the coming weeks, but as The Guardian notes, Brussels is simultaneously “demanding that Ankara close the western and northern routes to Europe.”

“We’re surprised that the Europeans should say we should open the borders to Syrians from Aleppo when we’ve been doing that for five years,” Yenel said. “It is all unfolding, another tsunami. How are we going to cope?” he asked, reflecting the exasperation Turks are experiencing after sheltering some 3 million Syrians, triple the number of total refugees German took in last year.

“Avramopoulos unveiled new plans to force Turkey and Greece to take asylum seekers back from the rest of Europe,” The Guardian goes on to write. “But the scheme would not apply to Syrians, who are virtually assured of successful asylum claims in the EU, and perhaps also Iraqis and Afghans.”

Substantially all of those entering Greece via the Aegean Sea route are either Syrian, Afghan, or Iraqi. Athens has been threatened with expulsion from Schengen if it can’t bring its procedures for coping with the migrant flows in line with European “norms” – whatever that means.

All of this comes as leaked documents reveal Erdogan effectively blackmailed the EU last year by promising to “send refugees in buses” into Europe if Brussels didn’t hand over billions and as NATO sends ships to the Aegean to deter people smugglers from moving refugees from Turkey to the shores of Greece.

Obviously, the NATO mission doesn’t exactly sound like it’s compatible with the compassionate, open-door policy Europe is keen on projecting, but as Jens Stoltenberg will tell you, it’s not about “stopping or pushing back refugee boats,” it’s about obtaining “critical information and surveillance to help counter human trafficking.”

“The decision marks the security alliance’s first intervention in Europe’s migrant crisis,” BBC writes. US defence secretary Ashton Carter says it’s critical that NATO target the “criminal syndicate that is exploiting these poor people.”

Of course if Ash Carter was really concerned about those “poor people,” perhaps he should consider not bombing the countries from which they are fleeing. Say what you will about Saddam, Assad, and the Taliban, but Iraqis, Syrians, and Afghans weren’t running for their lives to Western Europe by the millions prior to American interventions in their countries’ affairs.

GLOBAL AFFAIRS

 

 

Sweden upon seeing its Swedish kroner rise in value, decided that it was best to increase its NIRP further, this time to -.5%.  The Swedish bank governor stated that his nation was not experiencing any inflation and with the higher kroner, their exports were suffering. Thus currency wars at its finest as we now are in a war in a race to the bottom of the currency ladder:

 

(courtesy zero hedge)

 

Sweden Slides Further Into NIRP, Cuts Rates To -0.50%

Ever since the BoJ took the plunge into NIRP late last month analysts and commentators alike have begun to express a high degree of skepticism about the wisdom of adopting negative interest rates.

Once seen as a kind of peculiar policy experiment confined to Switzerland, Denmark, and Sweden, NIRP has escaped the lab so to speak and now that Kuroda is negative and Draghi is contemplating another depo rate cut in March, people are starting to realize that the entire developed world might be about to go Keynesian crazy. Even the US.

Indeed it was just yesterday that we brought you the latest from JP Morgan, where analysts made the following rather shocking predictions about how low rates could go under tiered implementation system:

As we’ve explained on a number of occasions, this is becoming a never-ending race to the bottom. It’s an all-out currency war and when one central bank eases, so too must the others or risk seeing their inflation targets jeopardized. That’s especially true for Sweden where governor Stefan Ingves is concerned about what the Riksbank sees as excessive krona strength and still sluggish inflation.

On Thursday, in an effort to get out ahead of the ECB, the Riksbank cut again, taking the repo rates by 15bps to -0.50% in a move that Nordea calls “a bit more than expected.” QE will continue as planned and the Riksbank “will reinvest maturities and coupons from the government bond portfolio until further notice.”

“Uncertainty regarding global developments is still high, with low inflation and several central banks pursuing more expansionary monetary policy,” the bank continued. “Swedish monetary policy must relate to this. Otherwise the krona exchange rate is at risk of strengthening at a faster rate than in the forecast, which would make it harder to push up inflation and stabilize it around 2 percent.” Here was the move in the krona:

The bank also reiterated that it’s prepared to intervene directly in the FX market to curb krona strength if necessary and contended that there’s still more room to cut rates further. “So far, at least in this economy, these things have worked actually pretty much the way one would expect,” Ingves said, addressing the effect deeply negative rates have on Swedish banks. “When it comes to Swedish banks, their profit level is very, very good so at this level that’s not an issue.”

Analysts are divided on how things play out from here. Here’s some commentary (via Bloomberg):

From Standard Bank:

  • After Riksbank cut its key rate to -0.5%, European central banks’ dive into deeper rates will continue, Steven Barrow, analyst at Standard Bank, says in e-mailed comments.
  • Riksbankoutcome is a bit more dovish than market expected and so weighs on SEK and yields
  • This is of significance because European banks are acting as a guide to how negative rates can go
  • Should the likes ofRiksbankand SNB lower rates further, that could offer more clues as to where the real lower bound is on rates

From Nordea:

  • Interpret the comment on the operational framework as a potential move toward a tiered-rates system in Sweden, as seen in Denmark, Switzerland and Japan, Martin Enlund, analyst at Nordea writes in e-mailed comment.
  • Says comment is very dovish and could wreak havoc with Swedish money-market rates
  • ECB likely to decide how much the Riksbank will do in the rates space, and some market participants are now looking for ECB to cut 20bps in March and another 20bps in June; would almost surely pushRiksbankinto a tiered-rates system later this year
  • Overall dovish surprise; Nordea would be a bit hesitant in buying SEK until dust settles, which could take a day; the normal pattern is that EUR/SEK drops 1% in the 2 wks after a softRiksbankdecision

