march 29/Janet Yellen backs down again as she becomes dovish on rate increases/ the message from China must have been quite clear to her!/We had a 3.27 tonnes of gold withdrawal from GLD and yet a rise of 1.475 million oz of silver inventory build with no increase in silver price at the SLV/Japanese retail sales plummet and as such Abenomics a complete failure/the USA/Yen falters into the 112 barrier (yen rises)/Rousseff close to impeachment hearings in Brazil/ Russia adds 11 tonnes of gold yet Turkey sell 37 tonnes: something must be seriously wrong inside Turkey’s finances/

Gold:  $1,235.60 up $15.70    (comex closing time)

Silver 15.23  UP ONLY 4 CENTS*

(*a huge clue that a raid on gold/silver coming tomorrow).

In the access market 5:15 pm

Gold $1242.00

silver:  15.35

 

Let us have a look at the data for today.

On Thursday I told you that after China devalued their yuan on 4 consecutive day, the POBC was sending a strong message to the USA not to engage in any interest rate rise. Although three of the Fed governors were pounding the table that the USA needed to raise rates, it was obvious that if China devalued their yuan say by 20% to 8:1 (8 yuan/USA) to stay competitive, then everything would hit the wall: the Euro would collapse, the dollar skyrocket, then dollar scarcity, commodities collapse in price and then emerging market collapses together with their sovereign bonds. Today, Yellen got the message as she again goes extremely dovish.  The USA can never raise rates again.

 

Today we saw gold advance $15.70 in regular hours and a further 7 dollars in the access market finishing at $1142.00.  Although we lost considerable OI as we enter our next active month, it sure looks like the OI for tomorrow’s reading will advance.  The silver price did not rise with gold which is their usual signal that a raid has been called for by our banker crooks.  First day notice is on Thursday and that is the last day for LBMA and OTC gold options and the raids should end by Thursday night but for only a short time until they start with their criminal antics again. The game ends when they are carried out on a stretcher  (when the East can no longer receive physical metal)

 

At the gold comex today, we had a good delivery day, registering 27 notices for 2700 ounces and for silver we had 61 notices for 305,000 oz for the active March delivery month.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 212.75 tonnes for a loss of 90 tonnes over that period.

In silver, the open interest ROSE by  1292 contracts UP to 171,872 DESPITE the fact that the silver price was unchanged with respect to yesterday’s trading . In ounces, the OI is still represented by .864 billion oz or 123% of annual global silver production (ex Russia ex China).

In silver we had 61 notices served upon for 305,000 oz.

In gold, the total comex gold OI fell as expected by 14,886 contracts to 482,636 contracts as the price of gold was down $1.50 with yesterday’s trading.(at comex closing) and also the fact that we are entering the new active month of April. However, I was expecting a larger contraction in OI in gold.  With today’s announcement of a more dovish Yellen, our new OI for tomorrow will no doubt be sky high.

we had a huge change in the GLD with gold’s drubbing for the past 3 days a withdrawal of 3.27 tonnes./ thus the inventory rests tonight at 820.47 tonnes. No doubt that will change tomorrow considering Yellen’s dovish comments today with regards to the raising of rates. 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,strangelywe had a  huge deposit in inventory tonight of 1.475 million oz,  and thus the Inventory rests at 330.389 million oz.  It is interesting that silver does not move and yet inventory continually rises.

.

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

 

1. Today, we had the open interest in silver rose by 1,292 contracts up to 171,872 as the price of silver was unchanged with yesterday’s trading. The total OI for gold fell by 14,886 contracts to 482,636 contracts as  gold was down $1.50 in price from yesterday’s level and we are now entering a new active delivery month. For some unknown reason for the past few years we always see a huge obliteration in OI.  In makes no sense with gold in either slight backwardation or extremely slight contango.

(report Harvey)

 

2 a) Gold trading overnight, Goldcore

(Mark OByrne)

off today

2b COT report/

(Harvey)

2c) FRBNY

Harvey

3. ASIAN AFFAIRS

i)Late  MONDAY night/ TUESDAY morning: Shanghai closed DOWN BY 37.99 POINTS OR 1.28% , /  Hang Sang closed UP 20.69 POINTS OR .10% / The Nikkei closed DOWN 30.34 POINTS OR 0.18% . Australia’s all ordinaires was CLOSED DOWN. Chinese yuan (ONSHORE) closed UP at 6.5080.  Oil FELL  to 38.54 dollars per barrel for WTI and 39.22 for Brent. Stocks in Europe ALL IN THE GREEN . Offshore yuan trades  6.5080 yuan to the dollar vs 6.5151 for onshore yuan. Japanese retail sales plunge the most in almost 4 years as negative interest rates are not helping at all.

.

REPORT ON JAPAN

Japanese retail sales plunge the most since 2010

(zero hedge)

REPORT ON CHINA

 

You have to see this to believe it:  Apartment walls made up of sand:

( zero hedge)

 

EUROPEAN AFFAIRS

Our favourite politician, Nigel Farage slams Germany’s migration policy:

( zero hedge/Nigel Farage)

RUSSIAN AND MIDDLE EASTERN AFFAIRS

Has the USA given up on its ally, Turkey:

( zero hedge)

 

EMERGING MARKETS

Turmoil in Brazil as Rousseff’s coalition partner backs out. It looks like Congress will vote to temporarily remove her.  If the senate also approves, then the impeachment process begins.  If they remove Rousseff, then next in line Temer takes over and he too is implicated in the same scandal.  Brazil needs a new election ASAP

( zero hedge)

OIL MARKETS

i)as we pointed out to you last week, the short squeeze is over: crude tumbles agian:

( zero hedge)

 

ii)Crude rises because of the weaker dollar, and a gasoline draw.  We did however have another crude buildup.

( zero hedge)

 

iii)Having been crushed by the record oil squeeze, our shorters in energy are going after the regional banks that supplied the money to the energy companies.

( zero hedge)

PHYSICAL MARKETS

i)The powerful magazine the Economist has now acknowledged financial repression as they talk about India’s decade long battle against citizens acquiring gold.

( the Economist/GATA/Chris Powell)

ii)Despite gold rising, Chinese investors continue to pile into physical gold whether it is jewelry or bullion or coins

( Wall Street Journal/GATA)

iii)Craig Hemke interviews Bill Murphy of GATA for Sprott Money news)

(Craig Hemke/Bill Murphy/GATA/Sprott Money News)

iv)Your humour story of the day

The wife of India’s finance minister who handles all of the families financial decisions refuses to paperize her gold jewellery.

( GATA/Hindustan Times/New Delhi/)

v)Chris Powell makes fun of Izabella Kaminska of the London’s Financial Times as she asserts that gold is “a dangerous obsession”…a “frivolous thing, a decadent luxury”

Chris asks why?

(courtesy Chris Powell/GATA)

vi)Barclay’s Kevin Norrish states that commodities such as oil and base metals like copper can fall another 20%, which “will drive bulls off a cliff”. He explains why!

( zero hedge/Barclay’s/Norrish)

 

vii)Russia purchased 11.07 tonnes of gold last month.  However in another surprising move Turkey sheds 1.2 million oz or 37 tonnes from its hoard of 529 tonnes leaving it with 492 tonnes.  Turkey’s finances must be in huge trouble!

( Reuters/RT)

 

ix)Dennis Gartman has to be the world’s dumbest moron by far!!. This buffoon notices that the GLD has added 180 tonnes and yet gold does not advance and his brain cannot compute why?  Now I know why he is invited all the time to CNBC.  They have intellectuals with IQ’s lower than 5.

( Kitco/Dennis Gartman)

 

x)Lawrie Williams of Sharp’s Pixley describes that citizens will search for gold once countries go cashless

 

( Lawrie Williams/Sharp’s Pixley)

USA STORIES WHICH WILL INFLUENCE THE PRICE OF GOLD/SILVER

ia)Janet Yellen goes full dove and thus dollar collapses, gold and oil rises as well as the Dow

( zero hedge)

 

i) b All 500 S and P companies have now reported and as we have indicated to you through David Stockman, that the P/E is a stratospheric 23: 1.  This is an accident waiting to happen:

( zero hedge)

ii)Very popular hedge fund Luxor Capital warns its shareholders that they will be “gated” after again suffering sharp losses.

( zero hedge)

iii)We have been covering two former darlings on the NYSE, SunEdison and Valeant.

Many hedge funds had these in their portfolio.  Today it is SunEdison that is collapsing, down 40% today on bankruptcy risk:
( zero hedge)

iv)Wealthy Chinese citizens are doing everything possible trying to convert their yuan into either gold or property.  Today, the Case Shiller home price report shows a big jump in prices on homes on the USA west coast:

( zero hedge)

v)Two confidence reports, and both polar opposite:

the Conference Board reports a modest rise in confidence, the Gallup poll shows a decrease:
( Conference Board, Gallup/zero hedge)

vi)Corporate debt defaults are exploding as well as lower debt rating.  We are now at higher levels of defaults since the last crisis in 2008:

( Michael Snyder/EconomicCollapseBlog)

Let us head over to the comex:

The total gold comex open interest fell to 482,636 for a loss of 14,886 contracts as  the price of gold was down $1.50 in price with respect to yesterday’s trading and as I mentioned above we are now entering the active delivery month of April. 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, the OI fell but not nearly as much as other month. With the huge dovish Fed with Janet Yellen’s speech today, you can bet the farm that OI will be sky high with tomorrow and Thursday’s reading. The front March contract month saw its OI fall by 1 contract down to 27.We had 0 notice filed upon yesterday, and as such we lost 1 contract or an additional 100 oz will not stand for delivery. .After March, the active delivery month of April saw it’s OI fall by 37,763 contracts down to 87,565.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was good at 341,932.  However we had considerable rollovers.. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was  good at 237,536 contracts. The comex is not in backwardation.  First day notice is this Thursday, March 31.  The options for the comex was over yesterday (The March contract goes off the board tonight). However we still have LBMA options and OTC options which expire March 31.2016.

Today we had 27 notices filed for 2700 oz in gold.

 

And now for the wild silver comex results. Silver OI rose by 1,292 contracts from 170,580 up to 171,872 as the price of silver was unchanged with yesterday’s trading. The next big active contract month is March and here the OI fell by 45 contracts down to 71 contracts. We had 0 notices served upon yesterday, so we lost 45 contracts or an additional 245,000 ounces will not  stand for delivery. The next contract month after March is April and here the OI  fell by 22 contracts down to 318.  The next active contract month is May and here the OI rose by 150 contracts up to 113,342. This level is exceedingly high. The volume on the comex today (just comex) came in at 35,002 , which is fair. The confirmed volume yesterday (comex + globex) was fair at 30,436. Silver is now in backwardation until May at the comex.   In London it is in backwardation for several months.
 
 
We had 61 notices filed for 305,000 oz.
 

March contract month:

INITIAL standings for MARCH

March 29/2016

Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil NIL oz
Deposits to the Dealer Inventory in oz NIL
Deposits to the Customer Inventory, in oz  14,146.000 oz

SCOTIA

440 KILOBARS

No of oz served (contracts) today 27 contracts
(2,700 oz)
No of oz to be served (notices) 0 contracts

nil oz

Total monthly oz gold served (contracts) so far this month  723 contracts (72,300 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 192,293.3 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 deposits: AND ANOTHER OF THOSE PHONY KILOBAR ENTRIES

 

i) Into Scotia:  14,146.000 oz  (440 kilobars)

total customer deposits:  14,146.000 oz

Today we had 0 customer withdrawals:

 

total customer withdrawals; NIL  oz

Today we had 0 adjustment:

.
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 27 contracts of which 5 notices was stopped (received) by JPMorgan dealer and 0 notices were stopped (received)  by JPMorgan customer account. 
 
To calculate the initial total number of gold ounces standing for the Mar contract month, we take the total number of notices filed so far for the month (723) x 100 oz  or 72,300 oz , to which we  add the difference between the open interest for the front month of March (27 contracts) minus the number of notices served upon today (27) 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 (723) x 100 oz  or ounces + {OI for the front month (27) minus the number of  notices served upon today (27) x 100 oz which equals 72,300 oz standing in this non  active delivery month of March (2.248 tonnes).  This is a good showing for gold deliveries in this non active month of March.
we lost 1 contract or 100 additional gold ounces will not stand for March delivery.
 
We thus have 2.248 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 2.248 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) = 9.2546 tonnes standing against 10.38 tonnes available.  .
 
Total dealer inventor 338,458.211 oz or 10.38 tonnes
Total gold inventory (dealer and customer) =6,840,001.787 or 212.75 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 212.75 tonnes for a loss of 90 tonnes over that period. 
 
JPMorgan has only 21.15 tonnes of gold total (both dealer and customer)
 end
 
And now for silver
 

MARCH INITIAL standings

/March 29/2016:

Silver
Ounces
Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 63,207.06 OZ. DELAWARE,CNT,

 

Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory nil
No of oz served today (contracts) 61 contracts

305,000 oz

No of oz to be served (notices) 15  contracts (75,000, oz)
Total monthly oz silver served (contracts) 1346 contracts (6,730,000 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 11,199,694.2 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 2 customer withdrawals:

i) Out of DELAWARE:

2962.800 oz

ii) Out of CNT: 60,244.26  (WHAT!!,  2 DECIMALS?? IT CANNOT BE SO FOR CNT)

 

:

total customer withdrawals:  63,207.06 oz

 
 

 

 we had 0 adjustments

 

 

The total number of notices filed today for the March contract month is represented by 61 contracts for 305,000 oz. To calculate the number of silver ounces that will stand for delivery in March., we take the total number of notices filed for the month so far at (1346) x 5,000 oz  = 6,730,000 oz to which we add the difference between the open interest for the front month of March (71) and the number of notices served upon today (61) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the March. contract month:  1346 (notices served so far)x 5000 oz +(71{ OI for front month of March ) -number of notices served upon today (61)x 5000 oz  equals  6,805,000 oz of silver standing for the March contract month.
we lost 45 contracts or an additional 225,000 oz  will stand in this delivery month.
 
Total dealer silver:  32.373 million
Total number of dealer and customer silver:   155.561 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.
end
.

And now the Gold inventory at the GLD

 

March 29/a withdrawal of 3.27 tonnes of gold from the GLD/Inventory rests at 820.47 tonnes.  (No doubt we will see a rise in gold inventory with tomorrow’s reading)

March 28/no change in inventory at the GLD/Inventory rests at 823.74 tonnes

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 18.I GIVE UP!! WITH GOLD DOWN TODAY, THE CROOKS OVER AT GLD ADDED ANOTHER IDENTICAL 11.89 TONNES OF PAPER GOLD INTO THEIR INVENTORY.

INVENTORY RESTS THIS WEEKEND AT 818.98 TONNES. IF I WAS A SHAREHOLDER OF THIS ENTITY I WOULD BE VERY WORRIED.

March 17/we had a whopper of a deposit tonight: 11.89 tonnes/with London in backwardation this is nothing but a paper addition/inventory rests tonight at 807.09 tonnes

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

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

March 29.2016:  inventory rests at 820.47 tonnes

 

end

 

Now the SLV Inventory
March 29.2016: a huge deposit of 1.475 million oz of silver into the SLV/Inventory rests at 330.389 million oz
March 28/no change in silver inventory at the SLV/Inventory rests at 328.914 million oz
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 18/ANOTHER WHOPPING DEPOSIT OF 2.665 MILLION OZ/INVENTORY RESTS 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 29.2016: Inventory 330.389 million oz
.end
1. Central Fund of Canada: traded at Negative 5.3 percent to NAV usa funds and Negative 6.0% to NAV for Cdn funds!!!!
Percentage of fund in gold 64.2%
Percentage of fund in silver:35.8%
cash .0%( Mar 30.2016).
2. Sprott silver fund (PSLV): Premium to NAV falls to  3.35%!!!! NAV (Mar 30.2016) 
3. Sprott gold fund (PHYS): premium to NAV falls  to -0.51% to NAV Mar 30.2016)
Note: Sprott silver trust back  into positive territory at +3.35%/Sprott physical gold trust is back into negative territory at -0.51%/Central fund of Canada’s is still in jail.
 
 
 end
Federal Reserve Bank of New York report on gold leaving NY shores:
Today, the FRBNY reports no change in gold inventory and thus no gold is leaving for Germany’s Bundesbank .
FRBNY gold in Feb 2016:  7995 million dollars worth of gold at $42.22
FRBNY gold for March 2016: 7995 million dollars worth of gold at $42.22
total gold departing:  zer0
end
 

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

Trading in gold and silver overnight in Asia and Europe
 

By Mark O’Byrne

Gold Mining Shares Or Gold? Percentage of Portfolio? BREXIT Risks – Newstalk Interview

Nick Bullman on Newstalk’s “Breakfast Business” interviewed Research Director, Mark O’Byrne, last week.

audioVault2

(Interview starts minute 20 – Navigation from toolbar at top)

A range of aspects about the gold market were discussed including whether to own gold mining shares or gold bullion, the extensive research on gold as a proven safe haven asset, why Germans are the largest buyers of gold in the EU today, lack of awareness of growing risks among ‘Pixie’ Irish and UK investors including the risks posed by ‘BREXIT’ and indeed the significant geopolitical risks of today.

With regard to asset allocation, the importance of owning physical gold rather than ETFs, paper proxies and mining shares were considered.

O’Byrne said that given the increasing financial and geopolitical risks and indeed stretched valuations with many stocks markets internationally and indeed bond markets looking “toppy” – higher allocations to gold are merited and a 10% to 20% is being recommended to GoldCore clients in order to to hedge the risks of today.

The Newstalk interview can be listened to here (Interview starts minute 20- Navigation from toolbar at top)


Gold Prices (LBMA)

29 Mar: USD 1,216.45, EUR 1,087.71 and GBP 853.04 per ounce
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

Silver Prices (LBMA)

29 Mar: USD 15.06, EUR 13.44 and GBP 10.56 per ounce
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


Gold News and Commentary

India’s finance minister can’t persuade own wife to paperise gold jewellery – GATA

Gold Holds Advance as Investors Weigh Fed’s Rate Path, Inflation – Bloomberg

Gold dips, but holds above one-month low on weak U.S. data – Reuters

Gold Bulls Retreat as Prices Slip to 1-Month Low on U.S. Economy – Bloomberg

Gold ends at lowest in a month as Fed guessing game plays on – Marketwatch

Chinese investors buy coins, bars as haven from global economic uncertainty – WSJ

Five Years That Changed Silver Forever – Butler – Silver Seek

Selling a 100 oz Silver Bar for $25 Dollars ! – Mark Dice via YouTube

2016: The End of the Global Debt Super Cycle – Palisade Research

It’s 1790 All Over Again – Salinas Price via Plata

Read More Here

7RealRisksBanner

‘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
Executive Director

END

 

Russia purchased 11.07 tonnes of gold last month.  However in another surprising move Turkey sheds 1.2 million oz or 37 tonnes from its hoard of 529 tonnes leaving it with 492 tonnes.  Turkey’s finances must be in huge trouble!

(courtesy Reuters/RT)

 

Russia becomes world’s top gold buyer

© Ilya Naymushin
The Central Bank of Russia bought 356,000 ounces of gold in February becoming the largest buyer of the precious metal among the world’s central banks, business daily Vedomosti reports, quoting the IMF data.

Last week, Russian foreign reserves increased by another $5.8 billion to $386.9 billion. The international reserves consist of foreign exchange, special drawing rights (SDR) holdings, the reserve position in the IMF and monetary gold.

In June 2015, the First Deputy Governor of the Central Bank Dmitry Tulin said the regulator intends to increase Russia’s international reserves to $500 billion within three to five years.

The Central Bank had previously been spending the reserves to prop up the ruble. In November 2014 the regulator switched to a floating exchange rate and started increasing the reserves which reached $510.5 billion in early 2015.

The IMF has not yet included China in its February statistics; however the People’s Bank of China reported it had bought about 320,000 ounces of gold that month.

The largest seller was Turkey which sold about 1.2 million ounces, more than seven percent of its gold reserves.

Canada, which is in the top 10 of gold producers, has sold off its reserves maintaining a symbolic 100 ounces.

In February, Canada’s Finance Department spokesman David Barnabe said the government has a long-standing policy of diversifying its portfolio by selling physical commodities (such as gold) and instead investing in easily tradable financial assets.

 

end

 

Dennis Gartman has to be the world’s dumbest moron by far!!. This buffoon notices that the GLD has added 180 tonnes and yet gold does not advance and his brain cannot compute why?  Now I know why he is invited all the time to CNBC.  They have intellectuals with IQ’s lower than 5.

(courtesy Kitoc/Dennis Gartman)

 

*Gold Market Showing “Disconcerting Weakness” – Dennis Gartman

Monday March 28, 2016 11:10

(Kitco News) – The bull market that began late last year continues but not without some very “disconcerting weakness,” says market watcher Dennis Gartman.

In his Monday edition of The Gartman Letter, he writes, “To say that we are not somewhat disconcerted would be wholly disingenuous, for indeed we are concerned, but so long as the trend line drawn remains intact we shall try our very best to remain consistently bullish of gold.” Gartman adds that

Gold

he is concerned that gold has not only failed to make higher highs, but that the yellow metal has not formed a “top” formation over the course of the past several weeks.

Movements of capital into the gold market remain supportive, however, says Gartman. “[A]s of the end of last week, GLD’s gold holdings have increased by just a bit more than 180 tonnes, or by more than 25% since the end of last year. There are now just under 824 tonnes of gold held by GLD and there are another 193 tonnes held by the smaller IAU.”

The newsletter writer says that his interest in the platinum group metals is growing. “Palladium is inordinately ‘cheap’ relative to gold, as is platinum, with the far more commonly reported platinum/gold ratio having apparently found ‘support’ around the .76-.78 level.

By Daniela Cambone of Kitco News; dcambone@kitco.com

-END-

 

 

The powerful magazine the Economist has now acknowledged financial repression as they talk about India’s decade long battle against citizens acquiring gold.

(courtesy the Economist/GATA/Chris Powell)

The Economist acknowledges ‘financial repression’ — at a safe distance from London

Submitted by cpowell on Mon, 2016-03-28 09:21. Section: 

4:21p ICT Monday, March 28, 2016

Dear Friend of GATA and Gold:

In an article headlined “A Tarnished Appeal,” The Economist magazine, the voice of the supposedly learned establishment, acknowledges this week that India’s government continues to wage a decades-old war on gold that arises mainly from the government’s own irresponsibility with its currency.

The Economist writes: “Decades of inflation and a much-debased rupee have pushed savers towards what is, in effect, a convenient way to insulate their nest-egg from the poor decisions of India’s policymakers (and, just as often, from its tax inspectors). In rupee terms, in other words, gold has been a stellar investment. ..

“Policymakers have other ways of making gold less appealing. A modest excise tax in the recently unveiled budget has kept jewellers across the country on strike for a month. Gold sellers were already furious at import duties and rules forcing them to identify customers buying more than 200,000 rupees’ ($3,000) worth. In addition, the central bank is discouraging lending to buy gold. …

“If the government really wanted to accelerate this shift, it could change its own ways. Various laws steer a big share of bank deposits into low-yielding government debt and agricultural loans. That, in turn, means that Indians earn little interest on their savings, enhancing gold’s relative appeal. Such financial repression helps the government fund itself cheaply. But it means that Indians are sitting on gold equivalent in value to four months of economic output. That could be financing productive investments instead.”

Wow — so “financial repression” by governments has been acknowledged by The Economist, if at the great distance of London from Mumbai. Now how about a longer excursion into the subject by the magazine? It could start not even 3 miles away at the Bank of England on Threadneedle Street, a nerve center of gold market intervention. Some ideas for such an excursion can be found here:

http://www.gata.org/node/14839

The Economist’s article is posted here:

http://www.economist.com/news/finance-and-economics/21695558-indias-gove…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

END

 

Despite gold rising, Chinese investors continue to pile into physical gold whether it is jewelry or bullion or coins

(courtesy Wall Street Journal/GATA)

Chinese investors see golden opportunity

Submitted by cpowell on Mon, 2016-03-28 11:57. Section: 

By Biman Mukherji
The Wall Street Journal
Monday, March 28, 2016

The rise in the price of gold — up 15% from its six-year low in mid-December — is stoking out-of-season buying in China, which consumes more than a fifth of global supplies.

Typically, gold purchases in China are strongly associated with jewelry buying around the Lunar New Year holiday, which this fell in early February. But the uncertainty confronting global economies has driven up demand from a different sort of buyer — the hard-nosed investor.

“It has been very, very busy for us in the last few weeks,” said Padraig J. Seif, chief executive officer at Finemetal Asia Ltd., a large Hong Kong-based bullion dealer that sold more gold in the first three weeks of March than in all of February.

The biggest jump, Mr. Seif says, has been the 10-fold increase in sales of 250-gram bars, which cost roughly US$10,000. Sales of the 1,000-gram kilobars were up by 50%, with most of the buyers corporate investors rather than jewelry makers. …

… For the remainder of the report:

http://www.wsj.com/articles/chinese-investors-see-golden-opportunity-in-…

END

 

Craig Hemke interviews Bill Murphy of GATA for Sprott Money news)

(Craig Hemke/Bill Murphy/GATA/Sprott Money News)

Craig Hemke interviews GATA Chairman Murphy for Sprott Money News

Submitted by cpowell on Tue, 2016-03-29 05:46. Section: 

12:44p ICT Tuesday, March 29, 2016

Dear Friend of GATA and Gold:

GATA Chairman Bill Murphy was interviewed this week for Sprott Money News by the TF Metals Report’s Craig Hemke (aka Turd Ferguson), discussing, among other things, the long failure to audit the U.S. gold reserve, Canada’s liquidation of its gold reserve, whether there is any jurisdiction where private investors can store gold safely, how much gold remains available to central banks for price suppression, and the control of the gold and silver futures markets by bullion banks whose trading is underwritten by central banks. The interview is 18 minutes long and can be heard at the Sprott Money Internet site here:

https://www.sprottmoney.com/blog/ask-the-expert-bill-murphy-march-2016.h…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

 

END

 

Your humour story of the day

The wife of India’s finance minister who handles all of the families financial decisions refuses to paperize her gold jewellery.

(courtesy GATA/Hindustan Times/New Delhi/)

India’s finance minister can’t persuade his own wife to paperize her gold jewellery

Submitted by cpowell on Tue, 2016-03-29 06:10. Section: 

Gold Monetisation Scheme Bows to Family Homilies

By Timsy Jaipuria
Hindustan Times, New Delhi
Tuesday, March 29, 2016

There is a conflict between two finance ministers, and it seems the official one is not winning this war.

The country’s finance minister announced a scheme to monetise the gold holdings of India’s families, but the finance minister back at home, the housewife, is having none of it.

This came through clearly at a recent meeting between economic affairs secretary Shaktikanta Das and representatives from the Reserve Bank of India, temple trusts, and other bodies to discuss ways to make the scheme more attractive.

“I am not even able to convince my wife to part with her jewellery, which she hardly uses,” one official reportedly said at the meeting, raising laughter. “It’s easy to convince North Block [one of the Indian government headquarters buildings in New Delhi] but very difficult to convince the finance minister at home to participate in this scheme.” …

… For the remainder of the report:

http://www.hindustantimes.com/business/gold-monetisation-scheme-bows-to-.

END

 

 

 

Chris Powell makes fun of Izabella Kaminska of the London’s Financial Times as she asserts that gold is “a dangerous obsession”…a “frivolous thing, a decadent luxury”

Chris asks why?

(courtesy Chris Powell/GATA)

Just whom is gold really so ‘dangerous’ to?

Submitted by cpowell on Tue, 2016-03-29 09:22. Section: 

4:24p ICT Tuesday, March 29, 2016

Dear Friend of GATA and Gold:

Gold, Izabella Kaminska of the Financial Times asserts in a 12-minute video posted this month, is “our dangerous obsession,” a “frivolous” thing, a “decadent luxury,” “anti-social,” “a wastage of human potential,” a mechanism for “destabilizing society” with selfishness, used to “hoard” wealth by people who should entrust it to banks for investment in financial assets — like stocks priced at a hundred times earnings or government bonds with negative yields. You know — the sort of products sold by the primary advertisers of the Financial Times.

And yet Kaminska concludes her parody of financial journalism by declaring that “gold is most valuable to society when it becomes a currency” — as if gold isn’t already a currency and as if governments and central banks aren’t doing their damnedest to prevent the monetary metal from becoming even more of a currency competing with their own currencies.

Of course Kaminska never addresses the matter of why, if gold is so awful, central banks are trading it, in the words of the director of market operations of the Banque de France, “nearly on a daily basis” —

http://www.gata.org/node/13373

— and, in the words of the executive director of the central bank of Austria, secretly intervening in the gold market even as they are trying to accumulate more for their own reserves:

http://www.gata.org/node/15878

If Kaminska is ever really worried about the “anti-social,” central banking is actually full of admissions that the gold market is rigged for imperialistic purposes —

http://www.gata.org/node/14839

— and what could be more “anti-social” than imperialism?

Kaminska’s video is posted at the FT’s Internet site here:

http://video.ft.com/4805151190001/Gold-our-dangerous-obsession/Life-And-…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

 

END

 

 

Barclay’s Kevin Norrish states that commodities such as oil and base metals like copper can fall another 20%, which “will drive bulls off a cliff”. He explains why!

(courtesy zero hedge)

Commodities Longs Will “Liquidate In Unison,” Driving Bulls Off A Cliff, Barclays Warns

“Energy needs lower prices to maintain financial stress to finish the rebalancing process; otherwise, an oil price rally will prove self-defeating as it did last spring,” Goldman’s Jeffrey Currie recently wrote, on the outlook for crude going forward.

The rally off the lows has largely stemmed from the market’s hopes for an output freeze from Russia, the Saudis, and everyone else who isn’t Iran. Producers will meet in Doha next month to try and hammer out an agreement, but as we’ve documented exhaustively, the whole effort is farcical at best.

Moscow and Riyadh (among others) are already pumping at record levels, and it’s not at all clear why “freezing” output at all time highs is bullish. Indeed, as we noted last week, Russian crude exports are set to rise going forward. “The discussion is only about freezing production. And not exports,” Russian Energy Minister Alexander Novak told reporters earlier this month.

Throw in the fact that a recalcitrant Iran is in no mood to freeze anything now that international sanctions have finally been lifted and you have a decidedly bearish fundamental backdrop for crude, and that, in turn, should be expected to pressure the rest of the commodities complex which has for years struggled to deal with slumping Chinese demand and a global deflationary supply glut.

For their part, Barclays thinks the bullish sentiment around commodities could shift abruptly in the not so distant future, leading the “herd” straight off a cliff.

“Investors have been attracted to commodities as one of the best performing assets so far in 2016,” analyst Kevin Norrish begins. “However, in the absence of any concerted fundamental improvements, those returns are unlikely to be repeated in Q2, making commodities vulnerable to a wave of investor liquidation that we estimate could, in a worst case scenario, knock as much as 20- 25% from current price levels.” Here’s more:

Given that recent price appreciation does not seem to be very well founded in improving fundamentals and that upward trends may prove difficult to sustain, the risk is growing that any setback will result in a rush for the exits that could again lead commodity prices to overshoot to the downside.

Key commodities markets such as oil and copper already face overhangs of excess production capacity and inventories, but also now face another obstacle in the recovery process, that of positioning which is now approaching bullish extremes.

Net flows into commodity investor products totaled over $20bn in January-February (the strongest start to a year since 2011), futures positioning in key markets such as copper and oil has switched rapidly from bearish to bullish extremes in a few short weeks and there is evidence of a surge in investment flows into Chinese commodity markets as well.


The risk for commodities is that investors seek to liquidate long positions quickly and in unison, with potentially highly negative consequences for prices. There are several reasons to believe that a short-term turning point for investor flows might be close.

First, the kind of commodity investment that is taking place currently is not the long-term buy- and-hold strategy for portfolio diversification and inflation protection that underpinned the huge inflows of the previous decade. It is much more short term and opportunistic, as is clear from the relatively short holding period for ETP buyers in oil. Many have been liquidating on the recent move up in prices, having held their positions for only 5-6 weeks.

Second, commodities are among the few assets that have generated a positive return in Q1 and, as quarter-end approaches, that may make investors keener than they would usually be to close out long positions and lock in profits.

Third, the risk rally set in place by the previous week’s more dovish-than-expected FOMC statement is already starting to fade, as several Fed policymakers came out last week with more hawkish statements. Part of the problem with recent Fed-driven risk rallies is that they most often result from a run of poor economic data usually for the US, though recent Fed comments suggest it is becoming increasingly conscious of the growth path in emerging markets as well. Unfortunately, that means that any commodity price gains that result tend to be transitory because they are not supported by any underlying improvement in demand fundamentals; that seems to be the case again this time.

“How bad could it get?,” Barclays asks? “A very simple analysis of the relationship between investor positioning and recent price movements in oil suggests the potential for a 20-25% move down in prices if positioning were to return to the average levels of the past few months. The potential downside in copper is similar,” the bank says, answering its own question.

So that puts copper in “the low $4,000s” and as for crude, we’re looking at the low $30s. In short, still suppressed demand, quarter-end profit taking, and the possibility that the Fed will turn more hawkish thus curtailing risk appetite and sparking a USD rally could cause a violent reversal. And as we noted just this morning, things are already starting to unravel:

But don’t worry, as long as everyone gathered in Doha next month agrees to freeze production at the current record-setting pace which, if it keeps up, will soon result in every backyard swimming pool in the world being filled to the brim with black gold, everything should be fine.

For those who need a visual of where Barclays thinks this is heading, consider that the note excerpted above is entitled “Buffalo Jump,” an allusion to Native Americans driving herds of bison off cliffs

Inline image 2

Trade accordingly…

 

 

end

 

Lawrie Williams of Sharp’s Pixley describes that citizens will search for gold once countries go cashless

(courtesy Lawrie Williams/Sharp’s Pixley)

 

LAWRIE WILLIAMS: Cash, Gold, Paranoia and Groupthink

MAR
29

I always look forward to receiving the latest Things that make you go hmmm… (TTMYGH)(www.ttmygh.com) newsletter from Grant Williams.  It is invariably amusing and thought provoking, as well as containing what I feel is a hugely valuable analytical viewpoint on current economic thinking.

TTTMYGH is always themed and the theme in the latest one revolves around ‘Groupthink’ – which Wikipedia defines as a psychological phenomenon that occurs within a group of people, in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome – Wikipedia.

In the latest newsletter Williams follows through this theme in particular with the current drive by some economists and politicians to do away with cash – a theoretical, if perhaps impractical, means of generating a future cashless society where all monetary transactions, except perhaps the very smallest, will have to be handled digitally, and thus vulnerable to government access.  You may feel that this is unlikely BUT this drive is already resulting in legislation in some countries to ban cash transactions higher than a certain fixed amount and the withdrawal of high denomination bank notes to make major cash transactions more and more difficult.  This is, as is much other spin on restrictive governmental legislation, given a prevention of terrorism financing and money laundering by criminal organisations angle.  This is to make it acceptable to the bulk of the general public who are for the most part blissfully unaware of the gradual erosion of civil liberties moves of this type engender.

Not surprisingly Williams’ newsletter editorial treatise draws heavily on the dystopian society George Orwell envisaged in his seminal novel 1984 where government tries to micro-manage everything through hugely invasive systems which keep the ‘proles’ suppressed and tries to control the thoughts of the intelligentsia, who might question the systems in place, through other draconian means.

1984 may be an ultimate vision of such a society taken to the extreme, but elements of the controls envisaged by Orwell are already in place in many countries.  These elements are perhaps largely beneficial in their effects, but what worries the civil liberties campaigners (who tend to be subjected to much ridicule by politicians and compliant media) is that these may just represent the beginnings of a slippery slope towards a 1984-type society, although one perhaps not quite as dystopian, or controlling, as that perceived by Orwell.  A truly cashless society is just one more element on such a path as government would have access to everyone’s savings and could monitor, and control, even the most innocent of transactions.

So what, you may say, I have nothing to hide!   But this already applies also to so many other legislative tweaks on the anti-terror front these days which give police and other government authorities powers to aggressively investigate all kinds of activities which are outside the scope of anything the legislation was designed to combat in the first place.  The law of unintended consequences.

In terms of access to your bank accounts, government, in theory, would be able to block transactions, take money from it, even put a total stop on your access to it if it felt you were abusing some legislation or other.  If government needs to be bailed out financially, but has access to bank deposits, it could well automatically take a percentage of your savings without your having any means of preventing this. (Think the Cypris bail-in!  Many countries already have legislation in place that would enable them to plunder your bank accounts in the ‘national interest’))

So, coming back to the current economic ‘groupthink’ designed to remove cash from use.  To an extent we are already well on the way there.  Use of credit and debit cards to settle shopping and transportation costs is commonplace as is the huge growth in online transactions, where cashless transactions are the only option.  But there’s still an element of society which has no access to anything but cash.  The homeless, the elderly, society dropouts etc. and those who just reject credit cards and banks on principle.

So where does gold come in?  If a truly cashless society is imposed on us with all the government control that envisages, then so would the search for alternative sources of savings outside of government controls.  Physical gold is probably the most tradable of any alternative cash preservation option which isn’t open to digital access by government entities.  So if fears of the death of cash start to be seen as even a possibility, then those who are scared of losing their hard-earned savings may well switch some or all of it into more easily tradable gold options – coins and small bars – where substantial values can be stored in a relatively small space.

