March 24/Despite the shellacking of gold, the GLD surprisingly adds 2.08 tonnes to its inventory/gold and silver fall today/China devalues greatly sending a strong message to the USA not to raise rates/Japan to initiate the helicopter route to supply free cash to poor citizens/30 yr uSA bond yield plummets/Atlanta Fed lowers 2nd quarter GDP to only 1.4%/

Gold:  $1,221.40 down $2.30    (comex closing time)

Silver 15.19  down 7 cents

In the access market 5:15 pm

Gold $1217.00

silver:  15.18

(pay no attention to this access knockdown/there is nobody to sell to/all left for the Good Friday holiday)



Let us have a look at the data for today.

At the gold comex today, we had a poor delivery day, registering 12 notices for 1200 ounces and for silver we had 0 notices for nil oz for the active March delivery month.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 212.17 tonnes for a loss of 91` tonnes over that period.

In silver, the open interest FELL by only 3863 contracts DOWN to 171,913 despite the fact that the silver price was whacked by 61 cents with respect to yesterday’s trading . In ounces, the OI is still represented by .860 billion oz or 123% of annual global silver production (ex Russia ex China).

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

In gold, the total comex gold OI fell by 13,363 contracts to 497,216 contracts as the price of gold was down $24.50 with yesterday’s trading.(at comex closing). I was expecting a larger contraction in OI

This is a huge surprise!!we had a huge deposit of 2.08 tonnes in the GLD despite gold’s drubbing yesterday and today/ thus the inventory rests tonight at 823.74 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. Our 670 tonnes of rock bottom inventory in GLD gold has been broken. It looks to me that China has taken the last amounts of physical gold from the GLD. I guess the only place left for China to receive physical gold, after they deplete the GLD will be the FRBNY and the comex.   In silver,/we had no changes in inventory tonight,  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 3862 contracts down to 171,913 as the price of silver was down 61 cents with yesterday’s trading. The total OI for gold fell by 13,363 contracts to 497,216 contracts as  gold was down $24.50 in price from yesterday’s level.

(report Harvey)

2 a) Gold trading overnight, Goldcore

(Mark OByrne)




i)Late  WEDNESDAY night/ THURSDAY morning: Shanghai closed DOWN BY 48.99 POINTS OR 0.63% , /  Hang Sang closed DOWN by 269.62 points or  1.31% . The Nikkei closed DOWN 108.65 POINTS OR 0.64% . Australia’s all ordinaires was DOWN 1.13%. Chinese yuan (ONSHORE) closed DOWN at 6.5114.  Oil FELL  to 38.93 dollars per barrel for WTI and 39.65 for Brent. Stocks in Europe so far ALL IN THE RED . Offshore yuan trades  6.5241 yuan to the dollar vs 6.5114 for onshore yuan. LAST NIGHT CHINA SIGNALS TO THE USA TO STOP ALL RATES INCREASES BY MASSIVELY DEVALUING THEIR YUAN. THE LAST TIME CHINA DID THIS, THE USA LISTENED AS THEY DO NOT WANT DEFLATION TO PERMEATE THE GLOBE




Japan goes to the helicopter route to give free money to poorer citizens.

Seems that Japan has reached its limit on QE

(courtesy zero hedge)



The POBC sends Washington a strong message:

“don’t mess with the Zohan..I mean China!!)

(zero hedge)

European Affairs


Since 2010, Switzerland has spent the equivalent of 470 billion USA on currency manipulation or 2/3 of its GDP

( zero hedge)



US Marines enter ground combat in Iraq to defend oil fields as ISIS seems to be getting stronger and willing to attack these fields

( Jason Ditz/



i)Dave Kranzler is correct;  the entire global system will implode when central bank intervention fails or has no effect on any economy!

( Dave Kranzler/IRD)

ii) John Rubino discusses the devastating effects of NIRP on global economies’

(John Rubino)


OIL Markets


i)Oil is heading southbound as a huge 31 million barrels that have been floating on the seas are coming to shore.  Recent hedging activity is now being unwound as the contango on oil is disappearing

( zero hedge)


ii)More USA rigs put out of commission

( zero hedge)



(y zero hedge)



i)We wish the Indian temple all the luck in the world if they think they are going to get their gold back:

( Reuters/GATA)
ii)China states that there was no agreement to let the dollar depreciate to alleviate the pressure on all other currencies.

( GATA/Chris Powell/Reuters)
iii)Lawrie Williams on yesterday’s gold whack.  He also questions if we will see a change in GLD inventory shortly.(courtesy Lawrie Williams/Sharp’s Pixley)

i)The big winner the long bond as 30 yr yields plummet/gold holds its own( zero hedge)


ii)Initial and continuing claims drop despite the iSM national mfging and services indices collapsing to 6 yr lows:

( zero hedge)


iii)Core durable goods (ex transporation stuff) tumbles for the 13th straight month:  a good indicator that the uSA in in deep recession

( zero hedge)

iv)The service sector is 70% of GDP/today Markit’s services PMI signals the softest expansion in new business since 2009:  March reading 51.0 average reading for 3 months;  51.3

( zero hedge)
v)Atlanta Fed, which is generally good at predicting results, forecasts 2nd Q, GDP at only 1.4% down from last week’s 1.9%.  Expect many of these downgrades to give the Fed cover not to raise rates in April or June

( zero hedge)
vi)A terrific article written by David Stockman as he advocates that the USA should dump it’s commitment to NATO now as it is not needed.

( David Stockman/ContraCorner)
vii)Horseman capital is the best run hedge fund in the world.  They have a theory when the USA stock market will burst and the answer is surprising:  a must read.( zero hedge/Horseman Capital/Russell Clark)

Let us head over to the comex:

The total gold comex open interest fell to497,216 for a loss of 13,363 contracts as the price of gold was down $24.50 in price. As I stated yesterday: “Expect our bankers to undergo relentless attacks on our two precious metals.” They have not disappointed us with their antics. For the past two years, we have strangely witnessed two interesting developments with respect to the gold open interest:  1) total gold comex collapse in OI as we enter an active delivery month or for that matter an inactive month, and 2) a continual drop in the amount of gold standing in an active month.   Today, both scenarios were in order.  The front March contract month saw its OI fall by 26 contract down to 52.We had 1 notice filed upon yesterday, and as such we lost 25 contracts or an additional 2500 oz will not stand for delivery. .After March, the active delivery month of April saw it’s OI fall by 31,272 contracts down to 152,305.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was 210,068. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was very good at 357,442 contracts. The comex is not in backwardation

Today we had 12 notices filed for 1200 oz in gold.


And now for the wild silver comex results. Silver OI fell by 3,862 contracts from 175,275 down to 171,913 as the price of silver was down by 61 cents with yesterday’s trading. The next big active contract month is March and here the OI fell by 102 contracts down to 187 contracts. We had 85 notices served upon yesterday, so we lost 17 contracts or an additional 85,000 ounces will not  stand for delivery. The next contract month after March is April and here the OI  fell by 16 contracts down to 355.  The next active contract month is May and here the OI fell by 5,063 contracts down to 116,036. This level is exceedingly high. The volume on the comex today (just comex) came in at 41,579 , which is  good. The confirmed volume yesterday (comex + globex) was humongous at 82,823. Silver is now in backwardation until April at the comex.   In London it is in backwardation for several months.
We had 0 notices filed for nil oz.

March contract month:

INITIAL standings for MARCH

March 24/2016

Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil 10,348.485 oz


Deposits to the Dealer Inventory in oz NIL
Deposits to the Customer Inventory, in oz  899.008 oz


No of oz served (contracts) today 12 contract
(1200 oz)
No of oz to be served (notices) 40 contracts(4000  oz)
Total monthly oz gold served (contracts) so far this month  696 contracts (69,600 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 192,175.0 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 1 customer deposit:

i) Into JPMorgan: 899.008 oz


total customer deposits:  899.008 oz

Today we had 3 customer withdrawals:

i) Out of Brinks;  8551.900 oz 266 kilobars

ii) Out of HSBC: 899.008 oz

iii) Out of jPMorgan; 897.597 oz


total customer withdrawals; 10,348.485  oz


Today we had 1 adjustment:

i) Out of Manfra: 100.128 oz was adjusted out of the customer and this landed into the dealer account of Manfra.

Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 12 contracts of which 2 notices was stopped (received) by JPMorgan dealer and 0 notices were stopped (received)  by JPMorgan customer account. 
To calculate the initial total number of gold ounces standing for the Mar contract month, we take the total number of notices filed so far for the month (696) x 100 oz  or 69,600 oz , to which we  add the difference between the open interest for the front month of March (52 contracts) minus the number of notices served upon today (12) x 100 oz   x 100 oz per contract equals the number of ounces standing.
Thus the INITIAL standings for gold for the March. contract month:
No of notices served so far (696) x 100 oz  or ounces + {OI for the front month (52) minus the number of  notices served upon today (12) x 100 oz which equals 73,600 oz standing in this non  active delivery month of March (2.289 tonnes).  This is a good showing for gold deliveries in this non active month of March.
we lost 25 contracts or 2500 additional gold ounces will stand for March delivery.
We thus have 2.289 tonnes of gold standing and 10.38 tonnes of registered gold for sale, waiting to serve upon those standing.  The bankers are still doing their best in cash settling as there is not enough registered gold to satisfy those that are standing.
We now have partial evidence of gold settling for last months deliveries We now have 2.289 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) = 9.309 tonnes standing against 10.38 tonnes available.  .
Total dealer inventor 338,458.211 oz or 10.38 tonnes
Total gold inventory (dealer and customer) =6,821,280.859 or 212.17 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 212.17 tonnes for a loss of 91 tonnes over that period. 
JPMorgan has only 21.15 tonnes of gold total (both dealer and customer)
Please be careful trading this week against our crooks:
this is what I stated on Tuesday night:
“We now enter options expiry week so our usual and customary raid on gold and silver will be modus operandi for our crooked banks.  On top of the options expiry week, we have over 500,000 contracts on gold  (and over 177,000 on silver) and that too will necessitate a raid trying to get these levels down.”
And now for silver


/March 24/2016:

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 60,555.660. oz


Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory nil
No of oz served today (contracts) 0 contracts

nil oz

No of oz to be served (notices) 187  contracts (935,000, 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 10,918,307.8 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 0 customer deposits


total customer deposits: nil oz


We had 1 customer withdrawals:

i) Out of Scotia:

60,555.660 oz



total customer withdrawals:  60,555.660 oz



 we had 1 adjustment

i) Out of CNT:  171,004.03 oz was adjusted out of the customer account and this landed into the dealer account of CNT


The total number of notices filed today for the March contract month is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in March., we take the total number of notices filed for the month so far at (1199) x 5,000 oz  = 5,995,000 oz to which we add the difference between the open interest for the front month of March (187) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the March. contract month:  1199 (notices served so far)x 5000 oz +(187{ OI for front month of March ) -number of notices served upon today (0)x 5000 oz  equals  6,930,000 oz of silver standing for the March contract month.
we lost 25 contracts or an additional 125,000 oz  will stand in this delivery month.
Total dealer silver:  32.122 million
Total number of dealer and customer silver:   155.902 million oz
 The crooks did not remove many silver contracts from the entire silver OI complex.It sure looks like we are going to have a commercial failure in silver.

And now the Gold inventory at the GLD


March 24.2016: a deposit of 2.08 tonnes of gold into its inventory/and this after a big drubbing these past two days??/Inventory rests at 823.74 tones


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 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 24.2016:  inventory rests at 823.74 tonnes




Now the SLV Inventory
March 24.2016/no change in inventory/rests tonight at 328.914 million oz/
March 23/we lost 1.428 million oz as a withdrawal today/SLV inventory rests at 328.914 million oz
March 22./ a huge deposit of 1.809 million oz of a silver deposit into the SLV/inventory rests at 330.342 million oz.
MARCH 21/no change in silver inventory/inventory rests tonight at 328.533 million oz
March 17/no changes in silver inventory at the SLV/Inventory rests at 325.868 million oz
March 16./no changes in silver inventory at the SLV/Inventory rests at 325.868 million oz
March 15/ no changes in silver inventory at the SLV/Inventory rests at 325.868 million oz/
March 24.2016: Inventory 328.914 million oz
1. Central Fund of Canada: traded at Negative 7.5 percent to NAV usa funds and Negative 7.5% to NAV for Cdn funds!!!!
Percentage of fund in gold 63.8%
Percentage of fund in silver:36.2%
cash .0%( Mar 24.2016).
2. Sprott silver fund (PSLV): Premium to NAV falls to  4.89%!!!! NAV (Mar 24.2016) 
3. Sprott gold fund (PHYS): premium to NAV falls  to -0.26% to NAV Mar 24.2016)
Note: Sprott silver trust back  into positive territory at +4.89%/Sprott physical gold trust is back into negative territory at -0.26%/Central fund of Canada’s is still in jail.