From Danske:

  • Swedish central bank will probably have to ease monetary policy further as inflation forecasts are still too optimistic, says Michael Grahn, an analyst at Danske Bank.
  • PredictsRiksbankwill expand government bond purchases beyond June; doesn’t exclude more repo rate cuts

From Swedbank:

  • Riksbank’s decision to cut its repo rate to -0.50% was expected but there’s now increased disagreement among board members, Anna Breman, chief economist at Swedbank AB, says by phone.
  • “Interesting” that two board members entered reservations against the rate cut and Floden against extension of FX intervention delegation mandate
  • Repo rate path indicates possible further rate cuts
  • Says that Riksbank further move into negative will lead to “big discussion”on mon. policy and the inflation target, as negative rates will remain below zero for a long period

From SEB:

  • SEB sees 40% likelihood that Riksbank will ease monetary policy further, mainly due to downside risks in world economy, says Olle Holmgren, an SEB analyst.
  • Riksbankinflation forecasts are still too optimistic
  • Further rate cut, expanded QE most likely stimulus tools
  • Still, reservations against today’s cut by two of six board members may suggest repo rate is starting to near bottom
  • FX interventions remain an option if SEK strengthens to 9-9.10 against EUR; uncertainties about scope ofRiksbank’s intervention mandate decreases likelihood of intervention

Your move Draghi.

 

END

 

 

Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings/THURSDAY morning 7:00 am

Euro/USA 1.1319 up .0038

USA/JAPAN YEN 111.94 down 1.312 (Abe’s new negative interest rate (NIRP)a total bust

GBP/USA 1.4402 down .01165

USA/CAN 1.3974 up .0049

Early this THURSDAY morning in Europe, the Euro rose by 38 basis points, trading now well above the important 1.08 level rising to 1.1319; Europe is still reacting to deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, crumbling bourses and the threat of continuing USA tightening by raising their interest rate / Last  night the Chinese yuan was flat in value (onshore) due to lunar holiday. The USA/CNY flat in rate at closing last night: 6.5710 / (yuan flat but will still undergo massive devaluation/ which will cause deflation to spread throughout the globe)

In Japan Abe went BESERK  with NEW ARROWS FOR HIS Abenomics WITH THIS TIME INITIATING NIRP   . The yen now trades in a hugely  northbound trajectory as IT settled UP AGAIN in Japan again by 131 basis points and trading now well BELOW  that all important 120 level to 111.94 yen to the dollar.  NIRP POLICY IS A COMPLETE FAILURE  AND ALL OF OUR YEN CARRY TRADERS HAVE BEEN BLOWN UP

The pound was down this morning by 117 basis point as it now trades just above the 1.44 level at 1.4402.

The Canadian dollar is now trading DOWN 49 in basis points to 1.3974 to the dollar.

Last night, Chinese bourses were closed/Japan NIKKEI IS CLOSED, AUSTRALIA IS HIGHER  All European bourses ARE DEEPLY IN THE RED as they start their morning.

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 and especially with the fall of the yuan carry trade. The emerging market which house close to 50% of the 9 trillion dollar short is feeling the massive pain as their debt is quite unmanageable.

2, the Nikkei average vs gold carry trade (blowing up and the yen carry trade HAS BLOWN up/and now NIRP)

3. Short Swiss franc/long assets blew up ( Eastern European housing/Nikkei etc.

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 THURSDAY morning: closed

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

2/ Asian bourses mixed/ Chinese bourses: Hang Sang closed DOWN 3.85% OR DOWN 743 POINTS ,Shanghai in the closed  Australia ONLY BOURSE IN THE GREEN: /Nikkei (Japan)red/India’s Sensex in the red /

Gold very early morning trading: $1236.00

silver:$15.57

Early THURSDAY morning USA 10 year bond yield: 1.57% !!! down 15 in basis points from last night  in basis points from WEDNESDAY night and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield falls to 2.41 DOWN 13  in basis points from WEDNESDAY night.  ( EXTREME policy error)

USA dollar index early THURSDAY morning: 95.60 down 22 cents from WEDNESDAY’s close.(Now below resistance at a DXY of 100)

This ends early morning numbers THURSDAY MORNING

 

OIL MARKETS

Last night:

 

Phillips 66 dumps crude on Cushing OK refiners.  As we have been pointing out to you on several occasions, Cushing has no refining space whatsoever.  This caused WTI price to fall into the 26 dollar handle and create conditions similar to a stock bloodbath.  We now have an oil bloodbath;

 

(courtesy zero hedge)

 

“Bloodbath” In Black Gold – Buffett’s Phillips 66 Dumps Oil In Cushing, Crashes Crude Spreads To 5 Year Lows

The canary in the coalmine of an increasingly desperate energy industry just croaked. With“unusual timing” and at “distressed prices,”Reuters reports that Phillips 66 – the major US refiner owned by Warren Buffett – dumped crude oil for immediate delivery into Cushing storage tonight. This sparked heavy selling of the front-month WTI contract (to a $26 handle) and crashed the 1st-2nd month spread to 5 year lows.

