Gold: $1,223.70 down $24.50 (comex closing time)
Silver 15.26 down 61 cents
In the access market 5:15 pm
This morning, on CNBC there was talk of a mini revolt at the Fed with some members who want to raise rates immediately as opposed to Yellen who issues to wait. Why was only Esther George, the lone dissenter…what about the others? Besides, the raising of rates is a joke in that they do not withdraw any liquidity from the market. The last rate hike was done by decree only, they did not remove the punchbowl. To me this is nothing but a charade!
Let us have a look at the data for today.
At the gold comex today, we had a poor delivery day, registering 1 notice for 100 ounces and for silver we had 85 notices for 425,000 oz for the active March delivery month.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 212.48 tonnes for a loss of 90 tonnes over that period.
In silver, the open interest FELL by 1241 contracts DOWN to 175,775 despite the fact that the silver price was up by 3 cents with respect to yesterday’s trading . In ounces, the OI is still represented by .878 billion oz or 125% of annual global silver production (ex Russia ex China).
In silver we had 85 notices served upon for 425,000 oz.
In gold, the total comex gold OI rose 6427 contracts to 510,579 contracts as the price of gold was up $4.40 with yesterday’s trading.(at comex closing). .
This is a surprise!!no changes tonight in the GLD despite gold’s drubbing/ thus the inventory rests tonight at 821.66 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 huge withdrawal of 1.428 million oz in inventory, and thus the Inventory rests at 328.914 million oz
First, here is an outline of what will be discussed tonight:
1. Today, we had the open interest in silver fell by 1241 contracts down to 175,775 as the price of silver was up 3 cents with yesterday’s trading. The total OI for gold rose by 6427 contracts to 510,579 contracts as gold was up $4.40 in price from yesterday’s level.
2 a) Gold trading overnight, Goldcore
3. ASIAN AFFAIRS
i)Late TUESDAY night/ WEDNESDAY morning: Shanghai closed UP BY 10.57 POINTS OR 0.35% , / Hang Sang closed DOWN by 51.52 points or 0.25% . The Nikkei closed DOWN 47.57 . Australia’s all ordinaires was DOWN 0.47%. Chinese yuan (ONSHORE) closed DOWN at 6.4984. Oil FELL to 41.09 dollars per barrel for WTI and 41.47 for Brent. Stocks in Europe so far ALL IN THE GREEN . Offshore yuan trades 6.50257 yuan to the dollar vs 6.49840 for onshore yuan/LAST 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.LAST WEDNESDAY, China signals that they are going to tax financial transactions. last night bond yields in Japan plummet and invert signalling trouble for their economy
report on Japan
Pure insanity: the 10 yr Japanese bond yield is now below the negative deposit rate and the 40 yr bond yield rate is below the 30 yr bond yield rate. Pure unadulterated mayhem!The pool of positive yielding bonds are disappearing fast!!
( zero hedge)
ii) report on China
i)How long that this be kept up? Desperation along the Macedonia/Greek border
( zero hedge)
ii)The following is really good for gold as polls indicate a BREXIT is probable/the Belgium terrorist attack surely did not help the pound as the Brits are surely not happy with Europe’s immigration policy.
iii)Ah!! those nasty rogue traders/Credit Suisse fires 2,000 workers:
i)The real economy inside Brazil continues to collapse as Rousseff refuses to resign.Today’s huge fall in oil and copper certainly did not help their cause( zero hedge)
ii)This is a killer blow to Brazil and its state owned Petrobras:
it had a 4th quarter huge loss!
i) Early this morning, oil drops to the 40 dollar handle after the IEA warns that their so called production freeze is “meaningless”
( zero hedge)
ii)Oil then rebounds for a short time only to plummet once again as the DOE reports on a huge inventory build. However production did drop.
iii)The following is a huge story. We have been reporting that Cushing OK refining capacity has reached its limit and that last week the Mid West was sending oil to the west coast because of their huge buildup. We should now start to see oil fall in price( zero hedge)
iv)Then crude plunges below 40 dollars:
i)Amazing, nobody at the press including Reuters asks why central banks engage in gold swaps?( Chris Powell/GATA)
ii)Another 12 tonnes of gold was sent to Switzerland from Venezuela. No doubt that kilobars will be the resultant product heading straight for China.
iv)This morning: a huge silver flash crash along with a copper collapse
( zero hedge)
v)HSBC states that USA supposed tightening is not frightening at all for gold. They expect gold to rise more:
iii)New home sales plunge the most in a year.
iv)David Stockman was on CNBC and he describes of bad the USA economy really is
v)the losses on deeper subprime auto loans are double the industry average.This is a ticking time bomb as the total auto loans are 1.3 trillion USA. Also student loans are in excess of 1 trillion dollars and it too presents itself with the same problem( zero hedge)
Let us head over to the comex:
The total gold comex open interest rose to 510,579 for a gain of 6427 contracts as the price of gold was up $4.40 in price. As I stated yesterday: “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. The front March contract month saw its OI fall by 54 contract down to 78.We had 61 notices filed upon yesterday, and as such we gained 7 contracts or an additional 700 oz will stand for delivery. .After March, the active delivery month of April saw it’s OI fall by 25,174 contracts down to 183,677. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was 346.198 which much help from our criminal HFT traders which front led gold and silver down… The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was very good at 279,670 contracts. The comex is not in backwardation
March contract month:
INITIAL standings for MARCH
|Withdrawals from Dealers Inventory in oz||nil|
|Withdrawals from Customer Inventory in oz nil||NIL|
|Deposits to the Dealer Inventory in oz||NIL|
|Deposits to the Customer Inventory, in oz||nil|
|No of oz served (contracts) today||1 contract
|No of oz to be served (notices)||77 contracts
|Total monthly oz gold served (contracts) so far this month||684 contracts (68,400 oz)|
|Total accumulative withdrawals of gold from the Dealers inventory this month||nil|
|Total accumulative withdrawal of gold from the Customer inventory this month||181,826.5 oz|
Today we had 0 dealer deposits
Total dealer deposits; nil oz
Today we had 0 dealer withdrawals:
total dealer withdrawals: nil oz
Today we had 0 customer deposits:
total customer deposits: nil oz
Today we had 0 customer withdrawals:
total customer withdrawals; nil oz
Today we had 0 adjustment:
MARCH INITIAL standings
|Withdrawals from Dealers Inventory||nil|
|Withdrawals from Customer Inventory||106,295.25. oz
|Deposits to the Dealer Inventory||nil|
|Deposits to the Customer Inventory||601,244.100 oz CNT,Delaware|
|No of oz served today (contracts)||85 contracts425,000 oz|
|No of oz to be served (notices)||204 contract (1,020,000 oz)|
|Total monthly oz silver served (contracts)||1199 contracts (5,995,000 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||10,857,752.1 oz|
today we had 0 deposits into the dealer account
total dealer deposit: nil oz
we had 0 dealer withdrawals:
total dealer withdrawals: nil
we had 2 customer deposits
i) Into CNT: 596,349.400 oz
ii) into Delaware: 4,894.700 oz
total customer deposits: 601,244.100 oz
We had 2 customer withdrawals:
i) Out of CNT:
ii) Out of Delaware:
total customer withdrawals: 105,305.15 oz
we had 1 adjustment
i) Out of CNT: 420,744.08 oz was adjusted out of the customer account and this landed into the dealer account of CNT
And now the Gold inventory at the GLD
March 23/no changes at the GLD today despite the gold drubbing. Inventory rests at 821.66 tonnes
March 22./no changes in inventory at the GLD/Inventory rests at 821.66 tonnes
MARCH 21/another big deposit of 2.68 tonnes/inventory rests tonight at 821.66 tonnes
(and this was done with gold down $10.00 today!!)
March 18.I GIVE UP!! WITH GOLD DOWN TODAY, THE CROOKS OVER AT GLD ADDED ANOTHER IDENTICAL 11.89 TONNES OF PAPER GOLD INTO THEIR INVENTORY.
INVENTORY RESTS THIS WEEKEND AT 818.98 TONNES. IF I WAS A SHAREHOLDER OF THIS ENTITY I WOULD BE VERY WORRIED.
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 23.2016: inventory rests at 821.66 tonnes
And now your overnight trading in gold, WEDNESDAY MORNING and also physical stories that may interest you:
By Mark O’Byre
“The Greatest Crash Of Your Life Is Just Ahead…” – Harry Dent Warns
Harry Dent, best-selling author and economist, has warned that the stock bubble in the U.S. today is the biggest in history and that the “greatest crash of your life is just ahead…”
Writing on his website EconomyandMarkets.com, Dent warned that
The story on Wall Street and CNBC continues to be that we’re in a correction and this is a buying opportunity. Even Warren Buffett joins the chorus of stock market cheerleaders for the skeptical public. Well, I agree with the skeptical public, not the experts here!
The bull market from early 2009 into May 2015 looks just like every bubble in history, and I’m getting one sign after the next that we did indeed peak last May.
I’ve been telling our Boom & Bust subscribers for months now that the dominant pattern in the stock is the “rounded top” pattern I show in the chart below:
After trading in a steep, bubble-like channel from late 2011 into late 2014, with only 10% maximum volatility top to bottom, the market finally lost its momentum… just as the Fed finished tapering its QE. That’s because the Fed was the primary driver in this stock bubble in the first place!
But the first sign that the bubble had indeed peaked was the break of that upward channel last August. Surprise, surprise! Without the Fed’s stimulus, stocks started to sputter out!
With that sign we can point to what now looks like a series of major tops, in one major index after the next, since late 2014.
Dow Transports, November 2014. Dow Utilities, January 2015. The DAX in Germany and the FTSE in the UK: April, 2015. The Dow and S&P 500, May 2015. The Shanghai Composite in June 2015. The Nasdaq, Biotech and the Russell 2000: July 2015. And finally, the Nikkei Index in Japan that peaked in August 2015.
The Shanghai Index crashed 45% in 2.5 months, similar to the Dow in late 1929 on its first 2.5 month wave down. That one was so obvious that when I said it was about to burst, it peaked that day and rolled over the next!
Read full article here
Dent is a successful newsletter writer and has written numerous best selling books over the years, most recently ‘Spending Waves: The Scientific Key To Predicting Market Behavior for the Next 20 Years’ and ‘The Demographic Cliff – How to Survive and Prosper During the Great Deflation of 2014–2019′ – detailing why we’re facing a “great deflation” after five years of stimulus — and what to do about it now.
With stock market valuations in the U.S. in particular looking stretched and U.S. stocks looking very overvalued, we agree with Dent that there is indeed a real risk of a material correction in stock markets as there was in 2000 and in 2007. In presentations to clients we have looked at and explained why we view these markets as over valued and having all the hallmarks of bubbles about to burst.
Given the risk of a new global financial crisis and the backdrop of a massively leveraged global financial system which has seen debt increase another $57 trillion in just 8 years, it would be foolhardy to dismiss Dent’s bearish prediction. Most economists, brokers, advisers and politicians would be likely to do – as they did regarding warnings we made in the 2005 to 2008 period, prior to the first global financial crisis.
Ultimately, none of us have a crystal ball and it is best to focus on what we control and always follow the three rules of investing: diversification, diversification and diversification.
Portfolios with very overweight allocations to equities and bonds are now at risk and there is a strong case for increasing allocations to cash and gold. Careful consideration should be given to who you deposit your money with and store your gold with. Counter party risk and the return of capital rather than the return on capital will assume importance once again in the coming years.
It is worth pointing out that while Harry Dent believes gold prices will fall initially in the coming deflationary spiral – perhaps as low as $700 per ounce – he clearly advises having an allocation to gold as a form of financial insurance:
“Investors might want to keep a little ‘insurance’ gold for diversification.”
Gold prices may indeed fall in the short term however as was the case in the near financial and economic deflationary collapse in 2008, we believe that gold will outperform other assets and should rise in value in the medium term and taking a view on an annual or multi year basis.
Dent’s view that gold will fall to $700 per ounce appears to be based primarily on technical analysis. It ignores the important global supply and demand fundamentals in the international gold market. The above ground, refined, investment grade, physical gold market remains a very small market vis a vis stock, bond, property, cash and derivative markets. Even a small amount of extra demand for physical bullion internationally, given the lack of extra supply should support and indeed lead to higher prices.
To consider gold prices without considering the supply, demand factors driving the market and in particular the very significant demand from China, India and globally and indeed the central bank demand of today is quiet simplistic and liable to lead to erroneous conclusions regarding future prices.
As ever with insurance, it is important to focus on the value derived by the owner rather than solely speculations regarding the price. When buying insurance – whether that be car, health, house or the financial insurance that is gold it is also important to consider the risk of not having insurance and how much it may cost not to be insured.
Real diversification and an allocation to the insurance that is physical gold remains the key to weathering the second global financial crisis.
Gold Prices (LBMA)
23 Mar: USD 1,232.20, EUR 1,101.76 and GBP 870.03 per ounce
22 Mar: USD 1,251.80, EUR 1,117.35 and GBP 876.96 per ounce
21 Mar: USD 1,244.25, EUR 1,104.47 and GBP 863.60 per ounce
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
Silver Prices (LBMA)
23 Mar: USD 15.58, EUR 13.92 and GBP 10.99 per ounce
22 Mar: USD 15.89, EUR 14.16 and GBP 11.12 per ounce
21 Mar: USD 15.81, EUR 14.02 and GBP 10.99 per ounce
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
Gold News and Commentary
Gold futures log gains in wake of Brussels terror attack (Marketwatch)
Global stocks recover from early selloff; safe-haven assets ease (Reuters)
Spot gold slips as dollar gains dampen safe-haven trade (Reuters)
U.S. Stocks Fluctuate After Brussels Attack as Gold, Dollar Gain (Bloomberg)
Venezuela exports $456 Mln in gold to Switzerland amid cash crisis (Reuters)
Gold-to-Silver Ratio May Favor Silver (Marketwatch)
Global Ponzi Collapse and Munich Re’s Pot of Gold (Max Keiser)
Greatest crash of your life is just ahead (Nasdaq)
Another damning report suggests fund managers can’t do their jobs (Money Week)
Why Goldman is wrong about gold (CNBC)
Read More Here
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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 internationally. Secure your allocation of silver bullion coins by contacting us today.
Amazing, nobody asks why central banks engage in gold swaps?
(courtesy Chris Powell/GATA)
‘All central banks’ do gold swaps, Venezuelan central banker says, but who will ask why?
Submitted by cpowell on Tue, 2016-03-22 23:29. Section: Daily Dispatches
7:29a ChST Wednesday, March 23, 2016
Dear Friend of GATA and Gold:
In the report excerpted below Reuters reminds us today that in February the president of Venezuela’s central bank, Nelson Merentes, discussing gold swaps such as those the bank had begun, told the news agency: “It’s normal. All central banks do this.”
Seven years ago the U.S. Federal Reserve confessed to GATA, if inadvertently, its own participation in gold swaps, though, unlike Venezuela’s central bank, the Fed insisted on secrecy for its swaps:
But if “all central banks do this,” what is their objective?
In Venezuela’s case the objective is plain: The kleptocratic regime that has driven the country into the ground needs foreign currency, for which the national patrimony is being pawned. But what are the Fed’s purposes with gold swaps? And if Morantes is correct that “all” central banks undertake gold swaps, what are their purposes? What are they doing in the gold business? Is the objective similar to that of gold leasing by central banks, which, as Federal Reserve Chairman Alan Greenspan told Congress in 1998, was undertaken to hold the gold price down?:
And, of course, since the story has practically been hurled in their face, why aren’t Reuters and other mainstream financial news organizations asking about those other gold swaps? In spite of these admissions, do the news organizations really believe the pontifications of Casey Research founder Doug Casey and others that central banks couldn’t care less about gold?
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Venezuela Exports $456 Million in Gold to Switzerland Amid Cash Crisis
By Alexandra Ulmer and Corina Pons
Tuesday, March 22, 2016
CARACAS — Venezuela exported about 443 million Swiss francs ($456 million) worth of gold to Switzerland in February, data showed on Tuesday, as the South American country’s central bank carried out swaps to receive cash due to a biting economic crisis.
Details of the data published by the Swiss customs bureau were not immediately clear, though Venezuela’s central bank’s president in February confirmed to Reuters it had been carrying out gold swaps.
“It’s normal. All central banks do this,” said Nelson Merentes, adding that the operations have time frames of three to four years with multiple banks, which he did not identify.
“As part of our strategy, the (central bank’s) board of directors has decided to carry out swaps.”
The OPEC country is suffering from a severe recession, triple-digit inflation, and chronic product shortages. The government’s currency control system has slashed approval of dollars for product imports, leading to empty store shelves and snaking supermarket lines. …
… For the remainder of the report:
Koos Jansen: Venezuela sent another 12 tonnes of gold to Switzerland in February
Submitted by cpowell on Tue, 2016-03-22 17:10. Section: Daily Dispatches
3:06a VLAT Wednesday, March 23, 2016
Dear Friend of GATA and Gold:
Venezuela’s official gold reserves continue to flow to Switzerland, gold researcher and GATA consultant Koos Jansen reports today, with another 12 tonnes having been shipped in February to help sustain the beleaguered social government. Jansen’s report is headlined “Venezuela Exported Another 11 Tonnes of Its Official Gold Reserves to Switzerland In February” and it’s posted at Bullion Star here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Hugo talks about the huge problems facing France in 1790’s. Their problem: a scarcity of money. They solved that problem with Assignats and that set France into hyperinflation
a good history lesson for you:…
(courtesy Hugo Salinas Price)
It’s 1790 All Over Again
It was 1790 and the revolutionary National Assembly in Paris was worried.
Complaints were reaching the Assembly from all over France, that business was stagnant, sales were down, people were without work, and there was a great scarcity of money.
This was quite natural, because all business slows down when the prevailing source of Authority is under question. The Bastille prison had been taken the prior year by a revolutionary crowd and all sorts of ugly things were being said about King Louis XVI and his pretty young Queen, Marie Antoinette.
But this was the “Age of Reason” and the most educated, intelligent and reasonable people in France were members of the revolutionary National Assembly, which gathered daily in Paris.
The Assembly put their highly educated heads together and came to the conclusion that a scarcity of money was quite intolerable and that the Assembly must really do something about it.
“What do we have highly educated brains for, if we can’t solve the problem of a scarcity of money? Without a doubt, Reason can overcome this problem.”
So the members of the National Assembly thought about the problem of the scarcity of money, and came up with a splendid idea: “Let us create the necessary money, and things will go swimmingly.”
Thus was born the “Assignat”. Out of the collective wisdom of the Assembly, the Assignat was born as a claim upon the vast extension of lands recently taken by the State of France, from the Catholic Church. What could be more solid than a claim upon the lovely lands of dear France?
The Assignats were soon printed up, with various denominations of monetary value in gold Francs.
At first, the Assignats circulated alongside gold coin at par value. But soon enough, the exchange value of the Assignats against gold began to fall.
Thus began a nightmare episode that lasted seven years.
The first issue of Assignats did not relieve the problem of business being in a funk. So a second issue followed the first; and then another, and then more, and thick and fast they came at last, and more and more and more, falling, falling, always falling in value against gold.
The highly intelligent gentlemen of the Assembly decided that this fall in value of their Assignat must be the work of wicked, unpatriotic people who should be severely punished.
The Assembly decreed that a merchant should be punished by being sent to the galleys or to the guillotine, if he should venture to ask a customer who wanted to know the price of bread, with what money he planned to pay for the bread – whether it was with gold coin or with Assignats?
The Assembly created a national net of spies to hunt down the wicked hoarders of gold, confiscate their gold and have them part with their heads with a short, sharp shock on a big, black block.
In the meantime, the more intelligent of the citizenry took out enormous debts in Assignats, with the certainty that their value would soon plummet; with borrowed Assignats they purchased all sorts of things of lasting value, such as real estate, art and jewelry. In due course, the value of the Assignat fell to next to nothing and the debts were wiped out. Enormous wealth was transferred from the mass of the ignorant to the few who were able to see what was going on.
Eventually, the common people of Paris found that bread was hard to come by. Starvation set in, and the Parisian government had to provide rations of bread for the multitude – rotting, wormy bread.
In 1797 Napoleon came to power in France. He put a stop to the very reasonable plans of the highly educated men of the National Assembly, and declared that henceforth, only gold would be money.
In the center of the Place Vendome, where today there stands a great column surmounted by a statue of Napoleon, a huge bonfire consumed piles of freshly printed Assignats and the wooden printing machinery which fabricated them.
The highly educated and eminently reasonable men of the National Assembly had succeeded – in the mighty work of bringing France to its knees. But not one of those men, responsible for the colossal disaster, was ever known to have said about it: “We were mistaken”.
2016: Why is it 1790 all over again? Because just as in France in 1790, today we have a set of conceited men running the world’s economic policy on the basis of a flawed intellectual construct. In 1790, the flawed construct was the Assignat. Today, the flawed intellectual construct is the irredeemable dollar and its derivative currencies.
In 1790, gold was the enemy of those conceited men, because the depreciation of the Assignat against gold revealed the falsity of the Assignat; so the National Assembly did their best to suppress the use of gold by violence against its owners. Today, gold is once again the enemy of our conceited masters: gold, whose value threatens to expose the falsity of the irredeemable dollar.
In 1933, the value of the dollar in gold was 1 1/2 grams. Today, the value of the dollar is only about 2 1/2 hundredths of a gram of gold. Our conceited masters are struggling to keep their intellectual construct, the irredeemable currency which is the dollar, from plunging in value to thousandths and ten-thousandths of a gram.
Like the Assignat, which in 1797 fell to a value of zero grams of gold, the dollar faces the same inevitable fate. And since the rest-of-the-world’s currencies are derivatives of the dollar, they too will become worthless.
The fundamental flaw in the thinking of the conceited members of the National Assembly of France in 1790 was their mistaken idea that they could invent a money more suitable than gold to achieve the prosperity of France.
Today, the fundamental flaw in the thinking of our conceited Masters of the Universe is the same as that which blinded the members of the National Assembly in France, in 1790: they are convinced that their intellectual construct, the irredeemable dollar, is far more suitable than gold for use as money.
The conceit of the majority of the members of the National Assembly in France in 1790 led to the total prostration of the economy of France in the course of seven years. The conceited Central Bankers of today will without a doubt achieve a world sunk in economic prostration. But don’t expect any one of them to ever say “We were mistaken”.
So that’s why It’s 1790 All Over Again.
This morning: a huge silver flash crash along with a copper collapse
(courtesy zero hedge)
Commodity Carnage: Silver Flash-Crashes, Strong Dollar Sparks Copper Collapse
The combination of a stronger dollar, terrorism bullishness fading, and Jim Bullard’s hawkish chatter have sparked modest carnage in commodities this morning. Copper has plunged, gold has been slammed twice, and silver flash-crashed (again).
Close-up, this happened to Silver…
For Gold, “Tightening Isn’t Frightening” Says HSBC
Gold has historically rallied for at least 100 trading days after the first hike by the FOMC, but as HSBC’s Jim Steel explains, this time it could be longer. Steel sees three key reasons to remain bullish and forecasts USD1,300/oz this year (though warns that beyond that level, physical demand may weaken and help curb further rallies.)
Tightening and gold
Background: The end of the long-run bull market
A perceived change in Fed policy brought the most recent long-run gold bull market to an end. After 12 consecutive years of positive performance, gold posted its first year of losses in 2013. Gold entered a bear market in April 2013, when bullion prices collapsed more than USD100/oz over a two-day time span. Sensing a shift in Fed policy, investors began liquidating bullion in earnest in April. Gold lost almost 14% of its value within two days after unprecedented amounts of futures were sold short, triggering several stop loss limits that caused a further cascade of selling. Heavy gold ETF liquidation also occurred.
Fed policy perception played a key role in the selloff. In May and June 2013, expectations of a Fed tapering of its QE program led to rising real interest rates and falling inflation expectations that, in turn, set off more gold selling. By the time the market steadied – due almost entirely to unprecedented China-led emerging market physical buying as prices slumped – gold had declined by almost a 25% in the second quarter alone. Declines continued over subsequent months but at a more moderate pace. Nonetheless, the market remained on a downswing up to December 2015, when prices fell to a cycle low of USD1,045/oz.
Fed tightening and gold: bullish at the start of the cycle
Gold prices resumed the upswing this year. But the resumption of Fed tightening raises concerns that the recent rally may be snuffed out by Fed rate rises. Tightening Fed policies, however, do not necessarily mean the end of the current rally. The role of the Fed’s tightening cycle is important in determining USD levels (and therefore gold) and the shifts in US rate expectations continue to influence the greenback. HSBC’s FX team has pointed out in previous reports that history suggests the USD tends to weaken after the Fed raises rates. Looking at the previous four Fed tightening cycles that have happened over the past 30 years, the USD has fallen in the period immediately after the first rate rise.
The converse happens for gold. Charts 1-4 below and on the next page show that gold prices tend to rally as Fed tightening cycles get underway. Gold prices weaken going into a tightening cycle and then rally for the next 100 trading days. We seem to be well into this period but given that rate hike expectations continue to be pushed into the future (HSBC economists expect a hike in June), we expect the gold rally to last even longer.
Gold and rate hikes
This time we see room for the gold rally to be extended
Gold is still recalibrating after the 2013-2015 sell-offs. This notwithstanding, gold has already rallied more than USD200/oz, or more than 20%, since hitting cycle lows in December 2015 and the ceiling for gold may be approaching. Our top-end forecast for gold is USD1,300/oz this year. Beyond that level, physical demand may weaken and help curb further rallies.
Three reasons to remain bullish gold:
- Dovish FOMC,
- Bearish view on the USD
- Negative rates
A more dovish FOMC
A major plank in our thesis that gold is likely to remain reasonably well-bid rests on our view that the gold market is adjusting to fewer potential Fed rate hikes and, in totality, a very shallow hiking cycle. This week’s scaling back by the FOMC of its forecasts for lifting interest rates later this year triggered a gold rally and the ratcheting down of rate hike expectations to two 25bp point increases from four previously, is likely to keep the market buoyant. Simply put, the longer the Fed holds its fire in raising rates, the better for gold.
USD to weaken
How the financial markets and, more specifically, the foreign exchange markets react going forward, will be of key importance for gold. Given that this week’s FOMC meeting was more dovish than expectations means it could spur on the broader theme of USD weakness that HSBC’s FX strategists have highlighted was already getting traction. This is bullish for gold. According to HSBC FX research, some of the bull USD argument is predicated on anticipated Fed rate hikes. The Fed, however, has commented repeatedly on the negative impact of a strong USD on import prices in depressing inflation. Although off its recent highs, the USD is still 20% stronger than it was two years ago. A stronger USD reduces the need for Fed tightening. If this is the main reason to buy the USD, it may become self-defeating at high USD levels. This runs counter to the argument for a stronger USD predicated on rate tightening and is, therefore, gold bullish. The USD gained (and gold weakened) last year on the divergence of monetary policies. This is no longer happening and we are now seeing more of a convergence. The US Fed has revised its rate projections lower, while the ECB and Bank of Japan are no longer chasing their currencies lower. HSBC FX research continues to expect EUR-USD to finish the year at 1.20, which supports our view of firm gold prices.
A third pillar of support for gold is the global phenomenon of negative interest rates. As we highlighted in Gold rally: Gold glows in a negative rate world, 11 February 2016, gold is one of the few beneficiaries of negative interest rates and deteriorating risk sentiment. With an increasing number of central banks implementing a negative rates policy, and this reflecting continued economic weakness, we expect gold to be supported by this backdrop. Negative rates are a sign of distress, which may increase flight-to-quality demand for gold. They lower the opportunity cost of owning gold and therefore encourage purchases. If the negative rates are deep enough or persist long enough they may encourage the hoarding of cash and gold. Gold may be a better alternative to cash in some cases as gold does not carry the risk of central bank ntervention by a monetary authority wishing to limit its currency’s appreciation.
Your early WEDNESDAY morning currency, Asian stock market results, important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight
1 Chinese yuan vs USA dollar/yuan DOWN to 6.4984 / Shanghai bourse IN THE GREEN, UP 10.57 OR 0.35%/last hr rescue : / HANG SANG CLOSED down 51.52 POINTS OR 0.25%
2 Nikkei closed down 47.57 or down .28%
3. Europe stocks all in the green /USA dollar index UP to 95.85/Euro DONW to 1.1197
3b Japan 10 year bond yield: FALLS TO -.115% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112.68
3c Nikkei now JUST BELOW 17,000
3d USA/Yen rate now well below the important 120 barrier this morning
3e WTI:: 41.07 and Brent: 41.46
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 DOWN for WTI and DOWN for Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to 0.211% German bunds in negative yields from 8 years out
Greece sees its 2 year rate FALL to 9.48%/:
3j Greek 10 year bond yield RISE to : 8.79% (YIELD CURVE NOW INVERTED)
3k Gold at $1232.60/silver $15.64 (7:15 am est)
3l USA vs Russian rouble; (Russian rouble DOWN 22/100 in roubles/dollar) 67.70
3m oil into the 41 dollar handle for WTI and 41 handle for Brent/
3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/expect a huge devaluation imminently from POBC.
JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP
30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9731 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0895 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.
3p BRITAIN STARTS ITS CAMPAIGN AS TO WHETHER EXIT THE EU.
3r the 8 Year German bund now in negative territory with the 10 year FALLS to + .211%
/German 8 year rate negative%!!!
3s The Greece ELA NOW at 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 1.94% early this morning. Thirty year rate at 2.74% /POLICY ERROR)
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
Dollar Winning Streak Continues For Fourth Day Pushing Oil Lower; Futures Flat
Following two days of rangebound moves, where Monday’s modest market rebound was undone by the Tuesday just as modest decline (despite the early surge higher on the latest “bullish for stocks” European terrorism), overnight equity action continued to be more of the same, and as of this moment S&P 500 futures were unchanged, while European stocks were modestly higher. But while equities remain surprisingly uneventful despite loud warnings by both JPM and Goldman now that another bout of volatility and equity downside is coming, in FX there has been a substantial change, one which has seen the US dollar rise for a fourth day, the longest winning streak in a month, driven by the latest round of hawkish Fed jawboning courtesy of the Chicago Fed’s Charlie Evens yesterday, which in turn has pushed down prices of oil, gold and copper.
As noted earlier by Bloomberg, the greenback gained against almost all of its major peers, with only the Japanese yen keeping pace, after a Federal Reserve official commented on the interest-rate outlook. This is in line with a warning issued by JPM yesterday, according to which selling of USD is about to fall out of vogue as it heads for worst month since 2011. The bank said hedge funds cut bets on further gains in dollar to the lowest since 2014 prior to last week’s Fed meeting, and with speculators having already ditched the U.S. currency, few are left to sell and push it down further, making greenback less susceptible to outflows of hot money. The last 4 days appear to have confirmed just this.
Elsewhere, the British pound fell to a one-week low after the explosions that killed at least 31 people in the Belgian capital stoked bets on the U.K. leaving the European Union. And speaking of terrorism, some were surprise that the initial selloff transformed into a surprising rally after yesterday’s bomb Brussels explosions, although as we showed, this is precisely the pattern followed by markets following terrorist events.
“Usually such attacks will have only a short-term impact,” said Chris Green, an Auckland-based strategist at First NZ Capital Group Ltd., a brokerage and wealth management firm. “Investors focus remains on macro-economic fundamentals and we do need to see more signs of sustainability in the U.S. economy and some stability in the Chinese data. I’m somewhat cautious given the recent rally we’ve seen.”
Still, others expressed a more skeptical outlook than merely being swayed by the manipulated price action: “There is a growing perception among European public opinion that EU leaders are not in control of the continent’s terrorist threat,” Mujtaba Rahman, director of European analysis at Eurasia Group, said in a note to clients. “This will in turn put more pressure on incumbent governments and limit their space for policy action to address Europe’s multiple crises.”
In any case, as a result of the stronger dollar and weaker euro, European stocks rose, more than recouping losses recorded after Tuesday’s deadly terror attacks in Brussels. The Stoxx Europe 600 Index rose 0.4 percent, the biggest gain in more than a week. Futures on the Standard & Poor’s 500 Index were little changed, while the MSCI Asia Pacific Index slipped 0.8 percent from its highest close since Jan. 1.
Australia’s S&P/ASX 200 Index fell 0.5 percent , while benchmark shares gauges in Hong Kong and Japan declined by as much as 0.4 percent. BHP Billiton Ltd., the world’s largest mining company, slid 1.7 percent in Sydney. Newcrest Mining Ltd., Australia’s biggest gold producer, sank 4.8 percent.
Where markets are at this moment:
- S&P 500 futures unchanged at 2044
- Stoxx 600 up 0.4% to 342
- FTSE 100 up 0.2% to 6203
- DAX up 0.8% to 10071
- German 10Yr yield up 2bps to 0.23%
- Italian 10Yr yield up less than 1bp to 1.26%
- Spanish 10Yr yield up 9bps to 1.52%
- S&P GSCI Index down 0.3% to 336.4
- MSCI Asia Pacific down 0.8% to 129
- Nikkei 225 down 0.3% to 17001
- Hang Seng down 0.2% to 20615
- Shanghai Composite up 0.4% to 3010
- S&P/ASX 200 down 0.5% to 5142
- US 10-yr yield up less than 1bp to 1.94%
- Dollar Index up 0.29% to 95.92
- WTI Crude futures down 0.7% to $41.16
- Brent Futures down 0.4% to $41.62
- Gold spot down 1.1% to $1,234
- Silver spot down 1.7% to $15.62
Top Global News
- Brussels Attack Suspects Sought as Suicide Bombers Identified: Authorities searching for 1 of 3 men filmed on closed-circuit TV wheeling baggage carts at airport after identifying 2 suicide bombers.
- Credit Suisse to Cut More Jobs, Speed Up Trading Reductions: Bank plans to eliminate an additional 2,000 jobs this year; deepen cuts at investment banking business.
- Clinton, Trump Win Arizona Primaries, Cruz Takes Utah Caucuses: Bernie Sanders won Democratic caucuses in Utah, Idaho.
- Nike Tumbles After Tepid Forecast Raises Concerns About Growth: Sales will increase by a high-single-digit percentage during next fiscal year.
- Amazon Exec. Undercuts Staples Claim of Competitive Threat: Amazon.com struggling to win primary office-supply contracts with companies, undercutting key argument that Staples is making to defeat U.S. opposition to its planned Office Depot deal.
- Zoox Gets Self-Driving Auto Permit to Build Uber for Robo Cars: Co. was granted permission by California to test self- driving cars on public roads in the state.
- Amazon Hosts Exclusive Robotics Conference in Palm Springs: Robotics cos., academics descended on resort in Palm Springs this week for an invitation-only conference.
- Oil Security Seen at Risk by IEA on ‘Historic’ Investment Cuts: Cuts taking place now increase possibility of surprises in “not-too-distant” future, says IEA’s Oil Industry & Markets Neil Atkinson.
* * *
Looking at regional markets, we start in Asia where stocks traded negative with sentiment cautiousfollowing the Brussels terror attacks. ASX 200 (-0.50%) underperformed with commodity names leading the declines after a retreat in metals and oil prices, which saw WTI retest the USD 41/bbl level to the downside after a large build in API crude inventories. Elsewhere, Nikkei 225 (-0.3%) saw choppy trade with the index driven by the overall risk-averse tone, while the Shanghai Comp (+0.4%) moved between gains and losses after several uninspiring earnings releases. Finally, 10yr JGBs were initially lower following spill-over selling from UST’s, but then recovered following a strong enhanced liquidity auction later in which the b/c rose to 3.92 vs. Prey. 2.87 and saw 92% allotted at the highest spread. Japan’s parliament has confirmed Sakurai as replacement for outgoing BoJ board member Shirai.
Top Asian News
- Biggest Currency Trader Backs Rupee Amid Best Rally in Two Years: Citibank’s Vohra sees 66-69 a dollar range in medium term
- China Inc. ‘Bleeding’ From Yuan Devaluation Seeks Hedging Help: KVB Kunlun Global Capital says hedging rose >50% this year
- Woodside Scraps $40 Billion LNG Project After Price Collapse: Australian producer won’t go ahead with floating LNG development
- Thailand Holds Rate a 7th Time as Government Bets on Stimulus: Bank of Thailand waits to gauge success of fiscal efforts
- Pimco Sees China Debt in Global Gauges by 2018 – With Caveat; Timing will depend on addressing settlement concerns, Spajic says
- Citigroup Asia-Pacific Prime Finance Head Joseph Chang Leaves: Chang left to pursue other opportunities, according to memo
European equities have seen somewhat subdued price action amid light news flow with the Eurostoxx (+0.5%) residing in the green, albeit mildly so. Softness has been observed in energy names in tandem with WTI and Brent futures following the latest API crude oil inventory which produced a substantially higher than expected build ahead of today’s DoE report. Elsewhere, Credit Suisse (+3.2%) has outperformed after reports that the company is to cut an additional 2000 jobs as well as deepen their cost cutting measures. With the upside in European equities, Bunds have tracked USTs lower, which comes ahead of supply from UK, Germany and Portugal while early month-end flows could potential come into play due to the holiday shortened week. Additionally, the 10-30yr curve held steady around 70bps before the 30yr reopening.
Top European News
- Brussels Attacks Hurt Cameron’s Europe Pitch, Merkel’s Open Door: Bombings seized upon by proponents of Britain leaving the bloc to argue that EU membership puts the U.K. more at risk.
- Italy’s Popolare, BPM Said to Edge Toward Merger After ECB Talks: Banks edging closer to merger that would create Italy’s third-largest bank after adjusting terms of an agreement to satisfy ECB: people familiar.
- Hungary Succumbs to Economic Reality in Restarting Easing Cycle: Hungarian central bankers surprised market by bringing forward cuts to combat persistently below-target inflation.
- Premier Foods Rejects Approach From McCormick: Says McCormick all-cash approaches at 52p, 60p/share rejected; significantly undervalues Premier’s growth prospects.
- Sparkle Roll Says Shareholder, Not Itself, in Talks to Buy B&O: Private company owned by Qi Jianhong is in talks to buy Bang & Olufsen.
- Hermes Profit Rises as Bag Maker Copes With Paris Attacks: Operating profit rose 19% to 1.54b euros vs est. of 1.52b euros
In FX, the Bloomberg Dollar Spot Index, a gauge of the greenback’s strength, rose 0.2 percent to a one-week high. Chicago Fed chief Evans said Tuesday that projections for two rate hikes this year were “a pretty good setting” for him. South Korea’s won dropped 0.6 percent, its biggest loss in two weeks.
“Evans’s comments are taken hawkishly by the U.S. dollar,” said Imre Speizer, a markets strategist at Westpac Banking Corp. in Auckland. “If we continue to hear comments along those lines, then the market will see one reason to perhaps adjust its pricing for a hike from the end of this year, to something earlier.” The pound weakened 0.1 percent to $1.4188, having slid 1.1 percent on Tuesday amid speculation the Brussels terror attacks will boost the case of campaigners who want to see Britain out of the European Union. Pro-“Brexit” politicians argued that migration leaves the nation vulnerable to attack, while figures in the opposing camp, including Prime Minister David Cameron, have said that being part of the economic and political union aids security.
In commodities, brent crude fell 0.7 percent to $41.48 a barrel, having rebounded over the past two months from a 12-year low of less than $28. U.S. stockpiles increased by 8.8 million barrels last week, the industry-funded American Petroleum Institute reported Tuesday, according to a document obtained by Bloomberg. Libya will skip a meeting between major oil exporters in Doha next month to freeze output, according to a person familiar with the situation.
“The large U.S. crude stockpiles will act as a headwind to price gains,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “If producers can agree to remove some incremental supply from the market at the Doha meeting, what they lose in production, they gain in a price rise and additional revenue. Just talking about a freeze has helped oil move higher.”
Gold for immediate delivery fell 1.1 percent, following a 0.4 percent advance in the last session, while platinum lost 1.3 percent. Bullion jumped as much as 1.3 percent during trading on Tuesday following the Brussels bombings.
* * *
Bulletin Headline Summary
- Treasuries steady overnight, European equity markets rally, Asian markets drop, U.S. dollar spot index up 1% since hitting YTD low on March 17; economic data today includes new home sales.
- With Britain’s referendum on the European Union exactly three months away, Bank of England officials are agonizing over the dangers from a vote to leave
- London’s finance industry would “flourish mightily” if Britain votes to leave the European Union in the referendum on June 23, London Mayor Boris Johnson told lawmakers
- Credit Suisse Chief Executive Officer Tidjane Thiam pledged to accelerate a restructuring amid a trading slump, targeting deeper cost cuts at the securities unit and eliminating an additional 2,000 jobs
- Energy producers clobbered by the worst price slump in decades have cut billions of dollars in spending, raising the potential for oil-supply shocks in the future, according to the International Energy Agency
- Strength in real estate and labor markets helped consumers in China’s biggest cities shrug off last year’s slowdown, according to a new survey based on 12,000 interviews
- Police captured the main suspect still on the run following Belgium’s worst terrorist attacks as heavy security persisted in Brussels after the strike by Islamic State
- $6.05b priced yesterday, WTD to $8.75b, MTD $138.555b and YTD to $432.805b; $2.3b HY priced yesterday, MTD 19 deals for $12.265b, YTD 44 deals for $27.12b
- Sovereign 10Y bond yields mostly steady; European, Asian equity markets mixed; U.S. equity-index futures mixed. WTI crude oil, gold and copper fall
DB concludes the overnight wrap
It is difficult to focus our attention over to markets following yesterday’s tragic events in Brussels. The tragedy further complicates the already polarizing debate surrounding Europe’s security concerns and migration crisis. We have already seen some extreme parties point to the event to make their case against open immigration. Ahead of the EU Referendum in June, Brexit concerns arguably flared up with the pound declining the most among major currencies yesterday (GBPUSD -1.12% yesterday). In addition to these political ramifications, we may also see shocks to economic confidence weigh on Eurozone growth that has been steadily gaining momentum.
Looking at our screens this morning, Asian equity markets are generally softer this morning as we go to print. Chinese equities are down again (CSI -0.64%; Shanghai Comp – 0.51%) after posting losses yesterday that ended a seven day winning streak. Elsewhere the Hang Seng (-0.54%, Kospi (-0.24%) and Nikkei (-0.34%) are also all down. Oil has also traded lower this morning (-1.75%) ahead of US crude inventory data that is expected to show a build-up of stockpiles.
Now we review some of the price action from yesterday. European equity markets showed resilience following the events in Brussels, with the STOXX recovering from early losses of up to -1.6% to close the day only marginally down -0.15%. The DAX and FTSE tracked a similar path but pushed through into positive territory, ending the day up +0.42% and +0.13% respectively. After a weak start US equities rallied into positive territory but faded into the close to leave the S&P (-0.09%) and the Dow (-0.23%) marginally down for the day. Some of the early weakness can arguably be attributed to the stronger dollar (+0.38%) that followed some hawkish Fedspeak the day before. That said equities in both Europe and the US were supported by the generally positive economic data out yesterday (more on this later).
Looking now at credit markets while cash spreads edged tighter again, CDS indices were generally wider on the day. iTraxx Main and Crossover spreads widened by around 2bps and 7bps respectively; meanwhile CDX IG and HY widened by 3bps and 10bps respectively. Looking over at the other end of the risk spectrum, government bond markets saw 10yr Bund yields fall by 2bps on the back of some increased demand for safe haven assets. On the other hand, 10yr Treasury yields actually rose by just over 2bps despite a good start to the day which saw yields as much as 3bps lower. While gold (+0.37%) ended the day in positive territory it finished comfortably off the day’s highs having been up as much as +1.35% earlier in the day.
Turning attention to yesterday’s data. The focus was of course on the PMI numbers out in the Eurozone, France, Germany and the US. Starting out in Europe, we saw the Eurozone composite PMI for March clock in above expectations at 53.7 (vs. 53.0 expected) while the manufacturing PMI was in line with expectations at 51.4. France and Germany both saw positive surprises in their services PMI prints of 51.2 (vs. 49.5 expected) and 55.5 (vs. 55.0 expected) respectively. However, they also saw their manufacturing PMIs disappoint, as the Germany number came in at 50.4 (vs. 50.8 expected) while France fell into contractionary territory (49.6 vs. 50.2 expected; 50.2 prior). Nevertheless, composite PMIs for France beat expectations and swung into expansionary territory (51.1 vs. 49.7 expected) while the German composite PMI matched expectations at 54.1. German business confidence also improved for the first time in four months as showcased by the IFO business climate survey numbers (106.7 vs. 106 expected; 105.7 prior), which was driven by an improvement in business conditions across almost all sectors. The IFO current assessment (113.8 vs. 112.7 expected; 112.9 prior) and expectations (100.0 vs. 99.5 expected; 98.8 prior) indicators also beat expectations and demonstrated improving sentiment. The only negative data point was the ZEW survey indicator for Germany which failed to meet expectations, as the current situation indicator slipped from the previous month (52.3 prior) to 50.7 (vs. 53.0 expected). The expectations indicator also disappointed relative to expectations (4.3 vs. 5.4 expected) but rose from the previous print of 1.0. On the back of the largely positive data our European economists point out that DB’s proprietary SIREN-momentum indicator remains close to last week’s 5-year high while SIREN-surprise has almost bounced back into positive territory from a near four-year low less than a month ago.
Heading over to the US now, we also saw the latest US manufacturing PMI reading which disappointed at 51.4 (vs. 51.9 expected), but also rose slightly from February’s print of 51.3. New orders also rose to 52.8 (vs. 52.3 prior). More positive news came in the form of the Richmond Fed’s March Manufacturing Survey which clocked in well above expectations at 22 (vs. 0 expected; -4 prior). Inventory levels of finished and raw goods both decreased from the previous month. Finally we saw the FHFA House Price index rise in line with expectations at +0.5% mom.
The day ahead is a fairly quiet affair on the data front. The only data of note is from the US where we get the latest new homes sales numbers for February (510k expected; 494k prior). We do however have some further Fedspeak with St. Louis Fed President Bullard due to speak on Bloomberg TV in New York. We will also hear from the Nouy and Lautenschlager at the ECB.
Let us begin;
Late TUESDAY night/ WEDNESDAY morning: Shanghai closed UP BY 10.57 POINTS OR 0.35% , / Hang Sang closed DOWN by 51.52 points or 0.25% . The Nikkei closed DOWN 47.57 . Australia’s all ordinaires was DOWN 0.47%. Chinese yuan (ONSHORE) closed DOWN at 6.4984. Oil FELL to 41.09 dollars per barrel for WTI and 41.47 for Brent. Stocks in Europe so far ALL IN THE GREEN . Offshore yuan trades 6.50257 yuan to the dollar vs 6.49840 for onshore yuan/LAST 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.LAST WEDNESDAY, China signals that they are going to tax financial transactions. last night bond yields in Japan plummet and invert signalling trouble for their economy
REPORT ON JAPAN
Pure insanity: the 10 yr Japanese bond yield is now below the negative deposit rate and the 40 yr bond yield rate is below the 30 yr bond yield rate. Pure unadulterated mayhem!The pool of positive yielding bonds are disappearing fast!!
(courtesy zero hedge)
Bank Of Japan Unleashes Yield Curve Chaos: JGBs Inverted At Short- And Long-End
You know you have ‘tinkered’ too much in the machinations of what dealers now call a “dead market” when the world’s largest sovereign bond market is inverted at the short-end and the long-end. The utter folly of Peter Pan policy has sent 10Y JGB yields below the BoJ’s overnight call rate for the first time ever…
Japan’s 10-year bond yield dropped to a record -12.5bps Friday, falling below the the negative deposit rate introduced by the Bank of Japan last month, after the central bank’s operation to buy long-term debt met the lowest investor participation on record. Yields on government debt have tumbled since the BOJ announced Jan. 29 that it would start charging 10bps interest on some deposits held at the bank starting Feb. 16.
40Y Yields are down a stunning 90bps since the BoJ went full retard… to record lows.
AND yields are so low that demand for 40Y JGBs has driven its yield below the 30Y yield by the most ever…
As Bloomberg notes, Japan’s long-term bond yields extended their push to record lows, driven by a shortage as the central bank buys record amounts of securities.
Investors are hoarding the debt because it still pays interest, while shorter maturities have negative yields.
“We’re in a situation where traders have no stock of the bonds,” said Hideo Suzuki, the chief manager of foreign exchange and financial products trading at Tokyo-based Mitsubishi UFJ Trust & Banking Corp.
A double inversion – we are sure just a little more debt monetization and the ‘deflation mindset’ will be vanquished.
Crucially, Japanese bond investors are increasingly reluctant to sell their holdings of longer maturities to the central bank as the pool of positive-yielding debt shrinks.
This means, as BNP Paribas warns, that there is a risk that The BoJ’s bond buying operations will fail to meet target this month, Tomohisa Fujiki, chief rates strategist at the bank.
In other words – Kuroda just hit the limit of his lies – any more buying from here and arguing that this is not direct debt monetization is simply folly. And as he reminded the world’s investors recently – just like Peter Pan, once you stop believing, monetary policy’s effectiveness is destroyed.
We can only imagine the capital controls that are coming..
How long that this be kept up?
(courtesy zero hedge)
Greek Border Desperation: 2 Refugees Self-Immolate Over ‘Concentration Camp’ Conditions
Just days after Greek Interior Minister Panagiotis Kouroumplis compared the nation’s refugee camps to WW2 concentration camps, saying “I wouldn’t hesitate to say that this is a modern Dachau,”KeepTalkingGreece reportstwo men poured gasoline on their clothes and set them on fire on Tuesday morning to protest the appalling conditions at Idomeni camp and the closure of the borders.
Other refugees who were standing by managed to extinguished the fire and save their lives. But both men suffered injuries and were transferred to hospitals in Kilkis and Thessaloniki, reports the Athens news Agency.
With their action, the two refugees reportedly wanted to protest the appalling conditions at Idomeni camp and the closure of the borders.
The action triggered tension among the other refugees who stated to chant “Open borders”.
Last night another man set poured fuel on his clothes, other refugees were quick to stop him from set himself on fire.
Another group of some 50 refugees and migrants demonstrate with a sit-in on the rail tracks.
More than 13,000 people of several nationalities and refugee or migrant status insist on staying at Idomeni camp, despite repeated Greek government calls that they should move to “accommodation centers” set by the Greek Army across the country. They hope that the borders to FYROM will open and that they can reach Germany and other countries.
The government has repeatedly said that it “will not remove the people form Idomeni by force.”
Greek Interior Minister Panagiotis Kouroumplis compared the camps to Dachau. “I wouldn’t hesitate to say that this is a modern Dachau,” he said, lamenting what he called “the awakening of a kind of nationalism against persecuted people.” As we showed previously, Indomeni is an atrocity…
“I don’t know how long the Greek government will keep its non-violent approach, if troubles continue up there in Idomeni.”
Bearish British Pound Bets Hit Record High As Poll Shows Brexit Most Probable
The campaign for Britain to leave the European Union has taken a 2 percentage point lead, according to an ICM poll, to 43%, up 2 percentage points from a similar poll a week ago and the highest proportion in favour of a British exit since ICM started its referendum tracker in May 2015. Bearish bets on GBP have soared to record highs as a split within the governing Tory party and the atrocities in Brussels have sent bookies odds to their highest yet.
As Reuters reports, support for Britain to leave the EU rose to 43 percent, up 2 percentage points from a similar poll a week ago and the highest proportion in favour of a British exit since ICM started its referendum tracker in May 2015.
Three months before a June 23 referendum, the poll of 2,000 people carried out March 18-20 showed the “In” campaign on 41 percent, down from 43 percent a week ago.
Cameron faces one of the deepest crises of his decade-long leadership of the Conservatives after senior cabinet minister Iain Duncan Smith, who opposes EU membership, resigned last week over plans to cut spending on welfare.
Divisions over EU membership – an issue that helped sink the Conservative premierships of Margaret Thatcher and John Major – have amplified such disputes within the party.
“The Tories are overtly split and that is never a good look,” Martin Boon, director at ICM, said.
“It’s possible that the split and the budget is creating EU dissatisfaction by proxy but equally it could be the public moving toward a more pro-Brexit positionor just normal sampling variation in the polls. Only time will tell,” he said.
The cost of hedging against sharp swings in sterling surged to its highest ever on Wednesday as investors stepped up to protect themselves from the uncertainty of Britain’s upcoming vote on whether to stay in the European Union.
And, as Reuters adds, the odds of Britain voting to leave the European Union in a June referendum narrowed on Tuesday as attacks in Brussels that killed at least 34 people were seen boosting the ‘Out’ campaign.
Bookmaker Paddy Power narrowed its odds on a Brexit to 7/4, or 36 percent, from 2/1, or 33 percent, on Monday. Betting website Betfair also shortened its odds to 36 percent, while four major bookmakers, including Bet 365 and Sky Bet, narrowed their odds to 6/4, or 40 percent, following the attacks.
PredictIt, a political prediction website run by Victoria University in Wellington, New Zealand, said the chances of an ‘Out’ had increased to 45 percent.
“What we’ve seen today in Brussels … may sway people (toward voting to leave the EU), so I think that’s why the bookies have shortened the odds,” said Chris Hawkes, a currency trader at ETX Capital in London.
“The average man on the street doesn’t really understand the ins and outs of a Brexit, and border control seems to be one of the primary concerns, so when we see attacks that we’ve seen today this is going to make people more staunch on their standpoint,” he added.
Credit Suisse Blames “Worst January Ever” On Rogue Traders; Fires 2,000
When last we checked in on Credit Suisse, things weren’t going so well.
The bank had just reported a $6 billion loss – in the fourth quarter. The red ink for 2015 totaled some $3 billion, representing the firm’s first annual loss since the financial crisis. Shares promptly plunged 13% to their lowest level in nearly a quarter century.
That was the first time the market got a look at a report issued under CEO Tidjane Thiam’s new structure which aims to increase the bank’s focus on wealth management while scaling back investment banking where revenues fell 17% last year thanks to market “volatility.” Fixed income revenue plunged by two-thirds.
Thiam is planning on cutting some 4,000 jobs in the restructuring. Actually no, scratch that. As of Wednesday morning, Thiam is planning on cutting 6,000 jobs. On a call with reporters, the CEO – who took the reins last summer – announced the firm’s second restructuring plan in five months (“restructuring-er-er”) as trading revenue is now projected down a horrific 45% in Q1.
“We’re cutting deeper, there will be more restructuring costs,” Thiam told Bloomberg this morning. “What we’ve announced today is really pushing the cost-cutting program further,’ Thiam said in the interview. “If you look at markets, January was the worst January ever.”
Yes, “the worst January ever” as IBCM posted a Q1 loss as a dearth of primary market activity hurt underwriting revenues. Thiam has requested a 40% cut in his own variable pay. “Credit Suisse plans to exit most of the distressed credit, European securitized product trading and long-term illiquid funding, while equities will remain ‘a core area of focus,’” Bloomberg reports.
Here’s Goldman with a summary of what Thiam announced this morning:
- CS pre-announced weak results for 1Q16 with gross writedowns of $346mn in the GM business as of March 11 ($633mn in 4Q) and the bank expects further writedowns to result in a loss for 1Q.
- Management said GM revenues have remained weak, with negative operational leverage.
- YTD it has seen net new asset inflows for APAC, International Wealth Management (IWM) and Swiss Universal Bank (SUB) of CHF3.6bn, CHF7.1bn and CHF4.5bn, respectively.
- CS expects resilient pre-tax income in SUB.
- CS revised its headcount reduction target to 6,000 (vs. 4,000 announced earlier), of which 2,800 have been achieved YTD across all divisions.
- The incremental headcount reduction should be driven by additional GM restructuring.
- The revised gross cost reduction target would drive the group’s operating cost base to CHF3bn.
- For 2016, CS aims to achieve CHF1.7bn and CHF1.4bn in gross and net cost savings, respectively, and achieve an operating cost base of CHF19.8bn.
- Of the CHF4.3bn in cost savings, CHF1.2bn will be in the GM and IBCM businesses, CHF1.5bn at the Strategic Resolution Unit, CHF0.4bn at the SUB, CHF0.2bn at IWM and CHF1bn at the Corporate centre.
- CS has reduced its (1) distressed credit exposures to $2.1bn as of March 11 (from $2.9bn in 4Q15), (2) US CLO secondary exposures to $0.3bn (from $0.8bn in 4Q).
- Of the $346mn write down in 1Q, $115mn was in securitized products, $99mn in distressed credit, $44mn in leveraged finance underwriting and $88mn at the corporate bank.
- On GM rationalization, management said it intends to exit the following businesses (1) distressed credit, (2) European securitized products trading, and (3) long-term illiquid financing.
- The group is targeting a combined 35% RWA reduction in (1) flow credit trading, (2) US securitized products, (3) trading, (4) global asset finance and (5) single name & illiquid CDS.
- It targets a combined 16% RWA reduction in (1) structured equity derivatives, (2) flow equity derivatives, (3) corporate equity derivatives, (4) convertibles, (5) structured credit, (6) fund-linked products and (5) EM financing
Ok, so let’s just break all of the above down in the simplest possible terms: 1) Thiam is cutting 50% more jobs than he was before, 2) trading revenue is a disaster and has basically been cut in half, 3) the bank is trying to get out of anything that even sounds like it might be dangerous in a stressed scenario, including distressed credit and anything that’s securitized.
Whose fault is it that the bank was overextended in distressed credit and securitized products? Why, rogue traders’ fault of course. “The firm’s traders had ramped up holdings of distressed debt and other illiquid positions without many senior leaders’ knowledge, helping lead to a first-quarter loss in the markets business,” Thiam told Bloomberg, pulling a UBS. “This wasn’t clear to me, it wasn’t clear to my CFO and to many people inside the bank” he said. “There needs to be a cultural change because it’s completely unacceptable.”
Right. Thiam also said there would be “consequences” for those responsible. We assume they will be included in the 2,000 employees who are now set to be fired. “A lot of the problems in the investment bank have been that people have been trying to generate revenue at all costs,” Thiam continued. “People were reluctant to reduce it because it would’ve exposed their cost problem.”
Or maybe they were “reluctant to reduce it” because head of global markets Timothy O’Hara said in October that the bank “intends to defend [its] highly profitable securitized products and credit franchises,” the former being “one of the strongest client positions of any business in the firm, while also being one of our most consistently profitable businesses within global markets.”
Global markets will incur a “big loss” in Q1. It’s also where all 2,000 of the new job cuts are coming.
Anyway, quarterly losses and layoffs are good news, which is why the stock is up on Thiam’s latest grim projections:
Thiam said he’s “confident” going forward, although he doesn’t want to get ahead of himself. “But really this is a very dislocated market, my natural caution makes me say that this is it for the moment. I don’t want to be hostage to fortune.”
RUSSIAN AND MIDDLE EASTERN AFFAIRS
The real economy inside Brazil continues to collapse as Rousseff refuses to resign.
Today’s huge fall in oil and copper certainly did not help their cause
(courtesy zero hedge)
Brazil’s President Digs In: “I Will Never Resign Under Any Circumstances!”
“My opponents have gone crazy, [but] let them come for me. I will hang on to power until the final day” — Nicolas Maduro
The history of postcolonial Latin American politics is replete with examples of turmoil and unrest and it now appears as though we may see not one but two coups before the end of the calendar year. The quote above is from Venezuela’s hapless autocrat who is desperately clinging to power by selling the country’s impoverished citizens on his own fantasy wherein Caracas is locked in an epic ideological struggle with Washington.
To the south, there’s a far more serious (in terms of ramifications for the global economy) drama playing out. Brazilian President Dilma Rousseff is locked in a battle for her political life and for the survival of the Worker’s Party, the leftist movement founded by her mentor and former President Luiz Inácio Lula da Silva.
Rousseff could be impeached as early as May on charges that she cooked the fiscal books in 2014 in the lead up to elections. The President is also attempting to dispel the notion that she was in any way involved in bribery and corruption at Petrobras, where she was chairman. So far, the car wash probe – which is being conducted by “rockstar” judge Sergio Moro – hasn’t reached the presidential palace’s doorstep, but Rousseff feared that might change when Lula was detained earlier this month. The former President’s arrest came after Senator Delcídio do Amaral delivered damaging testimony against Rousseff as part of a plea deal with prosecutors.
In order to save Lula (and likely herself) Rousseff offered her mentor a ministerial position that would shield him from prosecution. Long story short, the gambit backfired. Moro tapped her phone and released embarrassing tapes to the media triggering massive street protests, the courts blocked Lula’s appointment, and Rousseff’s enemies in Congress pointed to the Lula debacle as still more evidence of why she needed to be impeached.
Meanwhile, the economy continues to crumble.
That, in a nutshell, is where things stand now and despite the odds, Rousseff is doing her best Maduro impression. “I will never resign under any circumstances,” she told a gathering of legal experts on Tuesday. “I have committed no crime that would warrant shortening my term.”
That will ultimately be up to a newly-formed impeachment committee (¼ of which are themselves facing Supreme Court charges) and as Reuters notes, “the political survival of Brazil’s first female president depends largely on her main coalition partner, the centrist Brazilian Democratic Movement Party [where] growing numbers of lawmakers want the party to leave Rousseff’s government.” Although a decision could be reached at a March 29 executive committee meeting, some members of the party want to push a final ruling to April.
PMDB votes could ultimately decide Rousseff’s fate on the impeachment committee and if she is indeed ousted, party leader and VP Michel Temer would take over the presidency. Of course as Globo reminded us earlier today, Temer may himself be a target in investigators’ probe.
And while lawmakers and judges battle it out for political supremacy, the central bank and its beleaguered President Alexandre Tombini are desperately attempting to rein in excessive BRL strength in an effort to ensure the currency can adjust to macro fundamentals and thus help cushion the economy.
Reverse FX swaps have helped to put a lid on the BRL appreciation that’s accompanied growing calls for Rousseff’s ouster. Here’s the total stock as things stand now:
As Goldman wrote last week, “to increase the efficiency of the macro adjustment and lessen the output/employment loss of the required rebalancing, the authorities should restrain BRL/USD appreciation below 3.70.” We’re at 3.66 currently:
Apparently, the BCB is going to try to thread the policy needle, as it were, by using reverse swaps to contain the pace of BRL appreciation while simultaneously using expected BRL strength to justify rate cuts. If that sounds like a difficult task to you, that’s because it is.
Anyway, the real economy continues to collapse. Last month was the worst February on record for jobs…
… as employment fell 3.6% Y/Y and real wages declined by 7.5%. Here’s Goldman’s breakdown:
Employment declined by a large 3.6% yoy (-841K jobs). However, the economically active population declined 1.1% yoy (-276K individuals left the labor force). The variation (decline) of the economically active population went in the opposite direction of the +1.4% increase in the working-age population. Hence, the significant decline in the participation rate prevented an even sharper acceleration of the unemployment rate.
We expect the labor market to deteriorate further. Policy tightening, depressed consumer and business confidence, and tighter financial conditions are expected to lead to a deep recession in 2015-16, visibly higher unemployment rates in 2015 and 2016, and declining real wage growth.
We also got a look at trade data for February and that too was disaster as the country posted a current account deficit of $1.9 billion for the month on expectations of a tiny $150 million shortfall. About the only thing good to say about it was that it was better than last February’s mammoth $7.2 billion deficit. Commenting, Goldman harkens right back to the BRL discussion: “Reacquiring export knowledge and rebuilding such a culture will likely take a few years of learning; something that requires the expectation of a relatively cheap-to-fair-value BRL for some time to come, and also a conservative monetary policy stance to induce a gradual but permanent decline in the relative price of non-tradable over tradable goods.” Again, a delicate monetary balancing act.
It’s truly difficult to know what to say at this point. The country is rapidly becoming a banana republic and may well go down in history as one of the most spectacular examples of economic and political backsliding the modern world has ever seen. We won’t even speculate on the fate of the Olympics.
We’ll simply close by paraphrasing something Lula said to Rousseff on one of the phone calls Moro secretly recorded last week: “It’s all fucked [and] everyone thinking that some kind of miracle is going to happen.”
Record Loss For Petrobras As Political And Economic Crisis Worsen
Petrobras reported a record loss for the fourth quarter, a horrendous performance that raises questions about the company’s ability to handle its mountain of debt.
The state-owned Brazilian oil company announced that it lost more than 36 billion reais in the fourth quarter, or more than USD$10 billion, a 40 percent increase compared to the fourth quarter of 2014. The losses were all the more staggering because the previous year’s figures were inflated due to the massive corruption scandal, which continues to bedevil the company.
The problem for Petrobras is that it has the world’s largest pile of debt, bigger than any other oil company. And that debt, much of which is priced in U.S. dollars, is becoming more expensive to service, particularly since the Brazilian real has depreciated significantly over the past year. As The Wall Street Journal notes, Petrobras’ debt has jumped to just about 800 billion reais, or about 10 percent higher than at the end of 2015, despite spending cuts.
(Click to enlarge)
Petrobras previously announced plans to sell off USD$15 billion in assets, but has struggled to find buyers.
The results were vastly worse than the market expected. A Reuters survey beforehand found that even the most pessimistic estimates only predicted a loss of 9.7 billion reais for the quarter. Petrobras also wrote off 46.4 billion reais in impairment charges, 83 percent of which was connected to upstream oil assets. That came as falling oil prices pushed some deposits out of reach, forcing write-downs.
Petrobras also wrote off 5.28 billion reais related to a large refinery in Rio de Janeiro that has yet to be completed due to insufficient funding. Even after spending USD$14 billion on the refinery, it may not be completed until 2023. This year will mark the second year in a row that Petrobras does not pay any dividends to both private and government shareholders.
Petrobras’ CEO Almir Bendine said that despite the astronomical debt, the company has enough cash flow from its operations to meet all of its obligations through the end of 2017 at least, even if it fails to realize the planned $14 billion in asset sales.“Even if we hit a road-bump we have sufficient cash through 2017,” Bendine said. “This doesn’t mean if we have good opportunities to raise cash or lengthen maturities we won’t do it.”
The dismal performance for Petrobras, an iconic company in Brazil and also the largest company in Latin America, mirrors the current state of the Brazilian economy as a whole. Brazil is in its worst recession in a century and GDP will contract by more than 3 percent this year. Low oil prices and the corruption scandal have blown up the economy, and the resulting economic crisis has mushroomed into a political crisis, a situation that could yet force President Dilma Rousseff from power. On Monday, another man was arrested in Portugal in connection with the Petrobras bribery scandal.
Political opponents of President Rousseff are set to begin impeachment proceedings, and with her administration on the defensive, the opposition is considering adding new charges to their case against her. The allegations include cooking the budgetary books, but one Senator says that Rousseff also knew about the Petrobras corruption – she sat on the company’s board between 2003 and 2010 – and even used some ill-gotten funds for her campaign.
Her appointment of former President Luiz Inacio Lula da Silva to her cabinet has fanned the flames of discontent as the public sees it as a move to protect Lula from his own corruption charges. A court blocked the appointment, and the situation is still fluid. More than two-thirds of the Brazilian public think that Rousseff should be impeached.
All of this leaves Petrobras in a quandary. Its credit rating is in junk territory, its debt situation is not improving, the corruption scandal continues to implicate more and more people, and oil prices remain stubbornly depressed. “It was an extremely difficult year for the oil industry in general,” Petrobras’ CEO Aldemir Bendine said.
Early this morning, oil drops to the 40 dollar handle after the IEA warns that their so called production freeze is “meaningless”
(courtesy zero hedge)
Oil Drops To $40 Handle After IEA Warns Production Freeze Is “Meaningless”
It appears The IEA has come to the same reasoning as we have been pointing out for weeks –“freezing” production at what is already the highest output levels ever is “meaninglesss.” As Reuters reports, Saudi Arabia is the only country with the ability to increase output, a senior executive from the International Energy Agency (IEA) said on Wednesday. This reality check appears to have stalled crude’s exuberant run as WTI pushed below overnight API “build” lows.
As Reuters reports, a deal among some OPEC producers and Russia to freeze production is perhaps “meaningless” as Saudi Arabia is the only country with the ability to increase output, a senior executive from the International Energy Agency (IEA) said on Wednesday.
Brent crude futures are up more than 50 percent from a 12-year low near $27 a barrel hit early this year, bouncing back after Russia and OPEC’s Saudi Arabia, Venezuela and Qatar struck an agreement last month to keep output at January levels.
Qatar has invited all 13 members of the Organization of the Petroleum Exporting Countries (OPEC) and major non-OPEC producers to Doha on April 17 for another round of talks to widen the production freeze deal.
“Amongst the group of countries (participating in the meeting) that we’re aware of,only Saudi Arabia has any ability to increase its production,” said Neil Atkinson, head of the IEA’s oil industry and markets division, at an industry event.
“So a freeze on production is perhaps rather meaningless. It’s more some kind of gesture which perhaps is aimed … to build confidence that there will be stability in oil prices.”
Libya has joined Iran in snubbing the initiative, and the absence of the two OPEC producers – both with ample room to increase output – would limit the impact of any success in broadening the freeze at the April meeting.
The rise in output from Iran in the first quarter post-sanctions has been in line with IEA’s expectation of 300,000 barrels per day (bpd), Atkinson said, adding that Tehran’s output could rise again by the same amount by the third quarter.
“Iran has not exactly been flooding the market with lots more oil. It seems to be far more measured,” Atkinson said.
So the supply side of the equation remains a drag on prices. Meanwhile, on the storage side, things are worse than ever…
Trading houses are betting on oil markets remaining oversupplied for at least two more years even as crude prices stage a recovery driven by early signs of falling production.
Ian Taylor, chief executive of top oil trader Vitol, said on Tuesday that “stocks of crude and products continue to build and these will weigh upon the market”.
Oil Pumps’n’Dumps As DOE Reports 2nd Biggest Inventory Build In A Year, Production Drops
Following last night’s API-reported yuuge build in crude of 8.8mm barrels (and draw in gasoline and Cushing – confirming Genscape’s earlier report), DOE reports today an even bigger 9.36m barrel build – the 2nd biggest build in a year. Crude prices were confused as this massive build was offset by a drop in crude prioduction to Nov 2014 lows and a big draw at Cushing… but for now Oil is extending losses. Finally we note that gasolineprices are now flat from January last year – less unequivocally good than before.
- *CRUDE OIL INVENTORIES ROSE 9.36 MLN BARRELS, EIA SAYS
- *GASOLINE INVENTORIES FELL 4.64 MLN BARRELS, EIA SAYS
- *DISTILLATE INVENTORIES ROSE 917,000 BARRELS, EIA SAYS
Even more than API reported…
While the Cushingh draw is “good” news, it appears everyone is now dumping on the East and Gulf Coasts:
- East Coast +1.8
- Midwest -0.1
- Gulf Coast +9.0
- Rocky Mount +0.1
- West Coast -1.4
But the crude build was offset by a drop in production…
Crude reacted poorly, then the algpos ripped it higher, then realitry set back in…
The following is a huge story. We have been reporting that Cushing OK refining capacity has reached its limit and that last week the Mid West was sending oil to the west coast because of their huge buildup. We should now start to see oil fall in price
(courtesy zero hedge)
Oil Hits Critical Choke Point: Why “The Market Faces A Round Of Rapid Stockbuilds”
One month ago, just as Cushing storage was rapidly approaching its operational capacity, we warned that Cushing (and increasingly all parts of PADD 2) is denying storage requests. We also said that overall PADD 2 inventories had risen to a new record high 155 million barrels…
… hinting that it was just a matter of time before excess production would be shifted to other regions, most notably the Gulf Coast, or PADD 3.
In the intervening month, this is precisely the dynamic we have observed, which culminated with today’s weekly DOE announcement which saw not only a massive inventory build, one which surpassed the estimate threefold (surpassing yesterday’s gargantuan API build in the process), but also has confirmed that oil storage is now shifting away from Cushing and PADD 2 to PADD 3 just as we expected, to wit:
- PADD 1: East Coast +1.8
- PADD 2: Midwest -0.1
- PADD 3: Gulf Coast +9.0
- PADD 4: Rocky Mount +0.1
- PADD 5: West Coast -1.4
This confirms that the shift away from Midwestern storage to the Gulf Coast has begun in earnest, which was to be expected for a region that is already at operational capacity, even when netting out the excess oil that is being “exported” out of the US to Europe, Asia or Latin America. In fact, as shown in the chart below, with over 533 million barrels in storage, it is only a matter of time before oil overflows into swimming pools and household buckets.
Unfortunately, while most of this was as expected and suggests that the excess supply situation in the US is getting worse by the day, not even we expected the dour picture painted by some key industry participants.
According to Reuters, trading houses such as Vitol, Glencore, Gunvor and Trafigura whose most profitable business line in recent months has been oil transit and offshore storage, are betting on oil markets remaining oversupplied for at least two more years even as crude prices stage a recovery driven by early signs of falling production.
These traders are looking to extend or lock in new leases on storage tanks for crude oil and refined products in key hubs as far out as the end of 2018, sources at storage firms and trading houses say.
As we have shown repeatedly in the past by demonstrating surging contangos, storing oil in a heavily oversupplied market has been a cash cow for traders and oil companies in recent years as markets bet that future oil prices will be significantly higher than current ones.
Or, looked another way, that current prices will remain very low. Indeed, “lower for longer.”
Ian Taylor, chief executive of top oil trader Vitol, said on Tuesday that “stocks of crude and products continue to build and these will weigh upon the market.” Like other traders, Vitol has invested in recent years in storage, and last August acquired the other half of its VTTI storage subsidiary for $830 million.
As we also showed two weeks ago, with oil prices rising substantially since mid-February to around $40 per barrel, this has led to a significant narrowing of the crude contango despite a stock overhang of 300 million barrels, which means storage plays such as Vitols are suddenly far less lucrative.
Indeed, crude oil has found more of a balance in recent weeks through supply disruptions in Iraq, Libya and Nigeria (all of which are transitory).
However, while upstream, or crude, supply may have artificially stabilized modestly, downstream products have continued to build, something we also noted one month ago in “There’s A Feeling Of Bits Of Ice Cracking All At Once” – This Is The ‘Big New Threat’ To Oil Prices” in which we showed the dramatic buildup of gasoline and distillate products.
Reuters today also touches on this and cautions that “refined oil products have not followed suit” the broader oil rebalancing. In fact “gasoline and blending components have been quietly building, squeezing the amount of storage left in Europe. U.S. gasoline stocks, when adjusted for current consumption, are just at the top of their 10-year range.”
Krien van Beek, head of sales at RVB Tank Storage Solutions, a tank storage broker in the Netherlands, said traders are seeking storage on 12-month leases for products such as gasoline and naphtha outside key hubs in northern Europe, Singapore and the United States.“They are prepared to look at storage for the longer term because of the contango in the market but everyone is cautious about costs because we are at the top of the storage market,” van Beek said. “Since the standard storage options are taken, traders are considering less conventional and less attractive locations.”
According to RVB, global commercial tank capacity is around 900 million cubic meters across 4,400 facilities – not including “captive tanks” in refineries that are not open to commercial buyers.
In short: because the US is already on the verge of operational capacity for most liquidity commodities, soon the entire world will likewise be full to the brim with excess oil, distillates and gasoline as oil production continues to ooze into what the Saudis recently characterized as a 3MM b/d oversupplied market.
Which brings us to what Reuters describes as a key production “choke point”, one which is “forming in middle distillates – the diesel used to power trucks and generators, and the heating oil that warms homes around the world in winter.”
Typically, these stocks fall over the winter. But warm weather this year kept this from happening – all while refineries worldwide ran full steam to feed seemingly insatiable demand for gasoline in the United States, China and India.
Global distillate stocks in the developed world are close to a record high, in the thick of refinery maintenance season, and in the run-up to the time when gasoline use hits its summer high point, but interest in diesel typically fades.
“Absent run cuts, the market faces another round of rapid stockbuilds once refineries return from maintenance,” Robert Campbell of Energy Aspects said in a note.
At that point, the oversupply becomes self-fulfilling as the supply curve inverts that much more while producers scramble to find any marginal buyer in a world drowning with product, and unless some dramatic solution is found to stem the supply of the most upstream product, namely oil, whose dynamics we explained one month ago as follows…
As Paul Horsnell, global head of commodities research at Standard Chartered puts it, “There’s a feeling of various bits of ice cracking all at once” in the oil market, with both crude-oil and gasoline inventories at extremely high levels… People are worried about a short-term issue, particularly in the U.S., particularly at Cushing.”
The good news is that we are likely very close to the worst case scenario playing out: refiners are unlikely to start buying more crude in the coming weeks. Instead, many will begin seasonal maintenance ahead of the busy summer-driving season. That could leave some oil producers scrambling to find places to store their output.Prices in some regions might have to drop sharply to justify the cost of shipping the oil to where it can be stored.
… with every passing week in which nothing changes in the fundamental supply/demand picture, the most likely outcome will be a violent inventory liquidation over the next few weeks, one which will be accompanied by a substantial plunge in oil prices resulting from wholesale dumping as producers rush to sell product to anyone who will buy it.
Crude Plunges Below $40 At NYMEX Close
Between storage concerns and the potentially “meaningless” Doha production freeze talks,crude oil traders appear tohave realized that $40 oil is unsustainable at record glut levels…WTI crashed through $40 at the NYMEX close…
Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings/WEDNESDAY morning 7:00 am
Euro/USA 1.1197 DOWN .0024 ( STILL REACTING TO USA FAILED POLICY)
USA/JAPAN YEN 112.68 UP 0.427 (Abe’s new negative interest rate (NIRP)a total bust/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP)
GBP/USA 1.4196 DOWN .0027 (THREAT OF BREXIT)
USA/CAN 1.3064 UP.0015
Early THIS WEDNESDAY morning in Europe, the Euro FELL by 24 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 DOWN in value (onshore) The USA/CNY UP in rate at closing last night: 6.4984 / (yuan DOWN AND will still undergo massive devaluation/ which will cause deflation to spread throughout the globe)
In Japan Abe went BESERK with NEW ARROWS FOR HIS Abenomics WITH THIS TIME INITIATING NIRP . The yen now trades in a SOUTHBOUND trajectory RAMP as IT settled DOWN in Japan by 43 basis points and trading now well BELOW that all important 120 level to 112.68 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 27 basis points as it now trades WELL BELOW the 1.44 level at 1.4197.
The Canadian dollar is now trading DOWN 15 in basis points to 1.3064 to the dollar.
Last night, Chinese bourses AND jAPAN were MIXED/Japan NIKKEI CLOSED DOWN 47.57 , OR 0.28%HANG SANG DOWN 51.52 OR 0.25% SHANGHAI UP 10.57 OR 0.35% ON LAST HR RESCUE / AUSTRALIA IS LOWER / 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 WEDNESDAY morning: closed DOWN 47.57 OR 0.28%
Trading from Europe and Asia:
1. Europe stocks ALL IN THE GREEN
2/ CHINESE BOURSES MIXED/ : Hang Sang CLOSED IN THE RED. ,Shanghai IN THE GREEN/ Australia BOURSE IN THE RED: /Nikkei (Japan)CLOSED/IN THE RED/India’s Sensex in the GREEN /
Gold very early morning trading: $1234.75
Early WEDNESDAY morning USA 10 year bond yield: 1.94% !!! PAR in basis points from TUESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield falls to 2.72 PAR in basis points from TUESDAY night.
USA dollar index early WEDNESDAY morning: 95.85 UP 18 cents from TUESDAY’s close.(Now below resistance at a DXY of 100.)
This ends early morning numbers WEDNESDAY MORNING
And now your closing WEDNESDAY NUMBERS
Portuguese 10 year bond yield: 2.92% PAR in basis points from TUESDAY
JAPANESE BOND YIELD: -.114% UP A BIT in basis points from TUESDAY
SPANISH 10 YR BOND YIELD:1.53% UP 10 IN basis points from TUESDAY
ITALIAN 10 YR BOND YIELD: 1.29 UP 4 basis points from TUESDAY
the Italian 10 yr bond yield is trading 24 points lower than Spain.
GERMAN 10 YR BOND YIELD: .210%
IMPORTANT CURRENCY CLOSES FOR WEDNESDAY
Closing currency crosses for WEDNESDAY night/USA dollar index/USA 10 yr bond: 2:30 pm
Euro/USA 1.1175 DOWN .0046 (Euro DOWN 46 basis points/still represents to DRAGHI A COMPLETE POLICY FAILURE/
USA/Japn: 112.46 UP .207 (Yen DOWN 21 basis points) and still a major disappointment to our yen carry traders and Kuroda’s NIRP. They stated that NIRP would continue.
Great Britain/USA 1.4107 DOWN .01147 Pound DOWN 115 basis points/Huge Brexit concenr.
USA/Canada: 1.3213 up .0.0164 (Canadian dollar DOWN 164 basis points as oil was LOWER IN PRICE (WTI = $39.84)
This afternoon, the Euro was DOWN by 46 basis points to trade at 1.1175 AS THE MARKETS REACTED TO THE USA’s stooge Bullard’s comment that they may raise rates inApril..
The Yen FELL to 112.46 for a LOSS of 21 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 DOWN 115 basis points, trading at 1.4107 (HUGE BREXIT CONCERNS)
The Canadian dollar fell by 164 basis points to 1.3213 AS the price of oil was down today (as WTI finished at $39.81 per barrel)
the 10 yr Japanese bond yield closed at -.114% UP A BIT IN basis points in yield
Your closing 10 yr USA bond yield: DOWN 6 basis point from TUESDAY at 1.88% //trading well below the resistance level of 2.27-2.32%) policy error
USA 30 yr bond yield: 2.66 DOWN 6 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, 96.10 UP 44 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 WEDNESDAY
London: UP 6.37 points or 0.10%
German Dax :UP 32.93 points or 0.33%
Paris Cac DOWN 7.99 points or 0,18%
Spain IBEX DOWN 64.90 or 0.72%
Italian MIB: DOWN 235.94 points or 1.26%
The Dow was down 79.98 points or 0.45%
Nasdaq down 52.80 points or 1.09%
WTI Oil price; 39.81 at 2:30 pm;
Brent Oil: 40.49
USA dollar vs Russian Rouble dollar index: 68.44 (Rouble is DOWN 97 /100 roubles per dollar from yesterday)AS the price of Brent and WTI OIL ROSE
This ends the stock indices, oil price, currency crosses and interest rate closes for today
Closing Price for OIl, 5 pm/and 10 year USA interest rate:
WTI CRUDE OIL PRICE 5 PM: $39.78
USA 10 YR BOND YIELD: 1.88%
USA DOLLAR INDEX:96.05 up 37 cents
And now your more important USA stories which will influence the price of gold/silver
Trading Today in Graph form:
(courtesy zero hedge)
Bonds Best-Bid But Bullion Blasted As Belgium-Bombing-Bounce Is Battered
“And It’s Gone…”
It seems The Fed is not happy with the market’s exuberance…
Which makes sense…Because the market is not lining up with reality…
Micro-economy? Earnings expectations… Nope!
But today was all about Bonds Bitchez... the entire complex collapsed today with the long-end outperforming…
With 30Y yields back to 2-week lows…
This has compressed 2s30s below the “Dimon Bottom”
Stocks gave up their bullish terrorism bounce…
Small Caps were monkey-hammered today but everything was red…
On the week, Small Caps are also the weakest with Nasdaq back in the red after today’s plunge…
Which left S&P back in the red for 2016…
Energy and Financials now red on the week…
VIX topped 15 briefly…
Yesterday’s moves retraced but USD kept pushing higher…
FX markets were volatile today but the Buy Dollars theme was clear…(led by cable weakness)… This is the first 4-day rally in The USD Index this year.
Notably USDJPY and S&P decoupled…
As cable extended losses…
And bearish cable bets hit record highs…
Commodity Carnage ensued today as the USD rallied…
Here’s a close-up on Silver’s Flash-Crash…
And as far as gold goes – why wouldn’t you panic dump gold after Brussels’ biggest terror attack ever…
And finally we note that the last 2 weeks of exuberant crude buying has not been matched across the curve as producers have piled into hedges (which may explain the weakness today in the front-end)…
Bonus Chart: It Can’t Really Happen Again… Can It?
David Stockman discusses his views on the market including a recessionapproaching by year end.
Stocks are in for a steep and treacherous decline because of the Federal Reserve’s policies, Reagan administration aide David Stockman says.
“I would liken the Fed to a blindfolded arsonist. Armed, dangerous and lost,” the former director of the Office of Management and Budget told CNBC’s “Fast Money” traders on Monday.
“They can’t possibly believe that they’re going to wait out this cycle at zero interest rates at an economy that’s at peak debt,” he said. “I think they’ll hike one more time this year or they’ll make an excuse why they can’t.”
Stockman said a decline in earnings growth, global headwinds, mismanagement by the European Central Bank and lack of leadership from the Fed have led to a market resting on thin ice.
“As soon as the markets realize that the Fed and the ECB are out of ammunition, it’s over,” Stockman said. “I think we’re in an extremely unsafe world — we’ve never been here before.”
The proof of that uncertainty can be found in Asia, he said. Japan, China and South Korea all saw exports drop by double digits in the first two months of a years.
“The world economy is drifting into recession and we are not decoupled,” said Stockman. “We are not exempt.”
The S&P 500 has staged a massive 13 percent comeback since February’s low but Stockman said broad swings are nothing but the beginning of a long and burdensome bear market.
“We’re still in no man’s land. We’ve had a dead cat bounce. It’s been strong,” Stockman said. “The only thing left is to bury the cat!”
Stockman’s target on the S&P 500 is 1,300, a 37 percent drop from Tuesday’s open.
“Global deflation is going to turn into a recession worldwide,” said Stockman. “They’re out of ammo to deal with it.”
the losses on deeper subprime auto loans are double the industry average.This is a ticking time bomb as the total auto loans are 1.3 trillion USA. Also student loans are in excess of 1 trillion dollars and it too presents itself with the same problem
(courtesy zero hedge)
This Could Be A Problem: Losses On “Deep” Subprime Auto Double Industry Average
On Saturday, we highlighted a rather disturbing statistic.
60+ day delinquencies for subprime auto ABS have now risen above crisis levels to 5.16% – levels we haven’t seen since 1996.
That won’t surprise regular readers. The writing has been on the wall for quite a while. More auto loan originations are going to borrowers with shoddy credit and loan terms are looking more and more stretched by the quarter. Just ask the NY Fed. Or Experian, where even permabull Melinda Zabritski will tell you that underwriting standards are getting looser (although she likely won’t say that’s a bad thing).
While Citi and others are quick to point out that the originate to sell model isn’t prevalent in the auto loan industry, the inability for lenders to securitize subprime loans may well put the brakes on US auto sales. After all, the pool of creditworthy borrowers is finite. That means that at a certain point, incremental sales must be engineered by making ineligible borrowers eligible by resorting to looser underwriting. But that only works if you can offload that credit risk. No lender wants to be sitting on a book full of used car loans to deep subprime borrowers with sub-600 FICOs, and so, if demand for subprime auto ABS dries up, so too will credit to the subset of borrowers who are driving (no pun intended) incremental sales growth.
Here’s a look at the share of total auto loans that have been securitized:
As you can see, and as we noted last week, the share has remained range-bound for at least 15 years. But again, the question is what happens to auto sales if lenders can no longer expand the pool of eligible borrowers by relaxing their standards? That would likely occur if subprime and deep suprime start to underperform, leading investors to pull back from paper backed by loans to less creditworthy borrowers. And guess what? Deep subprime is underperforming. Massively. Here’s Goldman:
Many of the deep subprime pools are experiencing losses above the industry average. Exhibit 6, for example, shows the losses on three large 2015 vintage deep subprime deals vs. the subprime industry aggregate.
The deeper subprime deals have losses over two times the industry average.
Remember, somebody owns this paper and they sure as hell won’t be buying into any more deep subprime deals if the collateral pools continue to perform like that. And if investors aren’t buying, thenlenders can’t offload their credit risk which in turn means they will simply stop lending to shoddy borrowers. Once that happens, you can kiss the US auto sales “miracle” goodbye – for good.
If you need proof of just how important the ability to securitize truly is for subprime auto lenders, simply review the first-hand account we published last week that details what’s happening “under the industry’s hood,” so to speak.
For now, we’ll close with one last chart from Goldman which shows what happens when a pair of trillion dollar bubbles collide head-on with Americans’ inability to free themselves from the shackles of debt:
last week it was the numskull, Liesman who asked Yellen whether she has a credibility problem!
Today, it was Bob Pisani who is exclaims that the Fed is alarmed by market complacency! Is the Fed confusing the market? What changed in a week?
The real problem for the fed: if cheerleaders like Liesman and Pisani pronounce on the big screen the fed’s lack of credibility!
(courtesy zero hedge)
Bob Pisani Says “The Fed Is Alarmed By Market Complacency” – Why This Is A Big Problem For Yellen
“Is the Fed confusing the market?”
That is how Bob Pisani’ latest CNBC column begins, to which our logical response is “what market” – the “market” which any time it drops by 10% see every central bank unleashes historic jawboning and/or unprecedented monetary easing with QE (as in the case of the ECB now monetizing private bonds); the market which can not go below 2,000 without Yellen admitting her “dots” were twice as much as they should have been; the market which has been propped up only by corporate buybacks funded by cheap debt courtesy of… the Fed.
But before we mock Bob, he does make some interesting points, namely one which we heard as recently as one week ago from one of Pisani’s co-workers. This is what Bob says:
It was a beautiful narrative: the FOMC last week clearly reflected a dovish tone, implying two rate hikes in 2016, while modestly upgrading the state of the economy. Only Esther George of Kansas City, a hawk, dissented.
But that narrative is starting to change, for reasons that are confusing the market. This morning James Bullard, head of the St. Louis Fed and an FOMC voter, implied in an interview that an April rate hike was possible. He joins Patrick Harker from Philadelphia Fed, a hawk and nonvoter, who also said April was on the table. Charles Evans and Dennis Lockhart, while both nonvoters, also made hawkish comments recently.
This has only become more relevant now that Bullard, who is a voting member and perceived to be a centrist, has come out and implied the Fed may be getting behind the curve.
Bullard appeared to have an immediate effect on currency and commodity markets this morning: the dollar strengthened, and commodities dropped, with copper down 1.8 percent, gold down 2.5 percent, oil down 3 percent. Perhaps more importantly, the dollar index has been up four days in a row. It has now retraced 60 percent of the loss it saw in the days immediately following the FOMC meeting, when the dollar index dropped a stunning 2.3 percent in two days.
What happened? It’s possible the Fed has seen the market reaction and become alarmed by the complacency. It’s true, the probabilities for even a June rate hike—let alone April–declined dramatically in the face of the Fed meeting. That may have alarmed the Fed, and so some members may feel the need to keep the markets more alert.
Why is all of this relevant? Because it is nearly a carbon-copy of what none other than one of the Fed’s favorite journalists, Steve Liesman, said last week when he dared to ask Yellen if the Fed has lost credibility:
Madam Chair, as you know, inflation has gone up the last two months. We had another strong jobs report. The tracking forecasts for GDP have returned to two percent. And yet the Fed stands pat while it’s in a process of what it said at launch in December was a process of normalization…. Does the Fed have a credibility problem in the sense that it says it will do one thing under certain conditions, but doesn’t end up doing it?
Recall what we said one week ago:
“if the Fed can not make a favorable impression on those who are paid to at least pretend that they “get it”, what about the rest of the market. Worst of all, since the Fed peddles only in faith and “perpetuating the narrative” du jour, in this case one that the Fed has credibility despite not doing what it has explicitly said it would do, how long until it is not just Liesman, but everyone else, who openly admits that the Fed’s emperor is fully naked.”
Today we got one answer when one of the other people who are paid to pretend all is well, Bob Pisani, openly dared to question the status quo regime.
Which is concerning, not so much because the Fed may be having a “mini-revolt” on her hands within the Fed as Liesman asked – Yellen can easily ignore any opposing voices; the far bigger revolt is when the paid propaganda, such as Liesman and Bob, openly start asking questions. It is that lack of faith that is most troubling to Yellen, as it is this close from admitting the Fed emperor has been naked all along…
Let us close with this great interview of Egon Von Greyerz and Greg Hunter
well that about does it for tonight
I will see you tomorrow night