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

Trading in gold and silver overnight in Asia and Europe

By Mark O’Byre

Diversify Into Gold As An “Insurance Policy”

“Investors could be forgiven for heading for the hills given the tumultuous start to 2016,”  so writes Andrew Oxlade in The Telegraph today who advises investors to diversify into gold as an “insurance policy”:

We have long been advocates of exposure to gold as an insurance policy. This was demonstrated once again in the recent sell-off when the price of bullion surged from $1,061 (£762) an ounce on New Year’s Day to $1,246 (£895) by early February. In times of fear, gold is in demand. The price also rises when inflation becomes a danger.

Deflation remains the bigger threat for now, which is partly why gold has been a poor investment in recent years, but the money printing excesses of central banks could yet unleash inflation. In the meantime, the gold price offers some protection during repeat episodes of buckling confidence.

Gold in GBP – 5 Years

The Telegraph, like GoldCore, had warned of such turbulence at the start of the year. John Ficenec, editor of the Questor column, warned of the real risk of volatility and falls in stock markets.

We believe that the tragic events in Brussels show the continued very high degree of geopolitical risk and the need for an insurance policy.

Further attacks are quite possible, including in the U.S., and this should support gold.

Geopolitical risk is frequently underestimated and it would be unwise to discount the risk of a September 11 style attack in the coming months. Intelligence agencies and ISIS themselves are warning of such attacks and investors need to be diversified to hedge this growing risk.

It gives us no pleasure to be the bearer of this bad news but it is important that the reality of the real risks of today are considered in order to protect and grow wealth in these uncertain times.

Read Telegraph article here


Market Performance This Week (Finviz)

Gold is -2.6% and silver -3.4% this week and markets are in a sea of red as they react to the terrorist attacks in Brussels (See Table).


Gold Prices (LBMA)

24 Mar: USD 1,216.45, EUR 1,088.75 and GBP 861.89 per ounce
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

Silver Prices (LBMA)

24 Mar: USD 15.28, EUR 13.70 and GBP 10.82 per ounce
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

Gold News and Commentary

Spot gold targets biggest weekly loss in four months (Reuters)

Stock Slide Deepens in Asia as Oil Slumps Amid Resurgent Dollar (Bloomberg)

Gold Falls to Lowest in a Month as Dollar Advance Saps Demand (Bloomberg)

World’s richest Hindu temple wants gold back rather than cash (Reuters)

China’s vice finance minister denies any secret US-China exchange rate deal (Reuters)

Gold Investors Unfazed By Fading Rally – Chart (Bloomberg)

Silver Attractive as Gold-Silver Ratio at 2008 Financial Crisis Level – Video (Bloomberg)

Technician: Gold Heading Toward $1,450—Here’s Why (CNBC)

Bonds Best-Bid But Bullion Blasted As Belgium-Bombing-Bounce Is Battered (ZH)

Stocks vs. Gold – Money and Investment (Future Money Trends)

Read More Here



‘7 Real Risks To Your Gold Ownership’ – Must Read Gold Guide Here

Please share our website with friends, family and colleagues who you think may benefit from it.

Thank you

Mark O’Byrne
We wish the temple all the luck in the world if they think they are going to get their gold back:
(courtesy Reuters/GATA)

World’s richest Hindu temple wants gold back rather than cash


By Nidhi Verma and Rajendra Jadhav
Wednesday, March 23, 2016

The world’s richest Hindu temple is asking to be repaid in gold for longer-term deposits it makes under the Indian government’s monetization scheme in order to make the plan more attractive to the temples that are sitting on thousands of tonnes of the metal.

The Sri Venkateswara Swamy Temple, popularly known as the Tirupati, has requested repayment in metal rather than cash for their deposits of longer than three years under the Gold Monetisation Scheme, D. Sambasiva Rao, the executive director of the temple operator Tirumala Tirupati Devasthanam (TTD), told Reuters today.

TTD’s participation in the gold scheme is crucial to its success since the temple in the Southern Andhra Pradesh state holds 7 tonnes of the metal, equivalent to about $277 million at current prices. However, Tirupati and other temples around India are reluctant to part with the gold forever because of its religious and emotional significance.

“We wrote to the government to change certain conditions in the scheme and offer principal and interest in the form of gold for medium-term and long-term deposits,” Rao said, referring to deposits for between five and 15 years. “The changes will make the scheme attractive for all the temples in the country,” he said. …

… For the remainder of the report:


China states that there was no agreement to let the dollar depreciate to alleviate the pressure on all other currencies.  (Harvey: however they no doubt told the USA under no circumstances are they to raise rates  see below)
(courtesy GATA/Chris Powell/Reuters)

China’s vice finance minister denies any secret US-China exchange rate deal


By Sun Qizi and Pete Sweeney
Monday, March 21, 2016

China’s vice finance minister said on Tuesday there was no secret agreement between the United States and China regarding adjustments to exchange rates.

The comment by Zhu Guangyao at a forum follows speculation in foreign exchange markets that finance ministers at the recent G20 summit in Shanghai may have reached a tacit understanding in which the United States agreed to allow the dollar to depreciate, relieving pressure on other currencies. …

… For the remainder of the report:




Lawrie Williams on yesterday’s gold whack.  He also questions if we will see a change in GLD inventory shortly.


(courtesy Lawrie Williams/Sharp’s Pixley)



LAWRIE WILLIAMS: The gold correction is in – will it last?


As we come up to the Easter holiday and trading gets thin, the opportunities for traders to manipulate precious metals prices up or down become easier and for the moment, those who would like to see prices lower are in the ascendant.  Whether gold goes into freefall and loses all its gains achieved so far this year is the big question on gold investors’ lips.  We don’t think so. But its not something that can be totally ruled out.

The gold price has indeed been volatile over the past couple of days.  It shot up on news of the Brussels bombings – and then the momentum turned against it and it started trending downwards.  It has since lost over $50 from its temporary peak bringining it back through various bearish trigger points.

It will be interesting to see the effects on the gold ETFs in reaction.  The biggest of them all – SPDR Gold Shares (GLD) – has remained unmoved at 821.66 tonnes for the past three days – the highest level since mid-December 2013.  However the consistent upwards path does seem to have come to a halt, which could prove to be ominous for gold investors.  The gold holdings of GLD perhaps remain the best guide to sentiment in the U.S. which, for the moment is effectively where the spot gold price is set.

The latest turn-down in the gold price has been variously attributed to statements from some of the more hawkish members of the Fed’s Open Market Committee, taken as implying there could be a second rate rise announcement as soon as April, and a return to a falling oil price.  However general equities are looking shaky globally and if this continues the Fed may well again err on the side of caution at its next meeting given that further perceived tightening could be a trigger for another stock market downturn.  While some indicators are positive on the U.S. economy, others remain negative.  Gold could thus continue to play something of a safe haven role.

The gold price downturn which we have seen of late is hardly surprising with a number of even pro-gold commentators having predicted it.  An overall upwards path is seldom a smooth one.  Gold continues to flow from West to East, although perhaps not at quite such a high rate as seen in the second half of 2015 – while so far this year any shortfall in such movement has been taken up by gold moving into ETF coffers.  That this may be stuttering needs watching.

Even so, gold is still up by around 14% so far this year.  Those who climbed in big time in the second half of last year will thus have done really well.  The question is will they stay in, or take profits?  We suspect they’ll stay in because the hugely precarious debt situation generated by most central banks around the world could yet see the whole pack of cards crashing down.  Better to be safe than sorry.


Your early THURSDAY 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 6.5114 / Shanghai bourse  IN THE RED, UP DOWN 48.99 OR 1.13%/:  / HANG SANG CLOSED down 269.62 POINTS OR 1.13%

2 Nikkei closed down 108.65 or down .64%

3. Europe stocks all in the RED /USA dollar index UP to 96.20/Euro UP to 1.1165

3b Japan 10 year bond yield: RISES   TO -.085%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112.69

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  38.86  and Brent: 39.65

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 0.194%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate RISE to 9.74%/: 

3j Greek 10 year bond yield FALL to  : 8.73%   (YIELD CURVE NOW INVERTED)

3k Gold at $1218.50/silver $15.27 (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.


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9752 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0887 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 8 Year German bund now  in negative territory with the 10 year FALLS to  + .194%

/German 8 year rate negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,

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

4. USA 10 year treasury bond at 1.88% early this morning. Thirty year rate  at 2.66% /POLICY ERROR)

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

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

U.S. Futures Slide, Crude Under $39 As Dollar Rallies For Fifth Day

Following yesterday’s dollar spike which topped the longest rally in the greenback in one month, the prevailing trade overnight has been more of the same, and in the last session of this holiday shortened week we have seen the USD rise for the fifth consecutive day on concerns the suddenly hawkish Fed (at least as long as the S&P is above 2000) may hike sooner than expected, which in turn has pressured WTI below $39 earlier in the session, and leading to weakness across virtually all global risk assets.

And since a stronger dollar means a weaker Yuan, more potential devaluation, greater capital outflows but most importantly lower commodity prices and key among them cheaper oil, now flirting with sliding below $39 to the downside, which would lead to its first weekly decline, as lower oil means lower risk prices in general as per the very well-known correlation shown below…


traders walking in today are greeted by something they have barely seen in the past month’s bear market rally: a sea of red: not only are S&P500 futures down nearly 0.5% in today’s illiquid session, but European shares have retreated for a fourth day, while raw-materials producers led declines among Asian equities as the Bloomberg Commodity Index slumped for a second day. Industrial commodities like iron ore fell for a third day, while gold has continued to drift lower. Government bonds advanced in Australia and the euro area.

The reason for this resurgent dollar strength is none other than the very confused Fed: after last week halving its projection for interest-rate rises this year to two – a shift that spurred global stock gains and depressed the dollar – various Fed officials have in the past few days talked up the possibility of an increase something that CNBC’s Steve Liesman classified as a potential mutiny against a very confused Janet Yellen. As Bloomberg writes, Fed Bank of St. Louis President James Bullard on Wednesday joined a chorus of policy makers floating the possibility of a rate hike as soon as April, helping fuel a rebound in the greenback that’s unsettling the mostly dollar-denominated commodity market.

“Fed officials this week reminded the market that they still want to move forward with the rate hikes,” Mark Lister, head of private wealth research at Craigs Investment Partners told Bloomberg.

“Investors have been looking for a reason to pull back and this is one” he added and sure enough, the MSCI All Country World Index fell 0.5% in early trading after sliding 0.8 percent on Wednesday. The Stoxx Europe 600 Index slid 0.8%, the MSCI Asia Pacific Index lost 1.1% and futures on the Standard & Poor’s 500 Index declined 0.5%.

Additionally, now that the broader market levitation appears to be over, we have seen numerous single-name slams overnight, such as the following:

  • China Life Insurance Co., the nation’s largest insurer, dropped 3.9% in Hong Kong after reporting earnings that fell short of analyst estimates. PetroChina Co., the country’s biggest oil and gas producer, slumped 4.3% after reporting its lowest annual profit since 1999.
  • Mitsui & Co. dropped 7.5 percent in Tokyo after the trading company forecast its first loss since it was founded in its modern form in 1947.
  • Next -8.4%; cuts FY17 full price Next brand sales outlook
  • Mitie -7.6%; says it sees FY profit in line, revenue below expectations
  • Vallourec -5.4%; extends drop this week to ~15%
  • Anglo American -5.1%; miners underperform today: ArcelorMittal -4.4%, Antofagasta (ANTO LN) -4%, Fresnillo (FRES LN) -3.9%, Rio Tinto (RIO LN) -3.7%;
    Standard Chartered -4.3%; on track for worst weekly performance since early Jan.
  • Sacyr -3.6%; 4th straight decline, longest losing streak in >1 month
  • Credit Suisse -3%; falls for a 2nd day after CEO said on conf call yday that bank will probably post 1Q loss
  • Drillish -2.3%; CEO sudden departure is “not a welcome event”: Jefferies
  • HSBC -1.5%; downgraded at BofAML on dividend risks

Absent a dramatic turnaround in the USD momentum we expect this negative list to extend once the US market is open for trading for its last weekly session.

Top news stories include Starboard’s possible attempt to shake up board at Yahoo; Konecranes, Zoomlion bids for Terex, Nomura’s possible NorthAm job cuts.

