FEB 28/GOLD AND SILVER WHACKED IN THE ACCESS MARKET AGAIN/GOLD/SILVER EQUITY SHARES ALSO WHACKED/ NO MOVEMENT OF GOLD FROM THE FRBNY/TROUBLE AT GREEK BANKS AS CITIZENS THERE REMOVE THEIR DEPOSITS AND PLACE IN SAME HAVENS OTHER THAN GREECE/HUGE USA TRADE DEFICIT OF 68 BILLIONS DOLLARS WHICH WILL BE A NEGATIVE IN FIRST QUARTER GDP/TARGET PLUNGES DEEPLY INTO THE RED WITH POOR OUTLOOK/MANY BRICKS AND MORTAR COMPANIES HAVE THE SAME PROBLEMS AS TARGET/LIKELIHOOD FOR A RATE HIKE RISES TO 72% IN THE USA/FINAL DRAFT

Gold at (1:30 am est) $1252.60 down $4.80

silver was : $18.42:  UP 7 CENTS

Access market prices:

Gold: $1248.50

Silver: $18.31

For comex gold:

MARCH/ 

NOTICES FILINGS FOR FEBRUARY CONTRACT MONTH:  1 NOTICE(S) FOR 100 OZ.  TOTAL NOTICES SO FAR: 1 FOR 100 OZ    (0.003 TONNES)

For silver:

 

For silver: MARCH

349 NOTICES FILED FOR 1,745,000 OZ/

 

For two weeks now, gold/silver equity shares have been whacked by our banker friends even though silver and gold metal have been on a tear for the past 8 weeks. To me, it seems that the equity shares are being hit trying to convince holders of real metal to sell their physical.  I strongly believe that the comex has very little real gold/silver to serve gold/silver longs.

 

FEDERAL RESERVE BANK OF NEW YORK/GOLD MOVEMENT REPORT

 

In January reported that the total amount gold inventory at the FRBNY was 7,841 million dollars worth of gold valued at 42.21 dollars per oz.

 

In February:  the total amount of gold inventory at the FRBNY remains at 7,841 million dollars valued at 42.21 dollar per oz

 

Thus movement is zero.

 

 

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest FELL by 9,731 contracts DOWN to 199,568 with respect to YESTERDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.  0.997 BILLION TO BE EXACT or 142% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MARCH MONTH: THEY FILED: 349 NOTICE(S) FOR 1,745,000 OZ OF SILVER

In gold, the total comex gold FELL BY ONLY 2 contracts WITH THE FALL IN  THE PRICE GOLD ($0.20 with YESTERDAY’S trading ).The total gold OI stands at 452,363 contracts.

we had 1 notice(s) filed upon for 100 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

With respect to our two criminal funds, the GLD and the SLV:

GLD:

We had no change in tonnes of gold at the GLD:

Inventory rests tonight: 841.17 tonnes

.

SLV

we had no changes in silver into the SLV:

THE SLV Inventory rests at: 335.281 million oz

end

.

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

1. Today, we had the open interest in silver FELL by 9,731 contracts DOWN to 199,568 DESPITE THE FACT THAT SILVER WAS UP 1 CENT with YESTERDAY’S trading.WE MUST HAVE HAD CONSIDERABLE SHORT COVERING AGAIN.  WE ALSO HAVE AGAIN OPEN INTEREST IN AN ACTIVE MONTH OBLITERATE AS WE ENTER THE DELIVERY CYCLE MONTH.  The gold open interest FELL by ONLY 2 contracts DOWN to 452,363 WITH THE FALL IN THE PRICE OF GOLD OF $0.20  (YESTERDAY’S TRADING)

(report Harvey

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

 

3. ASIAN AFFAIRS

i)Late  MONDAY night/TUESDAY morning: Shanghai closed UP 13.07 POINTS OR .40%/ /Hang Sang CLOSED DOWN 184.32 POINTS OR 0.77% . The Nikkei closed UP 171.52 POINTS OR 0.06% /Australia’s all ordinaires  CLOSED DOWN 0.22%/Chinese yuan (ONSHORE) closed UP at 6.8673/Oil FELL to 53.91 dollars per barrel for WTI and 56.26 for Brent. Stocks in Europe MOSTLY IN THE GREEN EXCEPT GERMAN DAX. Offshore yuan trades  6.8626 yuan to the dollar vs 6.8673  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS A BIT AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN STRONGER AS IS OFFSHORE YUAN COUPLED WITH THE WEAKER DOLLAR

3a)THAILAND/SOUTH KOREA/NORTH KOREA

 

 none today

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

China wishes to tighten a little as they are limiting their money supply growth to 12% from 13%.  Remember that their debt is totally unsustainable.

( zero hedge)

4. EUROPEAN AFFAIRS

i)Trouble again with the Greek banks.  We are now at 16 yr lows in deposits at 119 billion euros as citizens remove their cash and put it in a safer zone such as Germany

( zero hedge)

ii)Europeans are piling into their VIX as they have hit the panic button with respect to upcoming elections, thew BREXIT and potential Italian-EXIT and others. Interestingly enough the European VIX is 80% higher than the USA. I wonder why?

(courtesy zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6.GLOBAL ISSUES

none today

7. OIL ISSUES

i)Twenty states are raising gas taxes.  If gas prices rise then so does the taxes

( zero hedge)

ii)Oil spikes on the denial of the rumour of changes to the ethanol mandate and then OPEC production cuts have compliance at 94%

( zero hedge)

iii)Then retreats on a surprise gasoline inventory build and a new record glut in crude:

( zero hedge)

8. EMERGING MARKETS

9.   PHYSICAL MARKETS

i)Gold denominated in Euros are nearing their Brexit highs as elections throughout Europe are upon us:

( zero hedge)

ii)Bullion star posts 9 charts which suggest that gold demand (physical) is very strong.

(Bullionstar/RonanManly/GATA)

iii)Two good commentaries today from James Turk and Egon Von Greyerz.  First Turk comments on the huge silver short position and how these shorts are digging in as they will not let silver advance.

Von Greyerz comments on the huge target 2 imbalances and he correctly states that Germany and Luxembourg are in much greater danger than southern banks as these imbalances can never be paid.

(courtesy Kingworldnews/James Turk/Egon Von Greyertz)

10.USA STORIES

i)Trading:

Yield curve collapses, yields drop as the economy is perceived to be weakening:

(courtesy zero hedge)

ii)Wow!! the USA Jan/ trade deficit balloons to a huge 69.2 billion deficit, the second largest deficit recorded since 2008. This should be a huge subtraction to the GDP for the first quarter of 2017:

( zero hedge)

iii)As indicated above, the USA economy grew by only 1.9% in the 4th quarter, and missing expectations despite the much stronger consumer spending:

( zero hedge)

iv)Bellwether Target plunges 12% with poor earnings and something that stockholders loath to hear:  slashing outlook

( zero hedge)

iv b) USA retailers are taking it on the chin:  it seems that many “bricks and mortar” operations are having their problems

(courtesy zero hedge)

v)This is not good for our entry level workers:  Wendy’s is unleashing 1000 robots to counter the higher labour costs

( zero hedge)

vi)Both Dudley and Williams pound the table for a rate hike and I believe (as does David Stockman) that there will be one:

( zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL BY ONLY 2 CONTRACTS UP to an OI level of 452,363 DESPITE THE  FALL IN THE  PRICE OF GOLD ( $0.20 with YESTERDAY’S trading). We are now in the contract month of MARCH and it is one of the poorer delivery months  of the year. In this MARCH delivery month  we had a LOSS of 186 contracts DOWN to 639.   The next  active contract month is April and here we saw it’s OI FALL by 682 contracts DOWN TO 291,639. The next big active month is June and here the OI ROSE by 810 contracts up to 83,490.

We had 1 notice(s) filed upon today for 100 oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
 And now for the wild silver comex results.  Total silver OI FELL by 9,731 contracts FROM  209,299 down to 199,568   DESPITE THE FACT THAT THE PRICE OF SILVER ROSE TO THE TUNE OF 1 CENT. We are moving FURTHER FROM the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540). The closing price of silver that day: $20.44

The next big active delivery month is March and here the OI decrease by 10,061 contracts down to 7299 contracts  or by definition a whopping 36,495,000 oz will stand.

For historical reference: on the first day notice for the March/2016 silver contract:  19,020,000 oz. However the final amount standing at the end of March 2016:  6,755,000 oz as the banker boys were busy convincing holders of many silver contracts to cash settle.

We had 349 notice(s) filed for 1,745,0000 oz for the MARCH 2017 contract.

VOLUMES: for the gold comex

Today the estimated volume was 214,675  contracts which is good.

Yesterday’s confirmed volume was 219,526 contracts  which is good

volumes on gold are getting higher!

INITIAL standings for MARCH
 Feb 28/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
nil OZ
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
 nil
No of oz served (contracts) today
 
1 notice(s)
100 oz
No of oz to be served (notices)
638 contracts
63800 oz
Total monthly oz gold served (contracts) so far this month
1 notices
100 oz
0.003 tonnes
Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL oz
Total accumulative withdrawal of gold from the Customer inventory this month     oz
Today we HAD 0 kilobar transaction(s)/
Today we had 0 deposit(s) into the dealer:
total dealer deposits:  nil oz
We had nil dealer withdrawals:
total dealer withdrawals:  nil oz
we had 0  customer deposit(s):
total customer deposits; nil oz
We had 0 customer withdrawal(s)
total customer withdrawal: nil oz
We had 0  adjustment(s)
For MARCH:

Today, 0 notice(s) were 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 1 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
To calculate the initial total number of gold ounces standing for the MARCH. contract month, we take the total number of notices filed so far for the month (1) x 100 oz or 100 oz, to which we add the difference between the open interest for the front month of MARCH (639 contracts) minus the number of notices served upon today (1) x 100 oz per contract equals 63,900 oz, the number of ounces standing in this  active month of MARCH.
 