Of course should this scenario come about there’s always the chance that if there was a government perception that too much wealth was being accumulated in a cash alternative like gold, then legislation could be introduced to confiscate, or ban, gold so where this gold is held or stored becomes more and more relevant to the paranoid.   As the saying goes: Just because you’re paranoid doesn’t mean that someone [government] isn’t out to get you!

Your early TUESDAY 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 6.5080 / Shanghai bourse  IN THE RED, DOWN 37.99 OR 1.28%/:  / HANG SANG CLOSED up 20.69 or .10%

2 Nikkei closed down 30.34  or down .18%

3. Europe stocks opened mostly in the green /USA dollar index down to 95.89/Euro up to 1.1208

3b Japan 10 year bond yield: RISES   TO -.08%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 113.64

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  38.54  and Brent: 39.22

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 0.163%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate FALL to 9.81%/: 

3j Greek 10 year bond yield RISE to  : 8.80%   (YIELD CURVE NOW INVERTED)

3k Gold at $1219.70/silver $15.30 (7:15 am est) 

3l USA vs Russian rouble; (Russian rouble DOWN 17/100 in  roubles/dollar) 68.71

3m oil into the 38 dollar handle for WTI and 39 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9739 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0916 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN STARTS ITS CAMPAIGN AS TO WHETHER EXIT THE EU.

3r the 8 Year German bund now  in negative territory with the 10 year FALLS to  + .163%

/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 1.86% early this morning. Thirty year rate  at 2.63% /POLICY ERROR)

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

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

Futures, Oil Dip On Stronger Dollar Ahead Of “Hawkish” Yellen Speech

With Europe back from Easter break, we are seeing a modest continuation of the dollar strength witnessed every day last week, which in turn is pressuring oil and the commodity complex, and leading to some selling in US equity futures (down 0.2% to 2024) ahead of today’s main event which is Janet Yellen’s speech as the Economic Club of New York at 12:20pm, an event which judging by risk assets so far is expected to be far more hawkish than dovish: after all the S&P 500 is north of 2,000 for now.

Crude slid below $39 a barrel in New York in a fourth day of losses while commodity currencies such as Russia’s ruble and the Norwegian krone weakened. Euro-area sovereign securities climbed as lower energy prices dimmed the outlook for inflation and the European Central Bank prepared to increase its asset-purchase plan by 20 billion euros ($22 billion) a month in April. Treasuries advanced and U.S. equity-index futures dropped before a speech from Federal Reserve Chair Janet Yellen and several key pieces of economic data this week culminating in payrolls figures.

The shaky sentiment was summarized by Pedro Ricardo Santos, a broker at X-Trade Brokers DM SA in Lisbon. who told Bloomberg that “the correction in oil prices is outweighing any optimism about the economy in the markets. Investors will also expect a little more hawkishness from Yellen’s speech today. Although the likelihood of a rate increase in April is practically zero, many are looking for two more hikes by the end of the year.”

Market Snapshot:

  • S&P 500 futures down 0.2% to 2024
  • Stoxx 600 up 0.3% to 336
  • FTSE 100 up 0.3% to 6126
  • DAX up 0.7% to 9920
  • German 10Yr yield down 3bps to 0.15%
  • Italian 10Yr yield down 6bps to 1.24%
  • Spanish 10Yr yield down 7bps to 1.45%
  • S&P GSCI Index down 0.9% to 325
  • MSCI Asia Pacific down 0.5% to 127
  • Nikkei 225 down 0.2% to 17104
  • Hang Seng up 0.1% to 20366
  • Shanghai Composite down 1.3% to 2920
  • S&P/ASX 200 down 1.6% to 5005
  • US 10-yr yield down 1bp to 1.87%
  • Dollar Index up 0.13% to 96.07
  • WTI Crude futures down 1.4% to $38.83
  • Brent Futures down 1.8% to $39.70
  • Gold spot down 0.3% to $1,218
  • Silver spot down 0.8% to $15.12

Global Top News:

  • Most Passengers on Hijacked EgyptAir Flight Are Released
  • U.S. Drops Apple Case After Getting Into Terrorist’s IPhone
  • BlackRock Joins Pimco Warning Investors to Seek Inflation Hedge
  • Yahoo Said to Set April 11 Deadline for Preliminary Bids: WSJ
  • Marriott Faces Prospect of Losing Starwood After Months of Work
  • Biotech Trovagene Fires, Sues Its CEO, CFO; Shares Tumble
  • Macquarie’s Wins $3.4b Cleco Deal Approval With 2 Promises

Looking at regional markets, we start in Asia stocks traded mostly negative following a subdued lead from Wall St. where discouraging data and a lack of EU participants kept risk-sentiment in check. ASX 200 (-0.77%) returned from its prolonged weekend to extend on last week’s financials weakness, while Nikkei 225 (-0.25%) was heavily pressured from the open following the largest decline in retail sales since 2014 and mass ex. dividends in Japan which totalled over 75% of Topix shares. Chinese markets (Shanghai Comp. -1.3%) conformed to the downbeat tone in the region and continued its recent declining trend with participants cautious ahead of several large named earnings reports and key PM! releases this week. 10yr JGBs traded lower with participants side-lined ahead of fiscal year-end, while the BoJ also refrained from entering the market with its bond purchase program.

Asia Top News

  • China Bull Who Beat 99% of All Bond Funds Says Yuan Drop Is Over: Seaman sees yuan rising on average 2-3% each year over decades
  • Offshore Yuan Gains as PBOC Raises Fixing, Fed Rate Bets Recede: Central bank boosts reference rate by most since March 18
  • RBA Rate Cut in Response to Stronger Aussie Seen by Bond Bull: Monetary easing more likely in 2H, Gor says
  • India Open to Importing U.S. Oil in Effort to Diversify Sources: India purchasing Iranian crude and engaging in other projects
  • Malaysia Building Society Becoming Islamic After Failed Mergers: Lender has stopped offering conventional loans, CEO says

European participants return from their long weekends today to see equities firmly in the green (Eurostoxx: +0.3%). Stocks have benefitted from upside in financials, with this the best performing sector in Europe. Material names underperform amid downside in the commodity complex, with a bid in USD weighing on the likes of WTI, which resides around the USD 39/bbl level, and base metals which are broadly in the red.

European Top News

  • ECB’s Gloomy Price Outlook to Be Confirmed Just as QE Grows
  • EasyJet Leads Britain’s Stock Advances After Week of Declines
  • Volkswagen May Suspend Dividend on Emissions Probe, DPA-AFX Says
  • Stocks Gain in Europe as Crude Extends Declines; Dollar Rebounds

In FX, markets are back to full strength today, but with USD sentiment hanging on the word(s) of Fed chair Yellen — due to speak in NY just after the London close – trading has been mixed, with very little sense of direction as yet. We saw some early selling in Cable and EUR/USD, but this proved short lived, though the highs seen in thin trade Monday have yet to be matched. That said, a softer tone in EUR/GBP is giving Cable better support than that seen last week.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, rose less than 0.1 percent. While it pared its monthly drop to 2.5 percent, that’s still biggest since April. “The dollar is really not your best bet right now,” Vassili Serebriakov, a foreign-exchange strategist at BNP Paribas SA in New York, said in an interview on Bloomberg Television. “Every time you have the dollar rising, concerns about China devaluation, concerns about emerging-market growth, concerns about commodity markets – those start to resurface.”

Odds of the Fed raising rates at its June meeting have fallen to 38 percent, from 42 percent a week ago, according to Fed funds futures data compiled by Bloomberg. The Japanese yen weakened 0.1 percent at 113.56 per dollar, falling for an eighth day. Norway’s krone and Australia’s dollar were the worst performing major currencies.

In commodities, amid the continued appreciation in the USD-index, the energy complex has subsequently been pressured with WTI crude futures residing near session lows having broken below yesterday’s low at USD 38.86 and is now eyeing last week’s low at USD 38.33. West Texas Intermediate crude dropped further after sliding 5 percent over the past three sessions amid ongoing concern over a global glut in the commodity. Weekly U.S. government data is forecast to show another increase in crude stockpiles. Brent futures in London lost 2.1 percent to $39.42. Indonesia will attend a meeting of major oil exporters in Doha next month to consider an output freeze, according to Energy and Mineral Resources Minister Sudirman Said.

Spot gold fell 0.2 percent to $1,218.90 an ounce, pressured by the aforementioned recovery in the greenback, with the precious metal relatively range bound for much of the European morning.

In the base metals complex, copper and iron ore prices were also pressured amid the widespread cautious tone, with the latter falling by as much as 5% to a 3-week low alongside weakness in steel. Zinc and tin also declined, while aluminum rose as the London Metal Exchange reopened after two days of public holidays.

On today’s calendar we get the January Case-Shiller, the latest Consumer Confidence print and the API weekly inventory number, but the key highlight will be Janet Yellen’s speech at 12:20pm at the Economic Club of New York, while former Goldmanite and current Dallas Fed president Steven Kaplan will speak in Austun at 4pm.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European bourses kick off the week in positive fashion as participants return from their elongated break with notable outperformance in financials.
  • USD-index stages a slight recovery as investors look towards comments from Fed Chair Yellen to subsequently shed light on the path of the Fed’s tightening cycle.
  • Looking ahead, highlights include US API Crude Oil Inventories, Fed’s Yellen (Voter, Soft Dove), Williams (Non Voter, Neutral), Kaplan (Non-Voter, Soft Dove)
  • Treasuries rally in overnight trading, global equity markets mostly higher and oil drops; Fed’s Yellen will speak this morning and U.S. housing prices will be released.
  • U.S. auctions continue today with $34b 5Y notes, WI yield 1.355%, compares with 1.169% awarded in Feb., lowest 5Y auction stop since 1.045% in May 2013
  • Central bankers have managed to steer the world economy clear of a recession while leaving it stuck in the same rut that led to its troubles in the first place
  • The Bank of England said banks should begin building up capital earmarked to support lending when the economy turns down, as the outlook for U.K. financial stability worsens
  • BlackRock joined Pimco in recommending inflation-linked bonds and warning costs are poised to pick up. “Stabilizing oil prices and a tighter labor market could contribute to rising actual, and expected, U.S. inflation,” Richard Turnill, BlackRock’s global chief investment strategist, wrote Monday
  • Commodities including oil and copper are at risk of steep declines as recent advances aren’t fully grounded in improved fundamentals, according to Barclays Plc, which warned that prices may tumble as investors rush for the exits; With energy stocks enjoying the biggest rebound since the beginning of the oil rout, short sellers have shifted their sights to regional banks that do business with the industry
  • While Japan’s labor market is tight with a jobless rate of just 3.3%, almost 38% of workers are now part-timers who are generally on lower pay and have less job security.
  • $4.65 IG credit priced yesterday, MTD $149.455b, YTD $443.705b; $1.4b HY priced yesterday, MTD 24 deals for $15.365b, YTD 49 deals for $30.22b
  • Sovereign 10Y bond yields mixed; European and Asian equity markets mixed; U.S. equity-index futures drop. WTI crude oil, gold and copper fall

DB’s Jim Reid completes the overnight wrap

So as we approach the final few days of what’s been one of the more volatile Q1’s in memory, the month of March has certainly been far kinder to risk assets relative to what we saw in January and February. A big rally across commodity markets and notably Oil has more than played its part, as has improving US economic data, a more dovish than expected Fed and of course the ECB bazooka. Over the holiday break newsflow has been fairly light and instead we’re looking ahead to a couple of events this week which will see the focus switch back once again to the Fed. The first of those will come this afternoon when we are due to hear from Fed Chair Yellen, speaking at the Economic Club of New York (scheduled for 4.20pm GMT). The speech looks set to take on slightly more importance than normal in light of what’s been a chorus of relatively hawkish Fedspeak over the past ten days or so. In that time we’ve heard Bullard, Lacker, Lockhart and Williams all hint at the possibility of a hike as soon as April or June, with Bullard the latest to suggest that ‘the Fed forecasts suggest that the next hike may not be far off’. This contrasts to the overall dovish view that we got from the Fed at the FOMC meeting earlier this month. Despite the comments in recent days, our US economists are still of the view that they doubt Yellen will sound overtly hawkish this afternoon and while she may reiterate that April remains a ‘live meeting’, they doubt that she will send a strong hike signal for next month. Markets are still yet to be convinced that the Fed will move next quarter, with the odds of an April hike a lowly 6% and a June hike just 38%, which is more or less where it has been since the FOMC meeting.

The other big event this week and another hurdle for the Fed is the March employment report which we’ll get this Friday. We’ll give a preview of this later in the week but the early market expectations are for a 210k print (after the 242k February number), a modest tick up in earnings and no change in the unemployment rate. As usual we’ve got the full run down of the week ahead at the end.

Taking a look at the latest in Asia this morning, it’s been a softer start on the whole with the bulk of bourses currently in the red. In China the Shanghai Comp is currently down -1.14%, while the tech-heavy Shenzhen is down a sharper -2.01%. The Nikkei (-0.49%) and Hang Seng (-0.26%) have seen more modest losses and are off their lows, although in Australia the ASX has tumbled -1.49% (with financials weighing the index down). Only the Kospi (+0.37%) is trading in positive territory as we go to print. Oil markets are reflecting the slightly damper tone this morning with WTI down close to half a percent, while credit markets are close to unchanged. Some mixed employment and retail sales data out of Japan this morning has seen the Yen trade in a fairly choppy manner meanwhile.

Moving on. In the period we’ve been off much of the newsflow has centered around a number of economic releases out of the US. Recapping the prints from yesterday firstly, on the inflation front we saw the core PCE print for February rise a less than expected +0.1% mom (vs. +0.2% expected) which has had the result of keeping the YoY rate unchanged at +1.7% (and a tenth above the Fed’s forecast for this year). The deflator was down -0.1% and in line with the consensus estimate. Away from this we saw personal spending rise +0.1% mom as expected last month, but more telling was the four-tenths of a percent downward revision to the January print. Personal income was a modest beat at +0.2% mom (vs. +0.1% expected). It’s worth noting that post yesterday’s PCE data the Atlanta Fed has now significantly downgraded their Q1 GDP forecast to 0.6% from 1.4% previously after revising down their real consumer spending growth forecasts.

Elsewhere yesterday, housing market data was reserved for the latest pending home sales data which revealed a bumper +3.5% mom rise for the month of February (vs. +1.2% expected) which was the biggest monthly gain in 12 months. Meanwhile the advance goods trade balance last month revealed a slightly wider than expected deficit ($62.9bn vs. $62.2bn expected) which is the widest in six months. The other notable release yesterday was further evidence of improvement in the manufacturing sector in the US. The Dallas Fed manufacturing survey bounced 18.2pts this month and although at a still lowly -13.6, is now at the highest level since November.

There was some notable data for us to highlight on Friday too, with an unexpected upward revision to the third estimate of Q4 GDP in the US to 1.4% qoq (from 1.0%). An upward revision to final sales boosted the number, as did a less negative contribution from inventories. Concerning in the details however was the first estimate of corporate profits in the quarter, with the data revealing a -7.8% qoq decline which is the biggest fall since Q1 2011. The -11.5% yoy decline for profits is now the worst since Q4 2008.

Quickly recapping the price action yesterday, with the bulk of markets shut in Europe for holidays it was an unsurprisingly quiet session in the US (with one eye on the events this week too) although both the S&P 500 (+0.05%) and Dow (+0.11%) did manage to eke out small gains with the former bringing to an end three consecutive days of (albeit modest) losses. The rally in the US Dollar, which had coincided with that run of hawkish rhetoric sputtered however with the Dollar index closing -0.34% for its first loss since the 17th of March.

Commodity markets were fairly subdued also with WTI closing out the day with a -0.18% loss and just below $40/bbl. Credit markets were near enough unchanged. Away from the US there was no negative reaction in Sterling (in fact closed up +0.86%) after Reuters ran a story on the weekend suggesting of some notable support for the pro-Brexit camp. According to the article, the report highlighted that 250 business leaders have backed the pro-Brexit campaign according to the Vote Leave group, although the Sunday Times did suggest that there were some notable omissions from the list which had some questioning the overall reliability of the headlines.

Over in the US this afternoon the notable release will be the March consumer confidence reading (where expectations are for a 1.8pt rise to 94.0), while the January S&P/Case-Shiller house price index for January is also due out. We’ll also hear from Fed Chair Yellen this afternoon when she is due to speak at the economic club of New York, while we’ll also hear from Williams and Kaplan today, Evans on Wednesday, Dudley on Thursday and finally Mester on Friday.

end

 

i)Late  MONDAY night/ TUESDAY morning: Shanghai closed DOWN BY 37.99 POINTS OR 1.28% , /  Hang Sang closed UP 20.69 POINTS OR .10% / The Nikkei closed DOWN 30.34 POINTS OR 0.18% . Australia’s all ordinaires was CLOSED DOWN. Chinese yuan (ONSHORE) closed UP at 6.5080.  Oil FELL  to 38.54 dollars per barrel for WTI and 39.22 for Brent. Stocks in Europe ALL IN THE GREEN . Offshore yuan trades  6.5080 yuan to the dollar vs 6.5151 for onshore yuan. Japanese retail sales plunge the most in almost 4 years as negative interest rates are not helping at all.

FIRST:  report on Japan

Japanese Retail Sales Plunge Most Since 2010

Just one more cut in rates more negative and just a little more ETF buying and bond purchases and we are sure the Japanese will start spending as wages rise…

4th monthly decline in a row and absent the tsunami and tax-hike reaction, this is the worst drop since Dec 2010…

At what point do you just admit failure?

end

SECOND: report on China

You have to see this to believe it:  Apartment walls made up of sand:

(courtesy zero hedge)

“Made Out Of Sand” – A Dramatic Look Inside A Newly Built Chinese Apartment

While real estate is all about “location, location, location,” it appears there are sometimes more prescient factors that any prospective buyer should pay attention to. Amid yet another government-fueled housing bubble, it seems in their haste to fulfil a rapacious demand for property in which to gamble their hard-grafted assets, Chinese construction companies have cut a few corners. As the following stunning video shows, a “newly constructed apartment” crumbles before the owners’ eyes as the ‘concrete’ walls turn to sand

LiveLeak exposes, in the following video, just how poor the standards can be of so-called “new” properties. LiveLeak footage shows two men in a supposedly “new apartment building” in China where the concrete walls crumble like sand.

China is currently in the midst of a huge property bubble

 

And the country is full of “ghost cities” and new apartment blocks waiting to be filled. Which is no surprise considering that China used about 6.4 gigatons of cement during their construction boom between 2011 and 2013, which is more than what the US used during the entire 20th century. However, those housing properties in China are frequently not built to stand the test of time: In 2010, officials revealed that many homes had a lifespan of just 20 years.

Just like buying worthless companies in the stock market bubble ended very badly, it appears buying ‘worthless’ homes is set for the same outcome…

 

Quick, back into stocks

Average:
END

EUROPEAN AFFAIRS

Our favourite politician, Nigel Farage slams Germany’s migration policy:

(courtesy zero hedge/Nigel Farage)

“Europe Is Burning” Nigel Farage Slams Merkel’s Migration Maelstrom

From ISIS marches in Germany to refugees “doing normal manly things” to women in Sweden, UKIP leader Nigel Farage confronts Angela Merkel and her peers in the European parliament over their dreadfully misguided immigration policies.

“Europe is burning,” he exclaims, adding that – just like the central-bankers of the world – their solution is insanely simple-minded: “Europe isn’t working, so we must have more Europe.” The only hope lies, he adds, in the British referendum showing the rest of Europe it is possible to take back control of its own borders.

 

xx
end

RUSSIAN AND MIDDLE EASTERN AFFAIRS

Has the USA given up on its ally, Turkey:

(courtesy zero hedge)

Pentagon Orders Hundreds Of Military Families To Evacuate Turkey

Has the US finally had enough of its “ally” Erdogan?

Moments ago the DOD announced that the Secretary of Defense, in coordination with the Secretary of State, has authorized the ordered departure of all DoD dependents not assigned to Chief of Mission authority from Adana (to include Incirlik Air Base), Ismir, and Mugla, Turkey. This decision allows for the deliberate, safe return of family members from these areas due to continued security concerns in the region.

It adds that while “this step does not signify a permanent decision to end accompanied tours at these facilities”, the evacuation “is intended to mitigate the risk to DoD elements and personnel, including family members, while ensuring the combat effectiveness of U.S. forces and our mission support to operations in Turkey. The United States and Turkey are united in our common fight against ISIL, and Incirlik continues to play a key role in counter-ISIL operations.”

“The decision to move our families and civilians was made in consultation with the Government of Turkey, our State Department, and our Secretary of Defense,” said Gen. Philip M. Breedlove, Commander, U.S. European Command. “We understand this is disruptive to our military families, but we must keep them safe and ensure the combat effectiveness of our forces to support our strong Ally Turkey in the fight against terrorism.”

Stars and Stripes adds more:

The Pentagon is ordering the evacuation of nearly 700 military family members from Incirlik Air Base and two smaller military installations in Turkey because of concerns over the deteriorating security environment there.

Families are expected to begin leaving Turkey on Wednesday, stopping first at Ramstein Air Base in Germany, before continuing on to the States or other duty locations, U.S. European Command told Stars and Stripes.

“We understand this is disruptive to our military families, but we must keep them safe and ensure the combat effectiveness of our forces to support our strong ally Turkey in the fight against terrorism,” EUCOM chief Gen. Philip Breedlove said Tuesday in a statement.

The mandatory departure order, announced by the State Department, affects nearly all Defense Department dependents assigned to Incirlik, as well as those at smaller bases in Izmir and Mugla.

About 670 dependents are expected to be evacuated, along with 287 pets. About 770 dependents, most from Incirlik, are currently in Turkey, EUCOM spokeswoman Julie Weckerlein said. Those allowed to stay are the family members of mission-essential personnel.

This is all taking place one day after the Turkey Foreign Ministry, outraged by a satirical clip making fun of the Turkish President and his recent policies that was broadcast on German television, summoned the German Ambassador for official explanations. Following the broadcast of the satirical piece titled “Erdowie, Erdowo, Erdogan” on NDR show titled “Extra 3” on March 17, German Ambassador Martin Erdmann was summoned up several days later to officially explain “in length” the reasons for the broadcaster’s behavior, Der Speigel has learned.

The one minute and 52 second long satire package showing footage from recent history in Turkey criticized Erdogan’s increased crackdown on the freedom of the press and hostile policies in the region, including Turkey’s alleged support for Islamic State (IS, formerly ISIS/ISIL) fighters in neighboring Syria.

The video also focused on the lavish living of the Turkish president and his multibillion euro deals with the Europeans to keep migrants at bay. The broadcast on German television comes at a time when Germany, as part of EU is actively seeking closer ties with Turkey to help tackle the migrant crisis in Europe.

Erdogan’s crackdown on journalists and restrictions on freedom of speech have been repeatedly criticized by the international community, along with Ankara’s controversial anti-terrorists campaign against Kurdish militants which inflicted much suffering on Turkey’s minority population.

The day the satirical piece was aired, RT launched a petition calling for a UNHRC-led investigation into claims of alleged mass killing of Kurdish civilians committed by the Turkish military during Ankara’s crackdown on Kurds in the country’s southeast.

The video is below:

Inline image 1

end

EMERGING MARKETS

 

Turmoil in Brazil as Rousseff’s coalition partner backs out. It looks like Congress will vote to temporarily remove her.  If the senate also approves, then the impeachment process begins.  If they remove Rousseff, then next in line Temer takes over and he too is implicated in the same scandal.  Brazil needs a new election ASAP

(courtesy zero hedge)

Brazil On The Brink As Rousseff’s Coalition Collapses, Bar Association Joins Impeachment Push

In the latest blow to Brazil’s embattled President Dilma Rousseff, VP Michel Temer’s PMDB will split with the coalition government, further isolating the Worker’s Party as the country lurches towards a political meltdown.

The PMDB’s decision was expected, but it still marks a key turning point in the effort to oust Rousseff, who angered opposition lawmakers when she attempted to appoint former President and Worker’s Party founder Luiz Inacio Lula da Silva to a ministerial position earlier this month. As Reuters writes, that “was the last straw for many of her allies who saw it as a desperate move to shield him from prosecution by a lower federal court that is overseeing most of the Petrobras case.” For a full recap of recent events, see the following posts:

Dialogue, I regret to say, has been exhausted,” Tourism Minister Henrique Eduardo Alves, a PMDB leader and former speaker of the lower house of Congress, said yesterday as he resigned from Rousseff’s cabinet. The split with PMDB “makes it likely Rousseff will be temporarily suspended from officeby Congress as early as May and replaced by Vice President Michel Temer while the Senate decides if she should be permanently ousted,” Reuters goes on to note.

Of course just like seemingly every other prominent political figure in the country, Temer faces legal problems of his own. “Those who know him best say he’s a business-friendly pragmatist who’s developed a knack over a multidecade political career for forging agreements with fellow lawmakers,” Bloomberg wroteon Monday evening. “But then there’s this too: He runs the risk of getting forced out of office by charges related to the same impeachment case being brought against Rousseff.” If an electoral court rules that Rousseff’s 2014 re-election should be annulled, Temer would be implicated as well. If neither Rousseff or Temer can govern, general elections would come next and that’s just fine with the country’s disaffected masses.