Markets Snapshot

  • S&P 500 futures down 0.4% to 2019
  • Stoxx 600 down 1.1% to 336
  • FTSE 100 down 1.1% to 6134
  • DAX down 1.1% to 9916
  • German 10Yr yield down 2bps to 0.17%
  • Italian 10Yr yield down less than 1bp to 1.29%
  • Spanish 10Yr yield up less than 1bp to 1.54%
  • S&P GSCI Index down 0.8% to 326.7
  • MSCI Asia Pacific down 1.1% to 127
  • Nikkei 225 down 0.6% to 16892
  • Hang Seng down 1.3% to 20346
  • Shanghai Composite down 1.6% to 2961
  • S&P/ASX 200 down 1.1% to 5084
  • US 10-yr yield down 2bps to 1.86%
  • Dollar Index up 0.24% to 96.28
  • WTI Crude futures down 1.9% to $39.03
  • Brent Futures down 1.4% to $39.89
  • Gold spot down 0.3% to $1,217
  • Silver spot down less than 0.1% to $15.25

Top Global News

  • Starboard Will Seek to Replace Yahoo’s Entire Board: WSJ: Fund to announce it will seek replacement of entire Yahoo board with its own slate of directors, WSJ says, citing letter prepared by activist fund.
  • Affymetrix to Enter Talks With Origin After Takeover Bid Boosted: Co. said it will enter talks with Origin Technologies after suitor boosted its offer to $17/share.
  • Konecranes to Pursue Terex Merger Even as Zoomlion Raises Bid: Zoomlion raised its cash offer to $31/share, a dollar higher than an unsolicited bid it made in Jan., Terex said.
  • Cabela’s Said to Open Books to Bass Pro Shops, Others: NYP: Co. opened its finances over past 2 weeks: NYP
  • Nomura Said to Prepare North America Job Cuts Amid Trading Slump: Co. has been expanding in U.S. to boost fee business.
  • Republicans in Bloomberg Poll Not Sold on Plan to Stop Trump: 63% of those who have voted in this year’s Republican primaries & caucuses, or plan to do so, back Trump’s view of nominating process.
  • Debris Found in Mozambique Likely From MH370, Australia Says: Two pieces of aircraft debris washed up on coast of Mozambique “almost certainly” from missing MH370: Australia’s Transport Minister.

Looking at regional markets, we start in Asia, where stock trader lower across the board following similar price-action seen on Wall St. as weakness across commodities dampened sentiment. ASX 200 (-1.1%) and Nikkei 225 (-0.6%) were led lower from the open by losses in energy and basic materials after a large build in DoE crude inventories coupled with a firmer USD, which saw WTI break below USD 40/bbl and iron ore futures drop under USD 50/mt. However, Japanese markets then recovered off worst levels as JPY weakened post-Tokyo fix. Elsewhere, Shanghai Comp (-1.6%) fell following several disappointing earnings results and the resumption of short-selling operations by Chinese brokerages.10yr JGBs traded marginally lower amid relatively quiet trade and an overall cautious tone in the region, while the results of today’s JPY 1.2trl BoJ’s buying operations were noted to be weak in the long-end.  BoJ Summary of Opinions from March 14th-15th meeting stated Japan’s economy had continued its moderate recovery trend but exports and production have been weak. The summary also noted one member advocated that withdrawing NIRP is preferable, however another member stated that undoing NIRP is not an option.

Top Asian News

  • Mitsubishi Books JPY450b Impairment, Expects Annual Loss: Bank expects a net loss of 150 billion yen in 12 months ending March 31.
  • Five Fault Lines Show Japan Bond Market Close to Breaking Point: Inverted curve, rising volatility, thin trading among risks
  • Malaysia Fund Spat With Central Bank Flares Over Zeti Comments: Bank Negara last year ordered 1MDB to repatriate $1.8b.
  • Samsung Looks Beyond Smartphones With Plans to Buy AI Developers: Smartphone giant seeking to acquire software makers.
  • Takata’s Stumble Spells 50% Share of Air-Bag Orders for Autoliv: Swedish-American Autoliv puts safety back into air bags.
  • Billionaire Ruias’ Steel Arm Said to Draw Tata, JSW Interest:

In Europe, equities took the impetus from a relatively lacklustre lead from Asia heading into the Easter break. As such, stocks this morning have been led lower by the fall in financial and energy names, with large banking arms Deutsche Bank and Credit Suisse down over 3%, pushing the iTraxx sub fin index higher by over 6bps. Additionally, oil prices have extended on yesterday’s losses with both WTI and Brent crude futures sub USD 40/bbl, coupled with a fallout in the base metals complex continuing to weigh on the likes of Glencore (-4.4%) and Antofagasta (-3.7%).

Elsewhere, the softness in equities allied with the resumption of credit spreads widening, has seen Bunds remain bid throughout much of the European morning, alongside no issuance in Europe’s primary market providing leeway for German paper.

Top European News

  • Italy’s Popolare to Buy BPM, Creating Third-Largest Bank: Banco Popolare investors will own 54% of combined lender, banks said in joint statement on Wednesday.
  • Swiss Banks Land in Middle of Venezuelan Money-Laundering Probe: At request of U.S. authorities, Switzerland has agreed to turn over records from at least 18 banks involving PDVSA.
  • British Pound’s $16b of Option Trades Envisage Drop to 1980s Lows: At least GBP11b wagered on options that would profit if sterling fell to or below $1.3502, after June 23 referendum, data compiled by Bloomberg show.
  • Premier, Trying to Fend Off McCormick, Says Nissin to Take Stake: Japanese noodle maker agreed to buy a 17.3% stake.

In FX, the USD index is still dominating FX flow this morning, but is being influenced by focus on Cable, where Brexit fears and renewed hawkish expectations at the Fed make this a lead play at the moment. However, ahead of the Easter break, the threat of a short squeeze is possible, but we expect limited mileage. UK retail sales were a risk for GBP bears, but despite (net) better than expected, did little to generate a major surge. EUR/GBP now eyeing .8000, but stalling ahead of .7950 for now. Some temperance in the commodity currencies also, where AUD and CAD have been hit hard over the last 24 hours, but holding up against some notable levels of resistance. Oil still on the wane, but some reluctance for USD/CAD to test 1.3300 just yet. AUD/USD is finding fresh buyers from the mid .7400’s, bottoming out at .7475 but in both cases, pressure remains. USD/JPY offers from 113.00 have contained trade here; domestic retail names said to be profit taking, but we suspect stocks market nerves will also attract sellers from here.

The ringgit dropped 1 percent, retreating from its highest close since August, as the slide in crude prices dimmed prospects for Malaysia, Asia’s only major net exporter of oil. Falling commodities prices also weighed on Australia’s dollar, which fell as much as 0.7 percent to a one-week low.

The yuan weakened 0.2 percent in offshore trading after the People’s Bank of China cut its daily reference rate for the currency by the most in two months. Pacific Investment Management Co. forecast the currency will weaken 7 percent over the next year, according to a report published Wednesday.

In commodities, WTI and Brent are both down on the day after yesterday’s larger than expected DoE crude inventory build and firmer USD weighed on prices, Gold is down roughly half a percent after its largest weekly decline in 4 months. Iron ore sank as much as 5.8 percent to $49.90 a ton in Singapore. The price has swung wildly in March, ranging from $46.45 to $61.95, as investors sought to gauge conflicting economic signals from China against still-elevated port stockpiles and shifts in the U.S. currency.

“There hasn’t been much improvement in China’s economy and steel mills aren’t keen to purchase iron ore, especially after the price surge,” said Zhao Chaoyue, an analyst at China Merchants Futures Co. in Shenzhen. “The dollar also surged overnight, spurring a sell-off in commodities.”

The Bloomberg Commodity Index declined 0.4 percent, after a 2 percent slide on Wednesday that marked its steepest loss in two months. Gold fell as much as 0.7 percent to this month’s low of $1,212.24 an ounce. Copper slipped 0.3 percent in London and zinc dropped 2.3 percent.

On the US calendar today, in addition to the usual weekly jobless claims data we will also get durable goods orders data for February (-3.0% expected; +4.7% prior) which is expected to be soft following a pullback in aircraft orders. The numbers excluding transport are expected to be better (-0.3% expected) but still on the negative side. Today also sees the Mark-it flash services and composite PMI data for March. The former is expected to rise to 51.4 from 49.7 last.

Bulletin Headline Sumary from Bloomberg and RanSquawk

  • Equities in Asia and Europe have spent the day in the red, with energy, material and banking names continuing to weigh on indices amid light newsflow ahead of Easter weekend
  • Commodity linked currencies remain under pressure, while GBP trades flat despite a higher than expected retail sales reading
  • Highlights today include US initial jobs claims, durable goods orders, manufacturing PM! and comments from Fed’s Bullard as well as ECB’s Knot
  • Treasuries higher in overnight trading, global equity markets, U.S. stock futures drop along with oil; fixed income market closes at 2pm ET today, futures trading floors at 1pm ET, U.S. markets closed tomorrow, according to SIFMA.
  • Royal Dutch Shell Plc and Siemens AG bond yields have dropped below zero, highlighting how ECB stimulus is contorting the region’s credit markets
  • Mario Draghi and Haruhiko Kuroda have handed a big gift to U.S. companies like Coca-Cola Co. and General Electric Co.: piles of money from European and Japanese investors
  • Nomura plans to cut jobs in North America, people with knowledge of the matter said, following competitors from Credit Suisse Group AG to Deutsche Bank AG in trimming operations amid a trading slump
  • Credit Suisse CEO Tidjane Thiam dropped a bombshell on investors: Caught off guard by a buildup of illiquid trading positions, the bank will probably post a second straight quarterly loss as it unwinds the trades
  • Thiam received $4.7 million for his first six months on the job, when he mapped out a strategy for the Swiss bank that he has since been forced to accelerate
  • Congress sent a message to financial regulators in 2010: No more pay that encourages Wall Street to take extra-large risks. Since 2011, the average bonus at New York securities firms has climbed 31 percent
  • As Britain ponders its future in the European Union, investors are betting an amount almost the size of Iceland’s economy on the pound falling to levels last seen in the 1980s
  • A research unit of China’s central bank branch in Shenzhen asked commercial banks in the city to strengthen risk- control practices on household mortgage loans as property prices have soared
  • More than a decade of profit gains at China’s largest banks probably came to an end last year, and the pain may deepen in 2016 as a surge in bad loans threatens their ability to maintain dividends
  • Opposition to free trade is a unifying concept even in a deeply divided electorate, with almost two-thirds of Americans favoring more restrictions on imported goods instead of fewer
  • $6.25b priced yesterday, WTD to $15b, MTD $144.805b, YTD $439.055b; $1.7b HY priced yesterday, MTD 22 deals for $13.965b, YTD 47 deals for $28.82b
  • Sovereign 10Y bond yields mostly steady; European, Asian equity markets lower; U.S. equity-index futures drop. WTI crude oil, gold and copper fall


DB concludes the overnight wrap

Weaker sentiment prevailed over markets yesterday as risk asset performance generally sputtered. Equity markets across the globe traded broadly lower on the day. Despite a healthy start to the European session with the Stoxx 600 up as much as 0.6% in early trading, the index eventually ended the day marginally down (-0.07%). The Stoxx 600 has now fallen every day so far this week, although the total losses have been fairly modest (-0.48%). The fall in US equities yesterday was more pronounced with the S&P 500 down -0.64%. The losses were led by the energy (-2.10%) and materials (-1.23%) sectors that followed the slide in oil prices and other commodities (more on this later).

Looking at our screens this morning the risk off sentiment continues to weigh on markets this morning. Chinese equities have see-sawed through early trading with the CSI300 and Shanghai Comp down -0.71% and -0.65% respectively as we go to print while the Hang Seng is down -1.19%. The Nikkei had erased earlier losses but is back in negative territory as we go to print (-0.36%).

Zooming in on China, we have an update from our Chief China Economist Zhiwei Zhang discussing the latest news on China’s capital outflows. The report highlights the key talking points from the transcript of the SAFE news conference in March, such as the reduced intensity of capital outflows and some official perspectives on capital control measures and a potential Tobin tax.

In terms of credit markets CDS indices were generally wider in both Europe and the US. iTraxx Main and Crossover widened by 1bp and 8bps respectively while CDX IG and HY widened by around 1bp and 10bps respectively. Looking at the cash market we saw EUR credit edge tighter once again however the tone in the USD market was softer with HY spreads widening by around 10bps. The losses in HY were led by the Oil & Gas and Basic Materials sectors as commodities, including oil, saw material falls yesterday. With risk assets generally selling off government bond yields fell with 10yr US Treasury and Bund yields falling 6bps and 2bps respectively.

The rally in commodities ran out of steam as the asset class suffered losses across the risk spectrum. Gold (-2.28%) experienced one of its largest single day sell-offs in the past four weeks, while other precious metals such as silver (-3.87%) also posted large drops. Industrial metals such as copper (-2.36%) have also dipped. There was a large sell off in crude (-4%, back below $40/bbl), its worst day since 11 February when it hit its lows for the year, after a report from the EIA noted that US crude inventories rose by 9.36mn barrels (vs. 2.53mn barrels expected) last week to push supplies to their highest levels in more than eight decades.

A stronger US dollar (+0.43%) also contributed to the drag on commodities. The dollar index has now gained for four consecutive days (its longest winning streak in a month) following a chorus of hawkish Fedspeak over this week (including Bullard yesterday) suggesting that a rate hike could be possible as early as April. Policy makers appear to be delivering mixed signals as these comments conflict with the dovish nature of FOMC statement released only a week ago.

There is little to report on the data front from yesterday, with the only numbers of note being new home sales in the US which came in marginally above expectations at 512k (vs. 510 expected; 494k previous). Our US Economist Joe Lavorgna does however downplay the importance of this series as it tends to be highly volatile.