Thus the INITIAL standings for gold for the MARCH contract month:
No of notices served so far (1) x 100 oz  or ounces + {(639)OI for the front month  minus the number of  notices served upon today (1) x 100 oz which equals 63,900 oz standing in this non active delivery month of MARCH  (1.9875 tonnes)
 
 
 
 
 
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
On first day notice for MARCH 2016, we had 2.146 tonnes of gold standing. At the conclusion of the month we had 2.311 tonnes standing. 
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
I have now gone over all of the final deliveries for this year and it is startling.
First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month.
Here are the final deliveries for all of 2016 and the first month of January 2017
Jan 2016:  .5349 tonnes  (Jan is a non delivery month)
Feb 2016:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2016: 2.311 tonnes (March is a non delivery month)
April:  12.3917 tonnes (April is a delivery month/levels on the low side
And then something happens and from May forward deliveries boom!
May; 6.889 tonnes (May is a non delivery month)
June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge)
July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!)
August: 44.358 tonnes (August is a good delivery month and it came to fruition)
Sept:  8.4167 tonnes (Sept is a non delivery month)
Oct; 30.407 tonnes complete.
Nov.    8.3950 tonnes.
DEC.   29.931 tonnes
JAN/     3.9004 tonnes
FEB/ 18.734 tonnes
March: 1.9875 tonnes
total for the 15 months;  246.716 tonnes
average 16.447 tonnes per month vs last yr  61.82 tonnes total for 15 months or 4.12 tonnes average per month (last yr).
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Total dealer inventory 1,418,640.029 or 44.125 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,942,235.978 or 278.140 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 278.140 tonnes for a  loss of 25  tonnes over that period.  Since August 8/2016 we have lost 76 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
 
IN THE LAST 6 MONTHS  76 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE MARCH DELIVERY MONTH
MARCH INITIAL standings
 feb 28. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
60,303.330 0z
Scotia
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
 1,389,742.550 oz
Scotia
JPM
No of oz served today (contracts)
349 CONTRACT(S)
(1,745,000 OZ)
No of oz to be served (notices)
6950 contracts
(34,750,000  oz)
Total monthly oz silver served (contracts) 349 contracts (1,745,000 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   60,303.330 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: nil oz
we had nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 1 customer withdrawal(s):
i) Out of Scotia; 60,303.330 oz
TOTAL CUSTOMER WITHDRAWALS: 60,303.330 oz
 we had 2 customer deposit(s):
i) Into JPM: 210,327.600  oz
ii) Into Scotia: 1,179,.414.950 oz
***deposits into JPMorgan have now resumed again.
total customer deposits;  1,389,742.550  oz
 
 we had 1  adjustment(s)
i) out of Scotia:  5,179.90 oz leaves the customer and enters the dealer account of Scotia
The total number of notices filed today for the MARCH. contract month is represented by 349 contract(s) for 1,745,000 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 349 x 5,000 oz  = 1,745,000 oz to which we add the difference between the open interest for the front month of MAR (7299) and the number of notices served upon today (349) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the March contract month:  349(notices served so far)x 5000 oz  + OI for front month of FEB.( 7299 ) -number of notices served upon today (349)x 5000 oz  equals  36,495,000 oz  of silver standing for the Mar contract month. This is  huge for AN active delivery month in silver. 
END
Volumes: for silver comex
Today the estimated volume was 63,516 which is excellent!!!
FRIDAY’S  confirmed volume was 100,678 contracts  which is gigantic.
To give you an idea of volume today’s confirmed volume::  100.678 contracts equates to 503 million oz or 72% of ANNUAL GLOBAL PRODUCTION EX CHINA EX RUSSIA
 
Total dealer silver:  30.624 million (close to record low inventory  
Total number of dealer and customer silver:   186.605 million oz
The total open interest on silver is now further from   its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD

FEB 28/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

feb 27/no change in gold inventory at the GLD/Inventory rests at 841.17 tonnes

Feb 24/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

FEB 23/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

FEB 22/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

FEB 21/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

feb 17/a withdrawal of 2.37 tonnes of gold from the GLD/Inventory rests at 841.17 tonnes

FEB 16/we had no changes in the GLD inventory today/Inventory rests at 843.54 tonnes

Feb 15./another deposit of 2.67 tonnes of gold into the GLD inventory despite another attempted whacking of gold/inventory rests at 843.54 tonnes

FEB 14/another deposit of 4.14 tonnes of gold into the GLD inventory/rests at  840.87 tonnes

FEB 13/another deposit of 4.15 tonnes of gold into the GLD/Inventory rests at 836.73 tonnes

Feb 10/no changes at the GLD/Inventory rests at 832.58 tonnes

feb 9/no changes at the GLD/Inventory rests at 832.58 tonnes

Feb 8/another “deposit” of 5.63 tonnes of gold into the GLD/The addition is a paper addition/total inventory: 832.58 tonnes

Feb 7/another huge fake deposit of 8.30 tonnes of gold into the GLD/the addition is a paper addition and no doubt not physical/ total inventory: 826.95 tonnes

FEB 6/a huge deposit of 7.43 tonnes of gold into the GLD/Inventory rests at 818.65 tonnes

FEB 3/no change in gold inventory at the GLD/Inventory rests at 811.22 tonnes

Feb 2/another huge deposit of 1.48 tonnes/inventory rests at 811.22 tonnes

Feb 1/a huge “deposit” of 10.67 tonnes of gold into the GLD/Inventory rests at 809.74 tonnes.  this should stop GLD from sending gold to Shanghai.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Feb 28/2017/ Inventory rests tonight at 841.17 tonnes
*IN LAST 99 TRADING DAYS: 108.64 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 46 TRADING DAYS: A NET  16.57 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017:    42.10 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory
FEB 28/no changes in inventor at the SLV/inventory rests at 335.281 million oz/
FEB 27/no change in inventory at the SLV/Inventory rests at 335.281 million oz/
FEB 24/no changes in inventory at the SLV/Inventory rests at 335.281 million oz.
FEB 23/no changes in inventory at the SLV/Inventory rests at 335.281 million oz
FEB 22/no changes in inventory at SLV/inventory rests at 335.281 million oz
FEB 21/a deposit of 568,000 oz into the SLV/Inventory rests at 335.281 million oz
feb 17/2017/again no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz/
FEB 16/we had no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz/
Feb 15./no changes in silver inventory at the SLV/inventory rests at 334.713 million oz
FEB 14/no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz
FEB 13/no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz
Feb 10/no change in silver inventory at the SLV/Inventory rests at 334.713 million oz
Feb 9/no changes in silver Inventory rests at 334.713 million oz
feb 8/No changes in inventory at the SLV/Inventory rests at 334.713 million oz
Feb 7/no change in inventory at the SLV/Inventory rests at 334.713 million oz
Feb 6/a we had no changes at the SLV/Inventory rests at 334.713 million oz
FEB3/ a tiny withdrawal of 136,000 oz to pay for fees etc/inventory rests at 334.713 million oz
Feb 2/no changes in silver inventory at the SLV/Inventory rests at 334.849 million oz
Feb 1/a withdrawal of 948,000 oz from the SLV/Inventory rests at 334.849 million oz
.
Feb 28.2017: Inventory 335.281  million oz
 end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 8.6 percent to NAV usa funds and Negative 8.4% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.2%
Percentage of fund in silver:39.6%
cash .+0.2%( feb 28/2017) 
.
2. Sprott silver fund (PSLV): Premium rises  to -.18%!!!! NAV (Feb 28/2017) 
3. Sprott gold fund (PHYS): premium to NAV rises to  + 0.06% to NAV  ( feb 28/2017)
Note: Sprott silver trust back  into NEGATIVE territory at -0.18% /Sprott physical gold trust is back into POSITIVE territory at +0.06%/Central fund of Canada’s is still in jail.
 

end

Major gold/silver trading/commentaries for TUESDAY

GOLDCORE/BLOG/MARK O’BYRNE

Gold’s Value – Weight, Beauty, Rarity, Peak Gold and Secure Storage – Interview

  • Why gold retains value?
  • Interesting unknown gold facts
  • “Prepare your jaws for a sizeable drop!”
  • History, finite, rare and peak gold
  • “It is beautiful to look at…”
  • ‘Heavy metal’ – Thud sound of a gold bar (kilo)
  • ‘Going for gold’ – Olympic gold medals to Chelthenham ‘Gold Cup’
  • Peak gold … “Hard work to get gold out of the ground…”
  • How much an Oscar is actually worth?
  • Importance of hiding gold creatively and securely if taking delivery
  • Owning a safe – “hidden away and bolted down”
  • Owning gold in secure storage in Zurich, Singapore and Hong Kong

gold-interview-2017

It’s the day after the Oscars and we’ve got gold on our minds!

Mark O’Byrne from Goldcore Ireland popped in to chat to Dermot & Dave this morning.

Mark told us lots of interesting facts that we didn’t know and revealed how much an Oscar is actually worth…

The entire statue is actually only sprayed with gold and is therefore worth a measly €600.

http://www.goldcore.com/us/gold-blog/golds-value-weight-beauty-rarity-peak-gold-secure-storage-interview/

 

END

 

Gold denominated in Euros are nearing their Brexit highs as elections throughout Europe are upon us:

(courtesy zero hedge)

European Gold Nears Brexit Highs As Elections Loom

While gold prices in dollars has been on a tear – almost erasing its post-Trump losses – the price of the precious metal in euros has soared as European elections loom.

As Bloomberg notes, in the Netherlands, Geert Wilders’ anti-Islam Freedom Party is holding a slim lead in polls before elections next month, and French presidential candidate Marine Le Pen has campaigned on overturning France’s ruling elites.

February is set for the biggest gains (almost 6%) since June 2016 (pre-Brexit) nearing the Maginot Line of EUR1200 once again.

It’s not just precious metals that are bid as a safe-haven. Short-dated German bonds are seeing an avalanche of safe haven flows…

And equity protection costs are soaring…

END

 

Bullion star posts 9 charts which suggest that gold demand (physical) is very strong.