Temer will be a second Dilma,” one  anti-government protester in Brasilia told Bloomberg. “We need new elections.”

(Temer)

Meanwhile, in yet another headache for Rousseff, Brazil’s Bar Association has submitted a new impeachment request to Congress. The request alleges that Rousseff attempted to obstruct a court investigation when she tried to appoint Lula to her cabinet. The Bar Association’s request effectively gives Rousseff’s opposition a backup plan in case the current impeachment effort fails. “”If by some chance there’s a problem with the current impeachment process, we have the association’s request as a backup,” opposition lawmaker Pauderney Avelino of the Democrats said. “The Bar Association’s request is well argued.”

“The OAB is a traditional, respected organization,” Paulo Kramer, a political scientist in Brasília remarked. “The fact that it is joining the impeachment bandwagon is very meaningful.”

“Rousseff’s relationship with the party has been rocky for some time [as] she’s openly feuded with House Speaker Eduardo Cunha, a powerful PMDB member who still holds sway in the Chamber of Deputies despite his own legal woes,” WSJ recounts. “It is Mr. Cunha who will decide whether to accept the OAB petition and start a second impeachment process.”

As a reminder, Cunha is, like multiple other current and former politicians, under investigation for bribery and money laundering tied to bid-rigging at Petrobras.

(Cunha)

Meanwhile, as we and others have noted, hopes for a political shakeup have i) catalyzed BRL strength and ii) led directly to a furious rally in Brazilian risk assets.

When it comes to the BRL, the BCB is dead set on curtailing further appreciation as an excessively strong real will keep the currency from doing the heavy lifting in terms of helping the eocnomy adjust. In order to keep a lid on things, the central bank is now offering reverse swaps. “Random BCB interventions may discourage traders from holding big USD short positions overnight due to risk of a surprise auction call after market closes,” Bloomberg’s Davison Santana wrote this morning.

As for Brazilian stocks, we remind you once again that domestic investors seem to know something foreign investors do not:

In short, the idea that political (not to mention social) upheaval is BRL/risk positive is absurd on its face, and on that note we close with a quote from Craig Botham, an emerging markets economist at Schroder Investment Management: “You don’t invest in a place where you don’t know who’s in charge.”

*   *   *

Bonus chart: credit creation just saw its first consecutive M/M contraction since 2003


 end

OIL MARKETS

as we pointed out to you last week, the short squeeze is over: crude tumbles agian:

(courtesy zero hedge)

WTI Crude Tumbles Into ‘Correction’ To 2-Week Lows

The greatest short-squeeze on record is over and now the great global oil glut in history, largest inventories since The Great Depression, and global growth demand collapsing fundamentals are being priced back in. WTI Crude is now down 10% from its highs a week ago, back to near 2-week lows and near a $37 handle.

Can we just get another random ‘Doha’ meeting headline…

 

end

 

Crude rises because of the weaker dollar, and a gasoline draw.  We did however have another crude buildup.

(courtesy zero hedge)

Crude Rises After Gasoline Draw, Crude Build

Following last week’s major surge in crude inventories, API reported a 2.6mm build (against expectations of a 3.1mm build) – 7th week in a row – which briefly jumped crude prices higher. A 319k draw at Cushing combined with draws in Gasoline (6th week in a row) and Distillates left oil pushing back to late-day highs.

 

API Details:

  • Crude +2.5mm (+3.1mm exp.)
  • Cushing -319k (confirming Genscape
  • Gasoline -1.94m
  • Distillates -95k

For now, it seems the market is being driven by gasoline so tomorrow’s DOE report on implied demand will be critical

 

The reaction in crude – after a volatile day..

 

Charts: Bloomberg

 

end

 

Having been crushed by the record oil squeeze, our shorters in energy are going after the regional banks that supplied the money to the energy companies.

 

(courtesy zero hedge)

 

Crushed By The Record Oil Squeeze, This Is How Energy Bears Are Shorting Crude Now

The “short energy” trade worked great for a while and then, as we first warned in late January,just as everyone jumped onboard leading to record WTI (and oil and gas equity) shorts, it very suddenly stopped working in early February when oil proceeded to soar by 50% in the month ahead, leading to the biggest short squeeze on record and crushing all those who had recently gotten on the short bandwagon (as well as most other shorts).

The result of this mega-squeeze has been a significant revulsion to shorting oil directly or indirectly, either by way of the underlying commodity or energy stocks, many of which have soared in tandem.

And yet the shorts remain, and continue to press their bets on the troubled energy sector. However, instead of directly shorting crude and various first-derivative oil and gas companies, short sellers – burned by the recent squeeze – have changed their strategy and shifted their sights to secondary exposure, namely those regional banks that do business with the industry. These are the same banks which, as we laid out previously, have the highest exposure to the very troubled energy sector, as laid out either by S&P:

 

… Or Raymond James:

 

It is these regional banks that Bloomberg finds are the object of shorts’ latest affection, as bearish bets have shot up 35% on average this year among the 10 most-shorted stocks in the KBW Regional Banking Index, and nowhere more so than at Cullen/Frost Bankers Inc. and Prosperity Bancshares Inc. in Texas, which have seen short interest surge about 60 percent.

The reason why shorts’ attention has been redirected to energy banks is well-known to our readers as we have been covering the banks’ exposure to energy since January: “as oil prices plunged, concern over energy companies’ ability to pay back loans drove investors to unload or bet against financial stocks judged to have the most at stake in the sector. So far, the rebound that pushed oil to around $40 a barrel has done little to dilute that speculation. Stubbornly low interest rates are also squeezing profits in a group that trades at a premium of almost 40 percent to their larger brethren.”

“It’s generally a very tough environment,” said Stephen Moss, a New York-based analyst at Evercore ISI. “Beyond oil and the yield curve, we have seen signs of credit softening overall. So going forward, it feels like you are going to have incrementally higher credit costs, which obviously will pressure earnings.”

The details are also mostly familiar, but here is a quick recap from Bloomberg:

Energy loans account for 15 percent of Cullen/Frost’s portfolio, while they make up 4 percent of Prosperity’s, according to Moss. Of the 10 most shorted regional banks, the majority do business in states like Texas, Oklahoma and Arkansas, centers of the drilling industry. Banks that have exposure higher than 4 percent to energy in their loan portfolios have slumped 22 percent since late 2014, Morgan Stanley’s Ken Zerbe wrote in a report earlier this month.

 

Bigger banks have also increasingly lured bears this year. Short interest makes up 6.2 percent of Zions Bancorporation’s shares outstanding and 4.5 percent percent of Comerica Inc. Seven percent of Zions’ loan portfolio is exposed to energy companies, and 6 percent of Comerica’s, according to Zerbe.

Being a smaller, regional bank instead of a TBTF, money-center bank means just that: “regional banks are more sensitive to the trajectory of interest rates, as a bigger proportion of their revenue stems from deposits and lending. The Federal Reserve scaled back its forecast for tighter policy on March 16, citing weaker global growth. That translates to lower-for-longer short-term rates, which crimp what local banks can charge on loans.”

But more so than the flat yield curve, the immediate catalyst are questions about the banks’ solvency if and when client O&G companies file bankruptcy, straddling the lenders with billions in bad debt.

Evercore ISI’s Moss said even if the Fed speeds up interest rates increases, a stronger dollar would hurt manufacturers, which in turns affects lenders. “You’ve seen hints from banks signaling that things are getting tough on that front,” he said. Alternatively, if the Fed remains dovish, it means yields on the long end will remain painfully low and make it next to impossible for energy companies to generate profits, leading to a lose-lose outcome, which is precisely what the shorts are betting on.

Not everyone is as concerned, however. While shorts are boosting bearish bets, other investors are taking the opposite view and loading up on shares. Gary Bradshaw, a Dallas-based fund manager for Hodges Capital Management said his firm recently increased its position in Cullen/Frost.

“I am looking at low price-to-book, good earnings and what I think will be a higher energy price,” said Bradshaw. “I don’t think interest rates are going to go up dramatically, and that will be the headwind for banks. But at the same time, some of the regional players will benefit more from higher energy prices.”

Still, with little updated information on bank exposure ahead of the spring borrowing base redetermination season, many would rather not risk it: “There is some uncertainty on how significant these oil credits are going to mean to the credit costs for these banks going forward,” said Daniel Werner, an analyst at Chicago-based Morningstar Inc. “Investors are right to be cautious with names in the Texas and Oklahoma area. That’s a fair assessment by investors until we figure out what’s going on with oil.”

What is going on is nothing good, and we expect fundamental impairments, charges and reserve increases to continue for the conceivable future. However, the right trade here is not to pile on in what is becoming the next bandwagon trade, but to think one step ahead, the same step which we said is inevitable in the oil trade in late January – the imminent, and massive, short covering squeeze, which has the added benefit that forced buyers are completely price indiscriminate when the market is ripping in their face, and will pay any price beyond the moment of max pain just to get out of a trades which, at least in theory, have unlimited downside.

As such we sit back and look forward to the inevitable regional bank “rip your face off” short squeeze, one which is inevitable especially since as Yellen showed today, the Fed will do anything and everything to reflate asset prices, consequences and most certainly credibility be damned.

 

end

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

Euro/USA 1.1208 up .0007 ( STILL REACTING TO USA FAILED POLICY)

USA/JAPAN YEN 113.64 UP 0.276 (Abe’s new negative interest rate (NIRP)a total bust/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP)

GBP/USA 1.4273 UP .0014 STILL THREAT OF BREXIT)

USA/CAN 1.3174 DOWN.0001

Early THIS TUESDAY morning in Europe, the Euro ROSE by 7 basis points, trading now WELL above the important 1.08 level RISING to 1.1102; Europe is still reacting to deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Chinese yuan was UP in value (onshore) The USA/CNY DOWN in rate at closing last night: 6.5080 / (yuan UP / SENT A HUGE MESSAGE TO THE USA NOT TO RAISE RATES AT ALL / IF CHINA DEVALUES ITS CURRENCY, 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 18 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 14 basis points as it now trades WELL BELOW the 1.44 level at 1.4273.

The Canadian dollar is now trading UP 1 in basis points to 1.3174 to the dollar.

Last night, Chinese bourses AND JAPAN were MIXED/Japan NIKKEI CLOSED DOWN 30.74 , OR 0.18%HANG SANG UP 20.69 OR 0.10% SHANGHAI DOWN 37.99 OR 1.28%     / AUSTRALIA IS LOWER / ALL EUROPEAN BOURSES ARE IN THE GREEN, as they start their morning/.

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

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

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

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

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

The NIKKEI: this TUESDAY morning: closed DOWN 30.74 OR 0.18%

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

2/ CHINESE BOURSES MIXED/ : Hang Sang CLOSED IN THE GREEN. ,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: $1218.00

silver:$15.08

Early TUESDAY morning USA 10 year bond yield: 1.86% !!! DOWN 2 in basis points from MONDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield FALLS to 2.63 DOWN 2 in basis points from MONDAY night.

USA dollar index early TUESDAY morning: 95.89 DOWN 9 cents from MONDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers TUESDAY MORNING

end

 

And now your closing TUESDAY NUMBERS

 

Portuguese 10 year bond yield:  2.92% DOWN 4 in basis points from MONDAY

JAPANESE BOND YIELD: -.083% PAR in   basis points from MONDAY

SPANISH 10 YR BOND YIELD:1.44% DOWN 8 IN basis points from MONDAY

ITALIAN 10 YR BOND YIELD: 1.24  DOWN 6 basis points from MONDAY

the Italian 10 yr bond yield is trading 20 points lower than Spain.

GERMAN 10 YR BOND YIELD: .137% (DOWN 4 BASIS POINT ON THE DAY)

end
IMPORTANT CURRENCY CLOSES FOR TUESDAY

 

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

Euro/USA 1.1299 UP .0001 (Euro UP 99 basis points/still represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN

USA/Japan: 112.65 UP ..788 (Yen UP 78 basis points) and  a major disappointment to our yen carry traders and Kuroda’s NIRP. They stated that  NIRP would continue.

Great Britain/USA 1.4388 UP .0139 Pound UP 139 basis points/(LESS Brexit concern.)

USA/Canada: 1.3050  down  .0.120 (Canadian dollar UP 120 basis points DESPITE THE FACT THAT oil was LOWER IN PRICE (WTI = $38.32)

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

 

This afternoon, the Euro was UP by 99 basis point to trade at 1.1299   as the markets generally SHUNNED THE DOLLAR

The Yen ROSE to 112.65 for a GAIN of 72 basis pints as NIRP is a big failure for the Japanese central bank/also all our yen carry traders are being fried.