It was just last week when we said that Cushing may be about to overflow in the face of an acute crude oil supply glut.

“Even the highly adaptive US storage system appears to be reaching its limits,” we wrote, before plotting Cushing capacity versus inventory levels. We also took a look at the EIA’s latest take on the subject and showed you the following chart which depicts how much higher inventory levels are today versus their five-year averages.

graph of difference in inventory levels as of January 22, 2016 to previous 5-year average, as explained in the article text

 

And now with Reuters reporting on major US refiners dumping crude, sparking speculation that the move reflected advance warning of looming output cuts amid sluggish winter demand and record inventories

Front-month WTI collapsed to a $26 handle…

 

 

The unusual sales of excess oil crashed the March/April WTI futures spread… One trader described the market as a “bloodbath.”

 

 

It was unclear how many barrels one of the largest U.S. independent refiners sold, but three traders confirmed at least two deals traded at negative $2.50 and $2.75 a barrel. Two sources said a second refiner was also looking to offload barrels but transactions were not confirmed.

 

These deals drew notice among traders, who said the prices were distressed and the timing unusual… sending the cash-roll to 5 year lows…

 

 

The so-called cash roll, which allows traders to roll long positions forward, typically trades in the three days following the expiry of the prompt futures contract. The trading period for February-March contracts concluded almost three weeks ago.

 

Since then, however, oversupply has pressured refined products prices lower, and now some grades of crude are yielding negative cracking margins, traders say.

 

“Midwest margins turned negative after operating expenses last week andforward cracks suggest margins will remain in the doldrums for some time,” said Dominic Haywood, an analyst for Energy Aspects in London.

If Phillips 66 does cut refinery runs, it would be the third refiner to capitulate amid record gasoline inventories and negative margins.

Earlier on Wednesday, sources said Delta Air Lines’ Monroe Energy refinery near Philadelphia had decided to cut output by 10 percent at its 185,000 barrels per day (bpd) refinery due to economic reasons.

 

On Tuesday, sources said that Valero Energy Corp was planning to cut gasoline production at its 180,000 bpd Memphis, Tennessee, refinery by about 25 percent.

U.S. Energy Information Administration data on Wednesday showed inventories at the Cushing, Oklahoma delivery hub hit a record 64.7 million barrels last week – just 8 million barrels shy of its theoretical limit – stoking concerns that tanks may overflow in coming weeks.

 

And so, with the news that Phillips 66 is dumping in apparent size, it appears, as we detailed previously, that BP’s warning that storage tanks will be completely full by the end of H1

We are very bearish for the first half of the year,” Dudley said at the IP Week conference in London Wednesday. “In the second half, every tank and swimming pool in the world is going to fill and fundamentals are going to kick in,” he added. “The market will start balancing in the second half of this year.”

May be coming true a lot sooner.

 

end
This morning: back to the 26 dollar handle after the Saudi Headlines
(courtesy zero hedge)

WTI Crude Pumps’n’Dumps Back To $26 Handle After Saudi Headlines

In a replay of yesterday’s idiotic opening action, WTI crude spiked on Saudi troops headlines – running stops to yesterday’s close – only to dump back below $27 once again…

 

end
More and more investors believe that Cushing Oklahoma refining will overflow:
(courtesy zero hedge)

The Most Ominous Warning That Oil Storage Is About To Overflow Has Arrived

It was just last week when we said that Cushing may be about to overflow in the face of an acute crude oil supply glut.

“Even the highly adaptive US storage system appears to be reaching its limits,” we wrote, before plotting Cushing capacity versus inventory levels. We also took a look at the EIA’s latest take on the subject and showed you the following chart which depicts how much higher inventory levels are today versus their five-year averages.

graph of difference in inventory levels as of January 22, 2016 to previous 5-year average, as explained in the article text

 

And now with major US refiners dumping crude, as we detailed overnight, those fears are surging.

U.S. Energy Information Administration data on Wednesday showed inventories at the Cushing, Oklahoma delivery hub hit a record 64.7 million barrels last week – just 8 million barrels shy of its theoretical limit – stoking concerns that tanks may overflow in coming weeks.

 

 

 

And now, given the “super-contango” in 3-month it is extremely clear that storage concerns are at their highest in 5 years…

 

Simply put, as one trader noted, speculators are now “making the leap to Cushing storage never being more full… will actually overfill, or even stop taking crude oil deliveries outright.”

end
Then late in the day:  The UAE supposedly speaking on behalf of Saudi Arabia states that OPEC is ready to cooperate on a cut in production.  We will see how long this story lasts:
(courtesy zero hedge)

Moments After Oil Crashes To 12 Year Lows, “OPEC Headline” Sends It Surging Again

Seconds after Oil hit the lows and NYMEX closed – and S&P broke the critical 1812 level, this hit:

  • *OPEC READY TO COOPERATE ON CUT, UAE ENERGY MIN SAYS: WSJ

Here is the source:

 

So, first it was Venezuela speaking for the Saudis, then it was Russia speaking for the Saudis, now it is the UAE.

And the reaction…

 

The last time front-month crude oil traded at these levels ($26.12) was May 2003 as WTI Crude has collapsed over 22% in the last 2 weeks – the biggest drop since Lehman in 2008. Goldman’s “teens” are getting closer…

 

 

With credit risk already at record highs – and getting higher – we suspect the moment of Chapter 7 truth is getting closer.

end
Then the Wall Street Journal comes out and states that the above story is bogus:
(courtesy Wall Street Journal/zero hedge)

Even WSJ Admits OPEC Production Cut Story “May Be Bogus”

He hope we are not the only ones who find it oddly confusing that moments after the WSJ reported that the UAE, supposedly speaking on behalf of the Saudis, said OPEC is “ready to cooperate on a production cut”, the very same WSJ writes that the “story may be bogus.”

From the WSJ:

Look, the OPEC thing may turn out to be bogus. Lord knows we’ve heard that line too many times to count, and oil’s at $26/barrel. Even if it is bogus, though, the episode illustrates one thing: there is still a sizable contingent of operators out there just waiting for an excuse to pounce on equities.

 

In other words, we still are not near capitulation.

Yes, it may very well be bogus, and no, it has nothing to do with operators pouncing, and everything to do with the latest violent short squeeze, one which was accelerated by frontrunning algos which swept away all the offers for minutes, sending the Nasdaq briefly into the green.

 

The WSJ also adds the following walkback:

It’s not that I think somebody planted a rumor, mind you. I’m not saying the news is wrong or that it’s being misreported. I just think that we hear this kind of talk out of OPEC a lot.

 

“We’ve heard this chatter enough times over the past month so take it with a grain of salt,” said Lindsey Group’s Peter Boockvar.

 

They have a notorious history of “agreeing” on cuts and quotas, and then going behind each other’s back and doing whatever is best for individual states.

 

It’s best to wait until OPEC actually does something on this front, and then to wait and see if they honor it. In other words, we’re a long way away from anything really happening here.

We expect the Saudis to chime in momentarily and explain how everyone got punked by the latest “OPEC headline” for the 6th time.

end

 

An OPEC production cut is unlikely until the USA production declines by at least 1 million barrels per day.  Thus if they do a production cut it will accomplish nothing except a very short term increase in price
(courtesy Arthur Berman/OilPrice.com)

OPEC Will Not Blink First

Submitted by Arthur Berman via OilPrice.com,

An OPEC production cut is unlikely until U.S. production declines by about another million barrels per day (mmbpd). OPEC won’t cut because it would accomplish nothing beyond a short-term increase in price. Carefully placed comments by OPEC and Russian oil ministers about the possibility of production cuts achieve almost the same price increase as an actual cut.

Bad News About The Oil Over-Supply from IEA and EIA

The International Energy Agency (IEA) and U.S. Energy Information Administration (EIA) shook the markets yesterday with news that the world’s over-supply of oil has gotten worse rather than better in recent months. IEA data shows that the global liquids over-supply increased in the 4th quarter of 2015 to 2.24 million barrels per day (mmbpd) from 1.62 mmbpd in the 3rd quarter (Figure 1).

Figure 1. IEA world liquids market balance (supply minus demand). Source: IEA and Labyrinth Consulting Services, Inc.

(click image to enlarge)

Supply increased 70,000 bpd and demand decreased 550,000 bpd for a net increase in over-supply of 620,000 bpd. The sharp decline in demand is perhaps the most troubling aspect of IEA’s report. The agency forecasts tepid demand growth of only 1.17 mmbpd in 2016 compared with 1.61 mmbpd in 2015. The weak global economy is the culprit.

EIA’s monthly data showed the same trend. Over-supply in January increased to 2.01 mmbpd from 1.35 mmbpd in December, a 650,000 bpd net change (Figure 2). Supply fell by 370,000 bpd but consumption dropped by a stunning 1.02 mmbpd.

Figure 2. EIA world liquids market balance (supply minus consumption). Source: EIA and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

The January 2016 Oil Price Head-Fake

Recent comments about a possible OPEC cut were largely responsible for the late January “head-fake” increase in oil prices (Figure 3). WTI futures increased 27 percent from $26.55 to $33.62 per barrel between January 20 and 29. As hopes for a production cut faded, prices fell 8 percent last week and have fallen below $28.00 as reality regains control of market expectations.

Figure 3. NYMEX WTI futures prices, October 2015-February 2016. Source: EIA, Bloomberg and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

There were, of course, other factors that boosted oil prices for that brief period. These included the usual questionably substantial suspects: a lower-than-expected build in U.S. crude oil inventories, sharp declines in U.S. land rig counts, and a weaker U.S. dollar on expectation that the Federal Reserve Board may slow planned interest-rate increases. What happens in the U.S. continues to drive oil markets.

Oil markets reflect a psychological conflict among investors between reality and hope. The reality is that the world is over-supplied with oil. The hope is that oil prices will increase without resolving that fundamental problem.

An OPEC production cut fulfills that hope. Deus ex machina.

Blame It On OPEC

Many believe that OPEC caused the global oil-price collapse by failing to rescue prices in its role as swing producer. This narrative also contends that OPEC and Saudi Arabia are producing at maximum capacity to destroy U.S. shale producers. The data do not support this narrative.

January 2016 Saudi crude oil production (9.95 mmbpd) increased slightly from December (9.90 mmbpd) but has declined since the August 2015 peak of 10.25 mmbpd (Figure 4).

Figure 4. Saudi Arabia crude oil production and change in production since January 2008. Source: EIA and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

Total OPEC crude oil production in January production was 31.61 mmbpd, almost half-a-million barrels per day less than in July (32.09 mmbpd) and only somewhat more than its 4-year average of 31.28 mmbpd.

Figure 5. Total OPEC crude oil production. Source: EIA and Labyrinth Consulting Services, Inc.

(click image to enlarge)

OPEC crude oil production since the Financial Crisis in 2008 has been remarkably balanced (Figure 6). Overall, increases by Iraq (+2.35 mmbpd) and Saudi Arabia (+0.6 mmbpd) have largely offset decreases by Iran (-1.0 mmpbd due to sanctions) and Libya (-1.4 mmbpd due to civil war). Renewed export by Iran with the lifting of sanctions is part of what pulls the oil market back to reality after its flights of sentiment-based hope.

Figure 6. OPEC crude oil production compared to January 2008 production levels (minus Indonesia). Source: EIA and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

Although it appears unlikely that Libya will resolve its civil unrest any time soon, renewed Libyan production and export is a sobering factor to ponder.

OPEC and Saudi Arabia increased production aggressively from March through August of 2015. Since then, however, production has declined to near average levels for 2012-2016.

The United States and Non-OPEC Are The Problem

OPEC did not cause the oil over-supply in early 2014. Over-production by the United States and other non-OPEC countries caused the problem. This is still the case.

The U.S. is responsible for more than 70 percent of the increase in non-OPEC liquids production since January 2014 (Figure 7). Brazil and Canada along with China and Russia account for the rest.

Figure 7. Non-OPEC liquids production compared to January 2014 production levels. Source: EIA and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

Until the structure of non-OPEC production decreases, there is little that OPEC can do to remedy low prices. Cuts by OPEC might temporarily increase prices but this would lead to more over-production outside of OPEC that would further collapse world oil prices later on.

Why U.S. Production Has Not Declined More

U.S. crude oil production has only declined by approximately 570,000 bpd from its peak of 9.69 mmbpd in April 2014 to 9.13 mmbpd in January 2016–about 60,000 bpd each month (Figure 8).

Figure 8. U.S. crude oil production and forecast. Source: EIA and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

EIA forecasts that production will fall another 820,000 bpd (about 100 kbpd each month) to 8.31 mmbpd by September 2016 before increasing again. The forecast provides hope that the oil market may balance later in 2016 or in 2017 but history to date suggests that it is probably optimistic.

Tight oil production in the U.S. has not declined nearly as much as many anticipated based on falling rig counts. Most explanations invoke increases in drilling and completion efficiency but I believe the truth lies in the continued availability of external capital to fund drilling of an ever-increasing number of producing wells until quite recently.

In the Bakken, Eagle Ford and Permian basin plays, the number of producing wells has declined or flattened in the last reporting months of October or November 2015. The plays are different and so are the patterns for production decline. Nevertheless, the decrease in new producing wells suggests that either capital is less available or that companies are choosing to drill and complete fewer wells.

Reporting in the Bakken is better than in the other plays. Bakken production only declined 51,000 bpd between the December 2014 and November 2015, the last reported data from the North Dakota Department of Mineral Resources (Figure 9).

Figure 9. Bakken production and number of producing wells. Source: North Dakota Dept. of Mineral Resources and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

Over the same period, the horizontal rig count fell by 111, from 173 to 62 rigs. Yet, the number of producing wells increased by 943, from 12,134 to 13,077 (the number of wells waiting on completion (WOC) increased by 219 from 750 to 969).

As long as more wells were added each month, production continued to increase. The number of producing wells only began to decline in October 2015. Each completed well cost approximately $8 million so capital spending did not decrease until then despite fairy tales about ever-increasing efficiency.

The resilience of tight oil production in the Bakken, therefore, reflected the continued availability of external capital to fund more drilling and completion. The impact of reduced capital is apparently a recent phenomenon in the Bakken.

The Eagle Ford and Permian basin plays show similar patterns of flattening rates of well completions in recent months. Eagle Ford production has declined 183,000 bpd since March 2015 while Permian basin production may just be peaking.

It is too early to draw concrete conclusions from the tight oil play data presented here but, in a way, that is the point. Production has only begun to decline because external capital was available until late 2015 despite low oil prices. If companies are forced to rely increasingly on cash flow for new drilling then, U.S. production should decline sharply. If, on the other hand, the recent $2 billion in equity raised by Permian basin operators becomes more the norm in 2016 then, production declines will be more modest.

The U.S. Crude Oil Storage Problem

There is little chance that oil prices will increase beyond the head-fakes and sentiment-driven price cycles of the past year until U.S. crude oil storage begins to decrease. Oil stocks are currently 154 million barrels more than the 5-year average and 131 million barrels more than the 5-year maximum (Figure 10).

Figure 10. U.S. crude oil stocks. Source: EIA and Labyrinth Consulting Services, Inc.

(click image to enlarge)

The Cushing, Oklahoma pricing hub and nearby Gulf Coast storage facilities make up almost 70 percent of U.S. working storage capacity. These crucial storage areas are currently at 85 percent of capacity (Figure 11).

Figure 11. Cushing and Gulf Coast crude oil storage. Source: EIA and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

Although the correlation between Gulf Coast and Cushing storage utilization, and WTI oil price is not perfect, it is as good as any single price indicator (Figure 12).

Figure 12. Cushing and Gulf Coast Storage Capacity and WTI oil price. Source: EIA and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

Despite considerable hype about 3 billion barrels of oil in storage around the world, Matt Mushalik has shown that OECD storage is only about 300 million barrels above the 5-year average based on IEA data. More than half of those 300 million barrels are in U.S. storage so, again, the U.S. drives the world oil market.

As long as storage volumes remain above 80 percent of capacity, oil prices will be depressed. Until U.S. oil production declines substantially, storage will remain near capacity. No OPEC production cut will be able to offset this powerful market factor for long.

Saudi Arabia Is Not Going Broke

Euan Mearns has presented a compelling case that OPEC made a gigantic blunder by letting oil prices fall below $40 per barrel for the sake of market share. I believe, however, that there is more at stake than market share.

The capital providers who enable high-cost oil projects are the market-share target of Saudi Arabia’s gambit. Oil sands are the primary focus because these have gigantic reserves. Deep-water and tight oil are secondary objectives because their reserves are smaller and shorter lived.

OPEC’s larger objective is to postpone the end of the Oil Age as far into the future as possible. This is accomplished by an extended period of low oil prices that puts renewable energy at a price disadvantage to oil and gas, and slows the climate change-based flight from fossil energy. It is further achieved by stimulating the global economy through low energy prices that may in turn increase oil demand.

The commercial present and future for the Saudis and their Gulf State comrades depend on oil. They take the long view that near-term losses are justified by longer-term gains.

I am not defending their stratagem but merely trying to understand it.

The press has been focused on the imminent financial demise of Saudi Arabia as a result of their production and price strategy. Although the strain on the Kingdom is considerable, I do not believe that these criticisms are completely realistic.

Saudi Arabia’s year-end 2015 foreign reserve accounts totaled $636 billion, an amount almost equal to its cash reserves in 2012 when Brent prices averaged $112 per barrel (Figure 13).

Figure 13. Saudi Arabia international reserve assets. Source: Saudi Arabia Monetary Agency and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

Its estimated cash reserves through 2017 of $443 billion are still above or nearly equal to levels from 2007 through 2010 and exceed the current accounts of all countries except Switzerland shown in Figure 14 (China ($3513 billion) and Japan ($1233 billion), not shown in the figure, are higher than Saudi Arabia).

Figure 14. International reserves and foreign currency liquidity. Source: International Monetary Fund and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

The Way Forward

Oil prices will not increase or stop falling until the current 2 mmbpd over-supply is consistently reduced for a period of many months. I do not expect a formal OPEC production cut until that happens. That means that U.S. production and storage inventories must fall. That may happen in 2016 if EIA’s forecast shown in Figure 8 is close to correct.

There are some considerable wild cards that might keep the world mired in over-supply and low oil prices beyond 2016. Renewed supply from Iran and Libya are the most obvious candidates. Continued supply of external capital to U.S. tight oil production is a second important wild card. The weak global economy and associated oil demand below the forecasted range of 1.2 mmbpd of annual growth represent other important uncertainties.

Without a meaningful forward reduction of U.S. oil production of around 1 mmbpd, an OPEC cut would only have a limited, short-term effect on prices. The focus going forward must be on the source of the problem. That is the United States and not OPEC.

 
And now for your closing THURSDAY numbers:
 
 

Portuguese 10 year bond yield:  4.10% up 40 in basis points from WEDNESDAY

Japanese 10 year bond yield: +.022% !! up 2/5 in  basis points from WEDNESDAY which was lowest on record!!
Your closing Spanish 10 year government bond, THURSDAY up 6 in basis points
Spanish 10 year bond yield: 1.78%  !!!!!!
Your THURSDAY closing Italian 10 year bond yield: 1.71% up 7 in basis points on the day:
Italian 10 year bond trading 7 points lower than Spain
.
IMPORTANT CURRENCY CLOSES FOR THURSDAY
 
Closing currency crosses for THURSDAY night/USA dollar index/USA 10 yr bond:  2:30 pm
 
Euro/USA: 1.1337 up .0053 (Euro up 53 basis points)
USA/Japan: 112.21 down 1.01(Yen up 101 basis points) and a major disappointment to our yen carry traders and Kuroda’s NIRP
Great Britain/USA: 1.4466 down .0054 (Pound down 54 basis points)
USA/Canada: 1.3942 up .0019 (Canadian dollar down 19 basis points with oil being lower in price/wti = $26.99 )
This afternoon, the Euro rose by 53 basis points to trade at 1.1337/(with Draghi’s jawboning having no effect)
The Yen rose to 112.21 for a gain of 101 basis points as NIRP is a big failure for the Japanese central bank
The pound was down 54 basis points, trading at 1.4466.
The Canadian dollar fell by 19 basis points to 1.3942 as the price of oil was clobbered today as WTI fell to around $26.99 per barrel/WTI,)
The USA/Yuan closed at 6.5710
the 10 yr Japanese bond yield closed at .022%
Your closing 10 yr USA bond yield: down 9 in basis points from WEDNESDAY at 1.63%//(trading well below the resistance level of 2.27-2.32%) policy error
USA 30 yr bond yield: 2.50 down 4 in basis points on the day and will be worrisome as China/Emerging countries  continues to liquidate USA treasuries  (policy error)
 Major crosses at 4 pm:
usa/euro: 1.1322
the all important:  usa/japan yen: 112.36
Great Britain Pound/usa:144.72
usa/canada: 1.3919
 
 Your closing USA dollar index: 95.57 down 32 in cents on the day  at 2:30 pm
USA dollar index:  95.56  down 33 cents  at 4 pm
Your closing bourses for Europe and the Dow along with the USA dollar index closings and interest rates for THURSDAY
 
London: down 135.33 points or 2.39%
German Dax: down 264.42 points or 2.93%
Paris Cac down 164.49 points or 4.05%
Spain IBEX down 397.40.10 or 4.88%
Italian MIB: down 941.14 points or 5.63%
The Dow down 254.56  or 1.60%
Nasdaq:down 16.76  or 0.39%
WTI Oil price; 26.78  at 2:30 pm;
Brent OIl:  30.65
USA dollar vs Russian rouble dollar index:  80.09   (rouble is down   84/100 roubles per dollar from yesterday) despite the fall in oil
This ends the stock indices, oil price, currency crosses and interest rate closes for today.
 
 
New York equity performances plus other indicators for today:

Oil Headline Rescues Stocks From Bloodbath As Precious Metals Soar

Market Psychology has swung from this…

 

To this…Losing SPY Religion

 

And seemingly back.

*  *  *

Gold grabs the headlines today. After beginning to surge yesterday, Hong Kong’s reopen sparked a spike which then accelerated all day.

 

This was gold’s best day since Nov 2008 and the highest level in a year…

 

With the best quarter in 30 years…

 

Perhaps even more stunning is the collapse in USDJPY since Kuroda unleashed NIRP – this is the worst 2-week drop (Yen strength) since LTCM in 1998…

 

Damn It, Janet!

 

It seems much of today’s turmoil began as Hong Kong re-opened last night…

 

An OPEC Rumor – which struck perfectly as the S&P broke 1812 – a crucial technical level (January’s intraday low back to Feb 2014)… And just look at VIX!!! Does that look like a “normal” market?

 

Spiked stocks briefly (enabling NASDAQ to briefly get green before dropping), and the soared again…

 

Techs managed to scramble green in the last hour but financials were the biggest loser…

 

Deutsche Bank’s dead-cat-bounce died and is back to tracking Lehman’s analog…

 

And it is spreading to US banks – Sub financial credit risk is up 18% this week – the worst week since at least 2011…

 

 

Treasury yields crashed overnight – 2Y was down 10bps and 10Y down 20bps at its apex, before a miraculous bid for USDJPY appeared and rescued risk…

 

The yield curve (2s10s) collapsed even further below 100bps – to Dec 07 lows near 95bps at its lows today – leading financials lower…

 

FX markets were volatile early on (with a huge drop in USDJPY when HK opened) and the USD drifted weaker…

 

The biggest 2-week drop in USD Index in 4 years…

 

Crude and Copper slumped as Gold & Silver surged…

 

As front-month crude plunged relative to 2nd month crude to 5 year lows..

 

Charts: Bloomberg

Bonus Chart: If everything is awesome, why is USA default risk on the rise?

Average:
The carnage today in USA bank stocks and its bonds:
(courtesy zero hedge)

The Crash In US Bank Stocks Is Only Half-Way Through

It appears by the total lack of coverage that the utter collapse of Europe’s banking system is entirely irrelevant to the “fortress-like” balance sheets of US banks… but it is not. Once again today, US financials saw bonds dumped across the senior and subordinated segments…

 

…and while US financial stocks have fallen hard year-to-date, if credit is right – and it usually is on a cyclical basis – US bank stocks have a long way to go (as believe in book values is battered).

 

Of course, the CEOs will all tell investors there is nothing to worry about – just as David Stockman warned

“in my experience is that when the crunch comes, bank CEOs lie”

end

Even though initial claims are now this week, Goldman warns that increases in the jobless will be forthcoming!
(courtesy zero hedge)

 

Initial Claims Drop But Goldman Warns “Recent Jobless Increase Is More Than Just Noise”

Initial jobless claims dropped notably last week (from 285 to 269k) but the overall trend (away from the noise) appears in tact. The smoother4-week average remains near 12-month highs and as Goldman notes weakness is widespread – “there is only limited evidence that the rise in claims is due to distress in the energy sector.” Continuing claims dropped modestly to 2.239mm but, as Goldman adds, “the persistence of the recent move suggests more might be going on, and we are treating the increase as more than just noise.”

 

And finally, here is Goldman explaining why it is time to be concerned…

Initial and continuing claims for unemployment insurance benefits have moved steadily higher since late last year. After nearing their respective post-crisis lows of 256k and 2,146k this past October, initial and continuing claims are now higher by 29k and 112k, respectively. Both series can be volatile, and one should be cautious about reading too much into the week-to-week changes. But the persistence of the recent move suggests more might be going on, and we are treating the increase as more than just noise.

And moreover, Goldman warns that they find only limited evidence that the recent increase in claims directly relates to distress in the energy sector.

And looking forward, every 1k increase in claims (relative to the breakeven rate) implies a slowdown in monthly payroll growth of just over 4k. Therefore, a further rise in claims to 300-315k, if sustained, could imply payroll growth closer to a trend-like rate—assuming the benefits take-up rate and other aspects of labor market flows remain unchanged.

end
Seems that the SEC is accusing Boeing of fraud:
(courtesy zero hedge)

Boeing Stock Nose-Dives On News Of SEC Probe

Just when you thought The BoJ would save the day with its miraculous intervention in carry trades, this happens:

  • *BOEING SAID TO FACE SEC PROBE OF DREAMLINER AND 747 ACCOUNTING

And just like that, Boeing’s stocks crashes 10% dragging the major US equity markets with it. So, just as a reminder, this is a firm which the US government (via Ex-Im Bank) lends billions of US taxpayer dollars… and now the SEC is accusing them of fraud.

 

As Bloomberg reports,

The U.S. Securities and Exchange Commission is investigating whether Boeing Co. properly accounted for the costs and expected sales of two of its best known jetliners, according to people with knowledge of the matter.

 

The probe centers on projections Boeing made about the long-term profitability for the 787 Dreamliner and the 747 jumbo aircraft, said one of the people, who asked not to be named because the investigation isn’t public. Both planes are among Boeing’s most iconic, renowned for the technological advancements they introduced, as well as the development headaches they brought the company.

 

Underlying the SEC review is a financial reporting method known as program accounting that allows Boeing to spread the enormous upfront costs of manufacturing planes over many years. While the SEC has broadly blessed its use in the aerospace industry, critics have said the system can give too much leeway to smooth earnings and obscure potential losses.

We’re gonna need more Ex-Im Bank bailouts to save this one!

end

You will get a good laugh at the following.  Janet Yellen is the real source of the leak and everybody knows it. She has no authority whatsoever to prevent the handing over of documents from the FOMC transcripts.  This will be fun to follow in the upcoming few weeks:
(courtesy zero hedge)

Here Is The Exchange That Left A Stunned Janet Yellen Looking Like A Deer In Headlights

Update: DJIA FUTURES AT DAY’S LOW, FALL 361PTS; S&P -38, NASDAQ -91

* * *

For nearly one year, Wisconsin Rep. Sean Duffy has been Janet Yellen’s nemesis over the ongoing  probe into Fed leakage of material inside information via Medley Global and any other undisclosed channels, one which has seen subpoeans be lobbed at the Fed which has been doing everything in its power to stall said probe, and which cost Pedro da Costa his jobwhen he dared to ask questions at a Fed presser that were not precleared by his WSJ “Fed mouthpiece” peers.

Today, during Yellen’s appearance before the House Financial Services committee, Duffy finally had enough, and in a heated exchange asked Yellen what on legal authority is the Fed exerting privilege to ignore a Congressional probe into what is clearly a criminal leak, one which has nothing to do with monetary policy and everything to do with the Fed providing material, market moving information to its favorite media and financial outlets.

The exchange highlights are below:

DUFFY: We sent a letter in the Medley investigation, in our oversight of the Fed, asking you for information regarding communication. No compliance. Then we sent you a subpoena in May, you did not comply with that.

 

We had partial compliance in October. We’re now a year after my initial letter. I’ve asked you for excerpts of the FOMC transcripts in regard to the discussion — in regard to the internal investigation on Medley. You have not provided those to me. Is it your intent today to promise that I will have those, if not this afternoon, tomorrow?

 

YELLEN: Well, congressman, I discussed this matter with Chairman Hensarling and indicated we have some concern about providing these transcripts… given their importance in monetary policy.

 

 

DUFFY: So let me just…

 

YELLEN: And I received a note back from Chairman Hensarling last night, quite late, indicating your response to that. And we will consider it and get back to you as soon as we can.

 

DUFFY: Oh no, no. I don’t want you to consider it and I think the chairman would agree with me, that this is a conversation, not about monetary policy. This is not market-moving stuff. This is about the investigation and the conversation of a leak inside of your organization. So this institution is entitled to those documents, wouldn’t you agree?

 

YELLEN: I will get back to you with the formal answer.

 

DUFFY: No, no, listen.

 

YELLEN: I believe that we have provided you with all the relevant information.

 

DUFFY: That’s not my question for you Chair Yellen. If I’m not entitled to it, can you give me the privilege that you’re going exert that’s going to let me know why I’m not entitled to those documents?

 

YELLEN: I said we received well after the close of business yesterday a letter explaining your reasoning and I will need some time to discuss this matter with my staff.

 

DUFFY: I don’t want — listen. I sent you a letter a year ago on February 5th. I had to send you a subpoena. You knew that I’m looking for these documents, you knew I was going to ask you about this today. So if you’re not going to give me the documents, exert your privilege, tell me your legal authority, why you’re not going to provide this to us.

And while a video of the exchange can be watched below (we will substitute a higher quality version when we can find one)…

 

The end result was this:

 

… which after just one more push by a few good men in authority, will be the same as another picture very familiar to regular Zero Hedge readers.

We just wonder if there are still a “few good men” left, daring to challenge the head of the Fed on what any other mere mortal would have been in prison for, long ago.

As for the “deer in headlights” look, and why Yellen is so adamantly refusing to comply with subpoenas and provide the US population and Rep. Duffy with the requested information regarding how it was that the Fed leaked critical information to Medley Global’s (founded by Richard Medley, former chief political strategist to George Soros) Regina Schleiger, the answer as Yellen explained last May

… is simple: Yellen herself was the source, only there is no definitive proof… yet, as confirmation that the Chairwoman herself leaked the information in question would be grounds for prison time.

And since we doubt that Janet would chose a legacy of being the first Fed Chairman thrown in jail, even if it is not that far below a legacy of totally mangling the Fed’s attempt at renormalizing rates at a time when the entire world was careening into a recession, we expect absolutely no cooperation by the Fed in this ongoing criminal matter.

end

see you tomorrow night

h

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