Turning the page over to today’s calendar, it’s once again a quiet day in Europe. The only numbers of note should be the retail sales data due for the United Kingdom (+3.9% YoY expected; +5.2% prior) and Italy (+0.6% YoY prior). We should also see the ECB publish its Economic Bulletin.

It is bit busier over in the US. In addition to the usual weekly jobless claims data we will also get durable goods orders data for February (-3.0% expected; +4.7% prior) which is expected to be soft following a pullback in aircraft orders. The numbers excluding transport are expected to be better (-0.3% expected) but still on the negative side. Today also sees the Mark-it flash services and composite PMI data for March. The former is expected to rise to 51.4 from 49.7 last.




i)Late  WEDNESDAY night/ THURSDAY morning: Shanghai closed DOWN BY 48.99 POINTS OR 0.63% , /  Hang Sang closed DOWN by 269.62 points or  1.31% . The Nikkei closed DOWN 108.65 POINTS OR 0.64% . Australia’s all ordinaires was DOWN 1.13%. Chinese yuan (ONSHORE) closed DOWN at 6.5114.  Oil FELL  to 38.93 dollars per barrel for WTI and 39.65 for Brent. Stocks in Europe so far ALL IN THE RED . Offshore yuan trades  6.5241 yuan to the dollar vs 6.5114 for onshore yuan. LAST NIGHT CHINA SIGNALS TO THE USA TO STOP ALL RATES INCREASES BY MASSIVELY DEVALUING THEIR YUAN. THE LAST TIME CHINA DID THIS, THE USA LISTENED AS THEY DO NOT WANT DEFLATION TO PERMEATE THE GLOBE



 FIRST:  report on Japan

Japan goes to the helicopter route to give free money to poorer citizens.

Seems that Japan has reached its limit on QE

(courtesy zero hedge)


Japan Goes Full Krugman: Plans Un-Depositable, Non-Cash “Gift-Certificate” Money Drop To Young People

The Swiss, the Finns, and the Ontarians may get their ‘Universal Basic Income’ but the Japanese are about to turn the Spinal Tap amplifier of extreme monetary experimentation to 11. Sankei reports, with no sourcing, that the Japanese government plans to unleash “vouchers” or “gift certificates” to low-income young people to stimulate the “conspicuous decline” in consumption among young people. The handouts may not be deposited, thus combining helicopter money (inflationary) and fully electronic currency (implicit capital controls and tracking of spending).

Since Ben Bernanke reminded the world of the existence of government printing-presses, echoed Milton Friedman’s “helicopter drop” solution to fighting deflation, and decried Japan for not being as insane as it could be… it has only been a matter of time before some global central bank decided that the dropping of cash onto the populace was the key to economic recovery. Having blown their wad on QQE (and been left with a quintuple-dip recession) and unleashed NIRP, it appears Japan has reached that limit.

As Bloomberg reports,

The Japanese government plans to include gift certificates for low-income young people in its fiscal 2016 supplementary budget, Sankei reports, without saying who provided the information.


Recipients would be able to use them for daily necessities.


The government sees gift certificates as more effective in stimulating consumption than cash handouts, which may be deposited.

As Sankei reports (via Google Translate),

The government 23 days, as the centerpiece of the 2016 fiscal year supplementary budget to organize because of the economic stimulus, cemented the policy to include the low-income measures for young people. To examine the distribution of vouchers to be devoted to the purchase of such daily necessities. Although the 2015 supplementary budget, which was established in January was the extraordinary benefits pillars of the elderly, because the conspicuous decline in consumption among young people, hopes to work to shore up at the pin point. Low-income measures of the past on the grounds such as “benefit is Oyobi difficult wage hike” (Chief Cabinet Secretary Yoshihide Suga) is for the elderly was the main.


However, in January of Family Income and Expenditure Survey (two or more people households), consumption expenditure of 34-year-old following of young people in a significant negative same month of the previous year of 11, 7% decrease, compared to the total household average of 3.1% year on year decline was noticeable even. Government in order to raise the level of personal consumption to be sluggish, the determination and consumption stimulus measures of young people is essential. Rather than the benefits that potentially turn into savings is pointed out, we are considering the distribution of gift certificates. Details, such as low-income earners of interest and business scale is filled from April.


According to the Cabinet Office survey, for which the straight-line benefits that were distributed in 2009, many of proportion to turn to the consumer from the elderly entitlements is more of the child-rearing households than the household, this time of the measures expected a certain effect on the consumption raise That’s it. Per capita 3 27 fiscal distribute the yen supplementary budget of extraordinary benefits to the elderly of the low-income, objection such as “Why do you favor only the elderly” was out of the ruling and opposition parties. Ahead of the House of Councillors election, there is also aim to appeal to the support measures for young people.

And so while some might liken it to EBT cards in the US… it appears this is simply a hidden way to directly hand out free money to those that spend (lower income) and force consumption (non-depositable or savable) and thus… increase inflation… So no need for firms to raise wages after all!??! Well played Abe.

One wonders how much these “gift certificates” will trade for on the black market…as we are sure some ‘spending’ will be disallowed and require the use of cash – no sugary drinks… no Fugu (google it)… no Sumo tournaments… and no BMW X6

And finally here is Charles Hugh-Smith to destroy the idea that this works…

In sum, the psychology of punishing the productive and rewarding non-contributors is destructive to everyone. Have proponents forgotten that humans are prone to emotions such as resentment? Resentment goes both ways; the recipients of Basic Income will be getting by, but they won’t be able to build capital or better their financial stake. They are in effect Basic Income Serfs.


Proponents also believe that the loss of work will free everyone getting a basic income to become an artist, composer, musician, etc. As I noted in“Super-Welfare” Guaranteed Income For All Isn’t a Solution–It’s Just the New Serfdom, Since meaningful work is the source of positive social roles, Hell is a lack of meaningful work.


In the myopic view of the Basic Income proponents, humans are nothing but consumer-bots who chew through the Earth’s resources in their limitless quest for more of everything– what the Keynesian Cargo Cult worships as “demand.”


Tragically, this blindness to humanity’s need for meaning and the elevation of spiritually empty consumerism to a Secular Religion leaves the basic Income crowd incapable of understanding this timeless truth: the only possible result of robbing people of their livelihood is despair.


Once meaningful work vanishes, so do positive social roles.


This is why guaranteed income for all is just a new version of Socioeconomic Hell. Being paid to do nothing does not provide meaningful work or positive social roles, which are the sources of positive identity, pride, purpose, community and meaning.


The petit-bourgeois fantasy of every individual flowering as an artist, musician and creator once freed of work is an abstraction, one born of the expansion of academic enclaves and private wealth-funded dilettantes fluttering from one salon to the next. (Ever notice how many trust-funders have therapists? Would they all need therapists if being freed from work automatically generated happiness and fulfillment?)


These are precisely what basic income for all doesn’t provide. To the degree that serfdom is political powerlessness and near-zero access to the processes of accumulating productive capital, guaranteed income for all is simply serfdom institutionalized into a Hell devoid of purpose, pride, meaning, community and positive social roles.

*  *  *

As we previously detailed,support is growing around the world for such spending to be funded by “People’s QE.” The idea behind “People’s QE” is that central banks would directly fund government spending… and even inject money directly into household bank accounts, if need be. And the idea is catching on.

Already the European Central Bank is buying bonds of the European Investment Bank, an E.U. institution that finances infrastructure projects. And the new leader of Britain’s Labor Party, Jeremy Corbyn, is backing a British version of this scheme.


That’s the monster coming to towns and villages near you! Call it “overt monetary financing.” Call it “money from helicopters.” Call it “insane.” 


But it won’t be unpopular. Who will protest when the feds begin handing our money to “mid- and low-income households”?

Simply put, The Keynesian Endgame is here… as  the only way to avoid secular stagnation (which, for the uninitiated, is just another complicated-sounding, economist buzzword for the more colloquial “everything grinds to a halt”) is for central bankers to call in the Krugman Kraken and go full-Keynes.

Rather than buying assets, central banks drop money on the street. Or even better, in a more modern and civilised fashion, credit our bank accounts! That, after all, may be more effective than buying assets, and would not imply the same transfer of wealth as previous or current forms of QE. Indeed, ‘helicopter money’ can be seen as permanent QE, where the central bank commits to making the increase in the monetary base permanent.


Again, crediting accounts does not guarantee that money will be spent – in contrast to monetary financing where the newly created cash can be used for fiscal spending. And in many cases, such policy would actually imply fiscal policy, as most central banks cannot conduct helicopter money operations on their own.



So again, the thing to realize here is that this has moved well beyond the theoretical and it’s not entirely clear that most people understand how completely absurd this has become (and this isn’t necessarily a specific critique of SocGen by the way, it’s just an honest look at what’s going on). At the risk of violating every semblance of capital market analysis decorum, allow us to just say that this is pure, unadulterated insanity. There’s not even any humor in it anymore.


You cannot simply print a piece of paper, sell it to yourself, and then use the virtual pieces of paper you just printed to buy your piece of paper to stimulate the economy. There’s no credibility in that whatsoever, and we don’t mean that in the somewhat academic language that everyone is now employing on the way to criticizing the Fed, the ECB, and the BoJ.

And it will end only one way…

The monetizing of state debt by the central bank is the engine of helicopter money. When the central state issues $1 trillion in bonds and drops the money into household bank accounts, the central bank buys the new bonds and promptly buries them in the bank’s balance sheet as an asset.


The Japanese model is to lower interest rates to the point that the cost of issuing new sovereign debt is reduced to near-zero. Until, of course, the sovereign debt piles up into a mountain so vast that servicing the interest absorbs 40+% of all tax revenues.


But the downsides of helicopter money are never mentioned, of course. Like QE (i.e. monetary stimulus), fiscal stimulus (helicopter money) will be sold as a temporary measure that quickly become permanent, as the economy will crater the moment it is withdrawn.

The temporary relief turns out to be, well, heroin, and the Cold Turkey withdrawal, full-blown depression.



 SECOND: report on China

The POBC sends Washington a strong message:

“don’t mess with the Zohan..I mean China!!)


China Sends Fed A Warning: Devalues Yuan By Most In 2 Months

With the USD Index stretching to its longest winning streak of the year, jawboned by numerous Fed speakers explaining how April is ‘live’ (and everyone misunderstood the dovishness of Yellen), it appears that The PBOC wanted to send a message to The Fed – Raise rates and we will unleash turmoil on your ‘wealth creation’ plan. Large unexpected Yuan drops have rippled through markets in recent months spoiling the party for many and tonight, by devaluing the Yuan fix by the most since January 7th, China made it clear that it really does not want The Fed to hike rates and cause a liquidity suck-out again.


The last 4 days have seen nearly a 1% devaluation in the Yuan fix with today’s drop the biggest in over 2 months…


And while everyone is quietly commenting on how “stable” the Yuan has been this year, the truth is that is only the case against the USD, the Yuan basket has been consistently devaluing since PBOC admitted it was more focused on that than the USD only...


The last time they sent a message, The Fed rapidly acquiesced and decided a rate hike was inadvisable due to global market turmoil… we wonder what happens this time.




Since 2010, Switzerland has spent the equivalent of 470 billion USA on currency manipulation or 2/3 of its GDP


(courtesy zero hedge)

Swiss National Bank Admits It Spent $470 Billion On Currency Manipulation Since 2010

By now it is common knowledge that when it comes to massive, taxpayer-backed hedge funds, few are quite as big as the Swiss National Bank, whose roughly $100 billion in equity holdings have been extensively profiled on these pages, including its woefully investments in Valeant and the spike in its buying of AAPL stock at its all time high.

But while the SNB’s stock holdings are updated every quarter courtesy of its informative SEC-filed 13F (we wish the Fed would also disclose the equities it holds courtesy of its Citadel proxy), getting a gllimpse of the flow is more problematic, and involves waiting for the hedge fund’s, pardon central bank’s annual report.

Earlier today patience was rewarded when the SNB filed its 108th annual report, in which it disclosed that it spent CHF 86.1 billion or $88 billion, on current interventions last year, a measure of its efforts to shield the economy from deflation.

As Bloomberg reports, SNB President Thomas Jordan and his colleagues have repeatedly pledged to step in to prevent the franc from strengthening. They’ve done so even since they gave up a minimum exchange rate of 1.20 per euro in January 2015 on the grounds the interventions required to sustain it were out of proportion to the economic benefit.

This is how the SNB explained its intervention:

In order to fulfil its monetary policy mandate, the SNB may purchase and sell foreign currency against Swiss francs on the financial markets. Foreign exchange transactions can be conducted with a wide range of domestic and foreign counterparties. The SNB accepts well over 100 banks from around the world as counterparties. With this network of contacts, it covers the relevant interbank foreign exchange market. The Singapore branch office facilitates round-the-clock foreign exchange market operations, if necessary.  


In 2015, the SNB purchased a total of CHF 86.1 billion of foreign currency, with the vast majority of foreign currency purchases being made in January. During the remainder of the year, the SNB also remained active in the foreign exchange market in order to influence exchange rate developments, where necessary.

This announcement was an odd departure from SNB protocol: Swiss policy makers rarely state outright that they’ve intervened, and analysts use data on sight deposits and foreign currency reserves to gauge the scope of the central bank’s actions. Breaking with the usual protocol, Jordan said in June the SNB had acted to stabilize the franc amid the Greek debt crisis.

The 2015 figure compares with 25.8 billion francs spent on interventions in 2014 and 188 billion francs in 2012. The SNB made no foreign-currency purchases in 2013.

In other words, as shown in the chart below, the SNB has spent a total of $471 billion to intervene in currency markets since 2010, amounting to two thirds of the country’s GDP, and in the end failed after the drain simply became too big.

And yet somehow “analysts” think that where Switzerland failed, China will be able successful in maintaining its closed capital account.




US Marines enter ground combat in Iraq to defend oil fields as ISIS seems to be getting stronger and willing to attack these fields

(courtesy Jason Ditz/

US Marines Enter Ground Combat in Iraq to Defend Oil Fields


Even as Pentagon officials have sought to emphasize their claims of ISIS being “on the run,”ever more US ground troops are being deployed into Iraq to try to cope with ISIS offensives, with the battle of Makhmur leading to the introduction of US Marines in front-line combat roles.

Officials are trying to downplay the operation as “force protection” for Iraqi ground troops, who have been massing in the area in an effort to ultimately launch an attack on the ISIS-held city of Mosul, not far away.

The explanation is unsatisfying for several reasons, but primarily because this “tactical assembly area” already includes thousands of Iraqi troops and Kurdish Peshmerga, and these are the same troops who are supposed to attack Mosul. Yet these troops are apparently unable to even hold Makhmur, let alone advance toward Mosul.

The Makhmur District is also a key to holding oil fields around Kirkuk, and the ISIS offensive is seen by many analysts as part of an effort to ultimately regain control over those lucrative oil fields, and have been “outgunning” the thousands of Iraqi troops in the area.

Whether they’re trying to save Iraqi ground troops who still can’t stand up to ISIS, or save oil fields, however, the latest escalation puts US troops even further in harm’s way, and has put the war even further afield from the “no boots on the ground” affair initially promised by the Obama Administration.



Dave Kranzler is correct;  the entire global system will implode when central bank intervention fails or has no effect on any economy!

(courtesy Dave Kranzler/IRD)


The System Will Implode When Central Bank Intervention Fails

The economic reports released this morning added to the near-continuous flow of information reflecting a U.S. economy that is likely contracting, for the most part.  Perhaps the only “fundamental” variable not contracting is the hot air coming from the Fed.

In today’s release of its “services” PMI, Markit explains:  “The US economy is going through its worst growth spell for three and a half years…and the worst may be to come as the greatest concern is the near-stalling of new business growth.”

The core durable goods new orders index released today dropped for the 13th month in a row – Zerohedge points out that it is the longest “non-recessionary” stretch of consecutive monthly drops in 70 years.

In fact, a good argument can be made that if a bona fide rate of inflation was applied to the Government’s GDP calculations, the U.S. economy has not produced real, inflation-adjusted economic growth since 2006.  Review the work of John Williams’ for evidence of this fact.

The Swiss National Bank admitted that it has spent $470 billion on currency manipulation since 2010.  Given the Fed’s refusal to disclose any information about its currency swap programs – including denying all FOIA requests on this matter – there can be no doubt that the Fed has been actively funding the SNB’s endeavors. The same goes for the SNB’s huge U.S. stock portfolio, which includes insanely overvalued gems like AAPL and AMZN.

We are witnessing the western Central Banks’ last gasp at preventing total systemic collapse.  The Fed et al were able to defer this event in 2008 with many trillions of direct money printing – deceptively marketed as “Quantitative Easing” – and many more trillions of direct Government income and spending subsidization.  After all, a Government willing to underwrite and guarantee 3% down payment, subprime credit mortgages is creating nothing more than a form of “helicopter money” dressed in drag.

A reader who is a self-professed real estate expert took issue with my blog post the other day in which I stated that the housing market is tipping over now.   He said: “Until proven otherwise, the U.S. housing market is still alive and well right now – and Denver is still doing very well too!”

Quite an assertion given that his opinion is based almost solely on the corrupted data produced by the National Association of Realtors (I refer you to one of several blog posts in the  past in which I demonstrate in detail why the NAR data is highly flawed, if not intentionally fraudulent to some degree).   To which I responded:

We’ll have to agree to disagree. Despite the propaganda, prices have been falling in Denver since last summer. Inventory is going through the roof. The “bubble” neighborhoods everywhere in metro-Denver are starting to look like they did in 2008, littered with for sale and for rent signs. I’m not sure where your “Denver” data is coming from but I conduct actual “boots on the ground” due diligence. I am getting emails from readers in Florida, DC/Virginia, NY and other regions describing the same thing I’m seeing in Denver.

The NAR data is highly manipulated. Yr over yr SAAR is useless as is the NAR data collection methodology. The “seasonal adjustment” regression program is the same program the Government uses in its data manipulation scheme.

At the lower end of the spectrum, we are seeing the last fumes of a regenerated subprime mortgage bubble sponsored by FNM/FRE/FHA/VHA/USDA. Yes, the USDA, which sponsors 0% down pmt mortgages in “rural” areas where “rural” turns out be the outermost suburban band of most MSA’s. Were you even aware of that?  There’s also been a “last gasp” surge in investor/flipper volume. They will be stuck holding the bag on homes they can’t sell or rent, just like in 2008.

My point in all of this is that the only “trick” left in the Fed’s bag right now is direct intervention in the stock market.   It’s a last gasp effort in an attempt to generate a “confidence” and “wealth effect” dynamic.  Hey, if the stock market isn’t going down things can’t be that bad, right?

The problem is that, for the most part, the world can no longer absorb any more credit expansion. We’re seeing this in the U.S. with the rapidly rising delinquency rates for auto and student loans, soon to be followed by another round of mortgage delinquency/defaults.

The Fed knows this and that’s why it continues to defer raising rates despite the constant barrage of threats to do just that at “the next meeting.”  Even the boy who cried “wolf” is blushing on behalf of the Fed.  I believe that the Fed’s inability to inflict a meaningful price take-down of gold and silver – especially silver – may be an indication that the Fed’s manipulative powers are beginning to atrophy.

It’s likely that this latest bear market bounce in stocks – the one for which Jim Cramer has ceremoniously proclaimed “a new bull market” – is going to start tipping over.  It won’t happen all at once but it will likely lead to yet another “waterfall” drop in the S&P 500.  Incredibly, the last two times around witnessed an incredible amount of screaming from the “peanut gallery” for the Fed to do something in response to just a 10-15% drop in stocks.  Bear markets typically don’t end until stocks have dropped 60-90%.

At some point the Fed will be completely helpless to prevent the market from going lower. That’s the point at which the system will collapse.  In my upcoming issue of the Short Seller’s Journal, I outline why I believe both oil and stocks are getting ready to head down the roller coaster tracks once again.  I have an idea that will capitalize on another move lower in oil plus accelerating defaults in the energy sector.  Subscribers also received an update email last night that presented a stock that I think is getting ready to experience an “elevator shaft” drop.  This company’s accounting is more misleading than Amazon’s, if that’s possible.

The Fed has been working overtime to hold up a stock market that is the most overvalued in U.S. history based on using traditional GAAP earnings.  My Short Seller’s Journal will help you find stocks that will ultimately fall at least twice as much as the overall market, either because of misleading accounting that gets exposed or rapidly deteriorating fundamentals, or both.  (click below to subscribe)


(courtesy John Rubino/DollarCollapse/com)

NIRP Is Absolutely Crushing Big Parts Of The Finance World

by John Rubino on March 23, 2016 · 14 Comments

Savers are the obvious victims of the past few years’ plunge in interest rates. But there are other casualties, including money market funds, which have no reason for existing if their yield is negative, and insurance companies, which price their policies on the assumption that they’ll earn good returns on their bond portfolios.

As bond yields plunge, the returns insurance companies can expect are also plunging, forcing them into huge write-offs and, soon, steep premium increases that will scare away customers. One big insurer just illustrated the spot in which the industry finds itself:

Lloyd’s of London Takes `Massive Hit’ From Low Investment Return

(Bloomberg) – Lloyd’s of London reported a 30 percent drop of full-year profit as the world’s largest insurance market was hurt by continued pressure on pricing and the lowest investment returns since at least 2001.Earnings declined to 2.1 billion pounds ($3 billion) for 2015 as income from investments, primarily fixed income, sank 60 percent to 400 million pounds, according to the company’s annual report Wednesday. Weaker pricing in 2015 is expected to continue this year, it said.

“We’ve taken a double hit from reduced margins in underwriting and lower investment yield,” Chief Executive Officer Inga Beale said in an interview with Bloomberg Television Wednesday. “On the investment side we saw a dramatic reduction in 2015 that was a massive hit” to earnings.

Most of Lloyd’s 2015 earnings were generated when bond yields were a lot higher than they are today, so things will be much worse going forward. Here, for instance, is that now-famous chart of Japanese long-bond yields plunging from modestly positive to negative in the space of a few months.

Japan yield curve March 16

For an insurance company — or a pension fund (more about them in another post) — the only recourse is to adjust to this new reality by raising premiums and taking huge writedowns, as Lloyds just did. In such a harsh environment, weak players will fail and strong ones will suffer, but few will make the kind of money that justifies the effort.

And now on to the banks. If your business model is to borrow short-term at low rates and lend longer-term at higher rates, a flattening yield curve — which eliminates the difference between long and short rates — is an existential threat. But in recent years the big Wall Street banks have morphed from traditional lenders into hedge funds which make most of their money by trading increasingly-exotic financial instruments for their own accounts. And in a world of flattening yield curves and multi-industry credit crises, this kind of trading is suddenly a loser’s game.

Liquidity Death Spiral Traps Credit Suisse

(Bloomberg) – Credit Suisse just got caught up in the same liquidity death spiral that has claimed a growing number of debt funds.Some of the bank’s traders increased holdings of distressed and other infrequently traded assets in recent months without telling some senior leaders, Credit Suisse CEO Tidjane Thiam said on Wednesday in a Bloomberg Television interview. This is bad on several levels. For one, it highlights some pretty poor risk management on the part of senior officers at the Swiss bank.

But perhaps more important from a market standpoint, it exposes a trap in the current credit market: Traders are getting increasingly punished for trying to sell unpopular debt at the wrong time. The result has been a growing number of hedge-fund failures, increasing risk aversion by Wall Street traders and further cutbacks at big banks.

This all simply reinforces the lack of trading in less-common bonds and loans. At best, this spiral is inconvenient, especially for mutual funds and exchange-traded funds that rely on being able to sell assets to meet daily redemptions. At worst, it could set the stage for another credit seizure given the right catalyst — perhaps a sudden, unexpected corporate default or two, or the implosion of a relatively big mutual fund.

To give a feeling for just how inactive parts of the market have become, consider this: About 40 percent of the bonds in the $1.4 trillion U.S. junk-debt market didn’t trade at all in the first two months of this year, according to data compiled from Finra’s Trace and Bloomberg. While corporate-debt trading has generally increased by volume this year, more of the activity is concentrated in a fewer number of bonds.

This has made it even harder for big banks to justify buying riskier bonds to make markets for their clients, the way they used to, because they could get stuck holding the bag. That’s what happened with Credit Suisse, apparently. The bank suffered $258 million of writedowns this year through March 11, and $495 million of losses in the fourth quarter, because of its holdings of distressed debt, leveraged loans and securitized products, including collateralized loan obligations, according to a Bloomberg News article by Donal Griffin and Richard Partington.

Credit Suisse is in a tough spot because it is trying to get out of its hard-to-trade assets at a bad time. It’s re-evaluating its business model under new leadership, higher capital requirements and the shadow of poor earnings.

But it’s certainly not alone in feeling the pain from a brutal and unforgiving period in debt markets. JPMorgan Chase, Bank of America and Goldman Sachs are expected to report disappointing trading revenues in the first three months of the year, and Jefferies already reported its train wreck of a quarter.

The upshot of all this paper carnage is that zero and negative interest rates are equal-opportunity destroyers, crushing the conservative strategies of insurance companies along with the idiotically aggressive practices of modern mega-banks. Virtually no area of finance will continue to function normally if rates stay at this level or — can’t wait to see this — go more deeply negative. And many niches will shrivel up and die.

We may, in short, be about to witness the market’s self-correcting mechanism in action.



Oil is heading southbound as a huge 31 million barrels that have been floating on the seas are coming to shore.  Recent hedging activity is now being unwound as the contango on oil is disappearing


(courtesy zero hedge)



Why Oil Prices Are About To Plunge Again: 31 Million Barrels In Floating Storage Are Coming On Shore

One week ago, we wrote that as a result of the collapsing crude contango, oil tankers (such as the fully loaded Distya Akula which has been on anchor in the Suez Canal for one month unable to find a buyer for its cargo so it continues to wait)will soon have to unload their cargo”, in the process flooding the already oversupplied market with millions of barrels of crude oil, thus pushing the price of oil far lower. But how many millions of barrels, and how much lower will the price of oil go?

For the answer we go to Deutsche Bank’s Michael Huseh, who has done the calculations to get the answer.

What he finds is that since the start of 2014, global floating storage inventory has ranged between 80 and 180 million barrels (Figure 1). According to estimates of the global VLCC fleet at the end of 2014, the potential storage capacity is implied to be 1169 million barrels. Adding Suezmax  vessels would add 528 million barrels of capacity.

After touching 186 million barrels in early March, inventories have begun to decline once more. Since the start of 2015, one can identify both periods when builds in floating storage have been associated with rising Brent prices, and also periods when draws in floating storage have been associated with falling Brent prices (Figure 2). Since the Arabian Gulf has represented much of the variability in floating storage inventory, one can also measure the incentives to add or withdraw from storage using Arabian Gulf tanker rates.

South East Asia would be another valid candidate to measure economics, as floating storage inventories in that region have moved in a very similar fashion (Figure 3).


As we discussed recently, as a result of a recent surge in hedging activity in the front-end of the strip, absent a dramatic collapse in spot prices, the contango is now so low as to make offshore storage no longer economical. Specifically, based on the all-in cost of operating tanker storage (dirty VLCC tanker day rates, financing, transit and transfer loss, insurance and bunkers, Figure 5), the current storage cost is too high relative to the steepness of the Brent forward curve. This means that prices do not justify inventory build, but rather gradual inventory drawdown as existing storage trades are unwound.


What is the current prevalent duration of booked offshore storage? A comparison of the historical profitability of storage trades of varying lengths indicates that even at the most extreme instances of contango in the last two years, the Brent forward curve is only steep enough over the first 2 to 6 months to justify the floating storage trade. Comparing the trade economics over a one-month horizon (Figure 4) and over a six-month horizon (Figure 6) shows the relative unattractiveness of the six-month trade. We use the second month Brent contract owing to discontinuities in the pricing of the rolling first month contract. Thus we would expect that floating storage trades begun in late January or early February would be unwound by July or August.

As DB calculated, comparing the current level of floating storage (157.3 million barrels) versus that in early February (126.6 million barrels), there may be an additional 31 million barrels of inventory to be drawn down between now and the next inventory trough over the next several months. Depending on the duration of drawdown (three months or six months) this could mean anywhere from 165-330 kb/d of incremental supply.

So how, according to DB, should one trade this imminent surge in incremental supply?

A tactical short position in Brent may benefit from the contango roll yield which over the first six months of the curve is an annualized 14%. Over the first year of the Brent curve, the roll yield is 11.9% p.a., and to provide an extreme comparison, the roll yield over the first six years of the curve is only 5.3% p.a. In other words, in a flat oil price scenario the contango roll yield for a short position would still provide positive returns if the curve structure remains static. In an upside oil-price scenario, the six-month forward contract should rise slower than the spot price.

Long WTI-Brent may be a viable alternative: because positioning in Brent is more clearly extended than NYMEX positioning in WTI, and also because US refineries returning from maintenance may add an incremental 717 kb/d of refinery crude demand between now and June, we believe WTI may be better supported than Brent. Brent net long non commercial positions rose to 164 thousand contracts in the week ending 15March, which is just below the 2015 high of 166 thousand contracts, although still some way below the 2014 high of 195 thousand contracts.

In WTI positioning on NYMEX however, net long non commercial positions stand at 331 thousand contracts, only 69% of the record high of 480 thousand contracts in June 2014. Therefore an alternative to selling Brent outright may be a long position on the WTI-Brent spread.

* * *

Of course, if DB’s calculations are correct, and if over the next three months 20% of the total 157 million barrels in offshore inventory are set to come onshore, not only will underlying prices slide, but higher beta assets, such as energy equities but mostly junk bonds due to their record high correlation with energy prices as we showed before…

… the best trade may be to either sell cash bonds or, if one can find them in this illiquid market in which even the ECB is now actively involved in bond purchases, simply buy junk bond CDS.

Because between the surge in recent hedging, the collapsing contango, the failure of supply to decline, the failure of demand to increase, there is only one thing the price of crude oil can do: tumble, no matter how many flashing red “OPEC meeting” headlines Bloomberg blasts at idiot headline-scanning algos.




More USA rigs put out of commission

(courtesy zero hedge)


US Oil Rigs Resuming Slide, Drop By 15 In Past Week To New Record Low

After posting the smallest possible rebound in the past week, moments ago Baker Hughes reported that in the holiday shortened week (in which there was some extrapolation) the decline in US oil rigs has resumed, and as of this moment there were only 372 oil rigs operating in the US, down 15 in the past week, the lowest number in recent history.


Offsetting the drop in oil rigs was a modest increase in nat gas rigs which rose by 3 in the past week; the result was that the drop in total US rigs was -12 to 464, a new record low in this 41 year-old series.

Some further breakdown:


Oil has staged a modest rebound on this latest pre-holiday news.

(courtesy zero hedge)

What Oil Production Freeze: Russia Just Revealed The Laughable Loophole In The OPEC “Agreement”

The main catalyst that pushed the price of oil from a 13 year low in early February, when crude briefly traded in the mid-$20 to well over 50% higher less than one month later in one of the world’s most furious short squeezes, was the recurring infatuation with the fabricated narrative that OPEC would if not cut production then, then at least freeze it.

We mocked this, as recently as one month ago, when we wrote “About That “Oil Freeze”: Russian Crude Production Sets New Post-Soviet Record In February” an article which was self-explanatory:

… according to calculations by Bloomberg’s Julian Lee, Russian crude and condensate production just set new post-Soviet daily record of 10.92m bbl yesterday.


He notes that the monthly estimate is based on daily data from Energy Ministry’s CDU-TEK for 1st 25 days, and applies the average rate over last week for final 4 days. And since this compares with a revised 10.91m b/d for January, it means that Russia took the production “freeze” seriously: by freezing at a new record high level of production.

What was even more entertaining, is that the so-called “production freeze” came at a time when both Saudi Arabia and Russia, the two most important oil exporters in the world, were already producing crude at the highest recorded level – they couldn’t produce more even if they wanted to.

Then this so-called “freeze” took on a truly bizarre twist one week ago when we first heard what we thought at the time was a cruel rumor, namely that while OPEC production may indeed be frozen, there is absolutely no limitation on exports. In fact, the lower the domestic demand for oil, the greater (and in the case of Saudi Arabia and Russia, even more record) the exports would be:

* * *

Moments ago we learned that this was not in fact a “cruel rumor” but was the whole truth, when Reuters reported that “Russia will export more oil to Europe in April than it has in any month since 2013 – despite Moscow’s plan to sign a global agreement on freezing production in a bid to lift the price of crude.”

Asked what would be covered by the agreement, Russian Energy Minister Alexander Novak told reporters: “The discussion is only about freezing production. And not exports.”

The high level of Russian oil exports next month was confirmed to Reuters on Wednesday by export pipeline monopoly Transneft. According to the company, Russia is set to export 7 million tonnes from Baltic Sea ports in April, the largest volume since October 2013. That marks a 9 percent increase on the 6.41 million tonnes planned for export in March.


At this point Reuters confirms what we have said all along: that the “production freeze” is just a farce, designed to jawbone the price of oil higher when in reality not only will it not limit supply but may very well boost it as exports increase to offset declining domestic demand (which is to be expected among the depressed oil-exporting countries):

The fact Russian exports are rising illustrates how hard it will be to enforce the deal, due to be finalised on April 17 in Qatar, and shows the potential for countries to use loopholes to keep exporting crude, blunting the intended impact on prices.


Russia can raise exports while keeping production flat by re-routing some oil away from refineries and into exports. Moscow says the freeze covers production, not sales abroad.

The joke is now only on the algos: as we noted yesterday, even the IEA admits the production freeze “deal may be meaningless.”

It gets even better: Iran and Libya have said they will not participate, at least for now, and they plan to raise production. It gets better: Nigeria, the top oil producer in Africa, has said it expects oil exporters to agree a supply freeze in Doha next month but that it plans to boost its own output.

In other words, not only is there not a deal, but this is merely the latest validation that OPEC no longer can enforce anything, and has effectively lost its cartel status.

Reuters confirms what we said in a tweet one week ago: “the increase in Russian exports is mainly because of planned maintenance at refineries that reduced their capacity to process crude. It also reflects Russia’s economic slump, which has reduced domestic demand for refined products.”

But another factor, according to one trader, is a desire by Russian producers to protect their share of the crude oil market in Europe, where Russia’s traditional dominance is under threat from newly arriving Saudi supplies.


“Of course, no one said those markets belong to Mother Russia. This is purely commercial trade,” said the trader, who spoke on condition of anonymity because he is not authorised to talk to the media. “But a marketplace is a marketplace, no one is going to give it up.”

But what is most laughable, is that in addition to the 30+ million in offshore barrels that will soon have to be unloaded on land as the contango no longer makes offshore storage economical (as described yesterday) the global supply glut is about to get even worse thanks to the likes of Russia, who are about to unleash an unprecedented export flood on the rest of the world.

According to Reuters calculations based on Energy Ministry data, Russia will have as much as 4.3 million tonnes of idle refining capacity next month, more than twice the 1.9 million tonnes unused in March. Russian refineries traditionally have the largest offline capacity in April, as companies scramble to finish maintenance before consumption of oil products peaks in summer.

This forces producers to divert crude towards exports, because there is nowhere to store the oil that otherwise would have gone to refineries.

This means that as soon as next month, there will be an extra 2.4 million tonnes of extra oil being exported by Russia; how this oil will be sold to some willing end buyer without crushing oil prices in what is already a 3 million barrel/daily oversupplied market, is unknown.



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



USA/JAPAN YEN 112.69 UP 0.251 (Abe’s new negative interest rate (NIRP)a total bust/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP)


USA/CAN 1.3250 UP.0044

Early THIS THURSDAY morning in Europe, the Euro FELL by 13 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 MASSIVELY DOWN in value (onshore) The USA/CNY UP in rate at closing last night: 6.5114 / (yuan DOWN AND SENT A HUGE MESSAGE TO THE USA NOT TO RAISE RATES AT ALL / IF CHINA DEVALUES IT  will cause MASSIVE 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 25 basis points and trading now well BELOW that all important 120 level to 112.69 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 UP this morning by 21 basis points as it now trades WELL BELOW the 1.44 level at 1.4135.

The Canadian dollar is now trading DOWN 45 in basis points to 1.3250 to the dollar.

Last night, Chinese bourses AND jAPAN were ALL IN THE RED/Japan NIKKEI CLOSED DOWN 108,65 , OR 0.64%HANG SANG DOWN 269.62 OR 1.31% SHANGHAI DOWN 48.99 OR 1.63%     / AUSTRALIA IS LOWER / ALL EUROPEAN BOURSES ARE IN THE RED, as they start their morning/.

We are seeing that the 3 major global carry trades are being unwound. The BIGGY is the first one;

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies and especially with the fall of the yuan carry trade. The emerging market which house close to 50% of the 9 trillion dollar short is feeling the massive pain as their debt is quite unmanageable.

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

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

These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>

The NIKKEI: this THURSDAY morning: closed DOWN 108.65 OR 0.64%

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

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

Gold very early morning trading: $1219.00


Early THURSDAY morning USA 10 year bond yield: 1.87% !!! DOWN 1 in basis points from WEDNESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield falls to 2.64 DOWN 2 in basis points from TUESDAY night.

USA dollar index early THURSDAY morning: 96.20 UP 16 cents from WEDNESDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers THURSDAY MORNING



And now your closing THURSDAY NUMBERS


Portuguese 10 year bond yield:  2.96% UPM 4 in basis points from WEDNESDAY

JAPANESE BOND YIELD: -.04% DOWN 3 in   basis points from WEDNESDAY

SPANISH 10 YR BOND YIELD:1.52% DOWN 1 IN basis points from WEDNESDAY

ITALIAN 10 YR BOND YIELD: 1.30  UP 1 basis points from WEDNESDAY

the Italian 10 yr bond yield is trading 22 points lower than Spain.




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

Euro/USA 1.1175 DOWN .0002 (Euro DOWN 2 basis points/still represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japn: 112.80 UP .374 (Yen DOWN 37 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 1.4162 UP .0049 Pound UP 49 basis points/Huge Brexit conceRN.

USA/Canada: 1.3245  up  .0.0037 (Canadian dollar DOWN 37 basis points as oil was LOWER IN PRICE (WTI = $39.67)



This afternoon, the Euro was DOWN by 2 basis points to trade at 1.1175 AS THE MARKETS REACTED TO THE USA’s stooge Bullard’s comment that they may raise rates in April AND THREATS FROM CHINA TO THE USA NOT TO RAISE RATES..

The Yen FELL to 112.80 for a LOSS of 37 basis pints as NIRP is still a big failure for the Japanese central bank/also all our yen carry traders are being fried.

The pound was UP 49 basis points, trading at 1.4162 (HUGE BREXIT CONCERNS)

The Canadian dollar fell by 37 basis points to 1.3245 AS  the price of oil was down  today (as WTI finished at $39.67 per barrel)

The USA/Yuan closed at 6.5110

the 10 yr Japanese bond yield closed at -.084% DOWN 3  IN basis points in yield

Your closing 10 yr USA bond yield: UP 2 basis point from WEDNESDAY at 1.90% //trading well below the resistance level of 2.27-2.32%) policy error

USA 30 yr bond yield: 2.67  UP 1 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, 96.13 UP 8 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 THURSDAY

London: DOWN 92.63 points or 1.49%
German Dax :DOWN 171.58 points or 1.71%
Paris Cac DOWN 94.30 points or 2,13%
Spain IBEX DOWN 137.30 or 1.54%
Italian MIB: DOWN 297.04 points or 1.61%

The Dow was up 13.14 points or 0.08%

Nasdaq  up 4.64 points or 1.09%
WTI Oil price; 39.67 at 2:30 pm;

Brent Oil: 40.47
USA dollar vs Russian Rouble dollar index: 68.51 (Rouble is UP 15 /100 roubles per dollar from yesterday)EVEN THOUGH the price of Brent and WTI OIL FELL


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

Closing Price for OIl, 5 pm/and 10 year USA interest rate:



BRENT: 40.40


USA DOLLAR INDEX:96.13 up 9 cents




And now your more important USA stories which will influence the price of gold/silver

Trading Today in Graph form:

(courtesy zero hedge)


The Streak Is Over – Stocks Suffer Down Week ‘Despite’ Bombings, Hawks, & Dismal Data

As we tweeted at the open, between plunging durable goods, the slide in Services PMI and the tumble in Q1 GDP expectations, it’s surprising it took this long to push the Dow green (BUT the S&P smash failed)… Happy Easter Christians…


Before we start, you are here…


This is what the day looked like across the asset classes… (dismal data sparked panic buying once the stock ‘market’ opened)…


The S&P and Dow desperately clung to unchanged as Small Caps ripped…


VIX was smashed back to a 14 handle to force the S&P green…BUT FAILED!


But, despite the surge effort, cash equity indices have a down week…


Valeant just can’t keep a bounce, tumbling 7% on Sequoia shenanigans…


Treasury yields V-shaped along with everything else, but 30Y yields closed lower on the week…


Cable rallied today but remains down 2.2% on the week. The Dollar managed a small gain today for a 5-day winning streak – the longest streak since April 2015


Commodities were mixed today but mostly ended flat, though all down for the week…


Gold was double-monkey-hammered overnight before bouncing back….


Charts: Bloomberg

Bonus Chart: We thought stocks are meant to LEAD fundamentals… NOT LAG…



Trading early this morning:


The big winner the long bond as 30 yr yields plummet/gold holds its own

(courtesy zero hedge)


Stocks Slammed Into Red For 2016; Bond Yields Plunge Most In 6 Months; Gold Bouncing Back

The last two days have seen 30Y yields plunge over 12bps (the biggest move since September’s Fed fold) to one-month lows. At the same time, thanks to The Fed’s hawkish jawboning, stocks are dumping also with The Dow joining the rest in the red for 2016. Gold is rallying back from its monkey-hammering yesterday but remains the laggard post-Fed.


The long bond is the big winner post-Fed!


It seems once again The Fed message is backfiring – bonds rally on hawkishly positive Fed commentary.



Initial and continuing claims drop despite the iSM national mfging and services indices collapsing to 6 yr lows:

(courtesy zero hedge)



The Initial Jobless Claims Mystery Continues

Still hovering near 43 year lows, initial jobless claims printed a better than expected 265k against expectations of 269k. Continuing claims also dropped from 2.218m to 2.179m – also back near 43 year lows. So, the mystery is – why is the ISM’s composite manufacturing and services employment index collapsing to 6 year lows?





Core durable goods (ex transporation stuff) tumbles for the 13th straight month:  a good indicator that the uSA in in deep recession
(courtesy zero hedge)

“Core” Durable Goods Tumbles For 13th Month – Longest Non-Recessionary Stretch In 70 Years

Durable Goods New Orders (Ex-Transports) or so-called “Core” durable goods dropped 0.5% YoY, extending its losing streak to 13 months. This is the longest streak in the history of the series with no recession. All segments of the durable goods report saw negative MoM moves with headline down 2.8% (small beat) but preior data was revised dramatically lower, Capital goods orders were drastically revised lower but still fell more than expected (-1.8% MoM) and finally shipments ex-aircraft dropped 1.1% MoM (missing the expedcted rise of 0.3% notable) with significant downward revisions once again.

  • Durable goods new orders down -2.8%, exp. -3.0%; prior revised down to 4.2% for Jan. from 4.7%
  • New orders ex-trans. down 1%, Exp. -0.3%; prior revised to 1.2% from 1.7%
  • Capital goods orders ex-aircraft down 1.8%, Exp. -0.5%, prior revised to 3.1% from 3.4%
  • Capital goods shipments ex-aircraft down 1.1%, Exp. +0.3%, prior revised to -1.3% from -0.4%

So all the exuberance bounce hope has been eviscerated.

This has never happened outside of a recession…


The headline data managed to eke out a small YoY gain..


and in case you were wodnering why the sudden and dramatic downward revisions from the exuberant Feb data, as we explained in detail here, there was a massive seasonal adjustment that juiced all the data…


Which is now being “fixed” and reducing the awesomeness of the historical data.

The service sector is 70% of GDP/today Markit’s services PMI signals the softest expansion in new business since 2009:  March reading 51.0 average reading for 3 months;  51.3
(courtesy zero hedge)

“Worst May Be To Come” Services PMI Signals “Softest Expansion Of New Business Since 2009”

Having blamed the weather for the Services PMI collapse into contractionary levels in February, the very modesty rebound (from 49.7 to 51.0) is a big let down: “The lack of a strong rebound in service sector activity in March is a big disappointment, as bad weather had been blamed for part of the weakness in the first two months of the year.” Indeed, confidence remains subdued and as Markit warns “The US economy is going through its worst growth spell for three and a half years…and the worst may be to come as the greatest concern is the near-stalling of new business growth.”

The average reading for the first three months of 2016 (51.3) revealed the slowest quarterly pace of expansion since Q3 2012.


Commenting on the flash PMI data, Chris Williamson, chief economist at Markit said:

“The US economy is going through its worst growth spell for three and a half years.


“The lack of a strong rebound in service sector activity in March is a big disappointment, as bad weather had been blamed for part of the weakness in the first two months of the year.


“Combined with the lacklustre performance seen in manufacturing, the subdued services survey points to the weakest quarterly expansion of the economy since the third quarter of 2012. The PMI surveys suggest the economy grew at a worryingly meagre 0.7% annualised rate in the first quarter.


“Worst may be to come. The greatest concern is the near-stalling of new business growth. Demand for goods and services is growing at the slowest rate seen this side of the global financial crisis. It’s not surprising therefore that companies lack pricing power, as reflected in a near-stagnation of average selling prices in recent months.


One positive is that the rate of hiring remained impressively resilient, signalling another month of 200,000 non-farm payroll growth in March. However, such strong hiring at a time of weak output growth suggests productivity is trending down at the fastest rate seen over the past six years.”

Sounds to us like someone is peddling some fiction…

Atlanta Fed, which is generally good at predicting results, forecasts 2nd Q, GDP at only 1.4% down from last week’s 1.9%.  Expect many of these downgrades to give the Fed cover not to raise rates in April or June
(courtesy zero hedge)

Altanta Fed GDP Forecast Tumbles To 1.4% To Justify Fed’s Downbeat Outlook On Economy

Some time in the second week of February, when the market was tumbling on, among other things, fears of a U.S. recession, the Atlanta Fed was scrambling to give the all clear signal on the US economy when it surprised watchers by releasing a far stronger than consensus Q1 GDP nowcast of 2.7%.

Since then things have once again not gone quite as planned, and following the latest flurry of poor economic data, the Atlanta Fed just confirmed that the current US economy is about as weak as it was when the Atlanta Fed first started estimating it at the start of February with a paltry 1.2% forecast.

As of moments ago, this is where we are now:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate)in the first quarter of 2016 is 1.4 percent on March 24, down from 1.9 percent on March 16. After this morning’s durable goods manufacturing report from the U.S. Census Bureau, the forecast for first-quarter real equipment investment growth declined from 0.9 percent to -1.4 percent while the forecast for the change in inventory investment in 2009 dollars declined from -$9 billion to -$11 billion. The forecast for real residential investment growth fell from 14.6 percent to 7.8 percent after Monday’s existing home sales release from the National Association of Realtors and yesterday’s new home sales and construction cost releases from the Census Bureau.

In other words, the US economy is once again rapidly deteriorating, which is precisely what the Fed wants now as it needs every last possible economic cover to justify its decision to lower the number of forecast hikes from 4 to 2. Expect even more weakness in the coming weeks if the Fed is concerned that the S&P is not at a high enough level just yet, or, said otherwise, bad news is once again bad news.

A terrific article written by David Stockman as he advocates that the USA should dump it’s commitment to NATO now as it is not needed.
(courtesy David Stockman/ContraCorner)

Trump Is Right—–Dump NATO Now

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If you want to know why we have a $19 trillion national debt and a fiscal structure that will take that already staggering figure to $35 trillion and 140% of GDP within a decade, just consider the latest campaign fracas. That is, the shrieks of disbelief in response to Donald Trump’s sensible suggestion that the Europeans pay for their own defense.

The fact is, NATO has been an obsolete waste for 25 years. Yet the denizens of the Imperial City cannot even seem to grasp that the 4 million Red Army is no more; and that the Soviet Empire, which enslaved 410 million souls to its economic and military service, vanished from the pages of history in December 1991.

What is left is a pitiful remnant—–145 million aging, Vodka-besotted Russians who subsist in what is essentially a failing third world economy. Its larcenous oligarchy of Putin and friends appeared to live high on the hog and to spread a veneer of glitz around Moscow and St. Petersburg. But that was all based on the world’s one-time boom in oil, gas, nickel, aluminum, fertilizer, steel and other commodities and processed industrial materials.

Stated differently, the Russian economy is a glorified oil patch and mining town with a GDP the equivalent of the NYC metropolitan area. And that’s its devastating Achilles Heel.

The central bank driven global commodity and industrial boom is over and done. As a new cycle of epic deflation engulfs the world and further compresses commodity prices and profits, the Russian economy is going down for the count; it’s already been shrunk by nearly 10% in real terms, and the bottom is a long way down from there.

The plain fact is Russia is an economic and military weakling and is not the slightest threat to the security of the United States.  None. Nichts. Nada. Nope.

Its entire expenditure for national defense amounts to just $50 billion,but during the current year only $35 billion of that will actually go to the Russian Armed Forces. On an apples-to-apples basis, that’s about three weeks of Pentagon spending!

Even given its non-existent capacity, however, there remains the matter of purported hostile intention and aggressive action. But as amplified below, there has been none. The whole demonization of Putin is based on a false narrative arising from one single event.

To wit, the February 2014 coup in Kiev against Ukraine’s constitutionally elected government was organized, funded and catalyzed by the Washington/NATO apparatus. Putin took defensive action in response because this supremely stupid and illegal  provocation threatened vital interests in his own backyard.

The openly hostile government installed in Kiev the very next day by the State Department threatened to join NATO, persecute the Russian-speaking minority in eastern Ukraine, renounce its multi-billion financial obligations to Moscow and imperil Russia’s rental arrangement for the homeport of its Black Sea naval fleet in Sevastopol (Crimea). The latter has been the historic anchor of Russia’s national security policy under czars and commissars alike.

Moreover, the putsch installed by the “regime change” crowd at the CIA, State Department and so-called Endowment for Democracy while Putin was minding his own business at the Sochi Olympics was crawling with adherents of the “Right Sector”. The latter is a fascist movement that looks to a World War II Nazi collaborator, Stepan Bandera, as its national hero.

That’s right. The new prime minister imposed by US Assistant Secretary of State and card-carrying neocon, Victoria Nuland, and affectionately known as  “our man Yats” was part of a neo-Nazi cabal.

Moreover, without the prodding of Washington and the bellicose incitements of the NATO apparatus, Europe wouldn’t even need a military alliance. Save for the manufactured and unnecessary conflict with Russia, Europe has no industrial state enemy on the planet; it doesn’t need to spend even the $250 billion or 2% of GDP that it collectively allocates to defense (waste) at present.

The whole confrontation with Russia including the self-inflicted economic folly of the anti-Putin sanctions is the handiwork of a war machine and its bureaucratic auxiliaries that are long past their sell-by date. That is, the entire “Russian threat” narrative is concocted by generals, admirals, spies, diplomats and other national security apparatchiks who would otherwise be out of power, jobs and cushy pensions.

Naturally, Trump’s GOP rivals crawled out of their time warps to calamity-howl the very idea of getting realistic about NATO. Not surprisingly, Governor Kasich said Trump was “dead wrong”, and then unleashed another barrage of his patented beltway stupid-speak:

We clearly have to make sure we strengthen NATO, we have to make sure that (Russian President Vladimir) Putin understands we will arm the Ukrainians so they fight for freedom,” Kasich told Anderson Cooper. “We need NATO. NATO is important; we all wish they would do more.”

The man is still campaigning for the Lithuanian vote in Youngstown—so maybe he has no particular reason to think about the matter. But it least someone should disabuse him of the fairy tale that the nationalist politicians, crypto-Nazi thugs and thieving oligarchs who seized the Ukrainian government are some kind of latter day “freedom fighters”.

But Ted Cruz is another matter. When it comes to foreign policy, the guy is just plain whacko. He has been so pumped full of neocon ideology that he fairly oozes jingoistic bile:

“It has been Russia’s objective, it has been Putin’s objective, for decades to break NATO. What Donald Trump is saying that he would unilaterally surrender to Russia and Putin, give Putin a massive foreign policy victory by breaking NATO and abandoning Europe.”

Needless to say, there is not a single accurate point in that statement. The truth is more nearly the opposite. And that begins with George H. W Bush’s 1989 promise to Gorbachev that in return for his acquiescence to the reunification of Germany, NATO would not be expanded by “a single inch”.

NATO should have declared victory and been disbanded. The defense budget should have been drastically reduced to a homeland defense force because there were no industrial state enemies left in the world.

As it happened, the Elder Bush’s sensible promise was torn-up and dropped into the White House waste basket by Bill Clinton in the mid-1990s. It seems that his reelection was threatened by charges from the GOP rightwing that he was soft on defense. So his solution was to invite Poland, the Baltic states and most of the remainder of the now disbanded Warsaw Pact to join NATO.

What should have been a vestigial alliance of 15 nations slated for zero was transformed into a menacing “Gang of 28” that virtually surrounds Russia. Yet aside from the now 25-month old conflict over the Ukrainian coup and the 2008 intermural fight over the borders of Stalin’s home country of Georgia between Moscow and a local crook, there was never any conflict at all.

During 15 years in power from 1999 through February 2014, Putin had demonstrated no desire whatsoever to swallow non-Russian peoples. And he has made it clear since then through the Minsk agreement that he supports an independent government in the Ukraine—-so long as the legitimate demands of the Russian-speaking Donbas region for a measure of autonomy and safeguards are implemented.

Nor is there a shred of evidence that Moscow is about to invade the already harmless Baltic States or highly independent Poland, let alone the rest of Europe.

So the whole case for NATO’s continued existence turns on the Ukraine matter, and there the facts and history leave no doubt.

Crimea has been part of Russia since 1783 when Catherine the Great bought it from the Turks for hard cash. Thereafter she made Sevastopol the homeport for the Great Black Sea Fleet that has ever since been the fundamental bulwark of Russia’s national security.

For the next 171 years Crimea was an integral part of Russia—a span that exceeds the 166 years that have elapsed since California was annexed by a similar thrust of “Manifest Destiny” on this continent, thereby providing, incidentally, the United States Navy with its own warm-water port in San Diego.

While no foreign forces subsequently invaded the California coasts, it was most definitely not Ukrainian rifles, artillery and blood which famously annihilated The Charge Of The Light Brigade at the Crimean city of Balaclava in 1854; they were Russians patriots defending the homeland from Turks, Europeans and Brits.

Indeed, the portrait of the Russian “hero” hanging in Putin’s office is that of Czar Nicholas I. His brutal 30-year reign brought the Russian Empire to its historical zenith, but, ironically, he is revered in Russian hagiography for another reason—-namely, as the defender of Crimea, even as he lost the 1850s war to the Ottomans and Europeans.

At the end of the day, it’s their Red Line. When the enfeebled Franklin Roosevelt made port in the Crimean city of Yalta in February 1945 he did at least know that he was in Soviet Russia.

Maneuvering to cement his control of the Kremlin in the intrigue-ridden struggle for succession after Stalin’s death a few years later, Nikita Khrushchev allegedly spent 15 minutes reviewing his “gift” of Crimea to his subalterns in Kiev in honor of the decision by their ancestors 300 years earlier to accept the inevitable and become a vassal of Russia.

So Crimea only became part of the Ukraine’s geography by happenstance during the Soviet era of the mid-1950s. Yet its re-annexation—-upon a 90% favorable vote in the referendum—-after the provocations of February 2014 has become the basis for virtually reigniting the Cold War.

Moreover, the fact that Crimea and the nearby industrial heartland of the Donbas are Russian speaking is not something “trumped up” by Putin. In fact, it is soaked in an 85-year history of blood.

During the 1930s Stalin populated the eastern industrial region (Donbas), which was the coal, steel, machinery and chemical backbone of the Soviet Union, with transplanted Russians for a perverse reason. He knew the Ukrainian Kulaks that he had liquidated in their millions during his catastrophic forced collectivization campaign were seething with hatred for the red regime in Moscow and could not be trusted to remain subjected.

Sure enough. The Ukrainian nationalists of Kiev and the western regions joined the Nazi Wehrmacht on its way to Stalingrad, liquidating Jews, Poles and Reds by the tens of thousands as they marched east in 1943; and after the Red Army finally broke the bloodiest siege in history, the Russian-speakers of the Donbas joined the Red Army on its march back to Germany, liquidating Ukrainian Nazi collaborators in their tens of thousands in retaliation.

So all the Washington sabre rattling about the Ukraine is rooted in an abiding ignorance about the Ukraine’s History of Horribles. The current renewed flare-up of this tragic history was self-evidently and wantonly triggered by Victoria Nuland’s coup; it was not some nefarious aggression by Putin!

And that gets us back to the original question. What kind of warped thinking holds that the addition of Albania, Croatia, Estonia, Slovakia and Slovenia, among the other economic and military midgets, to an obsolete NATO alliance adds one iota of safety and security to the citizens of Lincoln NE, Spokane WA or Worcester MA?

The answer is that it is not thinking at all. It reflects the dreadful inertia of a war machine that has sunk its tentacles deep into the nation’s economy and process of political governance. Now it virtually defies history and bleeds the nation white.

After the Berlin Wall fell in November 1989 and the death of the Soviet Union was confirmed two years later when Boris Yeltsin courageously stood down the red army tanks in front of Moscow’s White House, a dark era in human history came to an end.

The world had descended into what had been a 77-year global war, incepting with the mobilization of the armies of old Europe in August 1914. If you want to count bodies, 150 million were killed by all the depredations which germinated in the Great War, its foolish aftermath at Versailles, and the march of history into the world war and cold war which followed inexorably thereupon.

To wit, upwards of 8% of the human race was wiped-out during that span. The toll encompassed the madness of trench warfare during 1914-1918; the murderous regimes of Soviet and Nazi totalitarianism that rose from the ashes of the Great War and Versailles; and then the carnage of WWII and all the lesser (unnecessary) wars and invasions of the Cold War including Korea and Vietnam.

The end of the cold war meant world peace was finally at hand, yet 25 years later there is still no peace because Imperial Washington confounds it.

In fact, the War Party entrenched in the nation’s capital is dedicated to economic interests and ideological perversions that guarantee perpetual war; they ensure endless waste on armaments and the inestimable death and human suffering that stems from 21st century high tech warfare and the terrorist blowback it inherently generates among those upon which the War Party inflicts its violent hegemony.

So there was a virulent threat to peace still lurking on the Potomac after the 77-year war ended. The great general and president, Dwight Eisenhower, had called it the “military-industrial complex” in his farewell address, but that memorable phrase had been abbreviated by his speechwriters, who deleted the word “congressional” in a gesture of comity to the legislative branch.

So restore Ike’s deleted reference to the pork barrels and Sunday afternoon warriors of Capitol Hill and toss in the legions of beltway busybodies that constituted the civilian branches of the cold war armada (CIA, State, AID etc.) and the circle would have been complete. It constituted the most awesome machine of warfare and imperial hegemony since the Roman legions bestrode most of the civilized world.

In a word, the real threat to peace circa 1990 was that Pax Americana would not go away quietly in the night.

In fact, during the past 25 years Imperial Washington has lost all memory that peace was ever possible at the end of the cold war. Today it is as feckless, misguided and bloodthirsty as were Berlin, Paris, St. Petersburg, Vienna and London in August 1914.

Indeed, there is no peace on earth today for reasons mainly rooted in Imperial Washington—— not Moscow, Beijing, Tehran, Damascus, Mosul or even Raqqa. The latter has become a global menace owing to what didn’t happen in 1991.

What should have happened is that Bush the elder should have declared “mission accomplished” and slashed the Pentagon budget from $600 billion to $200 billion; demobilized the military-industrial complex by putting a moratorium on all new weapons development, procurement and export sales; dissolved NATO and dismantled the far-flung network of US military bases; slashed the US standing armed forces from 1.5 million to a few hundred thousand; and organized and led a world disarmament and peace campaign, as did his Republican predecessors during the 1920s.

Self-evidently, none of that possibility even entered the discourse in the Imperial City. Yet questioning NATO is actually a proxy—-belated as it is—–for re-opening the questions that were buried after 1991.

No wonder the Washington War Party has greeted Donald Trump’s impertinence with such rabid disdain.




Horseman capital is the best run hedge fund in the world.  They have a theory when the USA stock market will burst and the answer is surprising:  a must read.

(courtesy zero hedge/Horseman Capital/Russell Clark)


When Does The U.S. Stock Bubble Burst: The Best Hedge Fund Of 2016 Has A Surprising Answer

The name of Russell Clark and his Horseman Global hedge fund are well-known to regular readers: Clark is perhaps best known not only for having run a net short book since early 2012…


… but for being consistently profitable and successful during this period, a time when most of his “pedigree” peers have been underperforming the market and losing money hand over fist.


In fact, based on its size, one can probably argue that Horseman Global is the most successful hedge fund of 2016, if not of the entire decade.

His latest letter to clients can be found here.

The reason we bring Horseman Global up is not because his latest letter is out – we will share that once we have it – but because Russell Clark has released a fascinating white paper which seeks to answer the most important question of all: not if there is a bubble – by now everyone, even the central bankers, knows we are currently living inside the biggest asset bubble in history, but when does it burst.

This is what he says in a letter that looks at the curious relationship between peaks in the Nikkei ant the S&P500:

“One of the curious things over the last few years, is that despite the last two bubbles in markets being mainly US centred (dot com bubble and US housing) it has been the Japan based Nikkei that has peaked 3 to 6 months before the S&P 500.”

Here is his full letter:

One of the curious things over the last few years, is that despite the last two bubbles in markets being mainly US centred (dot com bubble and US housing) it has been the Japan based Nikkei that has peaked 3 to 6 months before the S&P 500. The Nikkei peaked in March of 2000, while the S&P 500 rolled lower in August of that year. The Nikkei peaked in June of 2007, while the S&P 500 peaked in October of that year.

The question is why should this be the case? Most investors would argue that the US economy is larger than Japan, and its stock markets are larger and more liquid. Theoretically, the US market should lead the Japanese markets.

The reality is that the US does not fund itself. The US has been running a fairly consistent current account deficit since the 1980s.

To fund this current account deficit the US has become the world’s biggest debtor. The US net international investment position was extremely positive for most of the post war period, but over the last decade has deteriorated dramatically.


The biggest supplier for credit to the US, particular relative to GDP has been Japan which has seen its net international investment position swell tremendously over the last decade.

My view is that the Japanese are the world’s biggest net savers and investors, and it is the movement of Japanese investments that cause the biggest moves in currencies and equities.If we convert the S&P into yen, we can see that Nikkei and S&P 500 tend to fall at the same time. That is the Nikkei and the S&P move together.

This seems to point to yen weakness being a good indicator of equity strength, as Japanese investors sell yen and seek higher returns elsewhere. Conversely yen strength is a sign that Japanese investors are repatriating assets and global markets are likely to be weak, at least in yen terms. If this is true, the most troubling aspect of such a theory is that Bank of International Settlement (“BIS”) put the case that yen is trading still close to all-time lows on a real trade weighted basis.

This line of thinking provides a very simple model for the performance of the Nikkei and S&P based on the value of the yen. If we assume that yen can rally to 100, we see that the Nikkei traded around 14000 the last time yen traded at 100. This model would assume the S&P would then trade somewhere between 1400 and 1600. I am very interested to see if this theory continues to work.

* * *

So are we.

And there you have it: if you want to know if the US stock bubble is about to burst, just keep an eye on the hilarious if ricketty debacle that Japan’s “stock market” have become, where only the daily interventions of the BOJ keep the whole house of cards from crashing down and wiping out Japan’s economy from the face of the earth. Because if the Nikkei is unable to “keep it up” despite a historic amount of debt monetizations, ETF and REIT purchases, and negative rates by the BOJ, the S&P 500 will follow shortly.


Well that about does it for this week
I hope that everyone has an enjoyable Easter holiday weekend
and please come back in one piece so that you can again delve into our commentaries
next week
Bye for now


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