(Bullionstar/RonanManly/GATA)

Bullion Star’s gold charts suggest that demand is strong

Section:

7:18p ET Monday, February 27, 2017

Dear Friend of GATA and Gold:

Bullion Star tonight posts nine charts that in general suggest that demand for physical gold is strong. They’re posted at Bullion Star here:

https://www.bullionstar.com/blogs/gold-market-charts/gold-market-charts-…

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

 

END

 

Two good commentaries today from James Turk and Egon Von Greyerz.  First Turk comments on the huge silver short position and how these shorts are digging in as they will not let silver advance.

Von Greyerz comments on the huge target 2 imbalances and he correctly states that Germany and Luxembourg are in much greater danger than southern banks as these imbalances can never be paid.

(courtesy Kingworldnews/James Turk/Egon Von Greyertz)

Shorts digging in against silver, Turk tells KWN

Section:

7:30p ET Monday, February 27, 2017

Dear Friend of GATA and Gold:

GoldMoney founder and GATA consultant James Turk tells King World News that while the silver shorts were pushed back at $18 they are digging in. Turk thinks this will slow silver’s advance but not stop it, since inflation is breaking out. His comments are excerpted at KWN here:

http://kingworldnews.com/james-turk-the-shorts-are-choosing-to-fight-des…

Also at KWN, Swiss gold fund manager Egon von Greyerz argues that banks in Germany and Luxembourg are in greater danger than banks in southern Europe, as the German and Luxembourg banks have lent huge amounts to borrowers who can’t pay:

http://kingworldnews.com/greyerz-this-may-crash-europes-financial-system…

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

 

 

END

 

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 STRONGER AT  6.8673(SMALL REVALUATION NORTHBOUND   /OFFSHORE YUAN NARROWS   TO 6.8535 / Shanghai bourse UP 12.07 POINTS OR .40%   / HANG SANG CLOSED DOWN 184.32 POINTS OR 0.77% 

2. Nikkei closed UP 11.52 POINTS OR 0.06%   /USA: YEN FALLS TO 112.17

3. Europe stocks opened MOSTLY IN THE GREEN     ( /USA dollar index FALLS TO  100.97/Euro UP to 1.0601

3b Japan 10 year bond yield: RISES TO    +.056%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112.27/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  53.91  and Brent: 56.26

3f Gold UP/Yen UP

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./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS  AND SELLING THE SHORT END

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.

3h Oil UP for WTI and UP for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.218%/Italian 10 yr bond yield DOWN  to 2.099%    

3j Greek 10 year bond yield RISES to  : 7.16%   

3k Gold at $1253.30/silver $18.32(8:15 am est)   SILVER CLOSE TO RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 5/100 in  roubles/dollar) 58.07-

3m oil into the 54 dollar handle for WTI and 56 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/GOT SMALL   REVALUATION NORTHBOUND   from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 112.17 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0046 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0651 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 VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.218%

3s The Greece ELA NOW a 71.4 billion euros,AND NOW THE ECB WILL ACCEPT GREEK BONDS (WHAT A DISASTER)

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 2.360% early this morning. Thirty year rate  at 2.974% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

HELICOPTER MONEY STILL ON THE TABLE FOR THE FUTURE

With All Eyes On Trump Tonight, US Futures, Global Stocks Hug The Flatline

With traders focused on President Trump’s address to Congress tonight where he is expected to outline his economic priorities and provide plan details, European stocks are little changed for a second day and Asian stocks decline modestly as U.S. futures trade around the flatline. Oil declines, trading just under $54, while the dollar is little changed. Before the open, the US reports the second reading of 4Q GDP, with attention also on the Chicago PMI print as well as the Conference Board consumer confidence index. Salesforce and Ross Stores are among companies reporting.

World stocks hover just shy of all-time highs and are on course for a fourth straight month of gains on Tuesday, as investors awaited a speech by U.S. President Donald Trump for signals on infrastructure spending and tax cuts. Global share markets have risen more than 10 percent since Trump won power in November and investors are hoping a speech to U.S. Congress later will detail his “big” spending promises.

Traders are in a holding pattern ahead of Trump’s State of the Union address before a joint session of Congress. It actually is technically called the State of the Union as it’s his first address but it’s the annual event that will become it. Yesterday’s headlines were largely dominated by reports of Trump proposing to boost military spending by $54bn, offset by cuts in nonmilitary budgets. The President was also reported as telling governors yesterday that “we’re going to start spending on infrastructure, big” but in reality markets were largely unmoved by the headlines and clearly just waiting for the main event.

As DB’s Jim reid writes, perhaps the biggest focus for the market in the address are clues as to whether the President supports the much talked about border adjustment tax – a key feature of House Speaker Ryan’s tax reform plan. Economists believe that the President will not directly mention the BAT but will highlight the necessity of increasing economic growth and work wages. Other topics which could be addressed include repealing of the Affordable Care Act, pulling out of trade agreements, immigration, de-regulation and of course other tax cuts. In terms of timing the address is scheduled for 9pm EST in the US tonight.

Ahead of Trump, asian markets were subdued overnight but some upbeat company earnings helped European stocks add 0.1 percent as the region looked to pull out of a three-day lull and extend a 2.5-percent gain this month. The Stoxx Europe 600 Index was little changed by 10:08 a.m. in London, after four straight days of losses. The index is still up 2.6 percent for February. Asia stocks erased gains after Japan’s Topix gave up almost all of a 1 percent rise, with the steepest paring coming in the final half hour of trading. The MSCI Asia Pacific Index trimmed its monthly gain to 2.2 percent.

In the currency markets, the dollar which has not taken to the Trump trade quite so enthusiastically, was treading water against most of its major peers, with the only notable move a dip against the yen to 112.25.

As Bloomberg cautions, even as global equities climbed to record levels, investors have remained wary as they await details of Trump’s economic policies and watch for signals on the timing for higher rates. The White House began sketching out plans Monday, as Trump followed promises of infrastructure spending with a caution that tax details won’t become clear until after the costs of repealing the Affordable Care Act are known.

“Tonight is going to be about laying out the agenda,” Paul Kavanagh, chief executive officer of Patronus Partners Ltd. in London, said in an interview on Bloomberg radio. “The bond markets and the stock markets are going to be listening. To push through on many of the initiatives that he’s looking for over the next few months, he’s got to be relatively downbeat about the things that he will want to change.” Fed Bank of Dallas President Robert Kaplan said policy makers should raise interest rates “sooner rather than later” and not pay excessive attention to market expectations. The chance of a rate hike at the central bank’s March 14-15 meeting jumped to 50 percent, federal funds futures showed, from 34 percent just five days ago.

“Dollar bears should take caution if Trump follows through on infrastructure and Yellen ratchets up the rate-hike rhetoric to end the week,” said Stephen Innes, senior currencies trader in the Asia Pacific at Oanda Corp. “The big question for the market is, will Trump use tonight’s platform to execute?”

Gold was also steady, having hit a 3-1/2 month high on Monday and 10-year U.S. Treasury yields hovered at about 2.36 pct, some 10 basis points down on where they started the year. That suggests that bond investors at least are fully convinced about a substantial pick-up in U.S. growth and higher interest rates.

“While markets no doubt appear to like what they are hearing, the president now needs to deliver, he’s talked the talk and he now needs to walk the walk,” CMC markets chief strategist Michael Hewson said.

Trump met U.S. state governors at the White House on Monday and said he sees “big” infrastructure spending and that he is seeking a “historic” increase in military spending of more than 9 percent. That means some $54 billion of military spending is now on the table, though that appears to be funded by cuts elsewhere in government. Led by engineering, construction and defense firms, Wall St stocks eked out another all-time high, with the Dow Jones recording its 12th straight record, a winning streak not seen since 1987. Futures pointed to it struggling to keep the run going later.

Yields on 10-year Treasuries were little changed after climbing five basis points on Monday. European government bonds traded in a tight range. The German 10-year yield rose two basis points to 0.22 percent. Peripheral bonds extended Monday’s gains as 10-year Italian yields fell three basis points to 2.1 percent.

* * *

Market Snapshot

  • S&P 500 futures down 0.01% to 2,368.00
  • STOXX Europe 600 down 0.02% to 369.45
  • MXAP down 0.2% to 144.81
  • MXAPJ down 0.1% to 466.05
  • Nikkei up 0.06% to 19,118.99
  • Topix up 0.09% to 1,535.32
  • Hang Seng Index down 0.8% to 23,740.73
  • Shanghai Composite up 0.4% to 3,241.73
  • Sensex down 0.3% to 28,728.63
  • Australia S&P/ASX 200 down 0.2% to 5,712.22
  • Kospi up 0.3% to 2,091.64
  • German 10Y yield rose 0.9 bps to 0.207%
  • Euro down 0.02% to 1.0585 per US$
  • Brent Futures down 0.2% to $55.81/bbl
  • Italian 10Y yield fell 6.1 bps to 2.134%
  • Spanish 10Y yield fell 3.5 bps to 1.624%
  • Brent Futures down 0.2% to $55.81/bbl
  • Gold spot down 0.2% to $1,250.87
  • U.S. Dollar Index down 0.02% to 101.11

Top Overnight News from BBG

  • March Hike Suddenly Real for Traders Ahead of Trump Speech
  • Traders Glued to These Trump Stock Trades Heading Into Address
  • Priceline Beats Profit, Sales Estimates on Bookings Increase
  • Seadrill Plunges as It Warns of Bankruptcy If Deadline Missed
  • Starbucks to Make Italian Debut With Upscale Roastery Cafe
  • Comcast Says Wireless Service Will Only Be Available as a Bundle
  • Takata’s U.S. Guilty Plea Sets Stage for Sale of Air-Bag Maker
  • Fiesta Restaurant Drops 15%; Suspends Sale Evaluation Process
  • Monsanto Cancer Suits Turn to EPA Deputy’s ‘Suspicious’ Role
  • Google Can’t Avoid Privacy Suit Over Biometric Face Prints

Asia equity markets were modestly lower, continuing the lacklustre lead from Wall Street where all 3 major US indices closed in the green and the DJIA notched a 12th consecutive daily gain amid outperformance in the energy sector, although upside was minimal as participants looked ahead to Trump’s appearance at Congress. ASX 200 (-0.2%) saw similar outperformance in energy names as WorleyParsons shares surged 30% although the index then turned negative at the settlement. Nikkei 225 (+0.3%) was underpinned by JPY weakness seen in the prior session, while Shanghai Comp. (+0.4%) and Hang Seng (-0.7%) were somewhat indecisive after another uninspiring liquidity injection by the PBoC, with participants in Hong Kong also awaiting earnings from the major casino operators. 10yr JGBs were lower amid an increased risk appetite in Japan, with mild pressure also seen following a 2yr auction in which the b/c fell and tail-in price widened from prior.