The pound was UP  139 basis points, trading at 1.4388 (LESS BREXIT CONCERNS)

The Canadian dollar ROSE by 120 basis points to 1.3050 , despite the fact that the price of oil was down today (as WTI finished at $38.32 per barrel)

The USA/Yuan closed at 6.5080

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

Your closing 10 yr USA bond yield: DOWN 7 basis point from MONDAY at 1.81% //trading well below the resistance level of 2.27-2.32%) policy error

USA 30 yr bond yield: 2.61  DOWN 5 in basis points on the day and will be worrisome as China/Emerging countries continues to liquidate USA treasuries (policy error)

\

Your closing USA dollar index, 95.13 DOWN 83 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 TUESDAY

London:  CLOSED DOWN .58 POINTS OR .01%
German Dax :CLOSED UP 36.59 OR .37%
Paris Cac  CLOSED UP 36.99 OR .85%
Spain IBEX CLOSED UP 18.50 OR .21%
Italian MIB: CLOSED UP 6.02 OR .03%

The Dow was up 97.72 points or 0.56%

Nasdaq  down 79.84 points or 1.67%
WTI Oil price; 38.35 at 2:30 pm;

Brent Oil: 39.09
USA dollar vs Russian Rouble dollar index: 68.20 (Rouble is UP 35 /100 roubles per dollar from yesterday)DESPITE THE FACT THAT the price of Brent and WTI OIL FELL
end

 

 

 

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

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

 

WTI CRUDE OIL PRICE 5 PM: $38.35

BRENT: 39.30

USA 10 YR BOND YIELD: 1.80% (and the Dow rises by 100 points???)

USA DOLLAR INDEX:95.18 down 78 cents on the day

 

END

 

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

Trading Today in Graph form:

“When Hawks Die” – Yellen-nado Sends Bonds, Stocks, & Bullion Soaring

Bwuahahahaha….

 

Another day in the “markets… Silver & Gold the big winners post-Yellen – oops!

 

As we have said before – there is one simple rule…

 

The “Market” Explained…

 

The machines ran the stops…

 

On the day it was Small Caps that won yuuge – as investors panic-bought the worst of the worst…The Dow surged 220 points off the pre-Yellen lows…

 

Nasdaq and Russell remain red Year-to-Date but S&P and Dow once again rejoined Trannies in the green…

 

Stocks decoupled from FX Carry and Oil…

 

VIX was instantly slammed on Yellen’s speech and pushed back to a 13 handle….

 

Bonds were also bid as yields utterly collapsed across the entire complex…sending yields to one-month lows…

 

This was the 2nd biggest drop in 2y yields since The Fed folded in September…

 

The USDollar was monkey-hammered as Yellen unleashed her dovish-ness…

 

EURUSD spiked to 1.13 crushing the hopes and dreams of Draghi’s devaluation…

 

and commodity currencies surged (weak USD) decoupling from Oil…

 

It appears the rush for crude is over as despite USD weakness, WTI tumbled 3% as Gold surged 2%…

 

So to sum it all up…

 

So it appears Janet saw this and panicced… so when do stocks catch down again?

 

Charts: Bloomberg

Bonus Chart: Yellen’s Dilemma (h/t Alex via @SoberLook)

Average:

4.857145
Your rating: None Average: 4.9 (7 votes)

end

 

Janet Yellen goes full dove and thus dollar collapses, gold and oil rises as well as the Dow

(courtesy zero hedge)

“Buy It All” Uber-Dovish Yellen Sends Stocks, Bonds, Gold, Oil Surging

Well that escalated quickly. Yellen’s uber-dovish (coin-flip whether we hike or QE) speech has sparked panic-buying in everything…

and USDollar dumping…

as rate-hike odds collapse…

end
As I promised you on Thursday (and in my interview with Silver Doctors), China has sent a very strong message to the United States to not raise rates.  Last week, on 4 consecutive days China devalued its yuan by the most in quite some time.  That caused commodities to fall hard as well as the dollar rising.  China basically stated, that if the USA continues on the vane of rate rises, she would have no choice but to devalue her currency hard.  It looks like the message was heard by Janet Yellen today in a complete about face from the 3 Fed governors who want a rate rise.
(courtesy zero hedge)

The Federal Reserve Of China?

Remember when the central bank of the United States worried about development in the, well, United States? Those days are gone. Presenting: China. From page 8 of Yellen’s speech on “The Outlook, Uncertainty, and Monetary Policy“:

There is a consensus that China’s economy will slow in the coming years as it transitions away from investment toward consumption and from exports toward domestic sources of growthThere is much uncertainty, however, about how smoothly this transition will proceed and about the policy framework in place to manage any financial disruptions that might accompany it. These uncertainties were heightened by market confusion earlier this year over China’s exchange rate policy.

Confusion, that is to say, which was the direct result of the US Dollar soaring to multi-year highs, which forced China, whose currency is peg to said dollar, to aggressively devalue its own currency.

The rest is history.

And it’s not just China: it’s every country which, as we warned in November 2014, is reliant on the viability of the Petrodollar, and more importantly, keeping the USD low. Here is Yellen explicitly addressing the impact of collapsing oil prices on oil exporters.

A second concern relates to the prospects for commodity prices, particularly oil. For the United States, low oil prices, on net, likely will boost spending and economic activity over the next few years because we are still a major oil importer. But the apparent negative reaction of financial markets to recent declines in oil prices may in part reflect market concern that the price of oil was nearing a financial tipping point for some countries and energy firms. In the case of countries reliant on oil exports, the result might be a sharp cutback in government spending; for energy-related firms, it could entail significant financial strains and increased layoffs. In the event oil prices were to fall again, either development could have adverse spillover effects to the rest of the global economy.

In other words, as John “Idiot?” Williams said yesterday, it is no longer about the US: the Fed’s so-called “reaction function” can be summarized with just one word: China. (and maybe one more word: oil, which the Fed just realized needs a low USD to rise…)

Average:

All 500 S and P companies have now reported and as we have indicated to you through David Stockman, that the P/E is a stratospheric 23: 1.  This is an accident waiting to happen:

(courtesy zero hedge)

2015 Ends With a Stratospheric P/E Multiple Of 23x

The Q4 earnings season is over and the numbers are in the bag. The GAAP numbers that is, not the non-GAAP garbage that lately everyone from Warren Buffett, to Factset, even to the SEC(and of course this site since 2013) has been bashing.

We wonder if they will continue bashing the GAAP numbers once they learn what they are, because as the charts below show, the earnings carnage on a real, unadjusted is simply unprecedented. Case in point: Q4 GAAP EPS just dropped even more from our previous estimate, and using IBES data, it is now down from 21 to 19.7, the lowest quarterly print since Q1 2010 when GAAP earnings were just 19.4 (and when the S&P was roughly half where it is now).

What about on an LTM and full year basis? As the chart below shows, the growing trailing 12 month divergence in the past few quarters between GAAP and non-GAAP has grown to proportions not seen since the financial crisis. What one can say with absolute certainty is that unless oil rebounds, and does so fast, all those “one-time, non-recurring” pro forma addbacks which have kept the non-GAAP EPS of the S&P500 flat while GAAP has plunged, will very soon be revised sharply lower.

Which brings us to the full year snapshot: what if Buffett, and Factset, and the SEC (and of course this website) are right and GAAP is the proper way of looking at earnings? Then we have a big problem, because instead of the 118.0 in 2015 non-GAAP S&P earnings, which translate into a P/E multiple of 17.3x as of today’s 2037 market close, the real, GAAP EPS of just 88.9 for the full year 2015 means the P/E multiple is now a gargantuan 22.9x!

It also means that GAAP earnings for the broader market are at a level last seen in 2010 when, as noted earlier, the S&P 500 was trading at about half where it closed today.

end
Very popular hedge fund Luxor Capital warns its shareholders that they will be “gated” after again suffering sharp losses.
(courtesy zero hedge)

Prominent Hedge Fund Luxor Capital Warns Redeeming Investors Will Be “Gated” After Sharp Losses

About a decade ago, Christian Leone’s Luxor Capital was one of the biggest brand names in the industry, and alongside Harbinger and DB Zwirn, every trader and analyst on Wall Street wanted to work there. Since then things have changed. According to Reuters, Luxor, which had $3.8 billion under management at last check (a steep drop from the ~$10 billion it ran several years ago) “has been losing money for months” and on Monday it surprised investors when it announced it would “not be returning exiting investors cash in full, keeping a portion locked up until some illiquid investments can be sold.”

Call it the latest hedge fund “gate”, only unlike some prominent debt focused names, this one is only partial: “instead of returning all exiting clients’ assets in cash, investors will receive 88 percent of their money back while 12 percent of the investments will be held in a so-called special purpose vehicle, Luxor’s founder, Christian Leone, wrote in a letter.”

The announcement comes before a critical March 31 redemption deadline and aims to treat all investors “fairly,” the letter said.

For those investors in the Fund that have submitted withdrawal requests for March 31, 2016 and for subsequent withdrawal dates, we will transfer a pro rata share of the applicable assets into a special purpose vehicle (SPV),” Leone wrote.

Client subject to the partial gate will be those who asked to get their money out on April 1 and July 1 and as a result; instead of getting all cash they will see a portion of their money put into the SPV and the fund will not charge any fees on these assets.

As Reuters reminds us (for those who have forgotten the gating junk bond funds of late 2015), “special purpose vehicles and side pockets are permitted at hedge funds but they are often viewed as a last resort that sour investors, and they have not been widely used since the 2008 financial crisis when many hedge funds posted heavy losses. But consultants have said that if illiquid positions become large, then it is prudent to segregate them and not charge fees until gains are realized.”

More form Reuters:

After sending the letter, Leone held a brief conference call with investors where he identified the four illiquid securities being put into the special purpose vehicle. Together they make up 12 percent of the portfolio, he said.

They include food delivery service Delivery Hero, which Leone said makes up more than half of the exposure and has seen a “multifold appreciation since we initially made the investment.” Additionally private equity investments in online food ordering service Foodpanda and drilling company Ascent Resources are in the SPV as well as preferred stock of Altisource Asset Management.

And while we are happy that these investments appear to have appreciated, they are rather useless if they are completely illiquid.

Leone told investors that clients have redeemed roughly 10 percent of their money in the first quarter and that redemptions requests are expected to be similar in the second quarter.

Last year, the fund saw investors redeem roughly 8 percent of their money from Luxor, a number that is roughly in line with what investors have done every year.

This year it is taking preemptive measures against what it knows will be even more redemptions and gating in advance.

As noted above, Luxor had been a popular fund in the hedge fund industry, gaining recommendations from such influential industry consultants as Cliffwater LLC, which advises on $56 billion in alternative assets invested by public and private pension funds as well as endowments and other big investors. But in 2015 it lost 19.2 percent when the average fund lost about 1 percent and it started 2016 with a 5.2 percent loss in January. This unnerved some clients, including Rhode Island’s state pension fund, which gave Luxor $50 million to invest in 2014, to exit. Last week its investment committee voted to pull its money out at the end of June and the fund told Reuters that it expected to receive $35 million back.

Luxor did not say when it expects to return the rest, saying only “We will continue to actively manage the assets held by the SPV until we can liquidate them in an orderly manner.”

end
We have been covering two former darlings on the NYSE, SunEdison and Valeant.
Many hedge funds had these in their portfolio.  Today it is SunEdison that is collapsing, down 40% today on bankruptcy risk:
(courtesy zero hedge)

SunEdison Plummets 40% On “Substantial Bankruptcy Risk” Warning

Just as we warned was likely, the once infamous hedge fund hotel US solar company SunEdison unitTerraForm Global said on Tuesday there was “substantial risk” that SunEdison would soon seek bankruptcy protection  given liquidity difficulties, noting that “such an action would have a material adverse effect” on TerraForm Global.

In 2016 alone, SUNE has collapsed from a hope-strewn $6 price to just 73c this morning…

As we detailed last week, the sun is about to set for this solar company…

The Beginning of the End?

Debtwire (“DW”) Report Suggests SUNE in Debtor-in-Possession (“DIP”) Negotiations with $725mn LIBOR +1,000bps A-1 & A-2 2018 Second Lien Term Loan Holders. Yesterday, DW (link) reported that SUNE, after talks failed to reach an out-of-court solution with second lien holders around resolving liquidity/leverage problems, entered into DIP discussions with creditors. By way of background, in general, we remind our readers that DIP financing is typically “put into play” after out-of-court resolutions fall apart. That is, if a company needs a loan, but a potential lender is unwilling to make it (due, mainly, to concerns around legal challenges), the Bankruptcy Code offers a way in which the lender can circumvent legal challenges from other creditors. This is typically done via a Chapter 11 Bankruptcy, whereby the lender(s) is granted a first priority security interest, a market/premium interest rate, approved budget, and other lender protections. Stated differently, via a Chapter 11 Bankruptcy filing, a distressed company who is unable to obtain a new loan outside of bankruptcy, may use DIP financing to get the liquidity necessary to run a sale process or finance a formal Chapter 11 restructuring. In our view, assuming SUNE is successful in acquiring DIP funding, we believe this likely shifts lower the priority of the majority of their capital structure (with equity holders the least likely to be made whole); it also suggests, as we’ve warned extensively, that SUNE’s current cash position is dire, if not completely compromised. We maintain our SELL rating and adjust our price target lower.

SUNE “Mum” when Asked for Comment, But Impact to US Solar Market Could Prove “Debilitating”. We reached out to SUNE regarding the validity of DW’s report, yet did not hear back. However, should SUNE be forced to liquidate projects out of its 5.5GW backlog in a Bankruptcy, the impact to US solar market project fundamentals (incl. rooftop) could be detrimental. Finally, according to DW, SUNE is seeking $300mn in new post-petition DIP liquidity.

Valuation. Using our sum-of-the-parts, where the key point of differentiation is our view that SUNE will develop just 1.95GW of projects in 2016 (vs. guidance of 3.3-3.7GW), our 2016 year-end price target adjusts lower to $0.22/shr (85% downside from yesterday’s closing price) vs. $0.39/shr prior – due to lower TERP/GLBL shr prices.

Not pretty…

end
Wealthy Chinese citizens are doing everything possible trying to convert their yuan into either gold or property.  Today, the Case Shiller home price report shows a big jump in prices on homes on the USA west coast:
(courtesy zero hedge)

Case-Shiller Home Prices Jump Driven By West Coast Chinese Buyers

US Home prices rose 5.75% YoY according to Case-Shiller (the fastest rate since July 2014) as it appears the Chinese buyers are migrating south from Canada with Portland, Seattle, and San Francisco reported the highest year-over-year gains among the 20 cities with another month of double digit annual price increases.  Home prices continue to climb at more than twice the rate of inflationamid a suply shortage as West Coast propertty markets become “Vancouvered.”

The S&P/Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, recorded a slightly higher year-over-year gain with a 5.4% annual increase in January 2016. The 10-City Composite is up slightly at 5.1% for the year. The 20-City Composite’s year-over-year gain is 5.7%. After seasonal adjustment, the National, 10-City Composite, and 20-City Composite rose 0.5%, 0.8%, and 0.7%, respectively, from the prior month.

Portland, Seattle, and San Francisco reported the highest year-over-year gains among the 20 cities with another month of double digit annual price increases.

Portland led the way with an 11.8% year-over-year price increase, followed by Seattle with 10.7%, and San Francisco with a 10.5% increase. Eleven cities reported greater price increases in the year ending January 2016 versus the year ending December 2015. Phoenix reported an annual gain of 6.1% in January 2016 versus 6.3% in December 2015, ending its streak of 12 consecutive months of increasing annual gains. The western part of the country saw the largest price gains in the past year; the northeast is the weakest region.

Portland, Seattle, and San Francisco home prices are now above 2006/2007 bubble highs…

“Home prices continue to climb at more than twice the rate of inflation,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.

“The low inventory of homes for sale — currently about a five month supply – means that would-be sellers seeking to trade-up are having a hard time finding a new, larger home. The recovery of the sale and construction of new homes has lagged the gains seen in existing home sales. This may be starting to change: starts of single family homes in February were the highest since November 2007. The single-family-home share of total housing starts was 70% in February, up from a low of 57% in June 2015, and approaching the 75%-80% range seen before the housing crisis.

While low inventories and short supply are boosting prices, financing continues to be a concern for some potential purchasers, particularly young adults and first time home buyers. The issue is availability of credit for people with substantial student or credit card debt. While rising home prices are certainly a factor deterring home purchases, individual financial positions are more important than local housing market conditions. One hopeful sign is that the home ownership rate, at 63.7% in the 2015 fourth quarter, may be turning around. It is up slightly from 63.5% in the 2015 second quarter but far below the 2004 high of 69.1%.”

Vancouver…

 

Coming to your West Coast real estate market soon.

 

end
Two confidence reports, and both polar opposite:
the Conference Board reports a modest rise in confidence, the Gallup poll shows a decrease:
(courtesy Conference Board, Gallup/zero hedge)

As Conference Board Confidence Jumps, Gallup Confidence Dumps

A yuuge surge in stocks – amid collapsing earnings and GDP expectations – appears to have enabled amodest bounce off 2-year lows for consumer confidence. The Conference Board’s index of consumer confidence increased to 96.2 in March from 94 a month earlier – but still below January’s levels. The bounce was driven purely by “hope” as expectations for the future rose and current conditions dropped to 4-month lows. At the same time Gallup’s consumer confidence survey plumbes new depths to its lowest since 2015.

For now, Stocks helped to blind ‘consumers’ to the economic collapse…

“Consumer confidence increased in March, after declining in February,” said Lynn Franco, Director of Economic Indicators at The Conference Board.

Consumers’ assessment of current conditions posted a moderate decline, while expectations regarding the short-term turned more favorable as last month’s turmoil in the financial markets appears to have abated. On balance, consumers do not foresee the economy gaining any significant momentum in the near-term, nor do they see it worsening.

And while the below-the-surface data is not as bullish, Gallup’s most recent survey of Economic Confidence shows more weakness.

This is what the direct polling service found for March economic confidence:

Americans’ confidence in the economy dipped last week, with the U.S. Economic Confidence Index averaging -13 for the week ending March 27. This score is down from -9 the previous week.

Since July, Americans’ economic confidence has remained fairly steady, apart from a couple of exceptions in late August and mid-January. Before falling back to -13 last week, index scores in recent weeks began to show signs of improving confidence. The terrorist attacks in Brussels last week could have shaken Americans’ confidence in the long-term stability of the global or U.S. economy. Confidence remains below where it was in early 2015, when weekly index scores were positive or just slightly negative.

Gallup’s U.S. Economic Confidence Index is the average of two components: how Americans rate current economic conditions and whether they feel the economy is improving or getting worse. The index has a theoretical maximum of +100 if all Americans say the economy is doing well and improving, and a theoretical minimum of -100 if all Americans say the economy is doing poorly and getting worse.

For the week ending March 27, the current conditions score of -5 was on the lower end of the range for this component so far in 2016. This score was based on 24% of Americans rating the current economy as “excellent” or “good,” and 29% rating it as “poor.” The economic outlook score was -20, resulting from 38% of U.S. adults saying the economy is “getting better” and 58% saying it is “getting worse.” The -20 score represents a six-percentage-point drop from the prior week’s reading of -14 on this component.

Bottom Line

The attacks in Brussels cast a dark shadow over last week, which could perhaps have tainted Americans’ optimism in their views of more than just their physical safety — such as their country’s financial stability. The Dow Jones industrial average also suffered in the aftermath of the attacks but has since begun to recover.

Meanwhile, the low gas prices Americans have enjoyed for months have started to climb back up. Although Americans largely stashed the savings they received at the pump in recent months, that doesn’t make saying goodbye to low prices any easier. It’s quite possible that Americans had become so accustomed to cheap gas that any sign of a price increase could influence their assessment of the economy. However, it is unclear whether Americans expect seasonal changes in gas prices or if they attribute those increases to a problem with the economy.

end
Corporate debt defaults are exploding as well as lower debt rating.  We are now at higher levels of defaults since the last crisis in 2008:
(courtesy Michael Snyder/EconomicCollapseBlog)

Corporate Debt Defaults Explode To Catastrophic Levels Not Seen Since The Last Financial Crisis

Boom - Public DomainIf a new financial crisis had already begun, we would expect to see corporate debt defaults skyrocket, and that is precisely what is happening.  As you will see below, corporate defaults are currently at the highest level that we have seen since 2009.  A wave of bankruptcies is sweeping the energy industry, but it isn’t just the energy industry that is in trouble.  In fact, the average credit rating for U.S. corporations is now lower than it was at any point during the last recession.  This is yet another sign that we are in the early chapters of a major league economic crisis.  Yesterday I talked about how 23.2 percent of all Americans in their prime working years do not have a job right now, but today I am going to focus on the employers.  Big corporate giants all over America are in deep, deep financial trouble, and this is going to result in a tremendous wave of layoffs in the coming months.

We should rejoice that U.S. stocks have rebounded a bit in the short-term, but the euphoria in the markets is not doing anything to stop the wave of corporate defaults that is starting to hit Wall Street like a freight train.  Zero Hedge is reporting that we have not seen this many corporate defaults since the extremely painful year of 2009…

While many were looking forward to the weekend in last week’s holiday-shortened week for some overdue downtime, the CEOs of five, mostly energy, companies had nothing but bad news for their employees and shareholders: they had no choice but to throw in the towel and file for bankruptcy.

And, as Bloomberg reports, with last week’s five defaults, the 2016 to date total is now 31, the highest since 2009 when there were 42 company defaults, according to Standard & Poor’s. Four of the defaults in the week ended March 23 were by U.S. issuers including UCI Holdings Ltd. and Peabody Energy Corp., the credit rating company said.

And by all indications, what we have seen so far is just the beginning.  According to Wolf Richter, the average rating on U.S. corporate debt is already lower than it was at any point during the last financial crisis…

Credit rating agencies, such as Standard & Poor’s, are not known for early warnings. They’re mired in conflicts of interest and reluctant to cut ratings for fear of losing clients. When they finally do warn, it’s late and it’s feeble, and the problem is already here and it’s big.

So Standard & Poor’s, via a report by S&P Capital IQ, just warned about US corporate borrowers’ average credit rating, which at “BB,” and thus in junk territory, hit a record low, even “below the average we recorded in the aftermath of the 2008-2009 credit crisis.”

What all of this tells us is that we are in the early stages of an absolutely epic financial meltdown.

Meanwhile, we continue to get more indications that the real economy is slowing down significantly.  According to the Atlanta Fed, U.S. GDP growth for the first quarter is now expected to come in at just 0.6 percent, and Moody’s Analytics is projecting a similar number…

First-quarter growth is now tracking at just 0.9 percent, after new data showed surprising weakness in consumer spending and a wider-than-expected trade gap.

According to the CNBC/Moody’s Analytics rapid update, economists now see the sluggish growth pace based on already reported data, down from 1.4 percent last week.

Of course if the government was actually using honest numbers, people wouldn’t be talking about the potential start of a new recession.  Instead, they would be talking about the deepening of a recession that never ended.

We are in the terminal phase of the greatest debt bubble the world has ever experienced.  For decades, the United States has been running up government debt, corporate debt and consumer debt.  Our trade deficits have been bigger than anything the world has ever seen before, and our massively inflated standard of living was funded by an ever increasing pile of IOUs.  I love how Doug Noland described this in his recent piece

With U.S. officials turning their backs on financial excesses, Bubble Dynamics and unrelenting Current Account Deficits, I expected the world to lose its appetite for U.S. financial claims. After all, how long should the world be expected to trade real goods and services for endless U.S. IOUs?

As it turned out, rather than acting to discipline the profligate U.S. Credit system, the world acquiesced to Bubble Dynamics. No one was willing to be left behind. Along the way it was learned that large reserves of U.S. financial assets were integral to booming financial inflows and attendant domestic investment and growth. The U.S. has now run persistently large Current Account Deficits for going on 25 years.

Seemingly the entire globe is now trapped in a regime of unprecedented monetary and fiscal stimulus required to levitate a world with unmatched debt and economic imbalances. History has seen nothing comparable. And I would strongly argue that the consequences of Bubbles become much more problematic over time. The longer excesses persist the deeper the structural impairment.

As this bubble bursts, we are going to endure a period of adjustment unlike anything America has ever known before.  I talk about the pain coming to America in my new book entitled “The Rapture Verdict” which is currently the #1 new release in Christian eschatology on Amazon.com.  To be honest, I don’t know if any of us really understands the horror that is coming to this nation in the years ahead.  None of us have ever experienced anything similar to it, so we don’t really have a frame of reference to imagine what it will be like.

This spike in corporate debt defaults is a major league red flag.  Since the last financial crisis, our big corporations went on a massive debt binge, and now they are starting to pay the price.

We never seem to learn from the errors of the past.  Instead of learning our lessons the last time around, we just went out and made even bigger mistakes.

I am afraid that history is going to judge us rather harshly.

Those that are waiting for the next great financial crisis to begin can quit waiting, because it is already happening right in front of our eyes.

If you believe that the temporary rebound of U.S. stocks is somehow going to change the trajectory of where things are heading, you are going to end up deeply, deeply disappointed.

end

Well that about does it for tonight

I will see you tomorrow night

h

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: