March 1/A mammoth 14.87 tonnes of gold bought by GLD and yet the price of gold falls/PMI’s around the globe plummet and bourses rise??/China’s WMP or off balance sheet wealth funds is a 15 trillion black swan ready to crack/China expects to hand out 5 million pink slips to workers/Japan floats its first negative yielding 10 yr bond at -.06%/Barclay’s cuts its dividend to only 3 pence and reports awful results in its earnings report/

Gold:  $1,230.30 down $3.60    (comex closing time)

Silver 14.73 down 16  cents

In the access market 5:15 pm

Gold $1232.50

silver: $14.83




Today can be outlined simply with two headlines from the same story issued by Reuters;

from zero hedge


“At precisely 10:00am this morning, Reuters’ journalist Abhiram Nandakumar issued a report which tried to “explain” what is going on and why stocks are soaring. This is what he came up with (link):


However, appears that someone did not like Reuters “peddling fiction” that the only reason stocks are soaring is for the same reason they have gone up for the past 7 years, namely hopes (either realized or not) of more central bank stimulus to fix the deteriorating economy, and Abhiram got a tap on the shoulder.

As a result, here is what the above article was promptly revised to in under two hours (link).


To summarize: the “bad” data which was originally so poor it prompted hope of more stimulus and let Wall Street surge, was subsequently seen as “data” that no longer spurs stimulus hopes but now points to economic recovery. Wall Street surged some more.

And now you know all there is to know.”




At the gold comex today, we had a fair delivery day, registering 8 notices for 800 ounces for  Silver surprisingly saw only 17 notices for 85,000 oz for the active March delivery month.  They must have problems sourcing silver!

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 211.70 tonnes for a loss of 91 tonnes over that period.

In silver, the open interest fell by 412 contracts down to 162,205. In ounces, the OI is still represented by .811 billion oz or 116% of annual global silver production (ex Russia ex China). Generally as we go into an active delivery month the liquidation is much bigger.

In silver we had 17 notices served upon for 85,000 oz.

In gold, the total comex gold OI rose by a whopping 11,950 contracts to 450,466 contracts as the price of gold was up $14.10 with yesterday’s trading.(at comex closing)

We had another huge change in gold  inventory at the GLD, a mammoth sized deposit of 14.87 tonnes and gold goes down??? / thus the inventory rests tonight at 7770.27 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 no changes in inventory tune of  and thus the Inventory rests at 311.618 million oz


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

1. Today, we had the open interest in silver fell by 412 contracts down to 162,205 as the   price of silver was up 20 cents with yesterday’s trading. The total OI for gold rose by 11,950 contracts to 450,466 contracts as gold was up $14.10  in price from yesterday’s level.

(report Harvey)

2 a) Gold trading overnight, Goldcore

(Mark OByrne)

2b) FRBNYgold report




i)Late  MONDAY night/ TUESDAY morning: Shanghai closed UP BY 45.19 POINTS OR 1.65%, HOWEVER IT HAD ANOTHER OF ITS FAMOUS LAST HR RESCUES/  Hang Sang closed UP by 295.53  points or  1.55% . The Nikkei closed UP 58.75 or 0.47%. Australia’s all ordinaires was UP 0.85%. Chinese yuan (ONSHORE) closed UP at 6.5480.   Oil GAINED  to 34.20 dollars per barrel for WTI and 36.73 for Brent. Stocks in Europe so far deeply in the GREEN . Offshore yuan trades  6.5489 yuan to the dollar vs 6.54800 for onshore yuan/ as POBC went after the shorts (see story).  Chinese PMI’s (mfg and service plunge (see story)




ii)Last night, the POBC strengthened the yuan going after the shorts.  It erased all the RRR cut swing. The problem for them is of course, they used considerable amount of the USA reserves going after the shorts.

( zero hedge)
iii)Just take a look at off balance sheet where 15 trillion dollars worth of WMP’s or Chinese wealth management products exist.  This is a huge black swan that when it crashes it will send black smoke billowing across the globe:

( zero hedge)
iv)Tier one area home prices are skyrocketing making it impossible for citizens to live:

( zero hedge)
v) This ought to be good for their economy: 6 million pink slips:

(courtesy zero hedge)
vi)Japan gets its first 10 yr bond auction and the result:  its first ever negative yield.

That is correct:  you pay the government for the privilege of owning a bond for 10 years and receive less every year for 10 years:
( zero hedge)



Barclay’s reports horrific results as it cuts its dividend as well as shed its African subsidiary. Their dividend is a huge 3 pence:

( zero hedge)




i)Wow!! a huge 5 sigma miss on Aussie housing data.  These guys are falling faster than a ten ton balloon!

( zero hedge)


ii)Now we witness over 70% of the global PMI’s decline last month:
( zero hedge)




i)Oil reacts negatively as Putin asks Russian producers to freeze levels at record levels. The world wants reduction in production not freezing at record levels

( zero hedge)

ii) Oil crushed on huge buildup in API

(zero hedge)




i)James Turk talks about silver and how it is ready to explode northbound

( James Turk/Kingworldnews/Eric King)


ii)Mike Ballanger on the technical features on the rising gold price

( Mike Ballanger/GATA)


iii)We brought this story to you yesterday  but it is worth repeating. Europe is sliding back into deflation

( Peter Spence/The London Telegraph)


iv)Mike Kosares explains the booming gold demand once money goes zero or negative in interest rates:

( Mike Kosares/USAgold/GATA)


v)The problem with gold derivatives and how people like ourselves are switching to the real stuff

(Fortson/London Times/GATA)


vi)John Hathaway interviewed on gold with Kitco’s Danielle Carbone
(courtesy Hathaway/Tocquille fund/GATA/Kitco)


vii)Gold now begins its task of retesting $1250.00 gold

( zero hedge)


vii) Dave Kranzler writes on the huge increase in demand for USA silver eagles

(Dave Kranzler/IRD)


i)Today it is Markit’s turn to show huge signs of distress in the USA manufacturing sector:
( Markit/zero hedge)


Let us head over to the comex:


The total gold comex open interest rose to 450,466 for a whopping gain of 11,950 contracts as the price of gold was up $14.10 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 or for that matter an inactive month, and 2) a continual drop in the amount of gold standing in an active month.   Today, both scenarios were in order as initially the total OI complex fell only to see it revive once March 1 was upon us.  The front March contract month saw its OI fall by 177 contracts down to 513.We had 20 notices filed yesterday, and as such we lost 157 contracts or 15700 oz will not stand for delivery. After March, the active delivery month of April saw it’s OI rise by 5150 contracts up to 302,598. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was 218,319 which is fair.  The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was good at 204,987 contracts. The comex is not in backwardation.


Today we had 8 notices filed for 800 oz.
And now for the wild silver comex results. Silver OI fell by a smallish 412 contracts from 162,617 down to 162,205 despite the fact that the price of silver was up by 20 cents with yesterday’s trading.  The next big active contract month is March and here the OI fell by 323 contracts down to 3,481 contracts. We had 5 notices served upon yesterday, so we lost 318 contracts or 1,590,000 ounces will not stand for delivery. The next contract month after March is April and here the OI fell by 2 contracts up to 367.  The next active contract month is May and here the OI fell by 1234 contracts up to 117,774. The volume on the comex today (just comex) came in at 41,244 , which is good. The confirmed volume yesterday (comex + globex) was also excellent  at 62,986. Silver is not in backwardation at the comex but is in backwardation in London. First day notice is today,  Monday,  the 29th of February and thus 
We had 17 notices filed for 85,000 oz.

March contract month:

INITIAL standings for MARCH

March 1/2016

Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil 26,452.126 oz



Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz    48,199.960 oz


No of oz served (contracts) today 8 contracts
(800 oz)
No of oz to be served (notices) 505 contracts(50,500  oz)
Total monthly oz gold served (contracts) so far this month  28 contracts (2,800 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 26,452.126 oz
Today, we had 0 dealer transactions
total dealer deposit; nil oz
total dealer withdrawals nil.
We had 2  customer withdrawal:
i) Out of Manfra:  96.45 oz
ii) Out of JPMorgan: 26,355.676
total customer withdrawal: 26,352.126 oz
we had 1 customer deposit:
i) Into HSBC: 48,199.60
total customer deposit:  48,199.60 oz

we had 1 adjustment and it was a dilly

Out of Scotia

38,316.746 oz leaves the customer account and this enters the dealer side of Scotia



 JPMorgan has a total of 46,083.778 oz or 1.4333 tonnes in its dealer or registered account.
***JPMorgan now has 634,356.528 or 19.734 tonnes in its customer account.
Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 8 contracts of which 5 notices was stopped (received) by JPMorgan dealer and 0 notices were stopped (received)  by JPMorgan customer account. 
To calculate the initial total number of gold ounces standing for the Mar contract month, we take the total number of notices filed so far for the month (28) x 100 oz  or 2,800 oz , to which we  add the difference between the open interest for the front month of March (xxxx contracts) minus the number of notices served upon today (8) x 100 oz   x 100 oz per contract equals the number of ounces standing.
Thus the INITIAL standings for gold for the March. contract month:
No of notices served so far (28) x 100 oz  or ounces + {OI for the front month (513) minus the number of  notices served upon today (8) x 100 oz which equals 53,300 oz standing in this non  active delivery month of March (1.6578 tonnes)
We thus have 1.6578 tonnes of gold standing and 8.655 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.
We now have partial evidence of gold settling for last months deliveries We now have 1.6578 tonnes (March) + 7.99 (total Feb)- .940 (yesterday’s) tonnes =  8.7078 tonnes standing against 8.655 tonnes available.  .
Total dealer inventor 278,290.480 oz or 8.655 tonnes
Total gold inventory (dealer and customer) =6,896,719.289 or 211.71 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 211.71 tonnes for a loss of 91 tonnes over that period. 
JPMorgan has only 21.16 tonnes of gold total (both dealer and customer)
And now for silver

MARCH INITIAL standings/

March 1/2016:

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory  1,725,841,850 oz(CNT,Delaware,


Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 253,023.170 oz(,JPM)
No of oz served today (contracts) 17 contracts 85,000 oz
No of oz to be served (notices) 3461  contract (17,320,000 oz)
Total monthly oz silver served (contracts) 22 contracts (110,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month nil oz
Total accumulative withdrawal  of silver from the Customer inventory this month 2,882,073.7 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 1 customer deposits


i) Into JPMorgan; 253,023.170 oz


total customer deposits: 253,023.170   oz

We had 4 customer withdrawals:
i) Out of CNT: 374,493.900 oz
ii) Out of Delaware; 1081.712 oz
iii) Out of HSBC: 750,093.918 oz
iv) Out of Scotia; 600,172.320

total withdrawals from customer account 1,725,841.850   oz


 we had 0 adjustments


The total number of notices filed today for the March contract month is represented by 17 contracts for 85,000 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 (22) x 5,000 oz  = 110,000 oz to which we add the difference between the open interest for the front month of February (3481) and the number of notices served upon today (17) x 5000 oz equals the number of ounces standing (19,020,000 oz)
Thus the initial standings for silver for the March. contract month:22 (notices served so far)x 5000 oz +(3481{ OI for front month of March ) -number of notices served upon today (17)x 5000 oz   equals  17,430,000 oz of silver standing for the March contract month.
we lost 318 contracts or an additional 1,590,000 oz were probably cash settled.
Total dealer silver:  24.795 million  (near all time recorded low level)
Total number of dealer and customer silver:   152.787 million oz
Questions: 1. why so much activity in the silver comex?
Question 2:    why so much deposit of silver and yet tiny delivery notices?
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:


March 1/a mammoth 14.87 tonnes of gold deposit into the GLD/inventory rests at 770.27 tonnes

FEB 29/another deposit of 2.08 tonnes of gold into the GLD/Inventory rests at 762.40 tonnes

Feb 26./no change in gold inventory at the GLD/Inventory rests at 760.32 tonnes

Feb 25./we had a huge deposit of 7.33 tonnes of gold into the GLD/Inventory rests at 760.32 tonnes. No doubt that this is a paper gold deposit/not real as the price of gold hardly moved on that huge amount of deposit.

FEB 24/no change in gold inventory at the GLD/Inventory rests at 752.29 tonnes

FEB 23./another huge addition of 19.3 tonnes of gold into its inventory/Inventory rests at 752.29 tonnes.  Again how could they accumulate this quantity of gold with backwardation in London/this vehicle is nothing but a fraud

Feb 22/A huge addition of 19.33 tonnes of gold to its inventory/Inventory rests at 732.96 tonnes/ How could this happen: a huge addition of gold coupled with a huge downfall of 20 dollars in gold.

FEB 19/a huge deposit of 2.68 tonnes of gold into the GLD/Inventory rests at 713.63 tonnes

fEB 18/no change in gold inventory at the GLD/Inventory rests at 710.95 tonnes

fEB 17/no change in gold inventory at the GLD/Inventory rests at 710.95 tonnes

Feb 16.a huge withdrawal of 5.06 tonnes from the GLD/the loss was probably a paper loss/inventory at 710.95 tonnes

fEB 12/ a huge deposit of 11.98 tonnes/inventory rests at 716.01 tonnes.  With gold in severe backwardation in London, I really believe that the gold added was paper gold and not real physical/

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


March 1.2016:  inventory rests at 770.27 tonnes


Now the SLV
March 1/no change in silver inventory/rests tonight at 311.618 million oz
FEB 29/no change in inventory/rests at 311.618 million oz
Feb 26./no change in inventory/rests at 311.618 million oz
Feb 25/no change /inventory rests at 311.618 million oz
FEB 24/no change/inventory rests at 311.618 million oz
FEB 23/no changes in inventory at the SLV/Inventory rests at 311.618 million oz
Feb 22/ we have a good addition of 666,000 oz into inventory/Inventory rests at 311.618 million oz
FEB 19/no change in inventory/inventory rests at 310.952 million oz
FEB 18/no change in inventory/inventory rests at 310.952 million oz
fEB 17/ a huge withdrawal of 1.237 million oz of silver removed from the SLV/Inventory rests at 310.952 million oz.
Feb 16.2016: a huge deposit of 3.809 million oz of silver added to the SLV/Inventory rests at 312.189
FEB 12 no change in silver inventory/inventory rests this weekend at 308.380 million oz
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/
March 1.2016: Inventory 311.618 million oz.
1. Central Fund of Canada: traded at Negative 8.2 percent to NAV usa funds and Negative 8.2% to NAV for Cdn funds!!!!
Percentage of fund in gold 64.5%
Percentage of fund in silver:35.5%
cash .0%( Mar 1.2016).
2. Sprott silver fund (PSLV): Premium to NAV falls to   1.98%!!!! NAV (Mar 1.2016) 
3. Sprott gold fund (PHYS): premium to NAV falls to +.05% to NAV Mar 1/2016)
Note: Sprott silver trust back  into positive territory at +1.98%/Sprott physical gold trust is back into positive territory at +.05%/Central fund of Canada’s is still in jail.



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

Trading in gold and silver overnight in Asia and Europe

Gold Bullion Rose Another 10% In February – Best Month Since January 2012

Gold bullion rose 10.1% in February adding to the 7% gains seen in January. This means that gold is the best performing asset this year, up 17% so far in 2016. Silver is the next best performing asset with an 8% gain year to date, followed by US Treasuries (30 Year Bond) which have gained 7.8% so far in 2016.

Comparatively, the S&P 500 index is down 4.7% this year, the Dow Jones Industrial Average is down 4.5% and the NASDAQ is down 7.8%. International indices have also seen losses with the FTSE down 2.6%, the DAX down 10.7% and the Nikkei down 13.7% (see table below).

Market Performance in February –

Gold is again acting as a hedge for investors and pension owners exactly when they need a hedge.

The biggest influence going forward for gold is “likely to be risk appetite and concerns about markets and the global economy,” Mark O’Byrne, research director at GoldCore told Marketwatch.

“If stock markets begin to recover and make gains and risk appetite returns, then gold could come under selling pressure,” he said. “However, we believe the volatility seen in the first two months is likely to continue.”

Read more on Marketwatch here


“7 Real Risks To Your Gold Ownership” – New Must Read Gold Guide Here

LBMA Gold Prices
01 Mar: USD 1,240.00, EUR 1,141.70 and GBP 886.09 per ounce
29 Feb: USD 1,234.15, EUR 1,131.46 and GBP 890.95 per ounce
26 Feb: USD 1,231.00, EUR 1117.58 and GBP 878.87 per ounce
25 Feb: USD 1,235.40, EUR 1,121.41 and GBP 887.10 per ounce
24 Feb: USD 1,232.25, EUR 1,122.33 and GBP 885.52 per ounce

Gold and Silver News and Commentary
– Gold scores for biggest monthly gain in four years – Marketwatch
– Gold extends gains on safe-haven bids, fund inflows – Reuters
– Gold prices gain strongly in Asia after weak China PMI reading – Investing
– Gold Assets in World’s Top ETP Reach Highest Since September – Bloomerg
– Barclays shares drop 6% after £1.9bn loss and divi cut – FT

– Eurozone Slides Back Into Deflation – Telegraph
– Socialism has created a humanitarian disaster in Venezuela – City AM
– Gold Glows As Stocks Suffer Longest Losing Streak Since 2011 – Zero Hedge
– Patiently Climbing Aboard New Gold Bull – AU Report
– Wall Street Gold Buying Binge Continues – GLD back to 25M ozs – GoldSeek
Read more here



James Turk talks about silver and how it is ready to explode northbound

(courtesy James Turk/kingworldnews/Eric King)

Watch silver closely, Turk tells KWN

Submitted by cpowell on Mon, 2016-02-29 20:56. Section: 

3:55p ET Monday, February 29, 2016

Dear Friend of GATA and Gold:

GoldMoney founder and GATA consultant James Turk tells King World News today that the gold-silver ratio has reached an extreme at which silver typically gains value relative to gold. Turk adds that silver’s performance may be a powerful indicator for the future of the monetary metals, and thus it should be watched closely. An excerpt from his interview is posted at King World News here:

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




Mike Ballanger on the technical features on the rising gold price

(courtessy Mike Ballanger/GATA)

Mike Ballanger: Patiently climbing aboard the new golden bull

Submitted by cpowell on Tue, 2016-03-01 03:28. Section: 

10:27p ET Monday, February 29, 2016

Dear Friend of GATA and Gold:

Our friend Michael Ballanger, a Toronto-based broker specializing in the mining industry, writes today that while fundamentals for the monetary metals are strong, manipulation of their futures market by the biggest investment banks that double as bullion banks is likely to smash prices down again any day now. Ballanger’s commentary is headlined “Patiently Climbing Aboard the New Golden Bull” and it’s posted at the AU Report here:…

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




We brought this story to you yesterday  but it is worth repeating. Europe is sliding back into deflation

(courtesy Peter Spence/The London Telegraph)

Eurozone slides back into deflation

Submitted by cpowell on Mon, 2016-02-29 16:24. Section: 

By Peter Spence
The Telegraph, London
Monday, February 29, 2016

The eurozone lurched back into deflation this month, putting more pressure on the European Central Bank to ramp up stimulus when it meets next week.

Prices fell by 0.2 percent in the year to February, according to figures published by Eurostat. The decline confounded economists, who had expected prices to remain steady.

The return to deflation followed inflation of 0.3pc in the year to January, and was the result of a renewed slump in oil and gas prices. The closely watched core inflation measure, which strips out volatile energy prices, also fell. …

… For the remainder of the report:…




Mike Kosares explains the booming gold demand once money goes zero or negative in interest rates:

(courtesy Mike Kosares/USAgold/GATA)

Mike Kosares: Gold at the zero bound

Submitted by cpowell on Mon, 2016-02-29 17:06. Section: 

By Michael J. Kosares
USAGold, Denver
Monday, February 29, 2016

Something happened on the way to negative interest rates. Something unexpected. Gold and silver demand went through the roof.

The first two months of business at USAGold were reminiscent of the 2009 run to gold. In London, where people have the additional concern of a potential exit from the European Union, investors were lining up around the block to purchase precious metals, and reports were circulating that “some London banks are placing unusually large orders for physical gold.” For the first two months of the year, the U.S. Mint reported gold coin sales running double what they were for the same period in 2015.

So what’s behind the rush for gold at a time when the financial news is dominated with concerns about negative interest rates? …

… For the remainder of the commentary:




The problem with gold derivatives and how people like ourselves are switching to the real stuff

(Fortson/London Times/GATA)

OMG: London Times acknowledges increasing vulnerability of gold derivatives

Submitted by cpowell on Mon, 2016-02-29 17:41. Section: 

As Fear and Uncertainty Stalk Markets, the World Turns to Gold

By Danny Fortson
The Times, London
Sunday, February 28, 2016

A young, smartly-dressed woman swept through the doors of a new shop in the heart of London’s clubland to buy £50,000 of gold last week. She paid with her debit card.

She was among the first customers at Sharps Pixley, Britain’s first high-street gold shop. Dealer Ross Norman opened his doors last month to serve what he said was an “unmet need.” …

In uncertain times, people want to buy gold. “We’ve been surprised by the diversity of the clientele,” Norman said. “We thought it would be mostly mature, wealthy males but it’s been much more varied.”

What did the woman want with the precious metal? “She gave me a look like, ‘I’ll give you the short version.’ She said: ‘Look, I’m Kurdish.’ I got the impression she had moved here fairly recently.” The Kurds are locked in bloody conflicts in Syria and Turkey. Many have fled.

Sharps Pixley’s client had her reasons, as do many others. The gold price has surged 15% this year to $1,215 an ounce, bringing to a halt a five-year slump in which the price sank from its high of more than $1,800 an ounce in 2011 to about $1,060 by December last year. The debate now is whether gold is set for a lasting resurgence, or if the recent price rise is just a momentary flash.

The beginning of the year certainly provided evidence for disciples of the former argument. A rollercoaster stock market, negative interest rates and geopolitical instability all stoked economic uncertainty — ideal conditions for gold, which people turn to as a haven of value in stormy times.

Paul Beesley, senior manager at Baird & Co, said the bullion merchant, run from a high-security warehouse in east London, is “busier than we have been in some years”. He added: “We have seen a particularly large rise in private individuals making multimillion pound purchases of physical gold.”

The surge has not been limited to people snapping up sovereigns or krugerrands. Investors have rushed back into exchange-traded funds (ETFs) — listed vehicles that invest in physical gold. Shareholders in gold ETFs had been net sellers for the past three years. That, too, has reversed.

Commerzbank said in a recent note that, since the beginning of February, “more gold has flowed into the ETFs than was withdrawn in the whole of last year. Inflows amounted to about 50 tons in two days — this is the sharpest two-day inflow since the Greek crisis first flared up in May 2010 and equates to roughly six days of global gold-mining production”.

So should investors start snapping up fingernail-sized, 1-gram minibars for L35 from the Sharps Pixley showroom? Maybe. Gold bulls point to a range of factors: the impending American election, uncertainty leading up to Britain’s vote on leaving or staying in the European Union, US Federal Reserve chairwoman Janet Yellen’s signals that she may put future interest rate rises on hold. All bode well for a strong commodity price.

Then there is the “paper” gold market, which encompasses the derivative contracts that financial investors use to bet on the price without taking possession of the metal itself. Amanda Van Dyke, fund manager at Peterhouse Asset Management, pointed out that the ratio of financial bets has exploded far beyond historical norms, especially over the past six months.

For each ounce of physical, deliverable gold that is registered with the Chicago Mercantile Exchange (the key market for gold contracts), investors have claims over another 542 ounces, a record level.

Van Dyke said the spike is distorting the gold price because for each derivative contract — which is a bet on the price going up or down — investors will also hedge their position in case the opposite occurs.

“Those hedges can push prices in different directions,” she said. “A comparison is mortgage-backed securities, when the proportion of derivative contracts was exponentially higher than the underlying actual mortgages they were built on. We ended up having a financial crisis and the majority of those contracts had to be painfully unwound.”

She added: “I don’t want to forecast that kind of doomsday here, but in the past two years the ratio of contracts has multiplied, and the number of registered ounces has fallen hugely, leaving the ratio at unprecedented levels. It is cause for concern.”

If that system were to break down, the “true” higher price of gold could be revealed, she argued.

Few are betting on a marketshaking breakdown. An orderly unwinding of the layers of financial bets that the bulls claim are holding back the price of the metal may be more likely — especially if the price continues to climb.

Jeffrey Christian, managing director of New York commodity expert CPM, pointed to a wave of money that began flowing into derivatives for gold and other commodities in 2014.

“This was when US equity markets were said by many to be hugely overvalued,” he said. Investors wanted to diversify into commodities and elsewhere. The problem, he argued, was that “more than 95 percent” of the funds that received this wall of cash were technically driven, “using price charts, momentum indicators, and computer generated buy and sell orders. These fund managers would have paid heed to their computer models and would have shorted commodities.”

Sooner or later, the worm will turn. Christian’s long-term price forecast is for $2,000 an ounce, even if factors like the end of China’s new year and impending end of India’s busiest wedding month lead to a softening in the coming months.

There are plenty of fundamentals to support his view. States from China to Kazakhstan, for example, have been buying at record rates, reversing a trend that began in the mid-1990s when state treasuries started selling down their reserves. They turned net buyers five years ago; 2015 saw the second biggest increase in central bank gold buying after 2013.

The trend shows no sign of slowing. Last year Beijing’s central bank alone bought an estimated 180 tons, equal to 6% of global output. In total, China snapped up nearly half of the 3,000 tons produced annually.

Most of the buying was by individuals, amid a concerted government campaign to encourage citizens to buy the precious metal. Demand has tripled in a decade. Global production, meanwhile, is declining, with projects abandoned when the drop in price made them uneconomic. Discovery rates have dropped every year since 2007, according to JPMorgan. Exploration spending has nearly halved to $3.5bn (L2.5 billion) globally in the past halfdecade. The final three months of 2015 represented the first time since 2008 that production fell.

Peter Hambro, founder of London-listed gold miner Petropavlovsk, predicted that gold’s time to shine is on the horizon. “From my 30 years in the business, the signs show that something is happening in gold. I don’t think it is speculation, I think it is wealth insurance,” he said.

“Central bank buying, physical gold traded in St James’s Street and call-option volumes outweighing futures volumes on the Chicago exchange are all evidence of unusual activity. This demonstrates palpable fear of systemic risk in the upper circles of international finance. When added to the geopolitical turbulence all around the world, it’s not surprising.”

A cynic would respond: Of course he would say that. Gold miners, notorious for overspending and under delivering, have had a horrific few years. The industry is in desperate need of an upturn.

Paradoxically, an extension of the weak gold price might be the best thing for investors. Suppliers would go bust. Investment would dry up. The resulting crash in production would lead to a surge in the price, which would inevitably lead to the birth of a new generation of prospectors.

In the meantime, the likes of Ross Norman are making hay from the latest gold rush.

Another of his early clients, he said, was a man who purchased L300,000 in gold bars, after all the money he had held in an account in Cyprus was seized during the island’s 2012-13 financial crisis.

“He couldn’t do anything about it. Investors are often driven by very personal experiences,” Norman said. “It’s what makes gold very interesting.”




John Hathaway interviewed on gold with Kitco’s Danielle Carbone

(courtesy Hathaway/Tocquille fund/GATA/Kitco)

Gold market is tighter than many think, Tocqueville’s Hathaway tells Kitco News

Submitted by cpowell on Mon, 2016-02-29 17:51. Section: 

12:50p ET Monday, February 19, 2016

Dear Friend of GATA and Gold:

In a seven-minute interview with Daniela Cambone of Kitco News, Tocqueville Gold Fund manager John Hathaway says the gold market is tighter than many people think and that returning gold to the market when it has been distributed in many forms could not be accomplished quickly. The interview can be watched at the Kitco News Internet site here:…

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




Gold now begins its task of retesting $1250.00 gold

(courtesy zero hedge)

Gold Retests $1250 After Dismal Global Data Dump

From decoupled American to deteriorating China, PMIs (and plenty of other data) is rapidly descending into the ugly reality that every mainstream economist is in denial about. Of course, this terrible news is terrific news for stocks (moar stimulus) but it is Gold that appears to be benefitting most as the inevitability of the next extreme monetary policy makeover looms ever closer

USA silver eagle sales set a February record. Kranzler writes that silver may be the Achilles heel of the bankers:
(courtesy Dave Kranzler/IRD)

Silver Eagle Sales Set A February Record

Betting against gold is the same as betting on governments.  He who bets on governments and government money [fiat currency like the U.S. dollar] bets against 6,000 years of recorded human history.  – Charles De Gaulle

Silver, for 6,000 years of human recorded history, has been “poor man’s gold.”  In fact, based on everything I can find on the topic, silver was used as currency before gold.Buying silver with the gold/silver ratio at 80 is like buying gold on steroids.

Charles De Gaulle is the person who is credited with forcing Nixon to “close the gold window” in 1971.  De Gaulle had figured out the U.S. had issued far more debt to foreigners than it had in gold to back that debt, per the requirement of the Bretton Woods Agreement.  De Gaulle had been quietly exchanging Treasury debt purchased by the French Government for gold, per the terms of Bretton Woods.  Before De Gaulle had a chance to clean out the Treasury’s gold, Nixon unilaterally and illegally terminated that portion of Bretton Woods.  To this day I have not read a reasonable analysis which explains why the rest of the world enabled the U.S. to get away with this.

The massive issuance of paper claims on the  stock of physical gold and silver supposedly available to deliver into those claims should they be exercised has risen to proportions which would make the Johnson and Nixon Governments blush.  Meanwhile the visible inventories of gold and silver continue to diminish (see this, for instance:  Deliverable Silver Stocks At The Comex Reach Historic Low).

it seems a small portion of the U.S. public understands the reasoning behind  De Gaulle’s assertion above and has been converting fiat dollars in poor man’s gold, as U.S. minted silver eagle sales hit an all-time high for the month of February:  Sales Of Silver Eagles Smash February Record.

If the percentage of the public – currently estimated at maybe 1% – that is buying gold and silver were to increase by just a few percentage points, the monstrous paper gold/silver short position underwritten by the bullion banks and the entities standing behind the bullion banks will go from potentially unmanageable to catastrophic.

Many of us think silver will be the ultimate “Achilles Heel” of these entities who have been aggressively manipulating the price of gold and silver since 2011.  While the impending move by Governments to a “cashless” banking system will likely cause a run on cash at the banks by the public, I believe that the run on cash will be followed by a run on gold and silver.

Paper money eventually returns to its intrinsic value – zero.  – Voltaire 

Something feels “different” about the way the precious metals are trading. This is reinforced by trading action in the mining stocks. The silver junior stock I recommended inNewSSJ Graphicthe Jan 10th issue of the Short Seller’s Journal is now up 50%.  It could easily be a 5-10 bagger from here.  I recommended another silver stock, an emerging producer, in the current issue. I also featured a short idea this week that could quickly shed 50% once this latest short-squeeze bear market rally subsides. Today might have been the start of that. You can subscribe to the Short Seller’s Journal by clickingHERE or on the image to the right.

Your early morning currency, Asian stock market results,  important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight


1 Chinese yuan vs USA dollar/yuan DOWN to 6.5480 / Shanghai bourse  IN THE GREEN BUT  ALSO A RESCUE IN THE LAST HR:  / HANG SANG CLOSED UP 273.53 POINTS OR 1.55%

2 Nikkei closed UP 58.75 OR 0.37%

3. Europe stocks all in the GREEN /USA dollar index UP to 98.26/Euro DOWN to 1.0875

3b Japan 10 year bond yield: FALLS  TO -.072%   AND YES YOU READ THAT RIGHT  !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 113.05

3c Nikkei now well below 17,000

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

3e WTI::  34.20  and Brent: 36.73

3f Gold UP  /Yen DOWN

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 UP for WTI and UP for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS  to 0.122%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate RISE to 11.57%/: 

3j Greek 10 year bond yield FALL to  : 10.26%  (yield curve deeply  inverted)

3k Gold at $1245.00/silver $15.02 (7:15 am est) 

3l USA vs Russian rouble; (Russian rouble UP 1 AND  4/100 in  roubles/dollar) 74.10

3m oil into the 34 dollar handle for WTI and 36 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.


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9989 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0864 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.


3r the 8 year German bund now  in negative territory with the 10 year FALLS to  + .122%

/German 8 year rate negative%!!!

3s The Greece ELA NOW a 71.4 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 1.74% early this morning. Thirty year rate  at 2.62% /POLICY ERROR)

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

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

Stocks Squeeze Higher On “Super Tuesday” As Poor Macro Is Offset By Jack Lew’s Soothing Words

With markets happy to put February in the history books because it marked the fourth consecutive monthly decline in global stocks, we move on to March 1st, which doubles down as ‘Super Tuesday’ in the US when Trump’s presidential candidacy will almost certainly be sealed and a day in which stocks decided to join the super fun by super surging overnight on nothing but bad global macro and economic which however was promptly ignored and instead the focus was on ongoing central bank intervention and even more jawboning.

As Bloomberg puts it “global stocks rallied, emerging-market currencies rose and crude oil climbed after investors across Asia responded favorably to stimulus in China” which is odd because the stimulus was announced over the weekend and stocks tumbled on Monday.

There were three key overnight news events:

1) the February plunge in China’s PMI, which missed expectations and where the manufacturing index dropped to a 7 year low, while the service tumbled to the lowest level since 2008:

2) the collapse in Glencore’s full year 2015 earnings, which just reported its worst year since going public, as net income plunged 69% to $1.34 billion, and the firm suffered an adjusted loss in its mining division, while announcing plans it will sell another $5 billion in assets.

3) the collapsing earnings and dividend cut by UK’s Barclays, whose pretax earnings plunged 56%, sending the stock tumbling by 10%, the biggest crash since June 2012, on the bank’s deteriorating outlook, the sale of its 62% stake in Barclays Africa, and cutting of the Barclays dividend.

On the surface, one would think that these are not exactly “good” developments and would not lead to a surge in overnight futures, and yet surge is precisely what global markets and US equity futures have done. What sparked the rebound? Well, the Shanghai Composite was largely unchanged for the day when shortly after midnight Eastern, US Treasury Secretary Jack Lew hit the tape when he spoke in briefing in Hong Kong after meeting Chinese officials in Beijing. And this is what unleashed the rally: Lew said that “China assured him it had no need or plans to devalue currency.”

This of course, came one day after China engaged in the biggest currency devaluation in 8 weeks after the conclusion of the G-20 meeting.

The rest of the jawboning from Lew:

  • China’s policy makers gave commitment on reforms, rebalancing economy
  • Discussed need to improve communications
  • Says global economy faces headwinds, needs more demand
  • Lew said U.S. real economy continues to do pretty well

Was this the reason for the buying? Of course not, but it provided a handy cover for the BOJ’s latest round of overnight USDJPY intervention which took the paid higher by 100 pips overnight, and since the markets make the news, why not ascribe the “buying catalyst” to Jack.

Elsewhere, European equities headed for a fourth day of gains for the first time since October as investors assessed earnings reports and deal activity. Russia’s ruble and South Africa’s rand led an advance among major currencies and the yuan strengthened for the first time in eight days after the People’s Bank of China cut lenders’ reserve requirements, freeing up funds to help spur lending. Germany’s bonds declined as nickel led gains in industrial metals prices and crude rose in New York. The cost of insuring corporate junk bonds in Europe fell for the fourth day, the longest run this year.

Where markets stand right now

  • S&P 500 futures up 0.8% to 1946
  • Stoxx 600 up 1% to 337
  • MSCI Asia Pacific up 0.7% to 120
  • US 10-yr yield up 2bps to 1.75%
  • Dollar Index up 0.06% to 98.27
  • WTI Crude futures up 1.5% to $34.25
  • Brent Futures up 1% to $36.93
  • Gold spot up 0.1% to $1,240
  • Silver spot down less than 0.1% to $14.90

Top Global News:

  • ICE Confirms It May Bid for LSE Group, Sending Shares to Record: Intercontinental Exchange said to work with Morgan Stanley, sees room to outbid German rival Deutsche Boerse despite risk.
  • Trump, Clinton Hope Super Tuesday Tightens Grip on Nomination: The two front-runners are expected to begin pulling away from their rivals when Tuesday’s results are tallied
  • Valeant Says It’s Under Investigation by SEC, Shares Plunge: Received a subpoena from the SEC in the fourth quarter and would have disclosed it in due course in its 10-K filing, which has been delayed
  • Peabody Energy Says It Has Held Talks With First Lien Lender: talks on its secured credit agreement regarding proposed bond exchanges and other issues, as plummeting coal prices spark an increase in debt defaults among U.S. coal companies
  • Apple Goes to Washington With Some Wind in Its Sails: Judge calls U.S. demand for help cracking iPhone ‘absurd’
  • Marathon Seeks $1.3 Billion in Stock Sale to Weather Rout: Sale would increase shares outstanding by about 20%. Morgan Stanley is acting as the book-running manager
  • BlackRock, Citi Say Buy Munis as Yields Climb From 50-Year Low: Increase in supply means a chance to lock-in higher yields. ‘Cheapness could be relatively short-lived,’ Citi’s Rai says
  • Exxon’s $12 Billion Bond Deal Doesn’t Make 2016 Any Sweeter: Signs that demand for U.S. corporate bonds is waning. Total issuance down about 3% from first 2 months of 2015

Looking at regional markets, we start in Asia where stocks initially traded mixed with choppy price action seen overnight as the region digested the surprise PBoC measures coupled with further weak Chinese data. Nikkei 225 (+0.4%) initially underperformed on JPY strength with declines to company profits and capital spending figures adding to the dampened tone. However, the index then recovered alongside a mild reversal in the currency. ASX 200 (+0.9%) was underpinned by commodity sector strength, while the Shanghai Comp (+1.7%) fluctuated between gains and losses as the PBoC 50bps RRR cut was counterbalanced by weak data in which Official and Caixin manufacturing PM’s missed expectations to post a 7th month and 5th month in contraction territory respectively. 10yr JGBs traded flat despite weakness in Japanese equity markets and a weak 10yr JGB auction. As noted previously, Chinese Official Manufacturing PMI (Feb) M/M 49.0 vs. Exp. 49.4 (Prey. 49.4); 7th month of contraction & lowest since 2011.

Top Asian News

  • China’s PMI Reports Show Slowdown Deepening as Services Slip: Factory gauge hasn’t been at a weaker level for 7 yrs; services index slips to lowest since Dec. 2008
  • Japan Gets Paid to Borrow for 10 Years as Auction Yield Negative: ‘Ten-year yields have overheated,’ Barclays strategists say
  • Macau Casino Revenue Downturn Eases on Festive Fillip: Feb. decline smallest on record amid 21-month slump as operators turn more to mass market to offset VIPs
  • Templeton’s Man in China Predicts 20% Stock Rally as Panic Fades: Xu says worst is over after panicked investors caused the world’s deepest selloff
  • Sharp Faces Cash Squeeze as Foxconn Takeover Talks Drag On: Sharp has 510b yen ($4.5b) in credit lines and loans that are set to expire on March 31

European equities saw a move higher shortly after the open to see Euro Stoxx reside firmly in the green (+1.1%), with much of the strength coming in the wake of stock specific news. LSE (+7.5%) is among the best performers after news that ICE (ICE) are to rival Deutsche Boerse’s bid, while BMW (+3.9%) are also among the best performers after some upbeat comments from the Co. at the Geneva motor show, which have helped support the DAX as the index future outperforms after breaking above the resistance level at 9600. Elsewhere, UK large cap Barclays (-11.0%) is among the worst performers after their pre-market earnings, with financials the softest sector in Europe.

In tandem with the upside in equities, fixed income has come under pressure so far today with Bunds back below 166.50, trading lower by around 50 ticks by the North American crossover. The downside in Bunds shortly after the European equity cash open was attributed by some desks to high volume, in the form of 5000 lots being traded in under a 1 minute period. However more generally, the pressure on the German benchmark also comes as a result of sovereign hedging amid deals from Finland and Belgium, combined with a reversal from yesterday’s month end-inspired moves.

Top European News

  • Barclays to Reduce Africa Stake, Cut Dividend in Revamp Plan: Will sell down its 62% stake in Barclays Africa over the next 2 to 3 years to a level that allows it to deconsolidate the business; FY adj. pretax, including restructuring costs, fell 56% to GBP247m, missed GBP519m est.; cut its dividend to 3p/shr for 2016 and 2017, from 6.5p last year
  • Glencore Posts Biggest Profit Drop Since IPO on Metals Slump: 2015 net income ex- some items down 69% to $1.34b as prices for metals and oil collapsed, to sell as much as $5b in assets
  • Gameloft, Ubisoft Shares Jump on Vivendi’s Renewed Deal Push: Vivendi plans a tender offer for Gameloft shares at EU7.20 each, vs original EU6; also raised its stake in Ubisoft above 15%, said plans to keep buying shares, seek board representation
  • Euro-Area Unemployment Drops to 4-Year Low Amid Stimulus Debate: Region’s Jan. jobless rate declined to 10.3%, lowest since Aug. 2011, beat median forecast of 10.4%
  • U.K. Manufacturing Has Its Worst Month in Almost Three Years: Markit Economics said its factory index dropped to 50.8 from 52.9, marking the weakest reading since April 2013
  • Handelsbanken Falls After Regulator Raises Capital Requirements: Swedish regulator ordered lenders in the country to increase corporate risk weights by “at least a few percentage points”
  • Fiat Makes Biggest Europe Push in Decade to Rescue 2018 Strategy: Showing 10 new models at Geneva Motor Show this week

In currencies, the yen dropped against 31 major peers, falling from strongest level in almost three years against the euro. It declined 0.5 percent to 113.22 per dollar and slipped 0.4 percent to 122.96 per euro.

Russia’s ruble rose 2 percent versus the dollar and Malaysia’s ringgit strengthened 0.7 percent as the rebound in crude prices brightened prospects for the oil-exporting nations. South Africa’s rand jumped 1 percent as data showed foreign investors on Monday pumped the most money into the nation’s stock market since 2009.  A Bloomberg gauge of 20 developing-nation currencies rose 0.5 percent, extending Monday’s advance. The measure increased 0.3 percent in February after falling 5.1 percent over the previous three months

In commodities, oil climbed from the highest close in more than seven weeks following the first monthly decline in production from the Organization of Petroleum Exporting Countries since November. West Texas Intermediate rose as much as 1.7 percent to $34.32 a barrel. Iraq’s production dropped by 125,000 barrels a day to 4.385 million after the pipeline exporting crude from the northern part of the country was halted, according to a Bloomberg survey of oil companies, producers and analysts. Saudi Arabian output was unchanged at 10.2 million barrels a day.

U.S. natural gas futures fell 0.3 percent to $1.706 per million British thermal units, extending the biggest monthly drop since 2014 on mild weather and record inventories of the heating fuel.

Nickel led gains in industrial metals, rising 0.9 percent to $8,600 a metric ton. Aluminum added 0.6 percent while copper climbed 0.4 percent.

In today’s US calendar, all eyes will be on the US ISM manufacturing data while vehicle sales (expected: 17.70m), construction spending (expected: 0.3%), IBD/TIPP economic optimism data (expected: 47.9) and the manufacturing PMI (expected 51.2) are also due.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities followed on from their Asian counterparts to trade in positive territory, despite underperformance in financials
  • JPY and GBP have been among the more notable FX movers this morning, with risk off sentiment sending USD/JPY higher, with GBP also heading upwards this morning towards 1.4000
  • Today’s highlights include US ISM manufacturing, manufacturing PMI and construction spending, Canadian GDP, API Inventories, Fonterra GDT Auction and comments from ECB’s Lautenschlaeger
  • Treasuries lower in overnight trading as global equity markets and commodities rally, spurred by China’s announced cut to banks’ required reserves; today’s economic data includes ISM and vehicle sales.
  • China’s benchmark money-market rate declined the most in more than three weeks after the central bank reduced the amount of deposits that lenders must set aside in reserve; will inject about 685 billion yuan ($105 billion) into the financial system
  • China’s factory gauge extended its stretch of deteriorating conditions to a record seven months while a measure of services fell to the weakest in seven years
  • The Japanese government got paid to borrow money for a decade for the first time, selling ¥2.2 trillion ($19.5 billion) of the debt at an average yield of negative 0.024% on Tuesday
  • Euro-area unemployment decreased to lowest in more than four years in January, giving European Central Bank policy makers some positive news a week before their monetary policy meeting
  • Euro-area factories cut prices at the fastest pace in almost three years in February as Markit Economics said the price gauge of its manufacturing Purchasing Managers Index fell further below the key 50 level, to the lowest since June 2013
  • Barclays Plc fell the most in more than three years in London trading amid investor concern that the bank’s profit outlook is weakening as the firm slashed its dividend
  • U.K. manufacturing grew the least in almost three years in February and new orders barely rose, highlighting the fragility of the economy as it heads into an uncertain year
  • Greece’s creditors hit a roadblock over the conditions for disbursing the next portion of emergency loans to Europe’s most indebted state, as PM Tsipras pointed the finger at the IMF for yet another delay in the review of the country’s bailout
  • Donald Trump and Hillary Clinton hope to use a pair of dominant Super Tuesday performances to all but cement a White House match-up this fall, as roughly a quarter of the nation votes in the biggest day so far in the 2016 campaign
  • $17.4b IG corporates priced yesterday, MTD volume $124.9b, YTD $294.25b
  • BofAML Corporate Master Index OAS 6bp lower yesterday at +205, +3bp MTD, +32bp YTD; T1Y range 221/129
  • BofAML High Yield Master II OAS 5bp lower yesterday at +775, -2bp MTD, +80bp YTD; T1Y range 887/438
  • Sovereign 10Y bond yields mostly steady; European, Asian markets rise; U.S. equity- index futures higher. Crude oil rallies, copper, gold higher

DB’s Jim Reid concludes the overnight wrap


We’ll dive straight into the Asian numbers starting with a disappointing PMI report from China overnight. The Manufacturing PMI series came in at 49.0 in February which is sequentially weaker than the 49.4 we saw in January and at 7 year lows. The market consensus was for an unchanged print of 49.4 in February. In terms of the details, new orders and the employment sub-series also slipped. There was some chatter that the Chinese New Year holidays helped keep the number weak but on the flip side this should have helped services. On this non-manufacturing PMI also came in sequentially weaker in February at 52.7 vs 53.5 (lowest since 2008) but at least it remains in expansionary territory even if new orders, selling prices, employment, backlog and inventories were worryingly below 50. The Caixin China PMI Manufacturing series also came out slightly below consensus overnight at 48.0 (est 48.4). Turning to Japan we saw the final Nikkei Japan PMI Manufacturing come in at 50.1 which is also a drop from January’s 52.3 reading.

Markets in Asia are mixed after the numbers. The Shanghai Comp is -0.68% as we go to print but many other EM equities are higher. The Hang Seng is broadly flat with the Nikkei -0.26%. One unprecedented move overnight has been that Japan has priced a 10yr government debt auction at a negative average yield for the first time. It drew an average yield of minus 0.024%. Also overnight FRB of NY President Dudley (whilst in China) has said his confidence in the Fed hitting its 2% inflation target over time has slipped and that he has edged down his growth expectations.

Back to the PMIs, the key release today will be the US manufacturing ISM. Although it’s expected to edge up from 48.2 to 48.5, this will still mark the 5th successive sub-50 print. Whilst manufacturing makes up only around 10% of the US economy, Joe LaVorgna points out that it is highly cyclical and is normally predictive of wider economic trends. The correlation between this number and annual real US GDP is 0.7 since 1948. At the moment none of us truly know whether there can be decoupling. With low energy prices, if there was ever a time where there could be some decoupling then this would be it. Thursday’s services ISM will give us a fuller picture though so it’s an important week before we even get to Friday’s payrolls.

Related to the PMIs, US data wasn’t great yesterday after a good recent run. The ISM Milwaukee survey was the only bright spot, as it rose to 55.2 in February (vs. 50 expected; 50.36 prior). However, many of the more closely watched indicators definitely threw up some red flags. The recently very volatile Chicago Area PMI fell more than expected to 47.6 (vs. 52.5 expected; 55.6 prior), one again raising concerns regarding the US manufacturing sector. Adding to these concerns, the Dallas Fed Texas Manufacturing outlook also disappointed (-31.8 vs. -30.0 expected; -34.6 prior) despite showcasing some improvement. Pending Home sales data was also a major red flag, as the index fell by -2.5% mom (vs. +0.5% expected; +0.1% prior) in January. This was the biggest drop since December 2013, with sales dropping in 3 out of 4 regions included in the index.

However China’s latest easing overshadowed the data. Last week we saw PBoC Governor Zhou Xiaochuan state that China still had ‘monetary policy space and multiple policy instruments to address possible downside risks’ and whilst some were expecting action over the weekend, yesterday we saw the PBoC demonstrate one such instrument by cutting the required reserve ratio (RRR) by 50 bp. According to our Chief China Economist Zhiwei Zhang, this is a sign of further policy easing and strengthens the case for their baseline expectations of 3 more RRR cuts (one per quarter) and 2 interest rate cuts (Q3 and Q4) in 2016. While such policy easing benefits short term investment growth and increases upside risks to our economists’ Q2 GDP forecast of 6.8% YoY, it actually raises downside growth risks in H2 and 2017 by exacerbating industrial excess capacity problems and the inflating the property bubble.

European equity markets brushed off the soft start following the inconclusive G20 meeting, China’s pre RRR cut equity sell-off and Monday’s weak economic data to end the day in the green. European equities rallied late in the day as the STOXX erased early losses and closed up +0.72%. Basic Resources equities (+3.43%) shot up as China announced more easing measures for its economy, while oil and gas stocks (+1.51%) also gained as crude prices rallied a percent or so. US equities slumped after Europe closed though with the S&P 500 declining 26 points from these highs to close -0.81% and in the process wiping out February’s hard earn recovery into positive return territory. Meanwhile Valeant (a top 5 largest US HY issuer in the index) fell 18% on the equity market as the company announced it was under investigation by the SEC. Spreads widened 75-100bps on the news.

Back to Europe, soft data and heightened expectations of ECB easing drove European government bond yields lower once again. German bond yields fell across all maturities from 1-10 years, with the 10Y yield 4bps lower at 0.106bp and close to getting back into single digits bps again. The impact of China’ easing and the building expectation of ECB easing was also seen in credit markets, with iTraxx Senior spreads tightening by 4.2bps while iTraxx Sub spreads tightening by 3.4 bps, thus continuing their rally from last week.

The renewed ECB hope was based on further gloomy European data. Following deflationary numbers out of Germany and France last week, inflation numbers for Italy (-0.2% YoY vs. +0.1% expected; +0.4% prior) and the Euro Area (-0.2% YoY vs. 0.0% expected; +0.3% prior) also turned negative in February. The cynic would certainly argue that after nearly a year of QE and an additional EU587bn on their balance sheet, inflation back below zero shows that the ECB has failed. However one must take into account that they are fairly powerless to counteract the huge price drop in oil and other commodities and also one wonders where inflation might have been if they had not printed over half a trillion Euros! A scary thought.

Below we look at the data day ahead, US politics will be in the spotlight today as Super Tuesday will see 12 states and one territory cast their votes for the Republican and Democratic nominees. It is the biggest day of the 2016 primary: roughly half of the delegates needed for a Republican candidate and one-third of the number needed for a Democratic candidate will be awarded here. Most polls (NBC News/WSJ) indicate Trump and Clinton to be the leading candidates for their respective parties across a number of participating states. Key results to watch for would be whether Texas Senator Ted Cruz can post a strong performance in Texas and level the playing field with Trump, and whether Clinton can further extend her lead over Sanders. Polls close in most states by 7 pm or 8 pm ET, though results will still be coming in tomorrow.

Taking a look at the day ahead in Europe, we have some key indicators to watch with the ECB meeting next week. We get the final February manufacturing PMI data for the Euro Area (expected 51.0) as well as regional data for Germany, France, UK, Spain and Italy. The Euro Area January unemployment rate (expected 10.4%) is also due. Over in the US, all eyes should be on the US ISM manufacturing data (as discussed above) while vehicle sales (expected: 17.70m), construction spending (expected: 0.3%), IBD/TIPP economic optimism data (expected: 47.9) and the manufacturing PMI (expected 51.2) are also due.

Today is quieter in terms of Central Bank speak: We are only scheduled to hear from Williams (President of the Federal Reserve Bank of San Francisco) and from Coeure from the ECB.


Let us begin;




Late  MONDAY night/ TUESDAY morning: Shanghai closed UP BY 45.19 POINTS OR 1.65%, HOWEVER IT HAD ANOTHER OF ITS FAMOUS LAST HR RESCUES/  Hang Sang closed UP by 295.53  points or  1.55% . The Nikkei closed UP 58.75 or 0.47%. Australia’s all ordinaires was UP 0.85%. Chinese yuan (ONSHORE) closed UP at 6.5480.   Oil GAINED  to 34.20 dollars per barrel for WTI and 36.73 for Brent. Stocks in Europe so far deeply in the GREEN . Offshore yuan trades  6.5489 yuan to the dollar vs 6.54800 for onshore yuan/ as POBC went after the shorts (see below).  Chinese PMI’s (mfg and service plunge (see below)

China PMIs Plunge, Economists Demand Stimulus To “Prevent Economy Falling Off A Cliff”

So, after $1 trillion in new credit, numerous RRR cuts, a devalued currency (great for exporters, right?), and the domestic exuberance of a housing bubble, China’s economy (manufacturing and non-manufacturing) collapsed to cycle lows (weakest since Dec 08) in February. Of course, this plunge after January’s bounce is all being blamed on the Lunar New Year… and in fact, according to The NBS, manufacturing confidence is increasing(seriously that’s what they said!)


Does this look like “confidence” to you?

So to be clear – China Services PMI went from the highest since June 2014 to the lowest since Dec 2008 in one month.

It appears a trillion dollars doesn’t go as far as it used to.

One can’t help but wonder, following these comments from PBOC’s Chen…


Whether this is some Fed-targeted dumping of bad data to allow turmoil and force The Fed to relent.

The data deluge continued to get worse as Caixin/Markit reported:


“The Caixin China General Manufacturing PMI for February is 48, down 0.4 points from the previous month. The index readings for all key categories including output, new orders and employment signalled that conditions worsened, in line with signs that the economy’s road to stability remains bumpy.”

Staff numbers declined at the sharpest rate since January 2009 during February. Companies that recorded lower headcounts widely commented on company downsizing policies as part of cost-cutting initiatives, along with the non-replacement of voluntary leavers. Despite lower employment, manufacturers were able to work through outstanding business during February. Though marginal, it was the first reduction in the level of work-in-hand since April 2015.

The government needs to press ahead with reforms, while adopting moderate stimulus policies and strengthening support of the economy in other ways to prevent it from falling off a cliff.

Last night, the POBC strengthened the yuan going after the shorts.  It erased all the RRR cut swing. The problem for them is of course, they used considerable amount of the USA reserves going after the shorts.
(courtesy zero hedge)

Get Shorty? PBOC Strengthens Yuan, Erases All RRR-Cut Swing

For the first time in six days, PBOC decided to strengthen the Yuan fix (+0.1% to 6.5385). This sent offshore Yuan surging back to pre-RRR-Cut levels, ensuring that (for the very short-term) speculators don’t get any ideas about piling into a Yuan short (again). This action followed the suspension of China’s Open Market Operations (due to lack of interest from traders).

Following this morning’s surprise RRR Cut, The PBOC decides now is the time to strengthen Yuan…


Wiping out the Yuan swing from today…

Let’s see how long this holds.

PBOC’s Chen had some comments on the matter (just don’t tell the Japanese)


In other words – Don’t short it, or else!

Just take a look at China’s off balance sheet where 15 trillion dollars worth of WMP’s or Chinese wealth management products exist.  This is a huge black swan that when it crashes it will send black smoke billowing across the globe:
(courtesy zero hedge)

China Faces 15 Trillion Bombshell As Shadow Banking Sector Collapses

We’ve spent more time than most documenting China’s wealth management product problem.

WMPs are part and parcel of Beijing’s sprawling shadow banking complex which, until 2014 that is, helped pump trillions of yuan into China’s economy and shouldered the burden when it came to propping up the most important economy on the planet.

But WMPs are dangerous. In fact, we flagged them as an 8 trillion black swan back in August on the way to asking what would happen if China’s shadow banking sector were to collapse altogether.

This is space that’s running what amounts to an enormous maturity mismatched fraud. Of course the describes the entire fractional reserve banking system, but in the case of China’s WMPs, it’s all on the verge of implosion. Don’t believe us? Just ask anyone who bought into products sold by Fanya Metals’ Shan Jiuliang.

This is a very real threat to the Chinese banking sector. The multifarious nature of the space’s liabilities makes it virtually impossible for anyone to assess what the embedded risks are. As we first documented last summer, some 40% of credit risk is carried off balance sheet and that figure might well have grown recently, especially considering mid-tier bank’s propensity to extend new credit through new cateogries of channel loans that are classified as “investments” and “receivables”

In any event, China is desperate to revive the credit impulse and that means keeping the shadow banking space alive. Here’s BofA with more on China’s ticking WMP time bomb:

  • Growth rate accelerated. By the end of 2015, WMP balance reached Rmb23.5tr, up 56.46% YoY. Astonishingly, growth rate accelerated last year compared to the year before despite a high base – in 2014, the balance grew from Rmb10.2tr to Rmb15.0tr, up 47.25% YoY. The key drivers of this accelerated growth are joint stock banks whose WMP balance rose from Rmb5.67tr to Rmb9.91tr, up 74.8% YoY; city commercial banks, Rmb1.7tr to Rmb3.07tr, up 80.6% YoY. On the other hand, the big four state-owned enterprise (SOE) banks’ balance rose by a more moderate 53.2% YoY (from Rmb6.47tr to Rmb8.67tr) while foreign banks’ balance declined by 25.6% (from Rmb0.39tr to Rmb0.29tr).

  • Liquidity risk is rising. The outstanding balance of open WMPs, of which buyers can subscribe or redeem largely at will, reached Rmb10.32tr, up 96.95% YoY. They accounted for 44% of bank-run WMPs balance as of Dec 2015, up from 35% a year earlier. The increased share of open WMPs adds to the duration mismatch in the shadow banking sector and makes the system more prone to liquidity shock in our view. In 2015, banks issued Rmb158.41tr worth of WMPs, i.e., Rmb13.2tr a month on average. If WMP buyers decide to ‘go on strike’ for whatever reason, a liquidity crunch in the shadow banking sector could quickly develop in our view.

  • Implicit guarantee still largely in place. Only Rmb1.37tr worth of open WMPs, representing 13% of the total, are priced based on NAV. Also, the portion of closed WMPs that are priced similarly is tiny. This means that the vast majority of WMPs are still sold with the so-called “expected return”, which is largely viewed as promised return by WMP buyers by our assessment. In 2015, only 44 WMP products, or 0.03% of matured products during the year, caused investors to lose money. This loss ratio appears unusually low in our view. It is interesting to note that most of the 44 products were sold by foreign banks.

  • Individual buyers still dominant. As of Dec 2015, individual investors, including high net-worth individual investors, accounted for Rmb13.34tr WMP balance, or 56.6% of the total (institutional investors, 30.6%; inter-banks, 12.8%). They subscribed to Rmb101.49tr of the newly issued WMPs during the year, representing 64.1% of the total. Mood of individual investors are more volatile than institutions in general.

The bottom line is this: if this implodes, it will not only tank the entire Chinese banking system but the global economy as well, as the amount of liabilities here is quite frankly enormous.

Tier one area home prices are skyrocketing making it impossible for citizens to live:
(courtesy zero hedge)

China’s Crowd-Sourced Housing Bubble Goes “Crazy” – $585,000 For A 65 Square Foot ‘Apartment’


The price of home price in China’s tier one cities (Beijing, Shanghai, Guangzhou and Shenzhen) started another around of rally in the last couple months, and became “crazy” in Feb as described by the Chinese who form lines to buy the apartments everywhere.

When I saw this online commercial as below, I cannot help asking myself: Really?  This place can be sold as a “home” (I thought it’s just a kitchen), and at this price ($9k per sqf)?

lian jia

The ads is posted on the web site of China’s biggest online real estate agent Lianjia, showing a 6 square meters (65 sft) property which asks for RMB 3.8milion ($585k in total or $9k per sft).  Frankly speaking, this place has its good selling points: sitting at a good school zone, close to the subway and not subject to the real estate restriction policy. But really, $9k per sqf?

Maybe you think the tiny kitchen is an isolated case, but let’s look at the following general price data.

Chart 1: Tier 1 cities ended the YoY price decline since June 2015 and enjoyed a strong rally as it did in 2010 and 2013. 

Price YoY

Chart 2:  Absolute price level of tier 1 cities (Shenzhen, Beijing and Shanghai (RMB/sqm))

3 cities absolute price

Source: Wind, blue line: Shenzhen, red line: Beijing, and blue dot line: Shanghai

The median home price in China’s top 3 tier 1 cities ranges between $0.5k to 0.6k per sqf (RMB 33k to 43k per sqm).  Based on Trulia’s data in 2015, the median home sales in NY is $1.5k per sqf and that in San Francisco is $0.95k per sqf.  However, the median household income in Shanghai is only $15,400 per year while that in NY/SF is around $59,000/$84160, so the home price to income ratio in China’s tier 1 cities is higher than those in US tier 1 cities.

Chart 3:  Price change % of tier 1 cities in the last five years

Price range YoY

Source: Wind, from left to right, Shenzhen, Beijing and Shanghai

So will investing in the tier one properties bring you stable income?  Let’s take a look at the rent yield.

Chart 4: Tier 1 cities’ rent yield in the last eight years (%)

Rent yield

Source: Wind; Red: Shanghai, Blue: Beijing and Pink: Shenzhen

 The trend of rent yield has been declining and now the yield stands at only around 2%.  But if we take a look at real yield, it’s another picture

Chart 5: Tier 1 cities’ rent yield minus China 10 yr treasury yield (%)

Rent real yield

Source: Wind; Red: Shanghai, Blue: Beijing and Pink: Shenzhen

Apparently, you will have negative real income if you investing in China properties.  Your investment return comes from the next buyer/speculator or the people who are stupid enough to pay 20 to 25 times home price to house income (if they really can afford).

You must wonder how the average Chinese people can afford a living place as the home price to income ratio is so high.  Yes, you are right, the average Chinese people or even the white collar/professionals are not able to afford the home price in tier 1 cities, but they can “invest” in the property market just like they did in the A share equity market through leverage.  For the A share equity market, we can estimate the leverage through the level of “margin debt”.  However, there’s no such a metric to estimate the size of the leverage used in the property market.  But we can get a remote sense from another perspective.  We all know January new RMB loans hit a record high RMB 2.51 trillion, while the deposit of industrial corporate only increased RMB 800 billion.  It means that a decent part of the loans did not go into industrial corporate’s bank accounts to support the real economy.  Where did it go?  Apparently the margin debt in equity market was dropping in Jan, then you know the answer.

In addition to the leverage part, there’re more concerns in the equity part: down payment.  For speculator, they like to buy as many as home in the same area so they can “manage” the price through volume control.  Right now China’s real estate policy still mandates 25% to 30% down payment when you buy a property, so the equity part itself demands significant cash flows (tier 1 cities’ average home price is around $1.2 million to $1.5 million per unit, so 25% to 30% down payment for 100 units is still a big number in China.  Yes, it’s not wrong number, 100 units is a normal case for a group of speculators who will buy the whole apartment complex).  Here are two ways how the speculators get around this entry barrier?

  • The real estate agents provide margin for the down payment. To boost the transactions and earn the commission, the agents provide 50% to 70% lending of the down payment part and make sure the buyers have enough money to finish the transaction. In reality, the buyer may only pay 10% down payment (agents lend him 70% of the 30% down payment requirement) to buy a home.  The speculator’s leverage is loosened from 1:3 to 1:10 through this down payment leverage.  Right now, the buyer not only owns money to the banks but also the agents.  But it does not matter in a quick and steep upward market, as the speculators will turn over their inventory quickly and make a fortune of it.  All they need is big enough equity to leverage the bubble.  How big is the size of down payment leverage?  From the public information of three top agents (Lianjia, 5i5j, and Fang), we know that they provided this kind of down payment leverage for transactions with the value of around RMB 500 billion.
  • Some small individual speculators use “crowdfunding” to make the down payment. Per Wiki, crowdfundingis the practice of funding a project or venture by raising monetary contributions from a large number of people, today often performed via internet-mediated registries.  Crowdfunding is popular in the tech space, but in China, speculators use it to fund their bets in the property market.  Ironically, they use Wechat as the internet platform to organize the crowdfunding.  In these days, as long as you walk into any Starbucks in Shanghai, you will hear people discussing crowdfunding their “real estate investments”.  The problem is, it’s difficult to define ownership in a crowdfunding support down payment, because it’s impossible to put 100 or 200 people’s names under a property’s ownership.

Anyway, the current crazy bubble in China’s tier 1 cities smells the same as the A share bubble which was boosted by the margin debt in the last two years.

We know it will end badly when the margin debt bubble is pierced.

*  *  *

Shortly after completing this note, Bloomberg runs the following headline:

China State Media Warns of Home Price Surge in Top Cities

Some developers and real estate agents created illusion of massive demand for homes that led to purchases by panic buyers, according to a commentary from Xinhua written by reporter Zheng Juntian on Monday.

More than 30% buyers of homes in Shenzhen city made purchases as investment, Xinhua cites data from unidentified researcher

Local govts should prevent home prices from rising overly fast and avoid speculative demand buying homes with financial leverage

So having herded people into the stock market and blown them up; and then back into housing (easing mortgage restrictions etc.), the authorities will now proceed to yell “bubble” in a crowded (and over-levered) ‘theater’ of real estate. We sense the social unrest building as we speak.


This ought to be good for their economy: 6 million pink slips:
(courtesy zero hedge)

China’s Mass Unemployment Wave Begins: Six Million Workers To Get Pink Slips

Back in November, just as the world’s attention was focusing on China for long-overdue reasons including a slowing economy, debt at well over 300% of GDP, an artificially high exchange rate whose devaluation is causing market shockwaves around the globe, a reflating housing bubble, a burst stock market bubble and non-performing loans, as high as 20%, when we pointed out the one “most under-reported” risk virtually nobody was talking about: Chinese employment.

… one risk, perhaps the biggest one, which has so far flown deep under the radar, is also the biggest one – which may explain why so few have noticed it – namely social discontent, resulting from a breakdown in recent “agreeable” labor conditions, wage cuts and rising unemployment, leading to labor strikes and in some cases, violence.

We then pointed out a disturbing indicator: the number of labor strikes in China, as a result of deteriorating labor conditions, sliding wages and surging unemployment, had become exponential.


Since then the media’s attention did shift to this biggest, if no longer-underreported risk if not in the international arena then certainly to the domestic “growth” story: the imminent surge in unemployment as China’s slowing economy is finally “passed down” to the worker level.

We received the first evidence overnight, when in the Markit report confirming China PMI deteriorating manufacturing, it also noted that “staff numbers declined at the sharpest rate since January 2009 during February. Companies that recorded lower headcounts widely commented on company downsizing policies as part of cost-cutting initiatives, along with the non-replacement of voluntary leavers. Despite lower employment, manufacturers were able to work through outstanding business during February. Though marginal, it was the first reduction in the level of work-in-hand since April 2015.

In other words, a labor bloodbath.

Today, Reuters finally peels away the first layer of just how bad China’s mass layoff wave will be when it reports that China aims to lay off 5-6 million state workers over the next two to three years as part of efforts to curb industrial overcapacity and pollution.

This admission, the first of many, will cost China.

As Reuters adds, “China’s leadership, obsessed with maintaining stability and making sure redundancies do not lead to unrest, will spend nearly 150 billion yuan ($23 billion) to cover layoffs in just the coal and steel sectors in the next 2-3 years.”

That number, coming from the government, is laughably lower that what our own estimate of how much it would cost China to preserve the peace, a number which will likely be in the CNY11+ trillion range.

Needless to say, the overall figure is likely to rise as closures spread to other industries and even more funding will be required to handle the debt left behind by “zombie” state firms.

The term refers to companies that have shut down some of their operations but keep staff on their rolls since local governments are worried about the social and economic impact of bankruptcies and unemployment. Shutting down “zombie firms” has been identified as one of the government’s priorities this year, with China’s Premier Li Keqiang promising in December that they would soon “go under the knife”.

As forecast here all throughout 2015, it was just a matter of time before China had no choice but to unleash the mass pink slips, and that is about to happen: “the government plans to lay off five million workers in industries suffering from a supply glut, one source with ties to the leadership said.”

A second source with leadership ties put the number of layoffs at six million. Both sources requested anonymity because they were not authorized to speak to media about the politically sensitive subject for fear of sparking social unrest.

Putting this number in context, the hugely inefficient state sector employed around 37 million people in 2013 and accounts for about 40 percent of the country’s industrial output and nearly half of its bank lending.

According to Reuters, this would be China’s most significant nationwide retrenchment since the restructuring of state-owned enterprises from 1998 to 2003 led to around 28 million redundancies and cost the central government about 73.1 billion yuan ($11.2 billion) in resettlement funds.

There are two big problems with this low-balled estimate. The first is that as China aims to cut capacity gluts in as many as seven sectors, including cement, glassmaking and shipbuilding, the downstream labor effects will be massive, and they will impact not only the public sector but all the countless workers in the private sector that service them.

According to some of the more bearish sellside estimates, as many as 20-30 million workers in both the public and private sectors will lose their jobs as a result of the massive overcapacity retrenchment that China will undergo in decades. Even that number may be a low estimate if the worst case scenarios about Chinese bad loans materializes.

The second problem is more nuanced.

The Ministry of Finance said in January it would also collect 46 billion yuan from surcharges on coal-fired power over the coming three years in order to resettle workers. In addition, an assortment of local government matching funds will also be made available.

However, the funds currently being offered will do little to resolve the problems of debts held by zombie firms, which could overwhelm local banks if they are not handled correctly.

“They have proposed this dedicated fund only to pay the workers, but there is no money for the bad debts, and if the bad debts are too big the banks will have problems and there will be panic,” said Xu Zhongbo, head of Beijing Metal Consulting, who advises Chinese steel mills.

In other words, China is about to unleash a war on two fronts resulting from its slowing economy, one dealing with soaring NPLs, which as a reminder is the basis of Kyle Bass’ bearish thesis on China and why he and many others think China will need massive devaluation in the coming year; the second will be dealing with the social fallout from the imminent mass layoff wave.

How any of this will happen is not clear:

Factories shut down would have to repay bank loans to avoid saddling state banks with a mountain of non-performing loans, the sources said. “Triangular debt”, or money owed by firms to other enterprises, would also have to be resolved, they added.


Although China has promised to help local banks transfer the bad debts of zombie steel mills to asset management firms, local governments are not expected to gain access to the worker lay-off funds until the zombie firms have actually been shut down and debt issues settled.

As for the 150 billion yuan earmarked to provide “social unemployment insurance”, one thing is certain – almost none if any of these funds designed to appears the newly unemployed, will actually reach the broader population.

Ultimately, Beijing’s attempt to centrally plan a transition into a regime with “unemployment claims” will fail, unleashing what China’s riot police has been preparing for ever since 2014, something we profiled in “Chinese riot police train for a “working class insurrection.”

Consider the photos below a preview of what China is about to unleash domestically as it begins handing out the mass pink slips.

Japan gets its first 10 yr bond auction and the result:  its first ever negative yield.
That is correct:  you pay the government for the privilege of owning a bond for 10 years and receive less every year for 10 years:
(courtesy zero hedge)

Japan Braces For A “Turbulent, Volatile” 10-Year Auction With First Ever Negative Yield On Deck

Two days after Japanese yields plummeted on January 29, when the BOJ unexpectedly stunned the world by announcing negative interest rates, the Japanese government sold 10 Year Bonds at what was then a near record low yield of 0.078% in an auction which carried a 0.3% coupon. Since then things have only gotten more… deflationary, and as can be seen on the chart below, as of this moment the 10Y JGB is yielding a record-0.055%

And since Japan is set to issue JPY2.4 trillion ($21 billion) in 10 year notes in a few hours, it means that for the first time ever, the Japanese government will be paid to actually “sell” 10Y paper – bonds which will have a negative yield at issue.

This won’t be the first time Japan has sold NIRP paper: as Bloomberg writes, over the past month Japanese government bonds of as long as five years in maturity sold at a negative yields, however tonight is only the first time when the entire curve through the 10 Year mark will be submerged below the X-axis.

However, where things may get tricky, is that as BBG adds demand at 10-year note auctions has declined this year as yields continued their slide, even with the central bank having the scope to buy every new bond issued as part of its stimulus program. In other words, bidders have no choice and if they want the “safety” of government backstopped collateral, they will have to pay Abe for the privilege of giving him their money for the next decade.

“There are concerns about who would actually buy 10-year bonds with negative yields,” said Shuichi Ohsaki, the chief Japan rates strategist at Bank of America Merrill Lynch. “Even if you wanted to participate in the BOJ trade, you would have to hold onto the bond until it becomes eligible for the BOJ operation. And with the increase in volatility, it’s a tough one to trade.”

Where things get even more complicated is that in China the concept of a yield curve is practically non-existent: as the chart below shows, the JGB yield curve was the flattest on record at the end of last week, under pressure from the BOJ’s bond purchases, with the premium offered by 10-year securities over two-year notes narrowing to just 11.5 basis points.

That’s not all: if DB’s Makoto Yamashita is right, tonight’s auction may be quite “turbulent”:

“We expect the10y JGB auction on the 1st to be a new issue with a 0.1% coupon, but auction yields are likely to go into negative territory. We do not expect the bank sector to buy, and demand from dealers and foreign investors is unlikely to provide sufficient support. We expect the auction to be turbulent given investors are also unlikely to short futures and the possibility of a tail. 

Then again, Japan’s hasn’t had a truly functioning bond market in a long time. This is the same market which none other than SocGen’s Albert Edwards recently fell in love with because Japan’s 10Y bond is the only asset class which, as we reported last week, has not had a losing year since 2007.

While Edwards was “all in” 10Y JGBs, we were less euphoric. As we said:

Yes, Japanese bonds have generated positive returns for the past 9 years, but all it takes is just one moment of sheer central bank stupidity, or outright insanity, to destroy everything. The BOJ had just such a moment one month ago when it launched NIRP. What if the next moment is its last?

In fact, in a world in which the last, and increasingly more risky, counterparty are central banks themselves, isn’t owning the one asset that has zero counterparty risk the best option?

Who knows: perhaps the combination of a manipulated, rigged bond “market”, one which is entirely controlled by the BOJ, with an unprecedented event like the first ever negative yield on a 10Y JGB in history, is precisely the catalyst that will not only snap Japan’s unbroken record, but finally end the farce that is Japan’s centrally-planned, well… everything, and result in the Bank of Japan finally losing control.

While we don’t think tonight’s auction will be the catalyst just yet, keep an eye on the auction results when the come in. Just in case.






Barclay’s reports horrific results as it cuts its dividend as well as shed its African subsidiary. Their dividend is a huge 3 pence:

(courtesy zero hedge)

Barclays Crashes Most Since 2012 On Dividend Cut, Abysmal Results

Don’t look now, but Barclays just joined the chorus of European banks reporting horrific results.

Shares plunged by double-digits on Tuesday after the bank said it swung to a £1.9 billion pre-tax loss in Q4 and moved to cut the dividend and shed its African subsidiary.

The payout will be cut by more than half this year and next in an effort to shore up the bank’s capital. For all of 2015, the red ink summed to £394 million, markedly worse than 2014. Adjusted pre-tax profit (which, as FT put it, strips out “lots” of one-offs) was £5.4 billion, a miss on consensus of £5.8 billion.

The bank will look to exit a 62% stake in Barclays Africa going forward and new CEO Jes Staley plans to exit the continent altogether. For the foreseeable future, Barclays will focus on its businesses in the US and the UK. The dividend will be cut to 3 pence per share from 6.5p in 2015.

“While we believe that the cut in dividend will be taken negatively initially, it will help to allay fears of capital weakness,” analysts at Haitong Research wrote on Tuesday.

“In the few months since Staley’s appointment, Barclays has made sweeping cuts across its investment bank and exited several businesses including in Asia, aiming to trim costs, reduce risk and shore up its balance sheet,” Reuters notes. “However, legacy issues continue to hurt the bank, with 4.01 billion pounds of provisions made against an array of regulatory missteps, compared with 2.36 billion a year earlier.”

“Staley, who joined the bank three months ago, is in the midst of reorganizing the bank around two lines: UK retail banking and its corporate and investment bank,” FT reminds us. “By splitting into two main divisions, he says Barclays would prepare for new ringfencing regulations forcing it to hive off its UK retail banking unit and its US activities into standalone entities.”

Revenues were up slightly in 2015 and the ratio of costs to income was 81%. Staley plans to reduce that figure to 60% or less. Previously, Barclays was looking at a target in the “mid-50s.”

Barclays Africa Group Limited will will be sold down until it can be deconsolidated, a move Staley says will beef up the bank’s capital ratio by 1%. As FT goes on to say “Barclays remains one of the most weakly capitalised banks in Europe, on a par with Deutsche Bank and Credit Suisse.”

The decision to exit Africa was “a difficult one to make,” Staley says, but it “presents specific challenges to Barclays as owners.” A third of all Barclays staff operate in Africa.

But while Barclays may be abandoning the Africa business, it won’t be exiting investment banking, as some commentators have suggested. “There are some who have recommended we would be wise to exit this business entirely — I strongly disagree,” Staley said on Tuesday. “That’s shortsighted,” he added, before admitting that the business “does not currently generate returns above our cost of equity.”

“Shortsighted” investors have sent the stock down nearly 40% over the past year alone.

Barclays Tier 1 ratio was 11.4% by the end of last year, up from 10.3% a year earlier. Staley says the bank will start paying out a “significant” portion of its profits in 2018. So stick around.

In any event, this is a train wreck. There’s also £18 billion in O&G exposure on the books and the bank said the SEC and the DoJ are launching “an investigation into certain hiring practices in Asia.”

Although Staley tried to keep it upbeat, he clearly has no idea how this is going to turn out. Here, for instance, is guidance: “[We’re going to] achieve attractive returns for shareholders.”

Fair enough, but “shareholders” aren’t happy. We close with what Nomura’s Chintan Joshi told Staley on the call: “Look at your stock price, and what it is telling you is no one is believing your ‘jam tomorrow’ capital story.”




Wow!! a huge 5 sigma miss on Aussie housing data.  These guys are falling faster than a ten ton balloon!

(courtesy zero hedge)


Aussie Housing Bubble Bursts – Building Approvals Crash Most In 4 Years

Having admitted to entirely ‘cooking the books’ with its jobs data, it appears Australian authorities are going full kitchen-sink and ‘allowing’ all the dismally honest data out to the market (we assume in some desperate PR need to justify their next monetary policy experiment). Building Approvals fell 7.5% MoM in January, crashing 15.5% YoY (5 standard deviations below expectations)  – the biggest drop since April 2012 (and the 3rd month in a row of declines).

Sudden collapse…

This was below the lowest economist’s estimate and was in fact a 5-sigma miss…

So why come clean now about the state of the housing bubble? As we noted when RBA admitted its fudged jobs data,

Simple: weakness in commodity prices “is far greater than people had been expecting,” Fraser said in earlier remarks to the panel. Australia is now “swimming against the tide” because of uncertainties in the global economy, he added.

Translation: “we need more easing, and to do that, the economy has to go from strong to crap.”

And with the Australian economy suddenly desperate for lower rates from the RBA, one can ignore the propaganda lies, and focus once again on the far uglier truth.

Now we witness over 70% of the global PMI’s decline last month:
(courtesy zero hedge)

Global Manufacturing Rolling Over: Over 70% Of Global PMIs Decline In February

Moments ago we got the two latest monthly US manufacturing surveys in the form of the downbeat Markit PMI, according to which “the February data add to signs of distress in the US manufacturing economy“, offset by the traditionally more optimistic ISM, whose chair Bradley Holcombe went so far as to say “US manufacturing may have found a bottom.” Then overnight we also received the latest Markit manufacturing sentiment update from around the globe. Suffice it to say, it did not support Holcombe’s cheerful “bottom hunting” outlook.

As the below table shows, 28 regions have reported so far. Seven saw improvements in their manufacturing sectors in February, twenty recorded a weakening, and India was unchanged. This means that over 70% of the world saw manufacturing sentiment deteriorate in February compared to January.

In terms of actual expansion, there were 21 countries in positive territory and 7 in negative. In particular, Greece moved from neutral to contraction territory, while Taiwan dropped below breakeven from expansion.

The biggest wildcard remains China where economists note that the fall in headline PMI was mainly driven by declining production and new orders, while inventory of raw materials improved. The government ascribed the deterioration in the manufacturing PMI to celebrations surrounding the Lunar New Year, however as BofA notes, “growth momentum of industrial activities could have further weakened in February.”

Ultimately, the only relevant question is whether China can stabilize its economy, and lead to a recovery in global manufacturing which for the past 7 years has ultimately been a downstream function of how well China is doing. For now the answer remains nebulous at best.


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

Euro/USA 1.0875 down .0010

USA/JAPAN YEN 113.04  UP .645 (Abe’s new negative interest rate (NIRP)a total bust

GBP/USA 1.3972 UP .0046 (threat of Brexit)

USA/CAN 1.3523 DOWN.0015

Early THIS TUESDAY morning in Europe, the Euro FELL by 10 basis points, trading now JUST above the important 1.08 level falling to 1.0883; 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, and the threat of continuing USA tightening by raising their interest rate / Last  night the Chinese yuan was UP in value (onshore)  The USA/CNY DOWN in rate at closing last night: 6.5480 / (yuan UP 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 SOUTHBOUND trajectory RAMP as IT settled DOWN in Japan by 65 basis points and trading now well BELOW  that all important 120 level to 113.04 yen to the dollar.  NIRP POLICY IS A COMPLETE FAILURE  AND ALL OF OUR YEN CARRY TRADERS HAVE BEEN BLOWN UP (TODAY TRADERS RAMPED USA/YEN AND THUS ALL BOURSES RISE!!)

The pound was UP this morning by 46 basis points as it now trades just below the 1.40 level at 1.3972 on fears of a BREXIT.

The Canadian dollar is now trading UP 15 in basis points to 1.3523 to the dollar.

Last night, Chinese bourses were UP/Japan NIKKEI  CLOSED UP 58.75  POINTS OR 0.37%, HANG SANG UP 295.53 OR 1.55%  SHANGHAI UP 45.19 OR 1.65% after being down HAD ANOTHER OF THEIR FAMOURS  last hr rescue/ AUSTRALIA IS HIGHER / ALL EUROPEAN BOURSES ARE  IN THE GREEN ON USA/YEN RAMP  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 TUESDAY morning: closed UP 58.75 OR  0.37%

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

2/ CHINESE BOURSES IN THE GREEN/ : Hang Sang closed UP 275.53 POINTS OR  1.55% ,Shanghai IN THE GREEN  Australia BOURSE IN THE GREEN: /Nikkei (Japan)GREEN/India’s Sensex in the GREEN /

Gold very early morning trading: $1245.50


Early TUESDAY morning USA 10 year bond yield: 1.74% !!! PAR in basis points from last night  in basis points from MONDAY night and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield falls to 2.62 PAR  in basis points from MONDAY night.  

USA dollar index early TUESDAY morning: 98.26 UP 11 cents from MONDAY’s close.(Now below resistance at a DXY of 100)

This ends early morning numbers TUESDAY MORNING




Oil reacts negatively as Putin asks Russian producers to freeze levels at record levels. The world wants reduction in production not freezing at record levels

(courtesy zero hedge)

Crude Tumbles Into Red After Putin Comments

With overnight weakness in data sparking hype that moar stimulus is coming, and therefore juicing demand for oil, crude prices spurted above $34.50 this morning (after the NYMEX close banging yesterday). However, the last few minutes have seen the machine slam WTI back into the red after Putin said he would ask Russian oil producers if they will freeze production (at record levels).


We presume the market was pricing in this as a done deal…

Or simply did the math that freezing production at record levels in a world beset by slumping growth is not a positive.


Crude Crushed After API Reports Biggest Inventory Build In 11 Months

Following last week’s builds overall and at Cushing, and Genscape’s Cushing build warnings, expectations were for a 3.3m build overall (and 700k build at Cushing). API reported a massive 9.9mm build – the largest since April 2015; and a yuuge build at Cushing of 1.8mm (most in 3 months). Gasoline saw a draw but Distilates a notable build. Following today’s v-shaped recovery in WTI, and NYMEX close ramp, the API data has sent crude reeling.


  • Crude +9.9mm (+3.3mm exp)
  • Cushing +1.8mm (+700k exp)
  • Gasoline -2.2mm (-1.1mm exp)
  • Distillates +2.7

And the reaction in Crude is clear…


Charts: Bloomberg

And now your closing TUESDAY numbers

Portuguese 10 year bond yield:  3.01% up 2 in basis points from MONDAY (and the European stock market rises???)

Japanese 10 year bond yield: -.060% !! par  basis points from MONDAY which was lowest on record!!
Your closing Spanish 10 year government bond, TUESDAY down 4 in basis points
Spanish 10 year bond yield: 1.49%  !!!!!!/ and the Spanish bourse rises????
Your TUESDAY closing Italian 10 year bond yield: 1.38% down 4 in basis points on the day:
Italian 10 year bond trading 11 points lower than Spain/and the Italian bourses rises???
Closing currency crosses for TUESDAY night/USA dollar index/USA 10 yr bond:  2:30 pm
Euro/USA: 1.0871 down .0014 (Euro down 14 basis points)
USA/Japan: 114.07 up 1.670 (Yen down 167 basis points) and still a major disappointment to our yen carry traders and Kuroda’s NIRP
Great Britain/USA: 1.3971 up ..0046 (Pound up 46 basis points on Brexit concerns)
USA/Canada: 1.3396 down .0143 (Canadian dollar up 143 basis points as oil was higher in price/wti = $34.33)
This afternoon, the Euro was down by 14 basis points to trade at 1.0871/
The Yen fell to 114.07 for a loss of 167 basis points as NIRP is still a big failure for the Japanese central bank/also all our yen carry traders are being fried
The pound was up 46 basis points, trading at 1.3971.(BREXIT concerns)
The Canadian dollar rose by 143 basis points to 1.3396  as the price of oil was up today as WTI finished at $34.26 per barrel,)
The USA/Yuan closed at 6.5480
the 10 yr Japanese bond yield closed at -.060%  par in  basis points.
Your closing 10 yr USA bond yield: up 9 basis points from MONDAY at 1.83%//(trading well below the resistance level of 2.27-2.32%) policy error
USA 30 yr bond yield: 2.70 up 8 in basis points on the day and will be worrisome as China/Emerging countries  continues to liquidate USA treasuries  (policy error)
 Your closing USA dollar index: 98.32 up 17 in cents on the day  at 2:30 pm
Your closing bourses for Europe and the Dow along with the USA dollar index closings and interest rates for TUESDAY
London: up 55.79 points or 0.92%
German Dax: up 221.76 points or 2.34%
Paris Cac up 53.29 points or 1,22%
Spain IBEX up 149.00 or 1.77%
Italian MIB: up 388.84 points or 2.21`%
The Dow up 348.58  or 2.11%
Nasdaq:up 134.64  or 2.89%
WTI Oil price; 34.39  at 3:30 pm;
Brent OIl:  36.84
USA dollar vs Russian rouble dollar index:  73.31   (rouble is up 1 and 87 /100 roubles per dollar from yesterday)  as the price of brent and WTI oil rose
This ends the stock indices, oil price, currency crosses and interest rate closes for today.
And now USA stories
First USA trading in chart form:

Worst Global Economic Data In 4 Years Sparks Stocks Best Day In 6 Months

Dudley’s “Downside Risks” and Draghi’s “No Limits” were all it took to trump theworst global macro data since 2012 (JPM Global PMI) and send stocks soaring…Some quick thoughts from (ironically) 1930…

Worst global economy since 2012…


Best day for Nasdaq in six months…(and best first day of a month since 2013)


Futures show what really happened…


The Dow soared over 400 points off overnight lows, surging to the lows from the first trading of 2016… Bad News Is Great News once again!!


With financials leading the ripfest…


With financials managing to tag the 50DMA…


But seriously – are we going to fall for this again?


Ripped higher on the back of USDJPY…(but even that decoupled in the last hour as 114.000 capped the gains)…


As the crude correlation broke shortly after EU close…


This was not a short-squeeze per se – but as the day went on the “most shorted” names did start to suffer…


But we do note that once again the “weakest momentum” stocks notably outperformed (messing with quant funds again)


VIX broke to a 17 handle following trail of its tails…


Breaking back below its 200-day moving-average for the first time in 2016…


Lots of chatter today about liquidations of VRX positions (and the SPY market hedges with them) – driving VRX lower and the market higher… until we tweeted about it…


Treasury yields exploded higher on the weak data this morning


The USD Index slid back to unchanged on the week today after an early bounce on JPY weakness which was trujmped by EUR strength after Europe closed)…


Commodities were mixed today: PMs very modstly lower, copper and crude higher – bnut we note the broad based flush ast around 8ET…


And finally there was Nattie – which popped and dropped and popped on weather changes, hedge fund rumors, and force majeurs…


Charts: Bloomberg


(courtesy zero hedge)
Today it is Markit’s turn to show huge signs of distress in the USA manufacturing sector:
(courtesy Markit/zero hedge)

Growing “Signs Of Distress” In US Manufacturing Data Demolish Decoupling Dream

Following the weakness in global PMIs, and yesterday’s Chicago PMI collapseUS Markit Manufacturing PMI dropped to cycle lows at 51.3 from 52.5 (very slightly better than expectations of 51.2) with job growth at 5-month lows, production at slowest in 28 months, and work backlogs tumbling to the lowest since Sept 2009. Then ISM Manufacturing hit, hovering at its weakest in 7 years rose modestly to 49.5 but remains in contraction for the 5th month in a row (longest streak since 2009). As Markit concludes, “the February data add to signs of distress in the US manufacturing economy.”

Remember the “America is an island and the rest of the world’s economic collapse doesn’t matter”meme… well that is over!! Cycle lows for Manufacturing PMI and 5th month of contraction for ISM Manufacturing

As Output plunges to cycle lows…

While ISM data showed a modest rise, New Orders were unchanged as Import and Export Orders fell.

Of the 18 manufacturing industries, nine are reporting growth in February in the following order: Textile Mills; Wood Products; Furniture & Related Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Chemical Products; Primary Metals; and Paper Products.

The seven industries reporting contraction in February — listed in order — are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Computer & Electronic Products; Printing & Related Support Activities; Transportation Equipment; Plastics & Rubber Products; and Fabricated Metal Products

ISM Respondents show a mixed bag:

  • “Low oil prices and reduced activity continue affecting our business.” (Petroleum & Coal Products)
  • “U.S. business demand is solid; international demand is soft.” (Chemical Products)
  • “Mobility spend is up.” (Computer & Electronic Products)
  • “Business has to get better. And it appears it is. Healthy backlog for 2016.” (Fabricated Metal Products)
  • “Very strong demand for product. Material availability very good and commodity pricing continues to be depressed.” (Machinery)
  • “Airlines are still ordering planes and spare parts for plane galleys.” (Transportation Equipment)
  • “Market is beginning to trend up with spring season on its way.” (Wood Products)
  • “Not seeing impact from global economic volatility or oil prices. Business is strong and growth projections remain the same.” (Miscellaneous Manufacturing)
  • “Orders are coming in stronger than expected.” (Furniture & Related Products)
  • “Still a bit sluggish.” (Food, Beverage & Tobacco Products)

Commenting on the February manufacturing data, Chris Williamson, chief economist at Markit said:

“The February data add to signs of distress in the US manufacturing economy.Production and order book growth continues to worsen, led by falling exports. Jobs are being added at a slower pace and output prices are dropping at a rate not seen since mid-2012.

“The deterioration in the manufacturing sector’s performance since mid-2014 has broadly tracked the dollar’s rise, which makes US goods more expensive in overseas markets and leads US consumers to favour cheaper imported goods.

“With other headwinds including the downturn in the oil sector, heightened uncertainty due to financial market volatility, global growth worries and growing concerns about the presidential election, it’s no surprise that the manufacturing sector is facing its toughest period since the global financial crisis.

Charts: Bloomberg


See you tomorrow night

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