Top Asian News

  • Japan Factory Output, India GDP Growth: Asia Economic Takeaways
  • Korean Prosecutors to Indict Samsung Heir on Graft Charges
  • BOJ Gives More Details on Bond Purchases to Provide Clarity
  • China’s CLSA Shuts Down U.S. Equity Research, Cutting 90 Workers
  • China’s Top Diplomat Meets Trump as North Korea Worries Rise
  • BOJ Looks Set to Buy More 5-to-10-Year Bonds, Less Short- Term
  • Hong Kong’s Biggest Developer Sees Profit Rise 57% as Sales Soar
  • MTR Awards Wong Chuk Hang Site to Road King, Pingan Real Estate
  • IPT: NAB EU500m 9/2022 Green Bond MS +Low 30s
  • Galaxy Entertainment 4Q Adj. Ebitda Tops Est., Plans Special Div
  • Tata, Docomo Settle $1.2 Billion Wireless Dispute in India
  • BOJ Hands Out More Details on Bond Purchases to Provide Clarity

European bourses are trading relatively flat, albeit on the softer side with slight underperformance in materials, with the likes of Randgold Resources and Fresnillo lagging in the FTSE 100. Although the slightly negative tone is largely owing to the cautiousness among investors ahead of Donald Trump’s speech to a joint sitting of the US Congress at 2100ET. Across fixed income markets, the GE-FR spread has seen another bout of narrowing with the spread tighter by around 2.5bps, while peripheral yields has been tightened against the German benchmark. However, gilts have underperformed after the latest Lloyds Business Barometer rose to its highest level since Mar’16 suggesting a potential rise in the upcoming PM! survey’s next month.

Top European News

  • Erste Sees No Growth This Year as Charges Mar Last Quarter
  • Merkel Risks Tension With Erdogan Over Turkish Reporter’s Arrest
  • Greece Said to Expect Revised Bailout Proposal for Tuesday Talks
  • German DAX Merits Bullish Stance as Records Set, Jefferies Says
  • Salzgitter Slumps; Warburg, Lampe Say Pretax Outlook Below Ests.
  • Erdogan Says Steps Taken Against ‘Outrageous’ Hurriyet Story
  • Jimmy Choo and Roof Racks Top Small-Cap Picks for UBP (Correct)

In currencies, the Bloomberg Dollar Spot Index fell less than 0.1%. The yen added 0.3 percent to 112.35 per dollar, after sliding 0.5 percent Monday to snap a three-day winning streak. Tt has been a very quiet morning in FX so far, with the markets looking to get the Trump address to Congress out of the way before initiating some fresh direction on the USD. Month end flow can produce some erratic price action, and this will further hamper liquidity as traders are content to stay on the sidelines for now. Both the EUR and JPY hold their ground vs the greenback despite a modest rise on UST yields; EUR is keeping in touch with 1.0600 but perhaps of greater focus is USD/JPY still hovering ominously above the 112.00 mark. US data today — GDP Q4 second reading, trade and wholesale inventories may (of may not) back some of the increasing odds of a March move, with some seeing the probability moving up to a little over 50%. Concerns that the Fed is falling behind the curve due to the inflationary impact on real yields the key driver. The British pound slipped 0.1 percent to $1.2425. The currency is down 1.2 percent for the month.

In commodities, gold has pulled back as the USD index recovers in line with yields, and is now trading closer to $1250.00 after briefly piercing the $1260.00 level. Little else behind this, with Silver following lower in tandem, but the relatively tight ranges are reflective of the uncertainty over president Trump’s speech to the joint session of Congress later today. Oil prices have moved off better levels again as OPEC reiterates the disparity in compliance on production cuts between members and non members. WTI has slipped back under USD54.00 again. Base metals continue to tread water across the board, with Zinc outperforming to a modest degree again.

Looking at the day ahead, the main highlight on the data front will be the second reading on Q4 GDP. The market expects the reading to be revised up to 2.1% qoq annualized (from 1.9%). Also due out is the January advance international goods trade deficit reading, wholesale inventories for January, the S&P/Case-Shiller house price index reading for December, Chicago PMI for February, consumer confidence reading for February and Richmond Fed manufacturing index for February. Away from that there’s no shortage of Fedspeak with Harker (3pm ET), Williams (3.30pm ET) and Bullard (6.40pm ET) all on the slate. That all comes before what is likely to be the main event though when President Trump delivers his aforementioned quasi State of Union address overnight. So strap in.

US Event Calendar

  • 8:30am: GDP Annualized QoQ, est. 2.1%, prior 1.9%; Personal Consumption, est. 2.6%, prior 2.5%; Core PCE QoQ, est. 1.3%, prior 1.3%
  • 8:30am: Advance Goods Trade Balance, est. $66.0b deficit, prior $65.0b deficit, revised $64.4b deficit
  • 8:30am: Wholesale Inventories MoM, est. 0.4%, prior 1.0%; Retail Inventories MoM, prior 0.0%
  • 9am: S&P CoreLogic CS 20-City MoM SA, est. 0.7%, prior 0.88%;  20-City YoY NSA, est. 5.4%, prior 5.27%
  • 9:45am: Chicago Purchasing Manager, est. 53.5, prior 50.3
  • 10am: Conf. Board Consumer Confidence, est. 111, prior 111.8; Present Situation, prior 129.7; Expectations, prior 99.8
  • 10am: Richmond Fed Manufact. Index, est. 10, prior 12
  • 3pm: Fed’s Harker Speaks on Economy in Philadelphia
  • 3:30pm: Fed’s Williams Speaks in Santa Cruz
  • 6:40pm: Fed’s Bullard Speaks in Washington

DB’s Jim Reid concludes the overnight wrap

A decade ago this morning I set the alarm for 4.30am, jumped out of bed and immediately started work on the first Early Morning Reid after some preparation the night before. Approximately 2500 editions later and the pattern hasn’t changed much. Thanks to all the main contributors to this piece over the last decade. This piece wouldn’t have gone out without them. In today’s edition we’ve republished the first copy from February 28th 2007 where we discussed how we were moving underweight credit as the silent destruction of the US sub-prime market had started with BBB ABX tranches moving from par to the mid-80s that month. As such we’ve always felt that the financial crisis started in February 2007.

To the present now where the last 24 hours and likely the next 19 hours or so has pretty much been about prepping the stage for President Trump’s State of the Union address before a joint session of Congress. It actually is technically called the State of the Union as it’s his first address but it’s the annual event that will become it. Yesterday’s headlines were largely dominated by reports of Trump proposing to boost military spending by $54bn, offset by cuts in nonmilitary budgets. The President was also reported as telling governors yesterday that “we’re going to start spending on infrastructure, big” but in reality markets were largely unmoved by the headlines and clearly just waiting for the main event.

Perhaps the biggest focus for the market in the address are clues as to whether the President supports the much talked about border adjustment tax – a key feature of House Speaker Ryan’s tax reform plan. Our US economists highlighted in their daily yesterday that their best guess is that the President will not directly mention the BAT but will highlight the necessity of increasing economic growth and work wages. Other topics which could be addressed include repealing of the Affordable Care Act, pulling out of trade agreements, immigration, de-regulation and of course other tax cuts. In terms of timing the address is scheduled for 9pm EST in the US tonight. For those in Europe you’ll want to set your alarms for 2am GMT tomorrow morning.

In terms of markets yesterday, after European stocks turned in a fairly cautious session (Stoxx 600 -0.13%, DAX +0.16%), bourses in the US chopped and changed for much of the afternoon before closing with another round of very modest gains. Still the Dow (+0.08%) notched up its 12th consecutive record close which is the longest such streak since January 1987 while the S&P 500 edged up +0.10%. Gains for the energy sector appeared to help after WTI Oil rose a little over 1% at one stage, only to then retrace into the close. Of some excitement we did see the VIX rise over 5% and in doing so closed above 12 (at 12.09 to be precise) for the first time since January 19th.

The direction was a bit more obvious in bond markets yesterday. Both Treasuries (+5.3bps to 2.366%) and Bunds (+1.3bps to 0.197%) undid a portion of Friday’s rally however it was more of the same for OATs (-4.4bps to 0.872%) and the periphery (-5bps to -6bps lower) seemingly after the weekend passed without any negative market developments in the French election campaigns.

Over in the Asia this morning it’s actually been an overall fairly decent session. Bourses in Japan in particular are performing well (Nikkei +0.78%, Topix +0.93%) despite an overall mixed bunch of data releases. Industrial production in Japan in January was unexpectedly soft (-0.8% mom vs. +0.4% expected) however that was offset by a better than expected retail sales print (+0.5% mom vs. +0.3% expected). Elsewhere in markets the Shanghai Comp (+0.28%), Kospi (+0.34%) and ASX (+0.29%) have also edged higher while the Hang Seng is little changed.

Moving on. Yesterday we published a new Credit Bites – “Credit Foundations Creaking?” – looking at 5 year swap spreads and its relationship with credit. Over the last few weeks 5 year Euro swap spreads have widened to the highest level outside of the 08/09 GFC and the 11/12 Euro sovereign crisis. So far credit spreads to governments haven’t matched the move and as such ASWs are looking tight given the external developments. If bunds are rallying because of a possibility of being redenominated back into DEM at some point, credit should not be following the yield move lower and should be widening given the turmoil that such a scenario would bring. Clearly if Le Pen fails to become President (as the vast majority believe) then bunds will eventually sell-off, swaps spreads will tighten and the pressure will be taken off credit spreads but for now European fixed income is sending conflicting messages of the potential risks. See the report from yesterday morning for more. Email Sukanto.Chanda@db.com if you haven’t got a copy.

With regards to yesterday’s dataflow, in the US headline durable goods orders came in a better than expected +1.8% mom in January (vs. +1.6% expected) driven by a sharp rebound in aircraft orders. Disappointing however were the core capex orders where orders fell -0.4% mom (vs. +0.5% expected). Shipments (-0.6% mom vs. +0.2% expected) also fell unexpectedly. There was better news in the Dallas Fed manufacturing survey however where the reading rose 2.4pts in February to 24.5 and so reaching the highest level since April 2006. Finally pending home sales in January were revealed as declining -2.8% mom.

Closer to home, the European Commission’s economic sentiment index reading was reported as rising a very modest 0.1pts to 108.0 this month and so touching a six year high. Our economists also noted that the ECB’s January M3 and credit data showed stable money supply growth but improving credit flows. Since a soft Q3 2016, euro area bank credit has accelerated, with January the strongest month for net private sector bank lending (EUR +31bn) since 2008. Loans flows over the past four months are equivalent to annual credit growth of close to 3%. The only other data to note is that of the ECB’s CSPP buying. Total holdings last week was reported at €66.6bn which works out to net purchases settled last week of €1.7bn or an average daily run rate of €335m. That’s a shade below the €366m average since the program started.

Looking at the day ahead, this morning in Europe we’ll be kicking off in France where the preliminary CPI figures for January will be released, alongside Q4 GDP data and January consumer spending data. Over in the US this afternoon the main highlight on the data front will be the second reading on Q4 GDP. Both the market and our US economists expect the reading to be revised up to 2.1% qoq annualized (from 1.9%). Also due out is the January advance international goods trade deficit reading, wholesale inventories for January, the S&P/Case-Shiller house price index reading for December, Chicago PMI for February, consumer confidence reading for February and Richmond Fed manufacturing index for February. Away from that there’s no shortage of Fedspeak with Harker (8pm GMT), Williams (8.30pm GMT) and Bullard (11.40pm GMT) all on the slate. That all comes before what is likely to be the main event though when President Trump delivers his aforementioned quasi State of Union address overnight. So strap in.

3. ASIAN AFFAIRS

i)Late  MONDAY night/TUESDAY morning: Shanghai closed UP 13.07 POINTS OR .40%/ /Hang Sang CLOSED DOWN 184.32 POINTS OR 0.77% . The Nikkei closed UP 171.52 POINTS OR 0.06% /Australia’s all ordinaires  CLOSED DOWN 0.22%/Chinese yuan (ONSHORE) closed UP at 6.8673/Oil FELL to 53.91 dollars per barrel for WTI and 56.26 for Brent. Stocks in Europe MOSTLY IN THE GREEN EXCEPT GERMAN DAX. Offshore yuan trades  6.8626 yuan to the dollar vs 6.8673  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS A BIT AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN STRONGER AS IS OFFSHORE YUAN COUPLED WITH THE WEAKER DOLLAR

3a)THAILAND/SOUTH KOREA/NORTH KOREA

none today

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

China wishes to tighten a little as they are limiting their money supply growth to 12% from 13%.  Remember that their debt is totally unsustainable.

(courtesy zero hedge)

 

In Latest Tightening Move, China To Cut Money Supply Growth To 12%

For a majority of China watchers, while Beijing’s goalseeked GDP reports are largely dismissed as politburo propaganda, most of the attention falls on the PBOC and banking sector’s credit creation, and particularly, how this translates into broad money supply, or M2, growth: after all, in a nation which has roughly $35 trillion in bank assets, the biggest variable is how much cash is being injected into the system, and what happens with said cash.

Which is why a Reuters report overnight that China plans to target broad money supply growth of around 12 percent in 2017, down from 13 percent in 2016, has been promptly noted as the latest signal to contain debt risks while keeping growth on track. The M2 growth target was endorsed by leaders at the closed-door Central Economic Work Conference in December, according to sources with knowledge of the meeting outcome.

As a reminder, yesterday even the NY Fed released a note in which central bank researchers warned about the unsustainability of Chinese debt. Under the PBOC’s new “prudent and neutral” policy, the central bank has adopted a modest tightening bias in a bid to cool torrid credit expansion, though it is treading cautiously to avoid hurting the economy.

“It’s not necessary to maintain last year’s high money supply growth,” said a source who advises the government. “A money supply rise of 11 percent should be enough for supporting growth, but we probably need to have some extra space, considering risks in the process of deleveraging.”

In 2016 China’s money supply target was 13%, roughly double the country’s GDP , though it ultimately grew just 11.3% due to the effects of the central bank’s intervention to support the yuan currency, which effectively drained yuan liquidity from the economy.  Last year’s M2 target reflected Beijing’s focus on meeting its economic growth targets, but top leaders have pledged this year to shift the emphasis to addressing financial risks and asset bubbles.

However, as we have shown in the past, M2 is just one aspect of liquidity injections: the PBOC injected more cash through its open market operations, medium-term lending facility (MLF) and standing lending facility (SLF), underpinning record lending of 12.65 trillion yuan ($1.84 trillion) in 2016.

Reuters has also reported that for 2017, China will lower its economic growth target to around 6.5% from last year’s 6.5-7 percent. The economy expanded 6.7 percent in 2016. Last week, state media cited a party statement issued after a meeting of the Politburo that China must maintain stable economic development and social harmony ahead of the 19th Communist Party Congress in the autumn. Key economic targets will be announced at the opening of the annual parliament meeting on March 5.

Whether China adopts the target or not, it is merely the latest indicator of tighter monetary policy this year. As we discussed at the start of the month, the central bank raised interest rates on its reverse repurchase agreements (repos) and the SLF on Feb. 3, following a rise in rates on the MLF in late January. “The central bank could raise such policy rates further. But we cannot see any possibility of raising benchmark interest rates in the near term,” said one of the sources.

Meanwhile, reversing the tightening trend, new yuan loans hit 2.03 trillion yuan in January, the second highest on record, due to a rush among lenders to maintain market share, while M2 rose an annual 11.3 percent in January. The central bank said in a working paper published on Feb. 15 that the debt deleveraging process should be managed prudently to help avoid a liquidity crisis and asset bubbles.

China’s debt-to-GDP ratio rose to 277 percent at the end of 2016 from 254 percent the previous year, with an increasing share of new credit being used to pay debt servicing costs, UBS analysts said in a recent note. Meanwhile, total bank assets to GDP is now well over 300%.

The biggest problem facing the massively indebted economy, however, remains one of a declining marginal impact of every incremental yuan of new debt.

“A decline in driving force from capital investment on economic growth is behind the rapid rise in leverage,” Ruan Jianhong, head of the Survey and Statistics Department at the central bank, said in remarks published on Friday.

In 2011, capital investment of 1 yuan could yield an increase of 0.32 yuan in GDP, but that has fallen to 0.16 yuan in 2015, Ruan told the official Financial News in an interview.

“We need to maintain appropriate economic growth. If growth slows sharply, various risks may be exposed,” said one of the sources. Of which the biggest being that China has now reached the Ponzi financing stage, and any incremental slowdown in debt creation will usher in the next and final step: the Minsky moment.

 

For more on this, please read “How Long Can China’s Debt Continue To Grow Before A Systemic Crisis Strikes?”

 

 

end

4. EUROPEAN AFFAIRS

Trouble again with the Greek banks.  We are now at 16 yr lows in deposits at 119 billion euros as citizens remove their cash and put it in a safer zone such as Germany

(courtesy zero hedge)

The Greek “Bank Jog” Is Back: Bank Deposits Tumble To Lowest Since 2001

It didn’t take much for the Greek bank run jog to return: with Greece once again stuck between an IMF rock and a Schauble hard case, and whispers that another bailout may be on the horizon, the local population took advantage of whatever capital controls loopholes they could find, and withdrew money from the local banking sector, which to this day remains on ECB life support, almost two years after the 3rd Greek bailout in the summer of 2015.

According to Greece central bank data, Greek private sector bank deposits declined in January for the second month in a row, driven by renewed concerns over the country’s neverending bailout. Business and household deposits fell by €1.63 billion, or 1.34% month-on-month to €119.75 billion ($126.8 billion), the lowest level since November 2001. The January outflow follows a “jog” of €3.4 billion in December, making the two-month drop the worst since the latest Greek bailout panic in July of 2015.

And as concerns about the Greek fate only grew in February, it is likely that the next month’s data will show another acceleration in outflows, especially since Greek non-performing loans remain at a staggering 70% of total bank assets and continue to grow.

As Reuters further notes, starting in December, the Bank of Greece stopped counting deposits of 4.2 billion euros held in the Loans & Consignment Fund and another 2.1 billion euros in the Deposit Guarantee Fund (TEKE) as private sector deposits. The move followed a reclassification by the country’s statistics service ELSTAT, which groups the two institutions under the general government sector.

The latest two months of outflows put an end to a period of relative stability during which Greek banks had seen small deposit inflows in more than a year after the country clinched a third bailout to stay in the euro zone. Local banks, for the most part insolvent, remain dependent on central bank borrowing to plug their funding gaps. The gap between outstanding loans and deposits has forced banks to rely on borrowing from the European Central Bank and the Bank of Greece to plug their funding holes.

Greece’s banking sector saw a 42 billion euro deposit outflow from December 2015 to July last year. Capital controls imposed on June 2015 helped contain the flight but sharply increased banks’ dependence on emergency liquidity assistance (ELA) from the Bank of Greece.

Prior to the latest outflows, to signal confidence in the banking system the government has eased capital restrictions after making headway on
bailout-mandated reforms and improved confidence in the banking system. Following the latest deposit outflow data, that may soon change.

As part of the relaxation of controls, “mattress” cash that are returned to banks are not subject to the restrictions, meaning amounts deposited can be fully withdrawn. That is, of course, assuming the upcoming showdown between the members of the Troika ends amicably. Should the outflows persist as this rate, Greece will be back on the front pages, and demanding a 4th bailout by mid-Spring, and certainly ahead of the looming July 2017 debt maturities.

 

end

 

Europeans are piling into their VIX as they have hit the panic button with respect to upcoming elections, thew BREXIT and potential Italian-EXIT and others. Interestingly enough the European VIX is 80% higher than the USA. I wonder why?

 

(courtesy zero hedge)

 

European Stock Investors Hit The Panic Button

 

While US equity markets drift endlessly higher on sea of Trumptopian euphoria (and retail ETF ramps), European equity investors have hit the panic button this week.

In the last week, investors have been piling into European VIX futures – hedging for a potential catastrophic end to the market calm ahead of French and Dutch elections.

Historically, European ‘VIX’ has traded around 20% higher than US ‘VIX’ over the last 8 years. The current spike to an 80% premium is unprecedented.

The extreme differences between Europe’s ‘fear’ and America’s ‘greed’ is nowhere more evident than in this chart and suggests – for the contrarian who sees record short US VIX positioning – a Long US VIX, Short EU VIX position may be the play through the turmoil of the next month or two.

If we had to guess, we would say that move has begun in VIX (as VXX ETF shares outstanding have surged as VIX futures record net spec positioning unwinds)…

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6.GLOBAL ISSUES

none today

7. OIL ISSUES

Twenty states are raising gas taxes.  If gas prices rise then so does the taxes

(courtesy zero hedge)

 

Gas Taxes Set To Surge In Roughly A Dozen States

Nearly 20 states have raised gas taxes or recalculated gas-tax formulas in recent years to generate additional revenues.  Which, of course, is an extremely politically expedient way to raise taxes on the unsuspecting masses since when gas prices soar later those price increases can simply be blamed on those evil oil corporations.

As the Wall Street Journal points out, the ease with which higher gas taxes have been passed through state governments over the past two years have emboldened at least a dozen more states, all of which are now actively considering additional gas taxes.

Tennessee Gov. Bill Haslam is putting his fellow Republican lawmakers to the test, with a plan to raise the state’s gas taxes for the first time in nearly three decades.

In Alaska, Gov. Bill Walker, an independent, proposed tripling the state’s gas tax to 24 cents a gallon by 2018. The state has the lowest gas tax in the country and hasn’t raised it since 1970. In his recent state of the state address, Mr. Walker said he is trying to deal with a $3 billion fiscal gap, after state revenues collapsed by more than 80% from four years ago due in large part to the drop in oil and natural-gas prices.

New Jersey’s Republican Gov. Chris Christie raised the state’s gasoline tax last year by 23 cents a gallon, his first tax hike in two terms as governor, which he offset with some other tax reductions.

On Thursday, the Republican-dominated Indiana House voted 61 to 36 in favor of increasing the state gas tax from 18 cents a gallon to 28 cents with annual adjustment increases possible through 2024. The bill now goes to the state Senate.

In yet another map that looks eerily similar to the 2016 electoral college map, here is where states currently stand on gas taxes.  Of course, the irony here is that the ultra-liberal states of the Northeast and West coast have the highest gas taxes…and while that might play well with their global warming narrative, gas taxes are among the most regressive forms of tax as they disproportionately impact lower-income families.  And unfortunately, unlike the cost of other goods and services that are driven to artificially high levels by misinformed government policies (did someone say Obamacare?), we suspect you’ll never see the leftist states of America subsidizing gasoline for poor people.

Gas Taxes

Despite serving as an easy scapegoat, as the U.S. Energy Information Administration notes, only 48% of the price that Americans pay at the pump actually goes to the evil oil companies for crude production.  Meanwhile, on average, nearly 20% of gas costs get sent to various federal, state and local government entities with the highest taxed states like PA, WA, NY and CA collecting even more.

Gas Tax

But, higher gas problems aren’t a significant long-term threat because everyone will just buy an $80,000 Tesla, right?  And, for those reading this post from the state of California please continue to ignore the fact that your Tesla is fueled by coal…

 

 

end

 

Oil spikes on the denial of the rumour of changes to the ethanol mandate and then OPEC production cuts have compliance at 94%

(courtesy zero hedge)

Oil Spikes On OPEC/White House Headlines

A double-whammy of bullish news hit WTI crude futures shortly after 1300ET today sending prices soaring. First, The White House denied earlier rumors on changes to the ethanol mandate; and then Reuters confirmed OPEC production cut compliance steady at 94%.

Following Renewable Fuel Association President Bob Dinneen telling
Bloomberg BNA earlier the White House aimed to shift the biofuel
mandate’s obligated party from importers and refiners to terminal
operators who house, ship and sometimes blend fuel;
The White House has no plans to change renewable fuel standard compliance structure, White House spokeswoman tells Bloomberg BNA’s Brian Dabbs. There is no ethanol rule in the works, White House spokeswoman Kelly Love says

The White House is denying rumors on changes to the ethanol mandate.

And then Reuters reported,

JUST IN: OPEC members subject to oil supply cut targets achieve 94 percent of pledged reductions in February – Reuters survey

OPEC has cut its oil output for a second month in February, a Reuters survey found on Tuesday, allowing the exporter group to boost already strong compliance with agreed supply curbs on the back of a steep reduction by Saudi Arabia.

In January, OPEC delivered 82 percent of the promised cuts, according to a Reuters survey and over 90 percent according to OPEC’s own report.

Compared with the levels the countries agreed to make the reductions from, in most cases their October output, this means the OPEC members have cut output by 1.098 million bpd of the pledged 1.164 million bpd, equating to 94 percent compliance.

And the resultant spike in crude prices (ahead of tonight’s API inventory data).

After WTI and RBOB tagged cycle lows…

end

Then retreats on a surprise gasoline inventory build and a new record glut in crude:

(courtesy zero hedge)

RBOB Slides After Surprise Gasoline Inventory Build; New Record Glut In Crude

After a volatile day of White House rumors and denials, and OPEC headlines, WTI and RBOB ended the day lower ahead of tonight’s API data which showed a slightly smaller than expected crude build (+2.5mm against expectations of +3mm). However RBOB prices tumbled after an unexpected build.

 

API

  • Crude +2.502mm (+3mm exp)
  • Cushing +544k
  • Gasoline +1.84mm (-1.5mm exp)
  • Distillates -3.73mm

While crude built again (the 8th week in a row), it was the swing back to a build in gasoline that is most notable…

If this holds for DOE data tomorrow it will be another new recod high for crude inventories.

Notably, along with denied reports of a shift in ethanol mandates, and reports of 94% OPEC cut complicance, U.S. shipments of crude by rail averaged ~377k b/d in December vs ~432k b/d in November, lowest since May 2012, EIA’s Petroleum Supply Monthly report shows.

 

The initial reaction post-API was weakness in RBOB (surprise build) and a jump in WTI but that quickly gave way as the realization was that it was still a build…

 end

8. EMERGING MARKETS

none today

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

Euro/USA   1.0601 UP .0018/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA RAISING INTEREST RATE/EUROPE BOURSES MOSTLY IN THE GREEN  

USA/JAPAN YEN 112.17 DOWN 0.575(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2432 DOWN .0005 (Brexit by March 201/UK government loses case/parliament must vote/PRIME MINISTER MAY  DECIDES ON A HARD BREXIT/LOWER HOUSE PASSES BILL TO BEGIN THE BREXIT PROCESS/AND NOW A NEW SCOTLAND REFERENDUM IS ON THE TABLE)

USA/CAN 1.3171 DOWN .0017 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU)

Early THIS TUESDAY morning in Europe, the Euro ROSE by 18 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0601; Europe is still reacting to Gr Britain HARD BREXIT,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 Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED UP 13.07 POINTS OR 0.40%     / Hang Sang  CLOSED DOWN 184.32 POINTS OR 0.77%    /AUSTRALIA  CLOSED DOWN 0.22%  / EUROPEAN BOURSES MOSTLY IN THE GREEN 

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 ( NIKKEI blowing up and the yen carry trade HAS BLOWN up/and now NIRP)

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

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

The NIKKEI: this TUESDAY morning CLOSED UP 11.52 POINTS OR 0.06% 

Trading from Europe and Asia:
1. Europe stocks MOSTLY IN THE GREEN EXCEPT GERMAN DAX

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 184.32 POINTS OR 0.77%       / SHANGHAI CLOSED UP 13.07  OR 0 .40%/Australia BOURSE CLOSED DOWN 0.22% /Nikkei (Japan)CLOSED UP 11.52 POINTS OR 0.06%  /  INDIA’S SENSEX IN THE RED

Gold very early morning trading: $1253.80

silver:$18.30

Early TUESDAY morning USA 10 year bond yield: 2.360% !!! DOWN 1 IN POINTS from MONDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  2.974, DOWN 1 IN BASIS POINTS  from MONDAY night.

USA dollar index early TUESDAY morning: 100.97 DOWN 20 CENT(S) from FRIDAY’s close.

This ends early morning numbers TUESDAY MORNING

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield: 3.877% DOWN 1/5  in basis point yield from MONDAY 

JAPANESE BOND YIELD: +.056%  UP 1/5  in   basis point yield from MONDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.655%  DOWN 1/4 IN basis point yield from  MONDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.086 DOWN 4 POINTS  in basis point yield from MONDAY 

the Italian 10 yr bond yield is trading 44 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.208% UP 1 IN  BASIS POINTS ON THE DAY

END

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

IMPORTANT CURRENCY CLOSES FOR TUESDAY

Closing currency crosses for TUESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM 

Euro/USA 1.0619 UP .0035 (Euro UP 35 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 111.81 DOWN: 0.923(Yen UP 93 basis points/ 

Great Britain/USA 1.2425 DOWN 0.0012( POUND DOWN 12 basis points)

USA/Canada 1.3264 UP 0.0077(Canadian dollar DOWN 77 basis points AS OIL FELL TO $53.26

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was up by 35 basis points to trade at 1.0619

The Yen ROSE to 111.81 for a GAIN of 93 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL 12  basis points, trading at 1.2425/

The Canadian dollar FELL  by 77 basis points to 1.3264,  WITH WTI OIL FALLING TO :  $53.26

The USA/Yuan closed at 6.8664/
the 10 yr Japanese bond yield closed at +.056% DOWN 1/4 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield PAR IN basis points from MONDAY at 2.344% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.9571 PAR  in basis points on the day /

Your closing USA dollar index, 100.83 DOWN 34 CENT(S)  ON THE DAY/1.00 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for TUESDAY: 1:00 PM EST

London:  CLOSED DOWN 27.67 OR 0.38% 
German Dax :CLOSED DOWN 143.80 POINTS OR 1.20%
Paris Cac  CLOSED DOWN 46.05 OR 0.94%
Spain IBEX CLOSED DOWN 39.90 POINTS OR 0.42%
Italian MIB: CLOSED DOWN 222.83 POINTS OR 1.18%

The Dow closed down 25.20 OR 0.12%

NASDAQ WAS closed down 36.46 POINTS OR 0.62%  4.00 PM EST
WTI Oil price;  53.26 at 1:00 pm; 

Brent Oil: 55.61  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  58.47 DOWN 35/100 ROUBLES/DOLLAR 

TODAY THE GERMAN YIELD RISES TO +0.208%  FOR THE 10 YR BOND  1:30 EST

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:$53.91

BRENT: $56.43

USA 10 YR BOND YIELD: 2.395%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.997%

EURO/USA DOLLAR CROSS:  1.0578 down .0005

USA/JAPANESE YEN:112.74   up 0.011

USA DOLLAR INDEX: 101.33  up 16  cents ( HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2380 : down 57   BASIS POINTS.

German 10 yr bond yield at 5 pm: +.208%

END

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

TRADING IN GRAPH FORM

 

The Dow Streak May Be Finally Over, But In February Everything Was Up

Just because…

 

The Record Winning Streak Is Over…

 

They desperately tried to ramp it but failed

NOTE: Today was the worst day for Small Caps since October

*  *  *

Banks, Bonds, Bullion, and Broad equity indices were all up in February…

 

So was VIX…a massive divergence for a month

 

Dow led the way this month with a 4th monthly gain in a row for stocks

 

Bonds were bid for the month with 2Y underperforming…

 

The USD Index closed the month lower…(Loonie weakest among the majors)

 

March rate-hike-odds have soared in the last few days from 37% to 54%…

 

But the Dollar isn’t buying it at all (and nor are bonds)… So WTF is going on in Fed Funds Futures?

ForexLive has some ideas

There hasn’t been much in the way of economic news in the past few days. Durable goods orders and GDP were weak; consumer confidence was strong. Fed speak was repetitious. But Fed funds futures hike probabilities have shot to 54% from 37% since Thursday.

 

Why?

 

One idea is pure manipulation. A bank that wants to see a hike might be buying Fed funds futures to try and somehow manipulate the Fed’s thinking.

 

Or it could be some other kind of leak from the Fed?

 

Or maybe someone is just making a big bet it’s going to happen as they take a closer look at the data.

 

What’s curious is that the US dollar hasn’t gone along for the ride. That suggests it’s not fundamental.

While on the topic we note that 1 Year OIS topped 1.00% for the first time since Nov 2008…

*  *  *

Mixed picture for today in bond-land with the long-end rallying and short-end dragged by the shift in FF futures… (Note the major flattening of the curve)

 

The US Treasury Curve has collapsed to its flattest since the election… but banks don’t care…

 

But stocks dropped and erased yesterday’s gains (before a desperate ramp into the close again)

 

Orrin Hatch comments at around 12ET that it’s “very difficult to change the current tax system because the Democrats are very uncooperative” seemed to spark the selling (and VIX buying). Of course that was ramped back above 20,800. Then again we saw selling pressure in the last 30 mins but once The Dow breached 20,800, a sudden buying panic resurfaced…

 

Target was monkeyhammered…but most retailers had an ugly day (SIG on sexual harrassment suits)

 

For the second day in a row, the dollar index rallied during the US day session after overnight weakness (and the Loonie was smashed lower)

 

WTI and RBOB ended the day lower but bounced back notably on OPEC cut compliance and White House ethanol mandate denials…

 

Gold topped $1250 and Silver topped $18 on the month…

END

 

Trading:

Yield curve collapses, yields drop as the economy is perceived to be weakening:

(courtesy zero hedge)

 

Treasury Curve Collapses To Pre-Trump Flats, Banks Don’t Care

The UST 2s30s curve has tumbled flatter and is now below election night flats – banks don’t care…

 

And the absolute level of real yields have plunged back to earth as Trumpflation bets fade fast.

Please… please… STFU with the “banks are surging due to steepening yield curves helping NIM” narrative… this is all about allowing the bank execs out and deregulation (and releveraging) hope.

 

end

 

Wow!! the USA Jan/ trade deficit balloons to a huge 69.2 billion deficit, the second largest deficit recorded since 2008. This should be a huge subtraction to the GDP for the first quarter of 2017:

(courtesy zero hedge)

Q1 GDP At Risk As Trade Deficit Balloons Near 9 Year Highs

On the heels of a disappointing revised Q4 GDP print, the US trade balance for January printed a $69.2 billion deficit. This is the second largest deficit since August 2008 (slightly smaller than the March 2015 plunge) as the dollar surge has not helped.

The biggest driver the deficit increase was  4.8% MoM increase in Consumer Goods (notably Auto exports rose 9.3%)

The $69.2bn deficit is considerably worse than the $66.0 billion expectations, and is lower than the lowest analyst expectation.

Certainly not a good sign for Q1 GDP expectations.

As BofAML notes, combining trade data with inventories for January, this slices 0.2pp from Q1 GDP tracking, leaving us at 1.8% for the quarter.

The USD strength has not helped…

 

So time for another rate hike to reverse that recent drop in the USD and stymie the US economy even more via its trade deficit?

 

end

 

As indicated above, the USA economy grew by only 1.9% in the 4th quarter, and missing expectations despite the much stronger consumer spending:

(courtesy zero hedge)

 

US Economy Grew 1.9% In Q4, Unexpectedly Missing Expectations Despite Stronger Consumer Spending

Following a series of better than expected GDP-feeding prints, consensus had expected Q4 GDP to tick higher in the first revision released today, rising from 1.9% to 2.1%. However, that did not happen and instead, the revised print came in unchanged at 1.9%. Notable underlying revisions include: an upward revision in consumer spending, both in services and goods; a downward revision to business investment, mostly in intellectual property products and equipment; and a downward revision to state and local government spending, primarily in structures.

Despite the headline miss, the revised data showed a solid rebound in Personal Consumption Expenditures, which rose 3.0%, higher than the 2.6% expected; furthermore, printing at 2.05% annualized, Consumption alone was higher than the overall GDP of 1.86%.

The reason for the miss was a decline in Fixed Investment which slid from 0.67% to 0.51% as initial CapEx reads appear to have been weaker than expected, coupled with a negative revision to both Private Inventories, down from 1.00% to 0.94% and the contribution from Government, which subtracted another 0.15% point.

 

Net trade remained flat, and was the biggest detractor from Q4 growth, taking away some 1.7% as the Q3 surge of exports to China was offset.

Of note: PCE prices failed to hit the expected 2.2% increase in the quarter, rising 1.9%, after increasing 1.5% in Q3, thus giving the Fed some more breathing room before hiking. Additionally, core PCE rose 1.2%, after rising 1.7% in the prior quarter, suggesting to Janet Yellen there is still some price slack, and the possibility of a rate hike may be more remote.

For the year 2016, real GDP increased 1.6% , compared with 2.6% in 2015. The increase in real GDP in 2016 reflected increases in consumer spending, residential investment, state and local government spending, exports, and federal government spending. These contributions were partly offset by declines in private inventory investment and business investment. Imports increased.

 

end

 

Bellwether Target plunges 12% with poor earnings and something that stockholders loath to hear:  slashing outlook

(courtesy zero hedge)

 

Target Plunges 12% After Missing Lowest EPS Estimate, Slashing Outlook

When we discussed yesterday Reuters’ report that Wal-Mart is now actively “price testing” its products, and squeezing vendors in a scramble to preserve market share while keeping margins relatively flat, we cautioned that this is the latest indication of what appears to be a pervasive “deflationary shock” among the retail industry which is caught in a vicious fight for market share. This morning’s results from Target validated this observation: moments ago the retail giant reported Q4 EPS of $1.45, missing both consensus ($1.51) and the lowest Wall Street estimate ($1.47), even as Q4 revenue came largely in line with expectations of $20.7 billion, suggesting that holiday spending was indeed far worse

The internals were just as messy, with Target reporting comp sales of -1.5%, missing the -1.3% estimate, on gross margin of 26.9%

But the most troubling part of the release was the company’s disappointing guidance: Target now sees 1Q adj. EPS of 80c to $1.00, far below the consensus estimate $1.33, and also over 20% below the lowest firecast (range $1.26-$1.41). The bleeding is expected to continue on the back of a “Low-to-Mid Single Digit Decline” in comp store sales in both Q1 and the full year. Also, for the full year, Target sees adj. EPS of $3.80 to $4.20, wildly missing consensus of $5.34 (range $5.05-$5.60).

CEO Brian Cornell was rather downbeat: “Our fourth quarter results reflect the impact of rapidly-changing consumer behavior, which drove very strong digital growth but unexpected softness in our stores. At our meeting with the financial community this morning, we will provide detail on the meaningful investments we’re making in our business and financial model which will position Target for long-term, sustainable growth in this new era in retail. We will accelerate our investments in a smart network of physical and digital assets as well as our exclusive and differentiated assortment, including the launch of more than 12 new brands, representing more than $10 billion of our sales, over the next two years. In addition, we will invest in lower gross margins to ensure we are clearly and competitively priced every day.”

Cornell concluded that while he is confident the proposed changes will best-position Target for continued success over the long term “the transition to this new model will present headwinds to our sales and profit performance in the short term.”

In other words, expect more of the same from America’s biggest retailers who are now stuck in a fight for market share, even as prices continue to decline, forcing CFOs to come up with increasingly more innovative ways of preserving margins and profits.

At last check, TGT was trading 12% lower after the earnings, wiping out $4 billion in market cap and weighing in on peers such as Walmart.

 

 

END

 

Both Dudley and Williams pound the table for a rate hike and I believe (as does David Stockman) that there will be one:

(courtesy zero hedge)

 

March Hike Odds Soar Above 70% After Hawkish Assault From Dudley, Williams

Update: the March odds continue to surge and are now at 72% and rising.

The Fed is really doing its best to convince the market that a March rate hike is coming, and it seems to be working.

First, it was Philly Fed president Patrick Harker, who speaking at Temple University reiterated his comments from February 15, and said that not only is the economy in pretty good shape, but that he continues to see three rate increases as appropriate in 2017.

Then, moments later San Fran Fed president John Williams, seapking in santa Cruz, said the Fed needs to ease its foot off gas gradually to avoid economy that’s “too hot”, and said that a rate increase is “very much on the table for serious consideration” at FOMC’s March 14-15 meeting. Williams, formerly an uber dove, also said that “right now interest rates are abnormallyh low.”

Finally, moments after Williams, NY Fed president Bill Dudley spoke in a CNN TV interview – an odd venue for a FOMC member – and said that the case for a Fed tightening has become “a lot more compelling”, adding that the phrase “fairly soon” used in the Minutes, means in the relatively near future. He also said that 3% growth is possible under certain condition, and further said that the Fed can’t overreact to every stock-market move. He concluded that while “sentiment has improved markedly”, confidence gains “haven’t translated yet into spending.”

And result, Eurodollar and Fed Fund futures traders reacted as if stung, and trading below 50% earlier today, the March rate hike odds have soared as high as 68% over the past hour – they were at 54% before Dudley started talking – effectively above the Fed’s permissive threshold. As a reminder, the Fed usually hikes only if the market prices in at least a 70% probability of such an event. Well, we are now almost there.

 

One question for now remains – why is the dollar not following through?

 

ForexLive has some ideas

There hasn’t been much in the way of economic news in the past few days. Durable goods orders and GDP were weak; consumer confidence was strong. Fed speak was repetitious. But Fed funds futures hike probabilities have shot to 54% from 37% since Thursday.

 

Why?

 

One idea is pure manipulation. A bank that wants to see a hike might be buying Fed funds futures to try and somehow manipulate the Fed’s thinking.

 

Or it could be some other kind of leak from the Fed?

 

Or maybe someone is just making a big bet it’s going to happen as they take a closer look at the data.

 

What’s curious is that the US dollar hasn’t gone along for the ride. That suggests it’s not fundamental.

While on the topic we note that 1 Year OIS topped 1.00% for the first time since Nov 2008…

 

*  *  *

This is not good for our entry level workers:  Wendy’s is unleashing 1000 robots to counter the higher labour costs

(courtesy zero hedge)

Minimum Wage Massacre: Wendy’s Unleashes 1,000 Robots To Counter Higher Labor Costs

In yet another awkwardly rational response to government intervention in deciding what’s “fair”, the blowback from minimum wage demanding fast food workers has struck again. Wendy’s plans to install self-ordering kiosks in 1,000 of its stores – 16% of its locations nationwide.

“Last year was tough — 5 percent wage inflation,” said Bob Wright, Wendy’s chief operating officer, during his presentation to investors and analysts last week. He added that the company expects wages to rise 4 percent in 2017. “But the real question is what are we doing about it?”

Wright noted that over the past two years, Wendy’s has figured out how to eliminate 31 hours of labor per week from its restaurants and is now working to use technology, such as kiosks, to increase efficiency.

Wendy’s chief information officer, David Trimm, said the kiosks are intended to appeal to younger customers and reduce labor costs. Kiosks also allow customers of the fast food giant to circumvent long lines during peak dining hours while increasing kitchen production.

As Dispatch.com reports, the Dublin-based burger giant started offering kiosks last year, and demand for the technology has been high from both customers and franchise owners.

“There is a huge amount of pull from (franchisees) in order to get them,” David Trimm, Wendy’s chief information officer, said last week during the company’s investors’ day.

“With the demand we are seeing … we can absolutely see our way to having 1,000 or more restaurants live with kiosks by the end of the year.”

A typical store would get three kiosks for about $15,000. Trimm estimated the payback on those machines would be less than two years, thanks to labor savings and increased sales. Customers still could order at the counter.

Kiosks are where the industry is headed, but Wendy’s is ahead of the curve, said Darren Tristano, vice president with Technomic, a food-service research and consulting firm.

“They are looking to improve their automation and their labor costs, and this is a good way to do it,” he said.

Who could have seen that coming? As we noted previously, minimum wage laws – while advertised under the banner of social justice – do not live up to the claims made by those who tout them. They do not lift low wage earners to a so-called “social minimum”. Indeed, minimum wage laws — imposed at the levels employed in Europe — push a considerable number of people into unemployment. And, unless those newly unemployed qualify for government assistance (read: welfare), they will sink below, or further below, the social minimum.

As Nobelist Milton Friedman correctly quipped, “A minimum wage law is, in reality, a law that makes it illegal for an employer to hire a person with limited skills.”

Despite the piling up mountain of evidence on the harmful “unintended consequences” of artificially high minimum wages, we suspect we already know how this story ends.  After all, it’s much easier to win elections by promising people more stuff rather than less.  And, as an added bonus, when it all goes horribly wrong it’s very easy to lame the blame at the feet of the wealthy 1%’ers who are behind all the layoffs. Checkmate.

END

More soft data and thus garbage:

Chicago PMI Rebounds To 2-Year Highs After January Crash

After crashing to its lowest print in a year (in January), MNI’s Chicago PMI soared in February to 57.4 – well above the highest expectation – to the highest since Jan 2015.

The median estimate of 35 economists was 53.5 – this surge to 57.4 is above the highest of those expectations with 6 of the sub-components rising.

 

The biggest spike was in Prices Paid – surging to 68.6 – as stagflation once again rears its ugly head.

Another ‘soft’ survey data beat to go with the ‘hard’ data misses.

 

end

 

USA retailers are taking it on the chin:  it seems that many “bricks and mortar” operations are having their problems

(courtesy zero hedge)

Number Of Distressed US Retailers Highest Since The Great Recession

Tyler Durden's picture

2016 was a rough year for the so-called brick-and-mortar retailers with several mall-based apparel companies, including Aéropostale, Pacific Sun and American Apparel, being forced to seek chapter 11 bankruptcy protection.  Meanwhile, The Sports Authority didn’t even bother with a reorg plan as creditors decided that a liquidation was the best way to maximize value for creditors.

But it’s not just the niche apparel retailers that are having a hard time competing for those scarce consumer dollars.  Target plunged as much as 14% on the open this morning after announcing that steep price cuts would be required in 2017 to compete with the likes of Wal-Mart and the online retailing giant, Amazon (see “Target Plunges 12% After Missing Lowest EPS Estimate, Slashing Outlook“).

Unfortunately, at least according to Moody’s retail credit analyst Charlie O’Shea, the environment for retailers in the U.S. is likely to get worse before getting better. As Moody’s notes, the number of distressed U.S. retailers has more than tripled since the Great Recession of 2008-2009, and with $5 billion worth of debt maturities over the next 4 years, the situation is likely to get much worse.

Over the past six years the number of US retailers on the lowest and distressed tier of its rating spectrum has tripled, Moody’s Investors Service says in a new report. Not since the 2008-09 recession has the percentage been so high, and the rising tide coincides with an increasing number of such companies across all industries.

 

“Moody’s-rated US retailers rated Caa or Ca today make up just over 13% of our total rated retail portfolio, which is the highest level since the Great Recession, when this group comprised 16% of the portfolio,” said Moody’s Vice President Charlie O’Shea. “And the increase comes at the same time as the broader universe of Caa rated companies is likewise growing.”

Retailers

 

Meanwhile, the latest round of retailing failures is just another example of the unintended consequences of the Fed’s “lower for longer” interest rate policy as private equity sponsors took advantage of cheap debt capital to snap up retailers with minimal equity exposure.  As Moody’s accurately notes, once the retail meltdown starts, companies can either choose to give up volume to preserve margin or slash prices resulting in a ‘race to the bottom’…

This situation comes on the heels of a protracted period of low interest rates, when the availability of cheap money serves as a “dinner bell” for sponsors to feast on target companies, O’Shea says in “Distressed Retailers Are on the Rise; Who’s Next?” Each such cycle begets a new pool of B2 or B3 rated companies, which don’t have far to fall into the lowest rating tier. Among companies, Claire’s, J Crew, Tops and rue21 have all been hamstrung with weak credit metrics after taking on high levels of debt to fund acquisitions.

 

And while the number of low-rated retailers is growing, so are debt maturities, Moody’s says. The 19 Caa/Ca companies in the agency’s retail portfolio owe roughly $5 billion in debt through 2021, with about 40% of this due by the end of 2018 and a spike during 2019. While the credit markets remain open to companies up and down the rating spectrum, that could change abruptly if investor sentiment turns. Among other considerations, interest rates have begun to trend upward, while US speculative-grade companies have a record $1 trillion of debt coming due in the next five years, which could make refinancing much more difficult for distressed names.

 

Meanwhile, a larger pool of low-rated retailers also poses challenges for their stronger competitors. “As they struggle to survive, distressed retailers can take more desperate measures, including highly promotional pricing that can border on irrational,” O’Shea added. “This leaves stronger firms with the choice of either competing in a race to the bottom, or giving up sales in order to preserve margin.”

clearly Target has chosen the “race to the bottom” approach…

 

end

 

Well that about does it for tonight

I will see you tomorrow night

Harvey

 

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: