March 18/DESPITE THE LOW PRICE OF GOLD/SILVER, GLD ADDS A WHOPPING 11.89 TONNES TO ITS INVENTORY/SLV ADDS 2.665 MILLION OZ/Gold whacked/silver held up pretty good/Gold and silver shares refuse to buckle/Gigantic rise in silver OI as it seems that someone big is willing to take on the crooks/comex gold OI also rises/Japanese 10 yr bond yield falls to -.107% after hitting -.137%: also the 30 yr rate plunges/In Brazil, Rousseff remains defiant despite impeachment vote in April/ In Oil two developments: i) USA rigs increase and ii) oil contango is disappearing/will cause oil to falter/In USA, the Univ. of Michigan Consumer Confidence index falters/

Gold:  $1,253.80 down $10.70    (comex closing time)

Silver 15.81  down 22 cents

In the access market 5:15 pm

Gold $1255.30

silver:  15.80


Yesterday afternoon as soon as the CME released the open interest on gold and silver I knew that a raid was coming and I emailed the CFTC that it would be forthcoming.  This morning I wrote to them again telling them that the “boys did not disappoint me” with their antics.

However this afternoon’s data is quite telling.  The OI on silver skyrocketed by almost 9,000 contracts to almost 177,500 contracts.  Now both comex gold and comex silver are at multi year highs.  The last time gold was at 500,000 was in late Sept 2012 and the gold price was $1700.00 USA. We are at the same OI but 445 dollars apart. The open interest with respect to silver has been at these elevated levels for years.  No doubt we have a strong entity waiting in the wings (the longs) to pounce on silver when it is convenient for them.


Let us have a look at the data for today.


At the gold comex today, we had a poor delivery day, registering 0 notices for nil ounces and for silver we had 242 notices for 1210,000 oz for the active March delivery month.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 213.23 tonnes for a loss of 90 tonnes over that period.

In silver, the open interest rose by an astonishing 8985 contracts up to 177,490 as the silver up by 81 cents yesterday . In ounces, the OI is still represented by .888 billion oz or 127% of annual global silver production (ex Russia ex China).

In silver we had 242 notices served upon for 1,210,000 oz.

In gold, the total comex gold OI rose also by a huge 6711 contracts to 508,262 contracts as the price of gold was UP $35.20 with yesterday’s trading.(at comex closing). The rise in OI in gold should add considerable  pressure on our bankers and thus expect future raids.

We had another big change in gold inventory at the GLD, another identical whopping deposit of 11.89 tonnes/ thus the inventory rests tonight at 818.98 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 A BIG change in inventory, ANOTHER DEPOSIT OF 2.665 MILLION OZ/ and thus the Inventory rests at 328.533 million oz


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


1. Today, we had the open interest in silver rose by 8985 contracts up to 177,490 as the price of silver was UP 81 cents with yesterday’s trading. The total OI for gold rose by 6,711 contracts to 508,262 contracts as gold was up $35.20 in price from yesterday’s level.

(report Harvey)


2 a) Gold trading overnight, Goldcore

(Mark OByrne)


b) COT report




i) Late  THURSDAY night/ FRIDAY morning: Shanghai closed UP BY 50.31 POINTS OR 1.73% , /  Hang Sang closed UP by 167.82 points or  0.82% . The Nikkei closed DOWN 211.57 or 1.25%. Australia’s all ordinaires was UP 0.24%. Chinese yuan (ONSHORE) closed UP at 6.4731.   Oil ROSE  to 40.82 dollars per barrel for WTI and 42.09 for Brent. Stocks in Europe so far ALL IN THE GREEN . Offshore yuan trades  6.4726 yuan to the dollar vs 6.4731 for onshore yuan/ON WEDNESDAY, China’s industrial production collapsed along with retail sales. JAPAN RE SIGNALS that they may continue with nirp a little longer which sends the USA/Yen spiraling northbound/markets in Japan tumble . Japan’s exports plummet (see below).ON WEDNESDAY, China signals that they are going to tax financial transactions. This morning they AGAIN raise the yuan trapping the shorts with huge losses


ii) report on Japan


WOW!!  a) Japanese yields climb to -.137% and ends up at -.107% this morning. Yields on the 30 yr Japanese bond is barely above zer0.  The yield curve inverts which means that Japan is now in a recession.

(courtesy zero hedge)

( zero hedge)
b) Bloomberg’s Mark Cudmore describes how NIRP has totally fired the Japanese economy:

(courtesy Mark Cudmore/zero hedge)
iii) report on China
As soon as the bubble burst in the stock market last year, one can easily see where the next bubble surfaced:  housing especially in Tier one cities like Shenzen, Beijing and Shanghai.
With average earnings oof around $1,200 / month how on earth can citizens pay exorbitant prices for homes .  (see stories below).  The answer of course is  the funding of the down payment with Peer to Peer loaning from the shadow banking sector
(courtesy zero hedge)

Catalonia is blackmailing Spain to pay its overdue bank loans. If Spain does no pay then Catalonia defaults sending their entire country into disarray

(courtesy zero hedge)




The deal ,announced today between the EU and Turkey, does not a chance of working.  But Erdogan certainly receives 3 billion and quite possibly 6 billion euros

( zero hedge)




i)Caterpillar, a terrific stock to measure what is going on in the global economy is signalling an industrial depression yet it’s stock has risen by 30% from its lows. In yesterday’s reporting of earnings, they stated that the bottom has now fallen out and they are in a freefall!

( zero hedge)

ii)And the following is causing major headaches for our central bankers.  As many nations are now in NIRP and the rest at ZIRP or close to it as well as undergoing massive QE, they are finding their currencies rising instead of falling and thus defeating the purpose of stimulating their economies.

( zero hedge)

OH OH! Rousseff is defiant as an impeachment vote is set for April

(courtesy zero hedge

i)WTI PLUNGES! OPEC has reached its production limits and Iran continues to increase.
( zero hedge)
ii)This is interesting:  crude extends it’s losses due to an INCREASE in oil rig counts.  This is the first increase in 3 months

( zero hedge)
iii)This is very important news, the contango on oil is collapsing;  the higher price of oil has seen many producers hedge their oil because they do not believe that the price will remain lofty in 2017.  This has caused the contango to collapse.  Contango means higher future prices than spot, so if contango is falling it means the spot is rising against a falling future price.  Contango in oil is essential for storage.  A lower contango will force oil out of storage and flood the market!

(courtesy zero hedge)
i)Silver overnight rose to above $16.00, as the gold/silver ratio tumbled the most in 5 months down to 78 from 81.  The gold/silver ratio has only been higher than 80 on 3 occasions and all 3 of those occasions were periods of extreme turmoil
ii) An outstanding commentary from Alasdair Macleod as he equates the debt bubble today to the Mississippi bubble of 1716-1720/

a very important read..
(courtesy Alasdair Macleod)
iii)The ECB is prepared to go further into NIRP if necessary, it’s chief economist states:( Chan/London’s Telegraph/GATA)

iv)Lawrence Williams on gold exports into Switzerland.  Bars are then fabricated into kilobars heading into Mainland China( Lawrie Williams/Sharp’s Pixley)

i)The consumer is 70% of GDP and today, we see that the consumer confidence index from the University of Michigan tumbled to a 5 month low of 90 from an expected reading of 92.2.  Not only that, but the “hope’ component tumbles in total contrast to the rise in the stock market. Makes no sense!

( zero hedge/University of Michigan Consumer confidence index)
ii)Former bellwether for the luxury goods sector , sees first quarter earnings down 20% as the global economy continues to spiral southbound:( zero hedge)


 iii)The USA has two major subprime problems:

a) student loans

b) auto loans

Tonight, the auto delinquencies soar past crisis 2008.

(courtesy zero hedge)

iv) Let us end the week with this wrap up courtesy of greg Hunter

( Greg Hunter/USAWatchdog)

Let us head over to the comex:

The total gold comex open interest rose to 508,262 for a gain of 6711 contracts as the price of gold was up $35.20 in price.  Expect our bankers to undergo relentless attacks on our two precious metals. 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, only the first scenario was in order as we actually gained in actual ounces of gold standing. The front March contract month saw its OI rise by 1 contract up to 150.We had 0 notices filed upon yesterday, and as such we gained 1 contract or an additional 100 oz will stand for delivery.  After March, the active delivery month of April saw it’s OI rise by 4,152 contracts up to 252,604. This high level is scaring our crooked bankers. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was 199,049 which is very good..  The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was  good at 239,272 contracts. The comex is not in backwardation .


Today we had 0 notice filed for 100 oz in gold.
And now for the wild silver comex results. Silver OI rose by 8985 contracts from 168,505 up to 177,490 as the price of silver was up by 81 cents with yesterday’s trading. The next big active contract month is March and here the OI fell by 40 contracts down to 675 contracts. We had 4 notices served upon yesterday, so we lost 36 contracts or an additional 180,000 ounces will not stand for delivery. The next contract month after March is April and here the OI rose by 5 contracts up to 368.  The next active contract month is May and here the OI rose by 7571 contracts up to 123,500. This level is exceedingly high. The volume on the comex today (just comex) came in at 44,837 , which is very good. The confirmed volume yesterday (comex + globex) was humongous at 86,776. Silver is now not in backwardation at the comex.   In London it is in backwardation for several months.
We had 242 notices filed for 20,000 oz.

March contract month:

INITIAL standings for MARCH

March 18/2016

Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil 1,662.47 OZ


includes 30 kilobars

Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz  64,300.000 OZ


No of oz served (contracts) today 0 contract
(nil oz)
No of oz to be served (notices) 150 contracts(15,000  oz)
Total monthly oz gold served (contracts) so far this month  585 contracts (58,500 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 128,670.4 oz
Today, we had 0 dealer transactions
total dealer deposit:  nil oz
we had no dealer withdrawals
total dealer withdrawals: nil oz.
We had 2 customer withdrawals:
i) Out of Brinks:  697.97 oz
ii) Out of Scotia:  964.500 oz (30 kilobars)
total customer withdrawal:1662.47  oz
we had 1 customer deposit:
i) we had another of our famous kilobar deposits:
Into Scotia: 64,300.000 oz  (2000 kilobars)
total customer deposit: 64,300.00 oz

we had 1 adjustment:

out of Brinks:

201.65 oz was adjusted out of the dealer and this landed into the customer account.



Today, 0 notices was issued from JPMorgan dealer account and 0 notice were issued from their client or customer account. The total of all issuance by all participants equates to 0 contracts of which 0 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 (585) x 100 oz  or 58,500 oz , to which we  add the difference between the open interest for the front month of March (150 contracts) minus the number of notices served upon today (0) 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 (585) x 100 oz  or ounces + {OI for the front month (150) minus the number of  notices served upon today (0) x 100 oz which equals 73,400 oz standing in this non  active delivery month of March (2.286 tonnes).  This is an excellent showing for gold deliveries in this non active month of March.
we gained 14 contracts or  1400 additional gold ounces will stand for March delivery.
We thus have 2.286 tonnes of gold standing and 10.449 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 2.286 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) = 9.2926 tonnes standing against 10.493 tonnes available.  .
Total dealer inventor 335,558.349 oz or 10.439 tonnes
Total gold inventory (dealer and customer) =6,856,956.319 or 213.28 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 213.28 tonnes for a loss of 90 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 18/2016:

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 54,476.47 oz (Scotia,Brinks,


Deposits to the Dealer Inventory 581,753.79 oz


Deposits to the Customer Inventory 18,212.48 oz


No of oz served today (contracts) 242 contracts 1210,000 oz
No of oz to be served (notices) 433  contract (2,165,000 oz)
Total monthly oz silver served (contracts) 971 contracts (4,855,000 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 10,150,743.6 oz

today we had 1 deposits into the dealer account

i) into CNT: 581,753.79 oz

total dealer deposit: 581,753.79 oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil


we had 1 customer deposits


i) Into CNT:  18,212.48 oz

total customer deposits: 18,212.48  oz


We had 3 customer withdrawal:

i) Out of Scotia: 50,421.87 oz

ii) Out of Delaware: 2038.700 oz

iii) Out of Brinks; 2015.85 oz


total customer withdrawals:  54,476.420 oz



 we had 1 adjustment

i) Out of CNT:  617,589.34 oz was adjusted out of the customer account and this landed into the dealer account of CNT


The total number of notices filed today for the March contract month is represented by 242 contracts for 1210,000 oz. To calculate the number of silver ounces that will stand for delivery in March., we take the total number of notices filed for the month so far at (971) x 5,000 oz  = 4,855,000 oz to which we add the difference between the open interest for the front month of March (675) and the number of notices served upon today (242) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the March. contract month:  971 (notices served so far)x 5000 oz +(675{ OI for front month of March ) -number of notices served upon today (242)x 5000 oz  equals  7,020,000 oz of silver standing for the March contract month.
we lost 36 contracts or an additional 180,000 oz  that will not stand.
No doubt this was cash settled as they are running out of real silver.
Total dealer silver:  31.691 million
Total number of dealer and customer silver:   155.074 million oz
It sure looks like we are going to have a commercial failure in silver.
At 3:30 pm we receive the COT report which shows position levels for our major players.
Let us head over to the gold COT:
Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
247,659 78,147 77,007 118,610 304,141 443,276 459,295
Change from Prior Reporting Period
-5,236 62 805 2,117 -7,724 -2,314 -6,857
175 103 92 49 59 268 216
  Small Speculators      
  Long Short Open Interest    
  49,810 33,791 493,086    
  -3,710 833 -6,024    
  non reportable positions Change from the previous reporting period  
COT Gold Report – Positions as of Tuesday, March 15, 2016
Our large speculators:
Those large specs that have been long in gold pitched 5236 contracts from their long side.
Those large specs that have been short in gold added a tiny 62 contracts
Our Commercials:
Those commercials that have been long in gold added 2117 contracts to their long side
Those commercials that have been short in gold  COVERED 7724  contracts from their short side.  (WOW!!!)
Our small specs;
Those small specs that have been long in gold pitched 3710 contracts from their long side
Those small specs that have been short in gold added 833 contracts to their short side.
The data is from last Tuesday March 8 to this past Tuesday March 15.  It does not include the huge gain in gold on Wednesday.
what more can I say.  Did the commercials get scared away by covering some of the shorts.  Did they know what the Fed would do on Wednesday? The commercials went net long by 9841 contracts.
And now for our silver COT
Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
76,606 18,533 19,118 46,447 116,471
-3,273 -1,462 591 -987 -1,778
91 52 44 35 43
Small Speculators Open Interest Total
Long Short 166,180 Long Short
24,009 12,058 142,171 154,122
-26 -1,046 -3,695 -3,669 -2,649
non reportable positions Positions as of: 144 126
  Tuesday, March 15, 2016   ©
Our large specs:
Those large specs that have been long in silver pitched 3273 contracts from their long side
Those large specs that have been short in silver covered 1462 contracts from their short side.
Our Commercials;
Those commercials that have been long in silver pitched 987 contracts from their long side
Those commercials that have been short in silver covered 1778 contracts from their short side exactly like our gold commercials
Our small specs:
Those small specs that have been long in silver added a tiny 37 contracts to their long side
Those small specs that have been short in silver covered 1080 contracts from their short side.
Conclusions: Commercials go net long by 808 contracts.
Are they scared about something?
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 17/we had a whopper of a deposit tonight: 11.89 tonnes/with London in backwardation this is nothing but a paper addition/inventory rests tonight at 807.09 tonnes

March 16.2016:/we had a deposit of 2.09 + 2.97(last in the evening)  tonnes of gold into the GLD/Inventory rests at 795.20 tonnes

March 15/ no changes in gold inventory at the GLD/Inventory rests at 790.14 tonnes

March 14/a huge change in gold inventory at the GLD, a withdrawal of 8.63 tonnes/Inventory rests at 790.14 tonnes

March 11 /despite the high volatility of gold last night and today, somehow the GLD added 5.95 tonnes of gold without disturbing anyone./inventory rests this weekend at 798.77 tonnes

March 10/a deposit of 2.08 tonnes of gold into the GLD/Inventory rests at 702.82 tonnes

March 9/a withdrawal of 2.38 tonnes of gold from the GLD/Inventory rests at 790.74


March 18.2016:  inventory rests at 818.98 tonnes




Now the SLV
March 17/no changes in silver inventory at the SLV/Inventory rests at 325.868 million oz
March 16./no changes in silver inventory at the SLV/Inventory rests at 325.868 million oz
March 15/ no changes in silver inventory at the SLV/Inventory rests at 325.868 million oz/
March 14/we had another huge deposit of 1.903 million oz into the SLV/Inventory rests at 325.868 million oz.
March 11/another huge addition of 1.333 million oz of inventory entered the SLV/Inventory rests at 323.965 million oz
March 10/no change in inventory at the SLV/Inventory rests at 322.632 million oz
March 9/no change in inventory at the SLV/Inventory rests at 322.632 million oz/
March 18.2016: Inventory 328.533 million oz
1. Central Fund of Canada: traded at Negative 7.7 percent to NAV usa funds and Negative 6.5% to NAV for Cdn funds!!!!
Percentage of fund in gold 63.4%
Percentage of fund in silver:36.6%
cash .0%( Mar 18.2016).
2. Sprott silver fund (PSLV): Premium to NAV falls to  3.94%!!!! NAV (Mar 18.2016) 
3. Sprott gold fund (PHYS): premium to NAV rises  to -0.04% to NAV Mar 18.2016)
Note: Sprott silver trust back  into positive territory at +3.94%/Sprott physical gold trust is back into negative territory at -0.04%/Central fund of Canada’s is still in jail.

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

Trading in gold and silver overnight in Asia and Europe

By Mark O’Byrne


Silver Soars 4%, Gold Consolidates On Dovish Fed

Silver rose 2% yesterday and has surged 4% this week to over $16 per ounce as the Federal Reserve flip flopped regarding interest rates and lowered its expectations for rate rises this year from four back to two or just one rate rise due to “global risks.”

Silver in USD (1 Year)

Gold is flat for the week but has consolidated on the 19% gains year to date and looks well supported especially given the real risk of renewed global and economic financial turmoil. The factors which led to this turmoil remain intact and continue to bubble under the surface, largely unnoticed as similar factors did prior to the financial crisis in 2007/2008.

Increasing questions about the policies of, the credibility of and indeed the wisdom of major central banks such as the BOJ, ECB and the Federal Reserve is supportive of the precious metals.

The Fed signals and ECB actions were even more dovish than expected and confirmed, if any confirmation was necessary, that ultra loose monetary policies are here to stay and may actually deepen.

Gold and silver are benefitting from this as ZIRP and NIRP (negative interest rates) are of course positive for non negative yielding gold and silver.

Silver at $16 per ounce remains 1/78 of the price of gold at $1,250 per ounce showing what good value silver is relative to even depressed gold prices.

Silver remains less than a third of its nominal price high at over $49 per ounce in 1980 and again in 2011. Unlike, most other commodities and indeed assets which are multiples of their nominal price highs in the 1970s and 1980 due to the very significant inflation of the last 36 years.

GoldCore continue to believe that silver will surpass its non-inflation adjusted, nominal high at just below $50 per ounce in the coming years. Indeed, we believe that silver will surpass its inflation adjusted high or real record high of over $150 per ounce in the next 5 to 7 years as depressed silver plays catch up and reverts to the mean versus stocks, property and other assets.

Gold Prices (LBMA)

18 Mar: USD 1,254.50, EUR 1,112.93 and GBP 868.78 per ounce
17 Mar: USD 1,269.60, EUR 1,119.40 and GBP 883.17 per ounce
16 Mar: USD 1,233.10, EUR 1,111.79 and GBP 874.09 per ounce
15 Mar: USD 1,233.60, EUR 1,112.56 and GBP 870.71 per ounce
14 Mar: USD 1,256.55, EUR 1,130.24 and GBP 875.89 per ounce

Silver Prices (LBMA)

18 Mar: USD 15.94, EUR 14.13 and GBP 11.02 per ounce
17 Mar: USD 15.78, EUR 13.86 and GBP 10.93 per ounce
16 Mar: USD 15.29, EUR 13.78 and GBP 10.84 per ounce
15 Mar: USD 15.32, EUR 13.81 and GBP 10.82 per ounce
14 Mar: USD 15.60, EUR 14.04 and GBP 10.87 per ounce

Gold News and Commentary

Gold set for weekly gain of 1% as Fed stance keeps dollar under pressure (RTRS)
Gold firms, dollar under pressure as Fed shifts stance (RTRS)
Yellen Reignites Commodities Rebound From Gold to Copper (BBG)
Oil hits 2016 high above $42 on production and demand outlook (RTRS)
R.I.P. Dollar Rally as Dovish Fed Spurs Worst Slump Since 2011 (BBG)

Silver Soars Post-Fed As Gold Ratio Tumbles Most In 5 Months (ZH)
Unless market volatility surges gold will remain ‘well supported’ (BI UK)
Global Currencies Soar, Defying Central Bankers (WSJ)
Dow’s Freakish Bounce Makes Investors Whole, Can’t Erase Doubts (BBG)
“We Have Gone Far From” Sound Currency – Greenspan (BBG Video)

Read More Here


We are now delivering legal tender silver coins, VAT free, throughout the EU. Meaning US clients can take delivery of silver bullion coins anywhere in the EU and not pay VAT or sales tax. Silver coins and bars can also be owned tax free with GoldCore in vaults in Zurich, Singapore and Hong Kong.

2016 Silver Nuggets or Kangaroos (1 oz)

Silver bullion coins – like Silver Nuggets (Kangaroos), Eagles, Maples, Philharmonics and Britannias are great forms of insurance against currency debasement and financial collapse. They also make very nice gifts for loved ones and are a great way to pass on wealth to the next generation.

We have very competitive prices – some of the most competitive in the industry. We do not report client buy or sell transactions. Secure your allocation of silver bullion coins by contacting us today.

Mark O’Byrne
Silver overnight rose to above $16.00, as the gold/silver ratio tumbled the most in 5 months down to 78 from 81.  The gold/silver ratio has only been higher than 80 on 3 occasions and all 3 of those occasions were periods of extreme turmoil
( zero hedge)

Silver Soars Post-Fed As Gold Ratio Tumbles Most In 5 Months

Two weeks ago we hinted at the flashing red warning coming from ‘a 4,000 year old’ financial indicator. The Gold/Silver ratio had reached extremely high levels, which at the time we explained…

This isn’t normal.

In modern history, the gold/silver ratio has only been this high three other times, all periods of extreme turmoil—the 2008 crisis, Gulf War, and World War II.

This suggests that something is seriously wrong. Or at least that people perceive something is seriously wrong.

And as we concluded at the time…

Good times never last forever, especially with governments and central banks engineering artificial prosperity by going into debt and printing money.

These tactics destroy a financial system. And the cracks are visibly expanding.

So while the gold/silver ratio isn’t any kind of smoking gun, it is an obvious symptom alongside many, many others.

Now, the ratio may certainly go even higher in the event of a major banking or financial crisis. We may see it touch 100 again.

But it is reasonable to expect that someday the gold/silver ratio will eventually fall to more ‘normal’ levels.

In other words, today you can trade 1 ounce of gold for 80 ounces of silver.

But perhaps, say, over the next two years the gold/silver ratio returns to a more historic norm of 55. (Remember, it was as low as 30 in 2011)

This means that in the future you’ll be able to trade the 80 ounces of silver you acquired today for 1.45 ounces of gold.

The final result is that, in gold terms, you earn a 45% “profit”. Essentially you end up with 45% more gold than you started with today.

So bottom line, if you’re a speculator in precious metals, now may be a good time to consider trading in some gold for silver.

And, that appears to have happened…

As Silver has soared post-Fed…

Crushing the Gold/Silver ratio back to one-month lows (withthe biggest 2-day drop since October 5th 2015)…

But do not forget – even at 79x – this is an extreme level of fear – nothing has been ‘fixed’ as governments escalate their repression of financial freedom.

An outstanding commentary from Alasdair Macleod as he equates the debt bubble today to the Missisippi bubble of 1716-1720/
a very important read..
(courtesy Alasdair Macleod)

Alasdair Macleod: The European Central Bank and John Law

Submitted by cpowell on Fri, 2016-03-18 01:33. Section: 

By Alasdair Macleod
GoldMoney, St. Helier, Jersey, Channel Islands
Thursday, March 17, 2016

Last week the European Central Bank extended its monetary madness, pushing deposit rates further into negative figures.

It is extending quantitative easing from sovereign debt into non-financial investment grade bonds, while increasing the pace of acquisition to E80 billion per month. The ECB also promised to pay the banks to take credit from it in “targeted longer-term refinancing operations.”

Any Frenchman with a knowledge of his country’s history should hear alarm bells ringing. The ECB is running the Eurozone’s money and assets in a similar fashion to that of John Law’s Banque Generale Privee (renamed Banque Royale in 1719), which ran those of France in 1716-20. The scheme at its heart was simple: Use the money-issuing monopoly granted to the bank by the state to drive up the value of the Mississippi Company’s shares using paper money created for the purpose. The Duc d’Orleans, regent of France for the young Louis XV, agreed to the scheme because it would provide the Bourbons with much-needed funds.

This is pretty much what the ECB is doing today, except on a far larger eurozone-wide basis. The need for government funds is of primary importance today, as it was then. …

… For the remainder of the report:



The ECB is prepared to go further into NIRP if necessary, it’s chief economist states:

(courtesy Chan/London’s Telegraph/GATA)


ECB’s bazooka has not run out of ammunition, chief economist says

Submitted by cpowell on Fri, 2016-03-18 15:23. Section: 

By Szu Ping Chan
The Telegraph, London
Friday, March 18, 2016

The European Central Bank is prepared to slash interest rates deeper into negative territory if the economic outlook deteriorates, according to its chief economist.

The economist, Peter Praet, insisted that the central bank had not run out of ammunition as he left the door open to pumping cash directly into the real economy through so-called “helicopter drops.”

“If new negative shocks should worsen the outlook, or if financing conditions should not adjust in the direction and to the extent that is necessary to boost the economy and inflation, a rate reduction remains in our armory,” he told Italian newspaper La Repubblica.

“We have not reached the physical lower bound” on rates.

Underscoring the ECB’s determination to drive inflation back up to its target of just below 2 percent, Mr. Praet did not rule out printing money and giving it away to households. …

… For the remainder of the report:…



Lawrence Williams on gold exports into Switzerland.  Bars are then fabricated into kilobars heading into Mainland China


(courtesy Lawrie Williams/Sharp’s Pixley)

Switzerland January gold exports:  Mainland China much higher than Hong Kong

The latest announcement on Swiss gold exports – for January – showed that for that month the small European nation, which provides a significant percentage of Asian physical gold demand from its refineries, exported far more gold to Mainland China than to Hong Kong.  42.1 tonnes as compared with 21.5 tonnes.  A chart from Nick Laird’ site detailing the latest gold export figures is shown below.


So why is this significant?  For many years the vast majority of gold flowing to mainland China was imported first into Hong Kong and then to the mainland.  So much so that Hong Kong gold exports into the Chinese mainland were taken by much of the world’s media and analytical consultancies as being a proxy for total Chinese gold imports.  For the past few years, though, things have changed substantially with much more gold being imported directly, bypassing Hong Kong altogether.  Yet still media headlines trumpet falls and rises in the Hong Kong to China export figures as though these are still a proxy for total mainland China gold imports.  As the latest Swiss export figures show, this is most definitely no longer the case.

Hong Kong still remains an important conduit for gold imports to the Chinese mainland but its significance seems to be diminishing year on year which readers should bear in mind the next time a headline blares a fall in Hong Kong exports to China with the implication that this means that Chinese demand is falling accordingly.

Another interesting point from these Swiss figures is that over 90% of Swiss gold exports are flowing to Middle Eastern and Asian nations.  Switzerland’s own gold imports come in primarily from the UK – still the world’s major gold centre.  It flows via Switzerland for London good delivery gold bars to be re-refined and recast by the dominant Swiss gold refiners into the smaller bars and wafers which are mostly traded in the Middle East and Asia.

In January, Switzerland imported 166.9 tonnes of physical gold of which that from the UK totalled 61 tonnes – or 36.5%.  Interestingly the second largest source of gold flowing into Switzerland was from  Venezuela at 35.7 tonnes, thus confirming earlier reports that Venezuela, having only recently repatriated its gold to hold it within the nation, was now shipping significant quantities to Switzerland.  This is thought to be being used to mitigate its precarious debt position in a series of gold swap agreements via The Bank for International Settlements.

Your early FRIDAY 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 UP to 6.4731 / Shanghai bourse  IN THE GREEN, UP 50.31 OR 1.73% :  / HANG SANG CLOSED UP 167/82 POINTS OR 0.82%

2 Nikkei closed DOWN 211.57  OR 1.25%

3. Europe stocks ALL in the GREEN /USA dollar index UP to 95.01/Euro DOWN to 1.1278

3b Japan 10 year bond yield: FALLS BADLY  TO -.107%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 111.44

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  40.82  and Brent: 42.09

3f Gold DOWN  /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 0.230%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate FALL to 9.06%/: 

3j Greek 10 year bond yield FALL to  : 8.76%   (YIELD CURVE NOW INVERTED)

3k Gold at $1250.50/silver $15.97 (7:15 am est) 

3l USA vs Russian rouble; (Russian rouble UP 40/100 in  roubles/dollar) 67.72

3m oil into the 40 dollar handle for WTI and 42 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 .9676 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0914 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  + .231%

/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 1.88% early this morning. Thirty year rate  at 2.66% /POLICY ERROR)

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

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

On Opex Day, It’s All About The Dollar: Futures, Oil Levitate As USD Weakness Persists

It may be option expiration day (always leading to abnormal market activity) but it remains all about the weak dollar, which after crashing in the two days after the Fed’s surprisingly dovish statement has put both the ECB and the BOJ in the very awkward position that shortly after both banks have drastically eased, the Euro and the Yen are now trading stronger relative to the dollar versus prior.

As DB puts it, “the US Dollar has tumbled in a fairly impressive fashion since the FOMC on Wednesday with the Dollar spot index now down the most over a two-day period since 2009” which naturally hurts those countries who have been rushing to debase their own currencies against the USD.

For now this is felt most acutely in Japan, where the Nikkei continues to tumble, tracking every move in the USDJPY. “There’s concern for exporters,” said Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. “If the yen’s trading around 114 to the dollar, then companies will expect profits next fiscal year, but when it’s 110, most exporters will post losses.” Worse, after last night’s record plunge in the 10Y JGB yield (more shortly), the Japanese curve is now inverted and the BOJ will have to cut rates at least once more in the immediate future, in the process also forcing additional Yen weakness.

Europe will soon realize the same, because as Bloomberg writes, ECB bond buying backstop or no, following a 12% rebound since a low last month, the Stoxx Europe 600 Index is trading near its highest valuation of the year even as analysts keep slashing profit estimates for European companies. which is odd considering the same is taking place in the US and the strong dollar is blamed.

The flipside, of course, is that the weak dollar has provided a relief trade for commodities, and has pushed crude back up over $40/barrell (a price above which US shale production will soon return), and sending commodity metals to multi month highs. The combination of the weak dollar and higher commodities have pushed up the beaten down energy sector, although it remains to be seen if this will translate into actual earnings gains. The Fed “has provided a strong boost for commodities,” said Niv Dagan, executive director at Peak Asset Management LLC in Melbourne. “The fact that U.S. interest rates won’t rise any time soon – and we’ve seen the ECB announce additional stimulus and the Bank of Japan moving to negative interest rates – does provide that additional confidence to the market.”

The MSCI Asia Pacific excluding Japan Index is back to where it was in December, having rebounded 15 percent since hitting a four-year low in January. U.S. crude retreated, after soaring 11 percent in the last two days, and copper traded near a four-month high. South Korea’s won posted its biggest two-day gain since 2010 versus the dollar and the yen traded near a 16-month high. Ten-year bond yields sank to all-time lows in Japan and Taiwan.

In short, for now the “central bank accord” profiled yesterday is working, to give the impression that inflation is returning when really all the CBs have done is agree to weaken the dollar for the time being so as to not offset each other’s currency devaluation efforst.

Elsewhere, Chinese stocks jumped another 1.7%, bringing its weekly gain to 5.2% and closing just shy of 3,000 after data showed the Chinese housing bubble is accelerating, with prices increasing in the most cities since March 2014.

Market Wrap

  • S&P 500 futures up 0.2% to 2035
  • Stoxx 600 up 0.2% to 341
  • FTSE 100 up 0.3% to 6221
  • DAX up 0.3% to 9917
  • German 10Yr yield down 3bps to 0.21%
  • Italian 10Yr yield down 3bps to 1.24%
  • Spanish 10Yr yield down 2bps to 1.41%
  • S&P GSCI Index down 0.3% to 336.8
  • MSCI Asia Pacific up 0.1% to 129
  • Nikkei 225 down 1.2% to 16725
  • Hang Seng up 0.8% to 20672
  • Shanghai Composite up 1.7% to 2955
  • S&P/ASX 200 up 0.3% to 5183
  • US 10-yr yield down 3bps to 1.87%
  • Dollar Index up 0.28% to 95.03
  • WTI Crude futures down 0.2% to $40.11
  • Brent Futures down 0.5% to $41.34
  • Gold spot down 0.2% to $1,255
  • Silver spot up 0.7% to $16.02

Top Global News

  • TransCanada Locks in Growth With $10.2 Billion Pipeline Deal: Will pay $25.50 a share, representing a 10.9% premium to Columbia’s closing price on March 16, will also assume ~$2.8b of debt; will fund the purchase with proceeds from asset sales and a C$4.2b offering of new shares; is its biggest-ever deal
  • TransCanada Bought a Power Plant Only to Sell It Six Weeks Later
  • Adobe Beats Estimates as Demand Surges for Cloud Services: 1Q adj. EPS 66c, est. 61c; 1Q rev. $1.38b, est. $1.34b.
  • Pearson Moves to Reassure Staff That Valeant Isn’t Going Broke: CEO Mike Pearson took a step to reassure his employees on Wed., saying in a memo to workers that the co. won’t go bankrupt, apologizing for recent turmoil, shrs down 51% Tues.
  • Ackman’s Horror Week Gets Worse as Valeant Fall Threatens Rating: Standard & Poor’s warned it might cut Pershing Square’s credit rating to the cusp of junk-bond status
  • Apple Prepares to Unveil Smaller IPhone With Narrower Ambitions: Analysts see Apple selling 15 million lower-end devices a year
  • Apple Embraced by Bond Buyers While Others Left Out in the Cold
  • JPMorgan Boosts Buyback by $1.88 Billion With Fed’s Blessing: Would be on top of the $6.4b in buybacks approved by regulators in last year’s capital plan
  • CFTC Brought in to Police Murky Market for Biofuel Credits: Refiners spent at least $1b on ethanol credits in 2015
  • Fed That Can’t Go It Alone Pulls Carpet From Under Bond Yields: Treasury 10-year yields see biggest weekly drop since Jan. 29; shallower rate path consistent with global backdrop: Barclays
  • Dow’s Freakish Bounce Makes Investors Whole, Can’t Erase Doubts: Crude rally, patient Fed boost benchmark by 12% since Feb. 11
  • Lockheed’s GPS Satellites Face New Delays Over a Cracked Part: Flawed capacitors from Harris Corp. may add 3 months to delays
  • Viacom Gets Interest From 3 Dozen Cos. on Paramount Stake: WSJ: Players “include some Asian interests,” WSJ cites CEO Philippe Dauman in an interview.
  • Facebook, Twitter in Race to Win Right to Stream Live TV: NYP: Facebook, Twitter approached programmers about a deal for rights to stream conventional TV programming: New York Post
  • Orix Said to Plan $1b on Acquisitions Via U.S. PE Firm: Reuters: Plans to spend $1b over 3-5 yrs on acquisitions via a private equity firm it has set up in the U.S., Reuters reports
  • Twitter to Shut TweetDeck for Windows on April 15: VentureBeat

Looking at regional markets, we as usual start in Asia where stocks traded mostly higher following a strong US lead where DJIA and S&P 500 closed in positive territory YTD after continued USD weakness boosted the commodity complex.

ASX 200 (+0.3%) coat-tailed on the commodity advance in which iron ore gained around 5% and WTI rose above USD 40/bbl to its highest since Dec. Nikkei 225 (-1.25%) underperformed after JPY continued to strengthen against USD to the detriment of local exporter competitiveness.

The Shanghai Composite Index advanced 1.7 percent and was up 5.2 percent
for the week, its best performance in four months. New-home prices
gained in 47 Chinese cities in February, compared with 38 in January,
according to a government report; also helping was the PBoC which upped its liquidity injections as not a day passes any more with some central bank engaging in drastic asset price reflating easing.

Hong Kong’s Hang Seng Index
rose to a two-month high. Tencent Holdings Ltd. jumped as much as 4.5
percent as investment in social networking and games helped Asia’s
biggest Internet company post a better-than-expected 45 percent jump in
quarterly sales.

10yr JGBs traded higher amid the risk-averse sentiment seen in Japanese stocks, with firm bids seen in afternoon trade after strong results from the BoJ’s JPY 1.26tr1 JGB purchasing operations which saw 10yr and 20yr yields decline to new record lows, while the BoJ were also said to purchase government debt under repo agreements for the 1st time in 5 years.

BoJ minutes from January 28th-29th policy meeting stated that negative rates were desirable to reach price goal and that underlying inflation trend is steadily progressing. BoJ minutes also stated that negative rates are to permit additional easing in 3 dimensions and that BoJ offered 2 options which were to expand QQE or adopt QQE with negative rates.

Asian Top News

  • Yuan Strengthens After PBOC Raises Fixing by Most Since November: Dollar declines to 5-mo. low following Fed comments
  • China Overseas Land Profit Advances 22% as Property Values Rise: Profit attributable to shareholders rose to HK$33.3b ($4.3b) last year, from HK$27.2b in 2014
  • Emerging-Market Stocks Near Bull Market After Fed Turns Dovish: Rally will probably last for next 3 mos., CBA’s Ji says
  • BOJ Minutes Show No Talk of More QQE Before Adopting Minus Rate: BOJ voted 5-4 on rate, one opponent of policy is leaving board
  • Default Jitters Calm for Indian Lenders on $12 Billion Boost: RBI allowed banks to treat some balance sheet items as equity
  • Leissner’s Work With Indonesia Financier Drew Goldman Scrutiny: Bank ended work on Newmont copper deal after in- house review
  • Indonesia Group Seeks $1 Billion for Newmont Copper Asset: Financing would include $750m loan, rest in mezzanine

In Europe, equities have kicked off the final session of the week in a tentative fashion, with major indices relatively flat amid light news flow . In terms of a sector breakdown, energy names are once again among the underperformers, with the commodity complex coming under modest pressure as WTI futures reside around the USD 40/bbl level. Bunds have continued their move higher this morning, on track to end the week over a point higher, with today’s price action bolstered by dovish rhetoric from ECB’s Praet and Draghi.

European Top News

  • UBS Bonus Pool Surges 14%, as Other Lenders Cut Compensation: Bonus pool swelled to CHF3.5b from CHF3.06b; CEO Ermotti received bonus of 11.5 million francs, up 37%
  • Praet Says ECB Rates Can Still Fall If Shocks Worsen Outlook: Central bank’s chief economist says recovery remains fragile
  • Generali Fourth-Quarter Profit Rises on Higher Operating Income: Net income rose to EU304m from EU81m million yr earlier
  • Former Porsche Executives Acquitted in Stuttgart Trial: Former Porsche CEO Wendelin Wiedeking and ex-CFO Holger Haerter were acquitted of charges they manipulated shares of Volkswagen in 2008 in a failed bid to buy the carmaker
  • Sunrise Gains After Germany’s Freenet Takes Stake in Carrier: Gained as much as 9.8% after Freenet agreed to buy a 23.8% stake
  • EDF Said to Plan Approval of Hinkley Point Nuclear Plant by May: Still plans to make the final decision to go ahead with an GBP18b nuclear power plant in the U.K. before its AGM in May
  • trategists Now See Virtually No Europe Stock Gains in 2016: Newest forecasts see weakest year since 2011 for region

In FX, it has so far been a very quiet session in Europe this morning, but with some notable volatility — against the USD — a welcome period of consolidation playing through across the board. The USD index has attempted a modest recovery of sorts, regaining some ground against GBP, where Cable has dipped back into the low 1.4400’s after the rejection of 1.4500. EUR/USD has drifted down into the mid 1.1200’s, but the commodity currencies have conceded lesser ground as risk sentiment has stabilised again.

In this respect, we have seen some basing out in spot and cross JPY rates also, but USD/JPY especially, is looking fragile above 111.00, though a move back to 112.00 would settle nerves . Little on the data slate until North American comes in; Michigan sentiment in the US and CPI in Canada are stand out, while Fed speakers Dudley, Rosengren and Bullard all make an appearance later today. NOK towards the better levels seen in the wake of the rate cut yesterday, but CHF trade very tight after the SNB provided the familiar rhetoric.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, gained 0.2 percent following a two-day slide of more than 2 percent that drove it to an eight-month low. The Fed cited weaker global growth and turmoil in financial markets for its decision to reduce the number of interest-rate increases forecast for 2016.

In commodities, WTI prices have started to consolidated around the USD 40/bbl after reaching highs of USD 40.55/bbl, and Brent has also slightly fallen of its recent highs and currently resides at USD 41.17/bbl. In addition to the dollar’s decline, crude was supported this week by data showing U.S. output fell to the lowest level since November 2014 as well as a planned freeze on production by countries including Saudi Arabia and Russia.

Gold prices have started to retrace after recent strengthening following the FOMC with the 1250.00/oz level firmly in its sights. Copper prices have erased recent gains after a recent rally over the last week and Iron Ore prices increase slightly on the session after continued improvement in the Chinese property sector. The Bloomberg Commodity Index held near a three-month high.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities have started the session off on a tentative footing with newsflow and data very much on the quiet side after what has been another busy week in the market
  • The USD index has attempted a modest recovery of sorts, regaining some ground against GBP, where Cable has dipped back into the low 1.4400’s after the rejection of 1.4500
  • Looking ahead, highlight Include Canadian CPI, US U. of Mich. Sentiment, Fed’s Dudley, Bullard and Rosengren
  • Treasuries higher in overnight trading, global equity markets mixed and oil drops; today’s economic calendar brings U. of Michigan Sentiment and three Fed speakers.
  • Policy makers across the world are acting in ways that suggest there may have been more to last month’s Group of 20 meeting in Shanghai than mere platitudes about promoting global economic growth. That’s led some analysts to conclude that there is indeed a secret Shanghai Accord
  • European Union leaders risked a showdown with Turkey over efforts to create a legal migration route to end the chaotic crossings of the Aegean Sea, as pressure from countries including Cyprus led the EU to retreat from earlier sweeteners
  • UBS, which cut its securities unit to focus on wealth management, raised its bonus pool by 14% in 2015, to 3.5 billion francs ($3.6 billion) from 3.06 billion francs, leaving it the only major European lender to award bankers with higher compensation
  • The ECB still has room to cut interest rates should the euro area’s economic recovery falter, Executive Board member Peter Praet said
  • Deutsche Boerse AG and London Stock Exchange Group Plc want to create a European trading champion. They just don’t want regulators to think it’s too big to fail
  • Investors at home and abroad can’t get enough 10-year Japanese government bonds, driving the yield to an unprecedented minus 0.135%
  • The yuan headed for the biggest two-day gain in a month after China’s central bank raised its reference rate by the most since November following a decline in the dollar. The PBOC boosted its fixing by 0.51% to 6.4628 against the greenback
  • $10.775b IG corporates priced yesterday; weekly volume $30.385b, March $116.805b, YTD $411.055b
  • No HY priced yesterday, MTD 13 deals for $7.315b, YTD 38 deals for $22.165b
  • BofAML Corporate Master Index OAS 2bp lower yesterday at +178, -32bp MTD, +0bp YTD; T1Y range 221/129
  • BofAML High Yield Master II OAS 12bp lower yesterday at +682, -53bp MTD, -12bp YTD; T1Y range 887/438
  • Sovereign 10Y bond yields lower; European, Asian equity markets mixed; U.S. equity- index futures rise. WTI crude oil, copper, gold fall

DB’s Jim Reid concludes the overnight wrap

Twenty-four hours on and there’s been little stopping the positive sentiment feeding its way through risk assets. With a dovish Fed to thank for that, yesterday saw the Dow (+0.90%) close in positive territory (+0.32%) for the first time in 2016. As a reminder it was down as much as -10% on the year during the February lows. The S&P 500 (+0.66%) had also joined the positive YTD club briefly but just failed to hold onto the stronger earlier gains by the end of play, while it was another strong session for US credit with CDX IG closing 2bps tighter. European equity markets were a little softer (the firmer Euro to blame) but, and playing catch-up, European credit markets were in rally mode with iTraxx Main and Crossover 6bps and 16bps tighter respectively.

Meanwhile the US Dollar has tumbled in a fairly impressive fashion since the FOMC on Wednesday with the Dollar spot index now down the most over a two-day period since 2009. It is emerging market currencies which have been the biggest beneficiaries of that, while yesterday also marked a landmark day for Oil as we saw WTI (+4.52%) close above $40/bbl for the first time in 2016. It’s now up a fairly remarkable +54% from the intraday lows of last month.

Doing little to hurt matters was further evidence of an improving US manufacturing sector yesterday. Indeed, on the back of a much better than expected improvement in the NY Fed empire manufacturing survey earlier this week, yesterday’s Philly Fed manufacturing survey showed the headline business conditions index rising an impressive 15.2pts to 12.4 (vs. -1.5 expected) and the best print since February last year. The details of the survey were encouraging also with new orders in particular a standout with the monthly increase the most since 2005, while shipments and employment also improved. All-in-all the data is certainly an encouraging sign for hopes of further improvement in this month’s ISM manufacturing reading which we’ll get two weeks today.

So in the past 8 days we’ve seen the ECB, BoJ and Fed meetings come and go and we can add the BoE, SNB and Norges Bank to that list after their respective policy meetings yesterday. Of the latter three the only change was a 25bps cut from the Norges Bank (as expected) to a record low 0.5% with plenty of signs that the Bank may be prepared to ease further later in the year. Despite only two of those six central banks actually having loosened policy, there’s no doubt that it’s been a decidedly dovish period. In the Fed’s case we’ve seen expectations for tightening scaled back, while the remainder appear to either be on hold in the near term or weighing the prospects for potential future easing later in the year. It’s worth taking a look at what the above action/lack of action has done for asset prices lately. Covering the period in the moments prior to the ECB last Thursday up to last night’s closing prices, the biggest impact has been in credit markets which is unsurprising given the news of potential corporate-bond buying from the ECB. In Europe we’ve seen Main and Crossover tighten 16bps and 53bps respectively, while US cash credit spreads have also performed very well with IG and HY 11bps and 75bps tighter respectively. Interestingly European equities are virtually unchanged with the Stoxx 600 -0.1% in that time. The S&P 500 is +2.6% however, driven by the last two days of gains. The USD index is 2.7% weaker, while the Euro (+3.0%) has failed to stick to the immediate post-ECB weakening script. Oil has rallied a robust +5.2%, Gold is +0.7% while moves in sovereign bond markets are perhaps most interesting. That’s more due to the lack of change in yields in the time period than anything substantial with 10y Treasuries just 2bps higher in yield, 10y Bund yields 1bp higher and 10y BTP yields (as a proxy for peripherals) 10bps lower. Clearly the volatility in between for all assets has to be acknowledged however.

Glancing at our screens this morning, bourses in Asia are closing the week on a high note generally and following much of the lead again from Wall Street last night. There are gains for the Hang Seng (+0.62%), Shanghai Comp (+1.88%), Kospi (+0.18%) and ASX (+0.33%), although bourses in Japan are weaker again have been weighed down by an appreciating Yen. The Nikkei is currently -1.28%. The other notable news this morning is out of China where the PBoC has strengthened the Yuan fix by the most since November (+0.51%) following those moves in the US Dollar yesterday. Elsewhere, Oil is continuing to hold those big gains, while credit markets in Australia and Asia are a couple of basis points tighter. The lone data has come out of China where property prices have continued to firm in February, gaining in 47 cities compared to 38 cities in January.

Moving on. With regards to the remainder of yesterday’s data, initial jobless claims printed at 265k for last week (vs. 268k expected) which was up a modest 7k on the prior week. There was further labour market data in the form of JOLTS job openings covering the month of January which came in slightly ahead of consensus at 5.54m (vs. 5.50m expected). Both the hiring and quits rates were reported as declining. Finally the Conference Board’s leading index was up a less than expected +0.1% mom in February (vs. +0.2% expected). Meanwhile in Europe the only data of note was the final revision to the February CPI report for the Euro area which was confirmed at -0.2% yoy at the headline, but revised up one-tenth at the core to +0.8% yoy.

Over at the BoE, as expected we saw no change in policy after a unanimous confirmation vote of 9-0. The bulk of the minutes showed little in the way of new information with domestic consumption reported as being robust and that the near term outlook for inflation was little changed since the inflation report last month. More interesting were the comments around the upcoming June Brexit referendum. The minutes made mention to there appearing to be ‘increased uncertainty surrounding the forthcoming referendum’ and that ‘uncertainty is likely to have been a significant driver of the decline in sterling’. The minutes also noted that ‘it may also delay some spending decisions and depress growth of aggregate demand in the near term’.

Looking at the day ahead now and what is a slightly lighter calendar relative to that of recent days. This morning in Europe the only data of note are the February PPI data for Germany and Q4 wage data out of France. In the US this afternoon the lone release will be the first read of this month’s University of Michigan consumer sentiment survey, where current consensus is for no change to current conditions but a modest pickup in expectations. Today will also see the first Fedspeak post FOMC so it’ll be worth keeping an eye on the individual comments from Dudley (due 1pm GMT), Rosengren (due 3pm GMT) and Bullard (due 7pm GMT).


Let us begin;



Late  THURSDAY night/ FRIDAY morning: Shanghai closed UP BY 50.31 POINTS OR 1.73% , /  Hang Sang closed UP by 167.82 points or  0.82% . The Nikkei closed DOWN 211.57 or 1.25%. Australia’s all ordinaires was UP 0.24%. Chinese yuan (ONSHORE) closed UP at 6.4731.   Oil ROSE  to 40.82 dollars per barrel for WTI and 42.09 for Brent. Stocks in Europe so far ALL IN THE GREEN . Offshore yuan trades  6.4726 yuan to the dollar vs 6.4731 for onshore yuan/ON WEDNESDAY, China’s industrial production collapsed along with retail sales. JAPAN RE SIGNALS that they may continue with nirp a little longer which sends the USA/Yen spiraling northbound/markets in Japan tumble . Japan’s exports plummet (see below).ON WEDNESDAY, China signals that they are going to tax financial transactions. This morning they AGAIN raise the yuan trapping the shorts with huge losses


report on Japan


WOW!!  Japanese yields climb to -.137% and ends up at -.107% this morning. Yields on the 30 yr Japanese bond is barely above zer0.  The yield curve inverts which means that Japan is now in a recession.

(courtesy zero hedge)

Japan Curve Inverts After 10-Year Yield Drops To New Record Negative Low

It was just last week when we observed and reported a highly amusing example of what excessive central bank meddling hath wrought in DM government bond markets.

Last Tuesday, yields on JGB 10s hit an all-time low of negative 10bps and yields on the 30Y plunged 21bps (the biggest percentage drop ever), as the post-NIRP curve crush continued unabated.

Then, overnight (literally), the entire dynamic shifted when the bid-to-cover in the BOJ’s POMO hit 3.58 from 2.93 the previous week, as sellers abounded. The rush to unload to Kuroda tripped the Osaka circuit breaker as JGB futures dropped 0.6%.

As Bloomberg’s Richard Breslow put it, “buying panic yesterday to front-run today’s QE buying led to panic selling today into BOJ bids 22 bps through Monday’s close. Oh, and did I mention, ahead of an auction tomorrow. The take-away is mayhem, not analysis.

Yes, “mayhem.” Or “sheer absurdity,” brought on by monetary policy at the Keynesian brink. But most certainly not “analysis.”

Well just a little over a week later, the very same dynamic that sent yields up 8bps and sent the 10Y sliding, happened again overnight – only in reverse. This time around, nobody wanted to sell to the BOJ as the POMO bid-to-cover was just 1.53.

So with the selling impulse the lowest on record, yields of course plunged on what BofA’s Shuichi Ohsaki called “panic buying,” with the 10Y sinking more than 8bps through the (negative) depo rate to an all-time low of -0.135%. 20Y yields also hit record lows at 29bps. 

Meanwhile, BoJ minutes showed that everyone at the NIRP meeting who agreed to go negative said rates can be cut more if necessary.

And it’s a good thing, because with the yield curve inverted and 10Y yields now below overnight rates, the market is screaming recession.

Here is Bloomberg: Mark Cudmore describing how NIRP has totally fired the Japanese economy:
(courtesy Mark Cudmore/zero hedge)

NIRP Has “Spectacularly Back-Fired”: One Trader Outlines Japan’s Grim Prospects

It’s all starting to fall apart for Japan, whose “lost decade” now appears as though it may turn into a “lost forever” and that’s if QQE doesn’t dead end in “failed state” status in 2018.

A rebound in inflation is nowhere in sight (even when Japan attempts to game the numbers by removing components where prices are declining) and as we saw last month, the “devalue our way to prosperity” idea isn’t working out so well as trade is collapsing in the face of the global currency wars. Wage growth is of course a complete joke as we’ve outlined on too many occasions to count.

The yen is sitting at its strongest levels since QE was expanded two Octobers ago and stocks are down by a fifth from last year’s highs. To borrow a phrase from 2 US senators discussing America’s train and equip program for Syrian rebels: “Let’s not kid ourselves, that’s a joke.This is just a total failure.”

And so, as Abe and Kuroda fumble blindly into the abyss, we bring you the following commentary from Bloomberg’s Mark Cudmore.

From Bloomberg

The long-term outlook for Japan, and the yen, is deteriorating significantly. The relatively rapid recent depreciation of both the dollar and the yuan is a hammer blow to a currency outlook that was already vulnerable.

  • The yen has been the third-worst performing major currency in the world this month. The trouble for Japan is that the two currencies that have fallen even more are the U.S. and Hong Kong dollars, while the yuan is the fourth worst, roughly on par with the yen
  • China and the U.S. account for roughly 40% of Japan’s exports. The two main economies that Japan has a trade surplus with are the U.S. and Hong Kong. Basically, the yen has started to weaken against every currency except the ones that really matter for Japan’s economy
  • So even though the currency is suddenly a global underperformer after world-beating gains over the previous three months, it’s not easing Japan’s plight
  • Inflation projections continue to be lowered. January’s shift to negative rates not only appears to be not helping, it seems to be spectacularly back-firing. Today, Japan Post, one of the country’s largest employers, announced they it’s refusing to raise wages specifically because of the harmful impact of negative rates
  • And now we’re again in a world of rising commodity prices with Japan being a major commodity importer. If the recent rally sustains, you can add a negative terms-of-trade shock to Japan’s difficulties
  • The dollar’s travails may disguise the yen’s weakness for now, but the recent depreciation of the yen is likely to be the start of a trend, one that is likely to continue long after the dollar plunge stops
As soon as the bubble burst in the stock market last year, one can easily see where the next bubble surfaced:  housing especially in Tier one cities like Shenzen, Beijing and Shanghai.
With average earnings oof around $1,200 / month how on earth can citizens pay exorbitant prices for homes .  (see stories below).  The answer of course is  the funding of the down payment with Peer to Peer loaning from the shadow banking sector
(courtesy zero hedge)

The Stunning Size Of China’s Housing Bubble In One Chart

Over the past month we have documented the surreal reemergence of China’s latest housing bubble (recall the first one burst in early 2014 which forced Beijing to reflate the stock market bubble, which also burst over a year later), in recent articles such as:

But nothing does China’s housing bubble justice quite like a simple chart showing what is going on right now with home prices in Shenzhen, which incidentally also puts the housing bubble in the context of China’s recently burst stock market bubble. No comment  necessary.



Catalonia is blackmailing Spain to pay its overdue bank loans.  If Spain does not pay then Catalonia defaults sending their entire country into disarray
(courtesy zero hedge)

Catalonia Said To Blackmail Spain On Overdue Bank Loans

Spanish politics is a mess.

Everyone knew, going into last fall and winter, that the waters were about to get decidedly choppy. At the national level, Podemos was ascendant as Pablo Iglesias rode a wave of anti-austerity sentiment straight to the front of disaffected voters’ collective consciousness.

A nation beset by sky high unemployment had grown tired of the PP and PSOE duopoly that had dominated Spanish politics since at least the late 80s. Between Podemos and Ciudadanos, a shakeup was virtually assured.

Meanwhile, Catalonia held what amounted to a referendum on independence in late September and then in early November, the regional parliament approved a resolution to take steps towards establishing an independent republic.

Mariano Rajoy didn’t like that idea so much. “Catalonia isn’t separating from anywhere,” he said at the time.

Four months, one national election, and a whole hell of a lot of political infighting both in Madrid and Barcelona later, and virtually nothing is resolved.

In fact, a new poll by Metroscopia published Sunday by El Pais shows that PP with 26% against 23.1% for the Socialists, 19.5% for Ciudadanos and 16.8% for Podemos. In other words: new elections wouldn’t solve anything.

Against this hopelessly fraught backdrop, Barcelona is playing a dangerous (if hilarious) game of chicken with Madrid.

Catalonia knows that, even though Mario Draghi is artificially suppressing yields on Spanish paper, and even though the memories of that fateful summer in 2012 when Spain’s borrowing costs spiked above 7% have long faded from investors’ minds, a regional default would be a catastrophe for the central government. Hold that thought.

That very same central government, Catalonia says, is dragging its feet on approving a plan between the regional administration and lenders to extend the maturity of $1.8 billion in Catalan debt.

Catalonia needs Madrid’s approval thanks to the terms of a bailout the region received in 2012. “What we want to do is extend the payment over the longer-term, for that we need the acting government’s approval,” Catalan spokesman Albert Puig tells Bloomberg, who explains that “Catalonia currently finances itself through a national liquidity fund managed by the central government [and] officials in Madrid argue that strict controls are needed to ensure that no funds are used to pay for the push for independence.”

In addition to the payment extension Catalonia wants Spain to approve, Barcelona is apparently attempting to blackmail Madrid into making some of the loan payments. Puig says this is aid money due to the region from two years ago. “Officials in the regional capital Barcelona are counting on Spain to step in and supply the funds they need to meet loan repayments coming due this year, betting the central government will be forced to back down because the costs of a default would be greater for the Spanish sovereign,” Bloomberg writes. “The region already missed payments on at least two bank loans, Regional President Carles Puigdemont said earlier this month.”

Amusingly, Puig admits that Barcelona is essentially extorting Madrid. The region is trying to convince Spain to cough up the aid money and there’s “no scenario” in which they’ll default, he says. Well, needless to say, that’s not exactly what you want to hear if you’re a bondholder, which is why yields soared on Wednesday:

According to El Mundo, S&P isn’t prepared to wait around to see who blinks first and will not hesitate to put Catalonia in selective default. Here are a few excerpts (Google translated):

The rating agency Standard & Poor’s has sent the Generalitat of Catalonia and the central government that is willing to put its debt as selective default (selective default), as confirmed by government sources.

According to the methodology of S & P, Catalonia not only deserves and continue its current rating of BB- of junk , even in high risk C. Worse, believes that should fall to the D of default , investors default for failing to meet debt maturities. Assigns the SD cited, selective default. The Valencia ran that risk in 2012, but never received formal communication agencies as has happened to the Generalitat.

How to avoid it? “It is necessary that the central government a mechanism to enable security for the loans we make to the Generalitat, the Autonomous Liquidity Fund should be a clear guarantee to investors”, explained in a financial institution creditor of the Generalitat.

The state FLA lends money to interest close to zero to the Generalitat , but does not cover all the debts of Catalonia, especially the short – term. The president of the Generalitat, Carles Puigdemont, already admitted in Parliament last day 3 which was incurring arrears to financial institutions when asked by a member of the CUP credit for BBVA 100 million.

“We have liquidity problems,” said Puigdemont, complaining that the state “hijacks unacceptable amounts of Catalan”. Moody’s also reported on June 11 that can sink further into junk bond the Generalitat and if they have not already done is for the support it receives from the state.

Right. So from what we can tell, Spain has two choices: 1) hurry it up with the approval for the maturity extension, or 2) make the payments yourself. Or who knows, maybe Catalonia is asking for both.

If Madrid chooses to do neither, Catalonia will threaten to default and that, in turn, would cause Spain’s borrowing costs to soar, a decisively unpalatable scenario amid the current political strife. “A default in Catalonia could trigger a constitutional crisis and could double Spain’s spread. For that reason, allowing a default is unthinkable, it’s a substantial negative for Spain as a whole,” Mark Dowding of London-based BlueBay Asset Management told Bloomberg.

Well if allowing a default is “unthinkable” for Madrid and if Barcelona needs cash, then effectively, Spain will be forced to fund the Catalan government as it outwardly prepares for independence, a rather humiliating situation but one which the caretaker government in Madrid is powerless to change unless Rajoy wants to watch yields on SPGBs double overnight.

Adding insult to injury, Spain is Catalonia’s biggest creditor, holding some 60% of the total.

For Rajoy, this must feel a bit like a punch in the face. And he would know…

Inline image 1




This deal does not a chance of working.  But Erdogan certainly receives 3 billion and quite possibly 6 billion euros

(courtesy zero hedge)

EU, Turkey Strike Migrant Deal; Erdogan Gets €6 Billion

Turkey and the EU came back to the negotiating table on Thursday and Friday in Brussels in the latest installment of a long-running attempt to hammer out a deal that will help stem the flow of refugees into Europe.

Germany, Sweden, Austria, and a number of other countries are quite literally breaking under the pressure and everyone involved fears things could get far worse as winter turns to spring and the Balkan route thaws.

While the ceasefire and the hope of a political settlement to Syria’s five-year-old conflict may help, there are still scores of jihadist elements operating in the country and those who are inclined to be realistic know there’s no hope of anyone wanting to go back to there anytime soon.

Of course Turkey is the key corridor through which the asylum seekers pass on their way to Greece. Europe is keen on figuring out a way to work with Ankara to ameliorate the current situation in which scores of migrants have found themselves stuck in Idomeni as they desperately try to cross the Macedonian border and make their way north.

(migrants in Idomeni at the Greek border with Macedonia: NY Times)

The conditions Turkey requires for striking a deal have changed over time, but two things have been relatively constant: 1) money, 2) accelerated EU membership.

On Friday, EU leaders agreed upon a proposal to present to Turkish PM Ahmet Davutoglu. Generally speaking, it looks a lot like a proposal that took shape earlier this month. Here’s a summary from The New York Times:

  • Sending Migrants Back to Turkey From Greece
    • All migrants who travel to Greece from Turkey using irregular means after an agreement is reached will be returned to Turkey, in what the agreement calls “a temporary and extraordinary measure, which is necessary to end the human suffering and restore public order.”
  • A One-for-One Swap of Syrians
    • For each Syrian migrant returned to Turkey, the European Union will directly resettle another Syrian from Turkey, with priority given to Syrians who have not previously entered, or tried to enter, the European Union, up to a total of 72,000.
    • If that number is reached — as it almost certainly will be — a new round of negotiations will be held.
  • Stricter Controls of Turkey’s Borders
    • Turkey will take “all necessary measures” to prevent migrants from opening new sea or land routes to the European Union from Turkey in a measure aimed at assuaging concerns in Bulgaria that migrants will stream into the country.
  • Concessions for Turkey
    • The European Union will speed up the disbursement of the €3 billion it pledged in November, and provide another €3 billion by the end of 2018, once Turkey meets its commitments.
    • The European Union will waive most visa requirements for Turkish citizens by the end of June, provided that Turkey meets certain requirements.

According to an official familiar with the talks who spoke to WSJ, “Turkish Prime Minister Ahmet Davutoglu signed off on the agreement and all 28 European Union leaders were expected to endorse it in the coming hours.”

The 1-for-1 swap (i.e. if you take a boat to Greece you get sent back, but if you don’t you might be able to get in from Turkey) is meant to end people smuggling, but of course it won’t. If you’ve read anything about Turkey lately you know that it’s hardly safe and we’re reasonably sure that accommodations will hardly be comfortable. The provision will also do nothing to assuage the likes of Viktor Orban in Hungary and Frauke Petry in Germany.

It’s also entirely unclear how this will work from an administrative perspective.

Practical and legal complications remain, as Greece would have to deploy thousands of staff on the islands to give every migrant the chance to file for asylum, organize interviews, set up decent housing conditions and organize returns to Turkey to make sure the program is in compliance with international refugee law,” WSJ goes on to note, adding that “some EU leaders had worried about the start date of the agreement, saying it could create a renewed surge of migrants crossing into Greece in a bid to beat the cutoff date.”

Make no mistake, what this will amount to is a free €3 billion (and possibly €6 billion) for Turkey, because there’s simply no way that something as amorphous as this “deal” has any hope of stemming a people flow of that size.

Oh, and we forgot to mention, Turkey’s EU membership bid will be hastened despite a Cypriot objection which means that Erdogan’s autocracy will soon not only be a NATO member, but also part of the EU, which we assume will given Erdogan even more cover to carry out genocide against the Kurds.

And Brussels does all of this knowing full well it won’t work. On that note, we close with a quote from Francois Hollande, who, after the Paris attacks, is perhaps a bit less sanguine than Merkel about the situation:

“Let’s not think that tomorrow, just because we have a deal with Turkey, we solved the refugee problem.”




Caterpillar, a terrific stock to measure what is going on in the global economy is signalling an industrial depression yet it’s stock has risen by 30% from its lows. In yesterday’s reporting of earnings, they stated that the bottom has now fallen out and they are in a freefall!


(courtesy zero hedge)

This Simply Does Not Compute: If Caterpillar Data Is Right, The Industrial Depression Has Never Been Worse

It has been over half a year since we first downgraded the industrial recession to an all-out global depression by using Caterpillar retail sales data, which have been so counterintuitive to what the company’s earnings have been reporting that last September we had to ask “What On Earth Is Going On With Caterpillar Sales?.”

Today, we must admit that something simply does not compute.

On one hand, CAT stock has soared by over 30% from its 2016 lows….

… despite warning just yesterday that the pain will continue after the company guided even lower to already depressed expectations.

But what makes no sense at all is that according to the just released CAT retail sales data, the industrial recession since downgraded to a depression, just fell out of the bottom, when the heavy industrial equipment company reported that February world sales crashed by 21%, after falling “only” 15% in January, led by double digit drops in every single market:

  • US down 11% after sliding 7% in January
  • China and Asia/PAC down 26% after being down 22%
  • EAME down 23% after sliding 14% the month before
  • Latin Marica imploding by 45% after a 36% drop one month ago, and one of the worst monthly drops on record.

Visually, this is as follows:

And what is more confusing is that CAT has not only not had a positive monthly increase in retail sales in a record 39 months, or more than double the length of the Financial Crisis’ 19 months and the longest in history, but the February drop was the biggest one month decline in 5 years!

Of course, on its face, this data would explain why over the past month first the BOJ, then the PBOC, then the ECB and finally the Fed all surprised with not only more dovishness but much more outright easing as central banks panic to halt what at least according to this one indicator confirms the global economy has not been worse in nearly half a decade.

And the following is causing major headaches for our central bankers.  As many nations are now in NIRP and the rest at ZIRP or close to it as well as undergoing massive QE, they are finding their currencies rising instead of falling and thus defeating the purpose of stimulating their economies.
(courtesy zero hedge)

Why Currency Traders Are So Confused

This morning the WSJ leads with an article that summarizes the prevailing market confusion at the moment, namely that global currencies are soaring, “defying central bankers” despite a flurry of easing around the globe in the past month, all of which have been undone by one Fed dot plot which cut the number of rate hikes forecast by Yellen & Co., from 4 to 2. To wit:“efforts by many of the world’s central banks to weaken their currencies are failing, raising concerns about whether policy makers are losing the ability to wield control over financial markets.

Despite the Bank of Japan ’s efforts to push down its currency and jump-start the economy with negative interest rates, the yen is up 8% this year and is at its strongest level against the dollar since October 2014. European central bankers are having similar problems containing the strength of the euro and other currencies.

The WSJ then briefly touches on what we have been warning about since 2009: “These difficulties are a reminder that the long stretch of exceptionally low rates in response to the 2008 financial crisis has created market distortions that may be difficult for central bankers to contain” and concludes that “this disconnect could produce more volatility in financial markets. Even if investors can predict what actions central banks are likely to take, they are having a hard time predicting how markets will react, potentially sparking a pullback from riskier assets, such as emerging markets or commodities.”

Which is to be expected: after all not even central banks have any idea what they are doing as the full relent by the “no longer data dependent” Fed showed on Wednesday, when Yellen decided to chicken out from the tightening cycle even though the PCE deflator of 1.7% is well above her year end target, while

In sum: “There is a rising concern that central banks are testing the limits of their policies,” said Brian Daingerfield, a currency strategist at RBS Securities. “Each time you take a tool out of the tool kit, it gets closer to being empty.”

But the best summary of just how confusing it all is comes from BofA’s Athanasios Vamvakidis who writes the following:

If FX is the messenger, the message is not clear

The FX market is confusing this year. More easing by the BoJ, the RBNZ, the Riksbank, the ECB and the Norges Bank, led to stronger currencies, despite delivering more than markets had expected in all cases. The market seems to be taking recent monetary policy easing as evidence that central banks are reaching their limits, as their forward guidance has sent mixed signals. We disagree in the case of the ECB, but are more sympathetic in the cases of the BoJ and the Scandies. A surprisingly dovish Fed this week added to the confusion, by ignoring the latest improvement in US data and better global market conditions. The market moves would be consistent with EM central bank interventions, as the time zone analysis in our quant section would suggest.

Vamvakidis’ take home:

However, we do not believe that this is sustainable. In our view, the more counterintuitive the market moves, the sharper the correction during the inevitable reality check.

That, however, should be no problem: once we get the reality check, central banks will unleash even more liquidity surreality, undoing what is now an 8 year overdue mean reversion, and forcing global central planners even more all in on their attempt to “reflate or bust.” And reflate they will, one way or another. After all, it was just one month ago when monetary paradrops and banning cash were the dominant topics in the financial media.




OH OH! Rousseff is defiant as an impeachment vote is set for April

(courtesy zero hedge)

“This Is How Coups Start!”: Brazil President Defiant As Impeachment Vote Set For April

“Brazil is being governed by a joke,” political commentator Josias de Souza says. “It’s turned into an aspiring banana republic.”

What was already an unimaginably bad situation took a decisive turn for the worst this week in Brazil when embattled President Dilma Rousseff, fearing that her mentor Luiz Inácio Lula da Silva was about to be arrested on corruption charges, appointed the former President to a ministerial position.

The opposition was already at their wit’s end with Rousseff, whose opponents say doctored the fiscal books in 2014 and who has presided over a catastrophic decline in the country’s economy. Thus far, Rousseff has managed to dodge an impeachment bid spearheaded by House Speaker Eduardo Cunha but after Senator Delcídio do Amaral gave damaging testimony in a plea deal and after Lula was detained earlier this month, it became clear that sooner or later, the two-year-old car wash probe would eventually dead end at the presidential palace doors.

Rather than risk that, Rousseff decided instead to effectively eliminate the possibility that Lula would ever be prosecuted by giving him a position in her cabinet. That affords him special privileges under the law and makes it all but impossible for anyone to prosecute him except for the high court.

It was an absurdly transparent move and everyone would have seen through it anyway, but judge Sérgio Moro – who is conducting the car wash probe – decided to make sure that there would be no doubt in the public’s mind about what was really going on and so, he tapped Rousseff’s phone and released some 50 recordings, at least one of which found Rousseff promising to send Lula his ministerial papers immediately “in case of necessity.” That was almost surely a reference to the fact that Lula could use the papers as a kind of get-out-of-jail-free card if anyone tried to arrest him before he could be sworn in. And make no mistake, Moro was probably going to arrest him.

Well, the tapes led to mass street protests which for all intents and purposes are still going on as pro-government rallies were planned for Friday following a swearing-in ceremony for Lula that was made comically absurd by the fact that although he’s technically a minister now, he can’t actually do anything because there are 20 injunctions in federal courts and 10 in the Supreme Court against him taking office. Here are a few images that should give you a fairly good idea of what the mood is in the streets right now:

As WSJ notes, “all the major players face accusations that they were overreaching their authority.”

“It isn’t clear whether Mr. da Silva will be able to claim his seat in Ms. Rousseff’s cabinet. After Thursday’s ceremony—which ended with the current and former presidents raising their clasped hands together in triumph while supporters chanted “There will not be a coup!”—another federal judge ordered Mr. da Silva’s appointment to be suspended,” The Journal recounts. “The judge, Itagiba Catta Preta Neto, was responding to a petition filed by a Brazilian lawyer challenging the legality of the appointment [but] the administration has appealed the order to the Supreme Court.”

(a picture taken at Lula’s swearing-in ceremony)

Moro has become a kind of hero in the country for his aggressive pursuit of corruption and while Lula remains popular among many citizens, his star has fallen among many others as is clear from this week’s protests. “They’re trying to hide that rat, that thief Lula, in a ministry,” a high-school teacher who was demonstrating Thursday said. “The government has failed the country.”

“Convulsing Brazilian society through illegal means violates [the country’s] precepts and sets grave precedents,” Rousseff seethed on Thursday. “This is how coups start.”

Sometimes. Coups also start when the economy collapses and when the government’s defining characteristic is rampant corruption. Just have a look at Rousseff’s impeachment committee, where 1/4 of the members are themselves under investigation by the Supreme Court.

The committee reportedly has 35 members in favor of impeachment, 24 against, and 6 undecided. As The Guardian notes, some 26% of Congress face active criminal investigations.

In a sign of just how fractured the government truly is, PMDB did not attend Lula’s swearing-in ceremony. Eurasia now expects VP Michel Temer to take over as President by May. There’s no telling what would happen to Lula in that scenario. PMDB will decide on March 29 whether to split with Rousseff’s government.

As for the impeachment vote, Cunha says the lower house will vote in April. “My previous expectation of 45 days to have a floor vote on impeachment can be reduced to 30 days approximately,” he said. Cunha is of course also being investigated – for hiding Swiss bank accounts. Here’s The Guardian to explain what happens next:

After Rousseff presents her defence, the committee will make a recommendation to the congress, but whatever it decides, the vote to impeach will go to the floor as a whole. If two-thirds approve, it then moves on to the senate, where it requires only a simply majority to pass. Should that happen, Rousseff will be suspended from the presidency while the supreme court decides her fate.

In the meantime, the economy and the streets will continue to burn.

On the bright side, Dilma and Lula did got an endorsement from a powerful Latin American ally late this week. “There is coup in Brazil. They decided for an operation to clear the legitimate and democratic leadership of these two leaders,” Venezuelan president Nicolas Maduro said, before reminding the world that “Dilma is one honest woman, known for honesty and bravery.” With Maduro in your corner, what could possibly go wrong?

Needless to say, things aren’t looking good for the Olympics.

While we await the next shoe to drop, we’ll simply close with the following quote from Lula himself ca. 1988: “In Brazil, when a poor man steals he goes to jail. When a rich man steals, he becomes a minister.”

WTI PLUNGES! OPEC has reached its production limits and Iran continues to increase.
(courtesy zero hedge)

WTI Crude Plunges Back Into Red For 2016 As The Fed And Oil Remain On Unsustainable Paths

Oil prices have increased 50 percent since the lows exhibited earlier this year, a rise that is largely linked to the positive market reaction to the OPEC output freeze.

But WTI Crude has given up all its early morning “see oil is fixed” gains in a hurry as once again the algo ramps give way to the realization that, as OilPrice’s Leonard Brecken via,notes, comes even as for all intents and purposes OPEC has nearly reached its production limits and Iran still plans in increasing output.

What started the entire correction, in my view, was the carry trade on buying the Euro ahead of more quantitative easing (QE) and the Fed playing games by talking up a recovery and threatening to raise rates. That created a double whammy on a strong U.S. dollar beginning in the summer of 2014 when oil prices peaked.

At the same time, U.S. producers did manage to ramp up output even further in the second half of 2014, at a time of rising inventories. By the first half of 2015 things began to self-correct as inventories began to fall. Oil prices started to make a recovery but reversed as OPEC flooded the market with more oil, which began in late 2014. Meanwhile the nuclear deal with Iran opened up the prospect of a new source of supply, a fact that was overhyped by the media.

Demand remained strong for gasoline despite the weakening global economy, much to the media’s surprise. Inventories rose in absolute terms, but in terms of days of supply, storage remained at much more modest levels, only eclipsing the upper end of the historic five-year range in 2016.

It now appears that the dollar’s strength is starting to reverse, in part due to the perception that the EU central bank implemented a much more aggressive monetary policy easing than expected, leading speculators who went long on the dollar to believe that the trade is over. The EU bazooka will work and no more easing by the European Central Bank will take place. Meanwhile, even though the U.S. economy is slowing, the Fed continues its madness of rate hike threats when only a few data points support such a move.

As the clueless join the more clueless down the path of failed monetary policy, at some point all this will fail to create real growth and then even the Fed will be compelled to ease again. It is possible that the markets are already anticipating this development, marking the bottom on oil and the rest of the commodity complex as the dollar loses value.

To sum up: the front running of central bank policy continues, which also creates an FX war, while real industries both prosper and fall due to these monetary experiments. Wages stagnate, economies slow and standards of living plunge as the debt from the last fiasco piles up. Just as our political process is being exposed for what it is (a few in a smoked filled room trying to thwart the popular vote), investors need to figure out what those on Wall Street will do in their smoke filled back rooms on continuing the charade.

In all likelihood oil will peak for a time as markets have yet to discount the realization of weak economic growth and the fact that no monetary policy will fix the structural problems we face.Thus, in my view, an unsustainable market rally will lead to an unsustainable rally in oil until we actually address the underlying causes of weak growth. That may or may not occur in the fall with a new administration.

If the next administration gives the economy more of the same, the propped up asset bubble that central banks created will lead to an even bigger crisis. In either case it’s most likely unavoidable in the short-term.

As an investor, the unprecedented levels of distortion and propaganda must be filtered out to clear the way to sound long-term investing. Oil prices simply cannot be held at artificially low levels forever as fundamental forces eventually come to bear. But in this day and age price distortions can last much longer compared to what history dictates.

The Fed is boxed in and that box is getting smaller and smaller. They are now in the difficult position of choosing between more monetary easing, unleashing inflation onto the already disgruntled lower middle classes when they can ill afford it, or continuing to run out the clock until the next administration through threats of rate hikes. I suspect it will be the latter as government has always kicked the can to the next administration rather than addressing the hard problems. After all, that was what the government has done over the last eight years anyway.


This is interesting:  crude extends it’s losses due to an INCREASE in oil rig counts.  This is the first increase in 3 months
(courtesy zero hedge)

Crude Extends Losses As US Oil Rig Count Rises For First Time In 3 Months

For the first time since mid-December, the US oil rig count increased (by 1 to 387)tracking a lagged crude price perfectly. The total rig count dropped to a fresh record low (-4 to 476). The early weakness in WTI Crude is extending on this news…

First rise in 12 weeks…


But the total rig count tumbled to fresh record lows…


The reaction was extnding the losses…

This is very important news;  the higher price of oil has seen many producers hedge their oil because they do not believe that the price will remain lofty in 2017.  This has caused the contango to collapse.  Contango means higher future prices than spot, so if contango is falling it means the spot is rising against a falling future price.  Contango in oil is essential for storage.  A lower contango will force oil out of storage and flood the market!
(courtesy zero hedge)

Collapsing Contango Means Tankers Full Of Oil Such As This One, Will Soon Have To Unload Their Cargo

One week ago we showed something the oil bulls did not expect: oil producer hedging had started.

As a trader cited by Reuters said “Brent’s flattening contango since January comes as many producers want to cash in immediately on recent price rises. They’ve been heavily selling 2017/2018 and beyond, and it shows that they don’t quite trust the higher spot prices yet.”


He further explained that “This means that even the producers don’t really expecting a strong price rally until well into 2017 or later,” and Reuters added that the companies that explore for oil and pump it out of the ground have been locking in price gains by selling off future output as a financial hedge, pulling down prices for those contracts.

We will have more to say on the topic of producer oil hedging, and specifically how they do it, in a subsequent post but for now it is worth noting that since last week the contango has flattened further as the spot price rose while the long end declined, suggesting even more hedging has taken place in recent days.


One analyst who notes this trend, is Saxo Bank’s Ole Hansen who observes that the rally in oil prices to 3 month highs has coincided with narrowing contangos that alter storage economics and threaten oil flooding back into the market. The reason for this is that storing oil, either on the ground or on ships, becomes less profitable the greater the flattening in the contango.

“As we’ve seen both Brent and WTI climb above $40 we have also seen the contango collapse.”

As examples, Bloomberg observes the WTI M1-M2 contango narrowing to earlier $1.25 today, the tightest since Jan. 22; while the WTI M1-M3 contango has reaches just $2.21, or the smallest in two months.

The long-end has seen even sharper moves with the WTI M1-M13 contango contracting 86c to close at $4.97 yesterday, compared to $6.64 Tuesday.

Hansen also added what we warned about two weeks ago, namely that $40-plus oil “could also stop the production slowdown, which with the weakness of the dollar has been the main driver for oil prices,” posing another downside risk.

Hansen adds that “If we rally too high the contango will collapse further and the storage economics reduce – that could trigger storage in tanks to be reduced,” increasing supply and putting pressure back on crude prices. Recall that several producers made it clear that once oil rises above $40, the pumping will resume, although not all. Today Bank of America laid out a useful chart showing the incremental production sensitivity, with the delta between $40 and $50 being critical.

But back to the contango, about which Hansen warned that “if we rally too high the contango will collapse further and the storage economics reduce – that could trigger storage in tanks to be reduced,” increasing supply and putting pressure back on crude prices.”

What does this mean? One example is the tanker Distya Akula shown below.


As Bloomberg writes, the Akula is a 1 million bbl-carrying Suezmax, currently loaded with cargo, which is not only not going anywhere, but which has been waiting near the southern entrance of Egypt’s Suez Canal to 22 days.

The ship, with cargo on board, left Kharg Island, Iran’s biggest crude-export terminal, in early February, and reached its present location on Feb. 24 or one month ago.  Elektrans, the ship’s joint owner, said Wednesday that the tanker’s cargo is probably destined for buyer in Mediterraneanm but didn’t know which because vessel is on long-term charter to another company.

In other words, the ship is hoping that prices rebound high enough to where a buyer will be found. For now, there is no buyer, and the bigger the contango drop, the less profitable such storage will be, forcing companies to unload tanker cargos and to flood the market with tens of millions of currently “inert” inventory.




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


USA/JAPAN YEN 111.44UP 0.083 (Abe’s new negative interest rate (NIRP)a total bust/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP)


USA/CAN 1.2994 UP.0008

Early THIS FRIDAY morning in Europe, the Euro FELL by 37 basis points, trading now WELL above the important 1.08 level RISING to 1.1102; 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 NOW THE USA’S NON tightening by  FAILING TO RAISE THEIR INTEREST RATE / Last night the Chinese yuan was UP in value (onshore) The USA/CNY DOWN in rate at closing last night: 6.4731 / (yuan DOWN 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 UP in Japan by 8 basis points and trading now well BELOW that all important 120 level to 111.44 yen to the dollar. NIRP POLICY IS A COMPLETE FAILURE AND ALL OF OUR YEN CARRY TRADERS HAVE BEEN BLOWN UP/SIGNALS TO THE MARKET THAT THEY MAY DO A U TURN ON  NIRP AND INCREASE NEGATIVITY

The pound was DOWN this morning by 26 basis points as it now trades WELL ABOVE the 1.44 level at 1.4446.

The Canadian dollar is now trading DOWN 8 in basis points to 1.2995 to the dollar.

Last night, Chinese bourses AND jAPAN were MIXED/Japan NIKKEI CLOSED DOWN 211.57 POINTS OR 1.25%, HANG SANG UP 167.82 OR 0.82% SHANGHAI UP 35.11 OR 1.22%  LAST HR RESCUE   / AUSTRALIA IS HIGHER / ALL EUROPEAN BOURSES ARE IN THE GREEN, 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 FRIDAY morning: closed DOWN 211.57 OR 1.25%

Trading from Europe and Asia:
1. Europe stocks ALL IN THE GREEN

2/ CHINESE BOURSES GREEN/ : Hang Sang CLOSED IN THE GREEN. ,Shanghai IN THE GREEN/ Australia BOURSE IN THE GREEN: /Nikkei (Japan)RED/India’s Sensex in the GREEN /

Gold very early morning trading: $1253.75


Early FRIDAY morning USA 10 year bond yield: 1.88% !!! DOWN 2 in basis points from THURSDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield falls to 2.66 DOWN 2 in basis points from THURSDAY night.

USA dollar index early FRIDAY morning: 95.01 UP 16 cents from THURSDAY’s close.(Now below resistance at a DXY of 100)

This ends early morning numbers FRIDAY MORNING



And now your closing FRIDAY NUMBERS


Portuguese 10 year bond yield:  2.94% UP 9 in basis points from THURSDAY

JAPANESE BOND YIELD: -.094% UP 9  full basis points from THURSDAY

SPANISH 10 YR BOND YIELD:1.44% UP 1 basis points from THURSDAY

ITALIAN 10 YR BOND YIELD: 1.27  PAR IN basis points from THURSDAY

the Italian 10 yr bond yield is trading 17 points lower than Spain.





Closing currency crosses for FRIDAY night/USA dollar index/USA 10 yr bond: 2:30 pm

Euro/USA 1.1274 DOWN .0041 (Euro DOWN 41 basis points and for DRAGHI A COMPLETE POLICY FAILURE/

USA/Japn: 111.54 UP .187 (Yen DOWN 19 basis points) and still a major disappointment to our yen carry traders and Kuroda’s NIRP. Today they stated that  NIRP would continue.

Great Britain/USA 1.4483 UP .0012 (Pound UP 12 basis points.

USA/Canada: 1.3014  UP  .0.0028 (Canadian dollar DOWN 28 basis points EVEN THOUGH oil was LOWER IN PRICE (WTI = $39.57)




This afternoon, the Euro was DOWN by 41 basis points to trade at 1.1274 AS THE MARKETS CONTINUE TOREACT TO THE FAILED USA INTEREST RATE POLICY.

The Yen FELL to 111.54 for a LOSS of 19 basis pints 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 12 basis points, trading at 1.4483 (LESS BREXIT CONCERNS)

The Canadian dollar FELL by 28 basis points to 1.3014 as the price of oil was DOWN  today (as WTI finished at $39.58 per barrel)

The USA/Yuan closed at 6.4740

the 10 yr Japanese bond yield closed at -.093% UP 9 FULL basis points in yield

Your closing 10 yr USA bond yield: DOWN 3 basis point from THURSDAY at 1.87% //trading well below the resistance level of 2.27-2.32%) policy error

USA 30 yr bond yield: 2.67 DOWN 3 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, 95.06 UP 29 cents on the day at 2:30 pm


Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for FRIDAY

London: DOWN 11.48 points or 0.19%
German Dax :UP 58.60 points or 0.59%
Paris Cac UP 19.62 points or 0,44%
Spain IBEX UP 72.30 or 0.81%
Italian MIB: UP 3.32 points or 0.02%

The Dow was up 120.81 points or 0.69%

Nasdaq :up 20.66 points or 0.43%


WTI Oil price; 39.58 at 2:30 pm;
Brent OIl: 41.23

USA dollar vs Russian Rouble dollar index: 68.35 (Rouble is UP 23 /100 roubles per dollar from yesterday) EVEN THOUGH the price of Brent and WTI OIL FELL


This ends the stock indices, oil price, currency crosses and interest rate closes for today


CLOSING PRICES FOR OIL 5 PM/ and 10 year USA interest rate:
WTI  crude price at 5 pm:  $39.35
Brent: $41.41
USA 10 yr bond yield: 1.88%
USA dollar index at 5 pm  95.06
And now USA stories

Fed Sparks “QE Trade” As Stocks, Bonds, Gold Soar

What happens next?


Well it’s been another week… As Goldman said this was the 4th most dovish Fed surprise since 2008

Surprises at FOMC meetings with the “dot plot” in the Summary of Economic Projections have on average been almost twice the size of pre-crisis norms.

Which enabled the 5th weekly S&P rise in a row – just like into the Nov 2015 highs…(before it all collapsed) – Trannies up 5% on the week!!


Trannies are up 9 weeks in a row – and this was the biggest week since the Bullard Bounce in Oct 2014.

Financials are up 5 weeks in a row for the first time since Sept 2014 right before plunging only to be saved by Bullard…


But we just wonder…


Post-Fed, Silver soared but gold was coincidentally marked down the last 2 days to ensure it did not make stocks look terrible and signal policy error…


Most-Shorted stocks were monkey-hammered higher after The Fed – back to unch ish on the week…


Treasury yields tumbled post-Fed with a yuuge 17bps plunge in 2Y Yields…(the biggest 2Y yield drop since Bullard Oct 2014)


The USD Index tumbled on the week – driven by The Fed and follow through in Asia – but notably stable again now for the last 24-36 hours..


This is the lowest weekly close in 5 months… and USD is down 3% YoY


The entire week for commodities pivoted around The Fed, with everything higher…


Crude managed its 5th weekly rise in a row, but things fell apart a little into the week’s close (April back below $40)…


And finally, as a reminder – You Are Here…


Charts: Bloomberg



The consumer is 70% of GDP and today, we see that the consumer confidence index from the University of Michigan tumbled to a 5 month low of 90 from an expected reading of 92.2.  Not only that, but the “hope’ component tumbles in total contrast to the rise in the stock market. Makes no sense!
(courtesy zero hedge)

Consumer Confidence Tumbles To 5-Month Lows As “Hope” Fades

But, but, but – low gas prices, high stock prices… everything is awesome. It appears not even the average joe American consumer is fooled by the latest manufactured rally in stock prices as UMich confidence tumbles to 5-month lows (90 vs 92.2 exp) with future expectations “hope” perfectly anti-correlated with the surge in stocks

On the bright side, inflation expectations picked up modestly… but that hardly helps given the overall confidence hovers near 18 month lows.


Former bellwether for the luxury goods sector , sees first quarter earnings down 20% as the global economy continues to spiral southbound:

(courtesy zero hedge)

Tiffany Slashes Guidance, Sees Q1 Earnings Down As Much As 20%, Three Time Worse Than Consensus

As of this moment, the DXY dollar index currently just above 95, is lower than where it was a year ago, but that does not stop companies from using it as an excuse for continuing earnings weakness.  Case in point, Tiffany & Co (which once used to be a bellwether for the luxury consumer and the overall market, but lately not so much) which moments ago reported Q4 earnings of $1.46, beating consensus expectations of $1.40, on inline revenues of $1.21bn, 6% lower than a year ago, as sales in the US, Asia Pacific and Europe all declined in the mid-single digits, offset by a 9% rebound in Japan; comparable store sales declined 5%.

This is what the company said: “We faced various challenges during the year that negatively affected our financial results, especially related to the strong U.S. dollar.” The company further said that “worldwide sales growth of only 2% on a constant-exchange-rate basis, or down 3% as reported, along with the lack of earnings growth, did not meet the forecasts we had communicated at the start of the year;” the good news is that since the company preserved “gross margin, and strong free cash flow” it was still able to return cash to shareholders through another dividend increase and share repurchases.

Mostly repurchases, which in 2015 were conducted at an average price of $78/share or about 10% higher than the current stock price:

The Company spent $220 million in the full year (at an average cost of $78 per share), including $104 million in the fourth quarter (at an average cost of $73 per share) to repurchase shares of its Common Stock. On January 21, 2016, the Company’s Board of Directors approved a new stock repurchase program, authorizing the repurchase of up to $500 million of the Company’s Common Stock; this new program immediately replaced the Company’s previously-existing program that had authorized the repurchase of up to $300 million of its Common Stock, and which had $59 million remaining available for repurchases at the time of termination. At January 31, 2016, $494 million remained available for repurchases under the new program that expires on January 31, 2019.

In other words, expect even more buybacks.

But the biggest surprise was in the guidance, where TIF lowered guidance for Q1, and now sees EPS down 15-20%, nearly three times worse than the consensus estimate of -7%.

The company also issued Q2 guidance of down 5-10%, and expects growth to resume in the second half.  Finally, TIF issues downside guidance for FY17, sees EPS unchangd to down mid single digits from $3.83 vs. $3.88 Capital IQ Consensus; it also sees FY17 revs equal to last year’s $4.10 bln) vs. $4.15 bln Capital IQ Consensus. Basically more deteriorating earnings all around, offset by the company removing the number of outstanding shares.  Form the release:

Management currently forecasts that full year earnings per diluted share in 2016 will range from unchanged to a mid-single-digit decline compared with 2015’s $3.83 per diluted share. Based on sales trends in the current quarter-to-date and an assumption of gradual improvement over the course of the year, management expects that earnings per diluted share in the first quarter may decline by 15-20%, followed by a 5-10% decline in the second quarter and a resumption of growth in the second half. This annual forecast is based on the following assumptions, which are approximate and may or may not prove valid: (i) worldwide net sales on a constant-exchange-rate basis increasing by a low-single-digit percentage, but approximately equal to the prior year when translated into U.S. dollars; (ii) increasing worldwide gross retail square footage by 2%, net through 11 openings, 6 relocations and 9 closings; (iii) operating margin below the prior year’s 19.7% (excluding the prior year’s charges) due to an expected increase in gross margin but with SG&A expense growth (despite some benefit from lower pension costs) exceeding sales growth; (iv) interest and other expenses, net unchanged from 2015; (v) an effective income tax rate slightly lower than the prior year; (vi) net inventories unchanged from the prior year; (vii) capital expenditures of $260 million; and (viii) free cash flow of at least $400 million.

In other words, TIF just did what Caterpillar did yesterday when it cut guidance; however just like yesterday we expect TIF to unleash some buybacks today to offset this “fundamental weakness” and the stock will surely close higher.



The USA has two major subprime problems:

a) student loans

b) auto loans

Tonight, the auto delinquencies soar past crisis 2008.

(courtesy zero hedge)


Subprime Auto Delinquencies Soar Past Crisis Levels, Now Highest In 20 Years

On Thursday night, we brought you a first-hand account of what’s really going on in subprime auto.

According to a reader who works in the industry, the securitization machine may be grinding to a halt for deals that are stuffed with loans to borrowers with low (or no) FICOs. Here’s an excerpt:

“I work for a smaller but fast growing auto finance company [and] we grew from opening the doors in 2013 to having a $250 million portfolio as of today. Things for the last 3 years have been booming and it seemed like there would be no end to our growth. We were rated by S&P in January and were ready to start securitizing our portfolio.


On March 1st I came into the office to find out that they had started layoffs. These people were fairly new and were in departments that the executive staff has now deemed unnecessary.

I had a meeting with my boss who told me my job is safe but due to us not being able to securitize we were freezing hiring going forward but we were hopefully done with layoffs.”

So why would a company not be able to securitize the loans on its book? Well presumably because someone, somewhere gets the feeling that demand for auto-backed ABS is going to dry up in the months ahead.

There’s evidence from both Experian and the NY Fed (see here) to suggest that the market is getting riskier. More auto loan originations are going to borrowers with shoddy credit and loan terms are looking more and more stretched by the quarter. Investors may fear that the credit cycle is about to turn and when it does, you don’t want to be anywhere near the double B tranches in subprime auto – even if you can get 9%.

With all of the above in mind, we bring you the following chart from Deutsche Bank which shows that 60+ day delinquencies for subprime auto ABS have now risen above crisis levels to 5.16% – levels we haven’t seen since 1996.

But don’t worry, even though Deutsche Bank does admit that it “raises eyebrows” when delinquencies for subprime are at their highest levels in two decades even as unemployment has plunged (so maybe those “jobs” people are getting aren’t that great after all), you shouldn’t worry, because it’s all about overcollateralization these days:

While it does raise eyebrows to see delinquencies exceed levels seen during the financial crisis at a time when unemployment is below 5%, we think subprime auto ABS structures remain well protected due to robust levels of hard credit enhancement, and structural features that increase credit enhancement as the transactions pay down.

For reference, 2015 saw about $25 billion in subprime auto ABS supply.



Let us end the week with this wrap up courtesy of greg Hunter

I will see you Monday night


(courtesy Greg Hunter/USAWatchdog)

Weekly News Wrap-Up 3.18.16-Greg Hunter

By Greg Hunter’s WNW 231 3.18.16

The mainstream media (MSM) is at it again, this time trying to trash Trump on a big primary day.  It didn’t work because trump won just about every contest.  The MSM also tried to bolster Hillary Clinton.  USA Today was particularly blatantly unfair and biased.  This is nothing more than telling people how to vote and the USA Today trying to thought shape and distort the election process for its political criminal cronies. When this happens, it is not journalism, and USA Today ceases being a bona fide news organization. You have to be fair and objective to call yourself a news organization, and the front page of the USA Today on the second so called “Super Tuesday” of the 2016 election cycle was anything but fair and objective. It is outrageous that anyone calling themselves a journalist would do this, and that means top management of USA Today, in my view, is either stupid or corrupt. I do not think they are stupid.

Russia is pulling some troops out of Syria. Many are hopeful this will signal an end to hostilities. Many are also thinking this will put pressure on the Assad regime to cut a peace deal. The Free Syrian Army, Al Qaeda, ISIS and the U.S., on the other side of the conflict, are dreaming if they think Russia is going to turn over Syria to ISIS and lose its new air base or give up its strategic port in Tartus. The Russians turned the tide of war in Syria with a surge in military power just like the U.S. did in Afghanistan. This is simply a cost cutting measure, and Russia says, if need be, it can send back troops quickly.

The Fed came out this week and surprise, surprise, it’s not going to raise interest rates. Why not hike rates? After all, it’s been harping that the economy was getting stronger. The simple answer is the economy is not getting stronger. It’s clearly getting weaker. Greg Mannarino of says this is really a “no confidence vote in the economy.” Mannarino also contends, “Gold is going up and so is the stock market—for now.” Mannarino says, “The market will top soon, and gold is going to the moon. All the global central banks are doing, at this point, is financing bankrupt governments.”

Join Greg Hunter as he talks about these stories and more in the Weekly News Wrap-Up.




  1. Bob Rushton · · Reply

    How is it we hardly hear of the 8000+ tonnes of Gold the US has in storage; if any of that comes onto the market it will drive the price of gold down; so it is an important subject.


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