March 3/Gold and silver rise sharply on Janet Yellen’s speech/A must read from Ted Butler/Deutsche bank tumbles on a new 10 billion euro stock offering/Ukraine ultra nationalists blockade coal from rail transportation to the rest of the country/Libor rates in the USA rising/No change in the Gold GLD but in silver: two withdrawals: 125,000 oz and a huge 2.365 million oz/Final draft with updates on Central Fund of Canada and Sprott late tonight/

Gold at (1:30 am est) $1225.50 down $6.40

silver was : $17.70:  down 0 CENTS (unchanged)

Access market prices:

Gold: $1235.00

Silver: $17.98

For comex gold:

MARCH/ 

NOTICES FILINGS TODAY FOR MARCH CONTRACT MONTH:  5 NOTICE(S) FOR 500 OZ.  TOTAL NOTICES SO FAR: 44 FOR 3900 OZ    (0.1368 TONNES)

For silver:

 

For silver: MARCH

302 NOTICES FILED TODAY FOR 1,510,000 OZ/

Total number of notices filed so far this month: 1420 for 7,100,000 

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.

end

 

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest FELL by ONLY 2543 contracts DOWN to 197,332 with respect to YESTERDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.  0.986 BILLION TO BE EXACT or 140% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MARCH MONTH: THEY FILED: 302 NOTICE(S) FOR 1,510,000 OZ OF SILVER

In gold, the total comex gold ROSE BY 3,315  contracts DESPITE THE FALL IN  THE PRICE GOLD ($17.00 with YESTERDAY’S trading ).The total gold OI stands at 444,157 contracts.

we had 5 notice(s) filed upon for 500 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

:

We had a huge change in tonnes of gold at the GLD: a withdrawal of 2.96 tonnes

Inventory rests tonight: 840.58 tonnes

.

SLV

We had two transactions today:

i)we had a small changes in silver into the SLV: a withdrawal of 125,000 oz and this would be to pay for fees.

ii) an huge withdrawal of 2.368 million oz of silver

THE SLV Inventory rests at: 332.788 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 ONLY 2543 contracts DOWN to 197,332 AS SILVER WAS DOWN A MONSTROUS 74 CENTS with YESTERDAY’S trading.  The gold open interest ROSE by 3315 contracts UP to 444,157 DESPITE THE FALL IN THE PRICE OF GOLD OF $17.00  (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

2C/ FEDERAL RESERVE BANK OF NY/GOLD MOVEMENT REPORT

(HARVEY)

2d) COT report

(Harvey)

3. ASIAN AFFAIRS

i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 11.71 POINTS OR .36%/ /Hang Sang CLOSED DOWN 175.35 POINTS OR 0.74% . The Nikkei closed DOWN  95.63 POINTS OR 0.49% /Australia’s all ordinaires  CLOSED DOWN 0.78%/Chinese yuan (ONSHORE) closed DOWN at 6.8978/Oil FELL to 52.70 dollars per barrel for WTI and 55.26 for Brent. Stocks in Europe ALL MIXED ..Offshore yuan trades  6.9067 yuan to the dollar vs 6.8978  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  WIDENS CONSIDERABLY AS POBC FAILS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN WEAKER AS IS OFFSHORE YUAN COUPLED WITH THE WEAKER DOLLAR. CHINA SENDS A MESSAGE TO THE USA NOT TO RAISE RATES

3a)THAILAND/SOUTH KOREA/NORTH KOREA

This is scary: the White House is exploring use of military force against North Korea

( zero hedge)

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

4. EUROPEAN AFFAIRS

i)EU/DRAGHI

The EU inflation rate has now climbed to 2% and the Northern group wants Draghi to curtail QE.  The problem of course is that there is nobody out there that will buy Italian bonds.

 

Quite a dilemma!!

(courtesy Mish Shedlock/Mishtalk)

ii)EU

My goodness:  The EU is now threatening member states with fines if they fail to accept refugees

( zero hedge)

 

iii)DEUTSCHE BANK

Part A

Deutsche bank’s stock tumbles as it announces another capital boost and a saleof some of it’s asset management business

( zero hedge)

ivDEUTSCHE BANK

PART B

DB then re-tumbles on the official announcement of a 10 billion euro capital raise

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)UKRAINE/

This is deadly:  The Soros backed ultra nationalistic party in the Ukraine  (we will call it Maidan) has now orchestrated a coal blockade from the rich mineral eastern Ukraine from reaching the western Ukraine.  The goal is for Soros to buy the rich minerals at pennies on the dollar.  This will bring in the Russians

( Johnson/SHTFPlan.com)

ii)The Ukraine Tax Chief (equivalent of the director of the IRS) is gunning for an Oscar as he “suffers” a heart attack when informed of his arrest over a 75 million dollars theft:

(courtesy zero hedge)

iii)RUSSIA

Putin is angry on the malicious campaign by the Obama unknowns to damage USA/Russia ties:

(courtesy zerohedge)

6.GLOBAL ISSUES

i)INDIA

The demonetization of the rupee bills has crushed Indian small business

( zerohedge)

ii)Mexico 

Wilbur Ross talks about a sensible NAFTA deal and all of a sudden the Mexican Peso rises and the dollar falls:

( zero hedge)

7. OIL ISSUES

Production rises greater than 9 million barrels per day on a continual rise in rig counts.  Thus expect production to further increase in size. Almost all of the gains came from the Permian basin.  Exxon is also entering the shale business as it bets big on this type of production

(courtesy zero hedge)

8. EMERGING MARKETS

9.   PHYSICAL MARKETS

i)A great commentary from Alasdair Macleod on how the thinking of gold with central banks is changing.

( Alasdair Macleod)

ii)Chris Powell writes on yesterday’s drive by shooting. What is more amazing is that unknown to Chris and all of us, was the fact that the open interest in entire silver comex contract in preliminary data actually rose despite the huge 74 cent downfall. It seems nobody liquidated

( Chris Powell/GATA)

a must read…

iv) Andrew Maguire and this is a must listen to commentary on gold/silver:

( Andrew Maguire/Goldseek.com/

v)Ted Butler..

Amazing:  this goes to the heart of what happened to silver pricing and how today’s reading of open interest in silver hardly budged lower despite the huge whacking.
a must read…
(courtesy Ted Butler)

10.USA STORIES

i).Janet’s long awaited speech:  Again she states that a March rate hike is on the table if the economy evolves as expected:

nothing but B.S.

(courtesy zero hedge)

 ii)Libor rates are rising!

The following deadly:  a rising libor rates:

 

( Robert H on the rising Libor rates)

iii)Soft data Markit USA Service data  gives conflicting data to the ISM Service:

It’s service PMI dropped to the largest in the year as Markit warns that business optimism has mellowed and companies are becoming more cautious. The ISM data surged to 15 month highs

( zero hedge)

iv)It never ends…another undisclosed meeting with the Russian ambassador.  Isn’t it what they are suppose to do?

( zero hedge)

v)This is interesting:  The public University of California, San Francisco just fired 79 IT workers and these guys have been replaced by H -1B visa holders from India. We just can’t wait until Trump comments on this

( zero hedge)

vi)Caterpillar

The CEO is sorry that shareholders had to experience a raid by the USA Feds and IRS

( zero hedge)

vii)Mish has been following this development for us for quite some time.  It now looks like the private Pension Benefit Guarantee Corporation, the fund that guarantees pensions when the initial pension defaults, is itself penniless and millions will be affected

( Mish Shedlock/Mishtalk)

 

Let us head over to the comex:

The total gold comex open interest ROSE BY 3,315 CONTRACTS DOWN to an OI level of 444,157 with THE  FALL IN THE  PRICE OF GOLD ( $17.00 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 43 contracts DOWN to 45. We had 15 contact(s) served upon yesterday, so we lost 28 CONTRACTS or 2,800  ounces will not stand for delivery.  The next  active contract month is April and here we saw it’s OI FALL by 4,238 contracts DOWN TO 267,032. The non active May contract month added 96 contracts and thus its OI is 199 contracts. The next big active month is June and here the OI ROSE by 6410 contracts up to 96,162.

 

We had 5 notice(s) filed upon today for 500 oz

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 And now for the wild silver comex results.  Total silver OI FELL BY ONLY 2,543 contracts FROM  200,761 DOWN to 197,332 WITH YESTERDAY’S  HUGE DRIVE BY SHOOTING OF SILVER AS IT FELL TO THE TUNE OF 74 CENTS. We are moving CLOSER TO 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

We are in the active delivery month is March and here the OI decreased by 421 contracts down to 2952 contracts. We had 289 notices served upon yesterday so we lost 132 contracts or an additional 660,000 oz  will not stand for delivery. This is totally unbelievable.  How could so many be late in rolling.

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 just like they did today.

The April contract month LOST 13 contracts to 978 contracts. The next active contract month is May and here the open interest LOST 1783 contracts up to 155,991 contracts.

We had 302 notice(s) filed for 1,510,0000 oz for the MARCH 2017 contract.

VOLUMES: for the gold comex

Today the estimated volume was 262,057  contracts which is very good.

Yesterday’s confirmed volume was 300,541 contracts  which is excellent

volumes on gold are getting higher!

INITIAL standings for MARCH
 March 3/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
16,197.15 OZ
Manfra
Scotia
501 kilobars
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
 1607.50 oz
50 kilobars
Manfra
No of oz served (contracts) today
 
5 notice(s)
500 oz
No of oz to be served (notices)
40 contracts
4000 oz
Total monthly oz gold served (contracts) so far this month
44 notices
4400 oz
0.1368 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     16,107.15 oz
Today we HAD 3 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 1  customer deposit(s):
 i) Into Manfra: 1607.50 oz
50 kilobars
total customer deposits; 1607.50  oz
We had 2 customer withdrawal(s)
 i) Out of Manfra; 32.15 oz
ii) Out of Scotia: 16,075.00 oz
total customer withdrawal: 16,107.15 oz
501 kilobars
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 5 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 (44) x 100 oz or 4400 oz, to which we add the difference between the open interest for the front month of MARCH (45 contracts) minus the number of notices served upon today (5) x 100 oz per contract equals 8,400 oz, the number of ounces standing in this NON  active month of MARCH.
 
Thus the INITIAL standings for gold for the MARCH contract month:
No of notices served so far (44) x 100 oz  or ounces + {(45)OI for the front month  minus the number of  notices served upon today (5) x 100 oz which equals 8400 oz standing in this non active delivery month of MARCH  (.2612 tonnes)
 
 
 
 
 
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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: 0.3483 tonnes
total for the 15 months;  244.95 tonnes
average 16.330 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 1,419,840.049 or 44.162 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,928,936.348 or 277.720 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 277.720 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
 March 3. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
112,253.686 0z
Delaware
JPM
Scotia
Deposits to the Dealer Inventory
1,139,693.720 oz
Brinks
CNT
Deposits to the Customer Inventory 
 600,691.63 oz
JPMorgan
Scotia
No of oz served today (contracts)
302 CONTRACT(S)
(1,510,000 OZ)
No of oz to be served (notices)
2650 contracts
(13,250,000  oz)
Total monthly oz silver served (contracts) 1420 contracts (7,100,000 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  889,864.6 oz
today, we had  2 deposit(s) into the dealer account:
 i) Into Brinks:  541,335.120 oz
ii) Into CNT: 598,358.600 oz
total dealer deposit: 1,139,693.720 oz
we had nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 2 customer withdrawal(s):
 i) Out of Delaware: 10,406.886
ii) Out of jPMorgan: 931.300 oz’
iii) Out of Scotia: 100,915.500 oz
TOTAL CUSTOMER WITHDRAWALS: 112,253.686 oz
 we had 2 customer deposit(s):
 i) Into JPMorgan: 918.600 oz
ii) Into Scotia; 599,773.03 oz
***deposits into JPMorgan have now resumed.
total customer deposits;  nil  oz
 
 we had 1  adjustment(s)
i) out of CNT:  2,933.89 oz leaves the customer and enters the dealer account of CNT
The total number of notices filed today for the MARCH. contract month is represented by 302 contract(s) for 1,510,000 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 1420 x 5,000 oz  = 7,100,000 oz to which we add the difference between the open interest for the front month of MAR (2952) and the number of notices served upon today (302) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the March contract month:  1420(notices served so far)x 5000 oz  + OI for front month of Mar.( 2952 ) -number of notices served upon today (302)x 5000 oz  equals  20,350,000 oz  of silver standing for the Mar contract month. This is  now average for an active delivery month in silver.  We lost 132 contracts or an additional 660,000 oz will not stand.  
 
END
Volumes: for silver comex
Today the estimated volume was 71,542 which is huge!!!
FRIDAY’S  confirmed volume was 103,216 contracts  which is gigantic.
To give you an idea of volume yesterday’s confirmed drive my shooting volume::  103,216 contracts equates to 516 million oz or 74% of ANNUAL GLOBAL PRODUCTION EX CHINA EX RUSSIA.
 
Total dealer silver:  34.863 million (close to record low inventory  
Total number of dealer and customer silver:   188.331 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

 

COT REPORT

At 3:30 pm we receive the COT report.  The report always ends on the Tuesday preceding today.

Today’s report is a dandy. You will recall that the bankers initiated their raids starting on Tuesday Feb 28, and thus the data includes the raid.

 

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
247,494 83,696 54,410 100,180 280,087 402,084 418,193
Change from Prior Reporting Period
27,821 -12,214 -8,880 -3,681 36,662 15,260 15,568
Traders
165 89 73 42 48 238 182
 
  Small Speculators      
  Long Short Open Interest    
  43,997 27,888 446,081    
  3,653 3,345 18,913    
  non reportable positions Change from the previous reporting period  
COT Gold Report – Positions as of Tuesday, February 28, 2017

Our large speculators;

my goodness!!

Our large specs who have been long in gold added a monstrous 27,821 contracts to their long side

Those large specs that have been short in gold covered 12,214 contracts from their short side

Our commercials;

Those commercials that have been long in gold pitched 3681 contracts from their long side.

Those commercials that have been short in gold added a GIGANTIC 36,662 contracts to their short side.  (Next week, we should see added commercial short selling on the first 3 days  of that report/Wed. Thur. and today)

Our small specs:

Those small specs that have been long in gold added 3653 contracts to their long side

those small specs that have been short in gold added 3343 contracts to their short side.

 

Conclusion: 

commercials go net short by a whopping 40,343.  That is huge and no wonder we had a raid on Wed.Thurs and part of today.

 

Let’s hop over and see what the silver COT reveals;

 

Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
115,229 19,806 8,521 50,081 158,091
6,381 -1,025 -13,625 -1,853 3,924
Traders
100 33 34 33 39
Small Speculators Open Interest Total
Long Short 197,629 Long Short
23,798 11,211 173,831 186,418
-1,421 208 -10,518 -9,097 -10,726
non reportable positions Positions as of: 145 97
  Tuesday, February 28, 2017   © SilverSeek

Our large speculators:

Those large specs that have been long in silver added 6381 contracts to their long side

those large specs that have been short in silver covered 1025 contracts from their short side.

 

Our commercials;

those commercials who have been long in silver pitched 1853 contracts from their long side.

those commercials who have been short in silver added a rather small 3924 contracts to their short side if you compare it to gold.

Our small specs;

Those small specs who have been long in silver pitched 1421 contracts from their long side (surprising)

those small specs that have been short in silver added 208 contracts to their short side.

 

CONCLUSIONS 

the commercials go net short by 5777 contracts but it seems that they are very timid to supply short contracts. The open interest on the silver complex hardly budged despite the huge whacking of 74 cents yesterday. It maybe that the strong handed longs are refusing to buckle no matter what the heat is provided by the bankers

 

 

And now the Gold inventory at the GLD

March 3/ a huge withdrawal of 2.96 tonnes of gold from the GLD/Inventory rests at 840.58 tonnes

March 2/a deposit of 2.37 tonnes of gold into the GLD/Inventory rests tat 843.54 tonnes

March 1/no change in gold inventory at the GLD/Inventory rests at 841.17 tonnes

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
March 3 /2017/ Inventory rests tonight at 840.58 tonnes
*IN LAST 102 TRADING DAYS: 109.23 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 48 TRADING DAYS: A NET  15.98 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017: a net    41.41 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory
March 3: two transactions:
i)March 3/ a small change, a withdrawal of 125,000 oz and this would be to pay for fees like insurance, storage etc/inventory now stands at 335.156 million oz.
ii) a huge withdrawal of 2.368 million oz/inventory rests this weekend at 332.788 million oz
March 2/no changes in silver inventory (despite the raid) at the SLV/Inventory rests at 335.281 million oz
March 1/no changes in inventory at the SLV/Inventory rests at 335.281 million oz/
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
.
March 3.2017: Inventory 332.788  million oz
 end

NPV for Sprott and Central Fund of Canada

 

1. Central Fund of Canada: traded at Negative 7.2 percent to NAV usa funds and Negative 7.4% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.5%
Percentage of fund in silver:36.4%
cash .+0.1%( Mar 3/2017) 
.
2. Sprott silver fund (PSLV): Premium RISES  to -.65%!!!! NAV (Mar 3/2017) 
3. Sprott gold fund (PHYS): premium to NAV falls to  – 0.20% to NAV  ( Mar 3/2017)
Note: Sprott silver trust back  into NEGATIVE territory at -0.65% /Sprott physical gold trust is back into NEGATIVE territory at -0.20%/Central fund of Canada’s is still in jail.
 

end

Major gold/silver trading/commentaries for FRIDAY

GOLDCORE/BLOG/MARK O’BYRNE

Silver On Sale – 4% Fall On Massive $2 Billion of Futures Selling

Silver On Sale – 4% Fall On Massive $2 Billion of Futures Selling

Silver fell a very sharp 85 cents from $18.40 per ounce to as low as $17.65 per ounce yesterday for a 4.25% price fall soon after the London bullion markets closed yesterday despite no market news or corresponding sharp moves in other markets.

silver-on-sale-2017
Silver had surged 15% in the first two months and had seen ten consecutive weeks of gradual gains. It had made convincing closes above the psychological $18 an ounce level and the 200 day moving average (DMA) at 18.155 and made 3-month highs only yesterday.

Silver Prices (LBMA)

03 Mar: USD 17.66, GBP 14.44 & EUR 16.76 per ounce
02 Mar: USD 18.33, GBP 14.93 & EUR 17.42 per ounce
01 Mar: USD 18.33, GBP 14.89 & EUR 17.40 per ounce
28 Feb: USD 18.28, GBP 14.70 & EUR 17.24 per ounce
27 Feb: USD 18.34, GBP 14.77 & EUR 17.33 per ounce
24 Feb: USD 18.27, GBP 14.56 & EUR 17.23 per ounce
23 Feb: USD 18.00, GBP 14.42 & EUR 17.06 per ounce

Silver investors were gaining confidence and dealers were experiencing robust demand for silver coins and bars. Suddenly at almost exactly 1630 GMT yesterday as European markets were closing, some entity decided to dump $2 billion worth of silver contracts into the futures market in minutes. A huge 23,000 silver contracts which is the equivalent of 1.15 million ounces of silver was dumped on the market:


Source: Zero Hedge

“Over 23,000 Silver futures contracts suddenly puked into the market as soon as Europe closed…” as noted by Zero Hedge.

Silver quickly fell over 4% and gave up much of the gains of the last month. Gold fell $14.90 or 1.2% to $1235.00.

Rate hike expectations and the risks of a rate hike on March 15 are being attributed for the sharp silver price fall.

However, one would have thought that this was already priced into the market and therefore why the sudden 4% fall in minutes yesterday. It was unusual as there was no breaking news, no bearish silver or gold related news and indeed no important news or announcements from the Federal Reserve.

Indeed, most other markets were becalmed with no major moves in most markets except for gold and silver.

GATA Chairman Bill Murphy’s “Midas” commentary at LeMetropoleCafe.com reviewed the smash in detail, as with commodity broker J.B. Slear’s minute-by-minute tracking of the smash as contracts were dumped on the market in great bulk “starting at 11:25 a.m. for 40 minutes straight:”

1,071 contracts at 11:25.
5,648 at 11:30.
2,798 at 11:35.
1,175 at 11:40.
2,815 at 11:45.
3,319 at 11:50.
1,517 at 11:55.
2,357 at 12:00.
5,861 at 12:05.
4,702 at 12:10.

“That’s a total of 30,192 contracts in 40 minutes.”

Banks have been found guilty of manipulating most markets in recent years including the gold and silver markets. GATA has amassed a huge amount of evidence over the years and as recently as December came new revelations of silver fixing: Silver Fixing By Banks Proven In Traders Chats

Therefore, it stands to reason to suspect that the massive sell off may again have been by a bank or a proxy hedge fund or other institutional fund manipulating the silver market – either for private gain and trading profits or indeed on behalf of the official sector and central banks.

It could be a combination whereby banks realise that central banks are quietly pleased for gold and silver prices to be manipulated lower and banks can profitably manipulate markets believing that they are above the law.

Worst case scenario they get a slap on the wrist and a fine that is small in the light of their massive profits. Some poor patsy “lone wolf” kid trader is found to take the blame and the senior managers and executives get way with this criminal activity.

Golden Opportunity for Silver Buyers
The important point to remember here is that small retail bullion buyers and investors appear to be being defrauded by the largest players in the market – massive banks with massive liquidity provided to them by central banks.

It is also important to remember that this creates an opportunity. The suppression of gold and silver prices means that precious metals remain undervalued – especially versus the assets that banks and central banks favour – property, stocks and especially bonds.

goldcore-vat-free-silverSilver Coins VAT Free in Ireland, UK and EU

Manipulation is an opportunity for investors as it allows them to accumulate physical gold and silver at artificially depressed prices.

The history of gold market ‘fixing’ and manipulation is of short term success followed by ultimate failure and much higher prices. This was seen after the ‘London Gold Pool’ failed spectacularly in the late 1960s. This was followed by gold and silver’s massive bull markets in the 1970s.

The gold and silver beach balls have been pushed near the bottom of the very small ‘precious metals pool.’ The lower they are pushed in the short term, the higher it will surge in the medium and long term.

Access breaking news and research here

 

http://www.goldcore.com/us/gold-blog/silver-sale-4-fall-massive-2-billion-futures-selling/

END-

 

A great commentary from Alasdair Macleod on how the thinking of gold with central banks is changing.

(courtesy Alasdair Macleod)

 

 

Alasdair Macleod: Central banks and gold

Section:

3:33p ET Thursday, March 2, 2017

Dear Friend of GATA and Gold:

GoldMoney research director Alasdair Macleod today examines the world’s geo-political and economic situation and sees the dissolution of the European Union, flight from the U.S. dollar, and a trend toward the yuan and gold. Macleod’s analysis is headlined “Central Banks and Gold” and it’s posted at GoldMoney here:

https://wealth.goldmoney.com/research/goldmoney-insights/central-banks-a…

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

 

 

END

 

Chris Powell writes on yesterday’s drive by shooting. What is more amazing is that unknown to Chris and all of us, was the fact that the open interest in entire silver comex contract in preliminary data actually rose despite the huge 74 cent downfall. It seems nobody liquidated

(courtesy Chris Powell/GATA)

a must read…

Now that the silver rig is as obvious the gold rig, will anyone else speak out?

Section:

10:08p ET Thursday, March 2, 2017

Dear Friend of GATA and Gold:

Central banks gave their gold game away in April 2013 when they used the futures markets to knock the price down by more than $200 with relentless selling over several days. The selling had to be inspired by central banks because there was no important relevant news in the market to spook investors and because nobody else would have had access to the huge amounts of metal and capital involved.

All major central banks had to be participating or at least acquiescing in the smash, because any of them could have used it to buy metal at a discount. For many months before April 2013 the gold market was said to have official Chinese support underneath it. In April 2013 that support disappeared.

Today someone took the hammer to silver futures to an extent not seen in a long time, driving the price down by almost a dollar in less than an hour. The news potentially affecting the market was only the usual speculation about an increase in U.S. interest rates.

Of course the invaluable Zero Hedge quickly took note of the smash and the “massive volume” of sudden selling:

http://www.zerohedge.com/news/2017-03-02/silver-collapsing-massive-volum…

GATA Chairman Bill Murphy’s “Midas” commentary at LeMetropoleCafe.com reviewed the smash in detail, as with commodity broker J.B. Slear’s minute-by-minute tracking of the smash as contracts were dumped on the market in great bulk “starting at 11:25 a.m. for 40 minutes straight.” Slear counted it this way:

1,071 contracts at 11:25.
5,648 at 11:30.
2,798 at 11:35.
1,175 at 11:40.
2,815 at 11:45.
3,319 at 11:50.
1,517 at 11:55.
2,357 at 12:00.
5,861 at 12:05.
4,702 at 12:10.

“That’s a total of 30,192 contracts in 40 minutes.”

Toronto gold and silver market analyst Harvey Organ estimated that these contracts represented more than $2 billion in notional value even as that amount of metal is not available anywhere in the world.

Even the most obtuse apologists for the monetary metals markets will have to admit that this kind of selling was not designed to get a good price for the seller but to undertake a bear raid and protect or profit from a short position being managed by the biggest player or players in the market.

The only players that big are central banks or investment banks fronting for them.

But as of this hour the silver smash seems to have gone unnoticed by mainstream financial news organizations. Even most internet sites devoted to the monetary metals appear to be silent about it. And if the smash itself is to be overlooked, no one will be asking who perpetrated it and why — not even the monetary metals mining industry itself, though documents filed in 2014 with the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission certify that governments and central banks are surreptitiously trading all major U.S. commodity and financial futures contracts:

http://www.gata.org/node/14385

http://www.gata.org/node/14411

The longstanding policy and mechanisms of Western governments and central banks in suppressing the monetary metals and thereby impairing all markets have been summarized and documented by GATA here:

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

Yes, governments and central banks have enormous power. But their power here is still limited here because it cannot succeed without deception. Markets cannot be rigged unless buyers and sellers can be fooled. So the greatest power of governments and central banks here is only the power conferred on them by the monetary metals industry’s fecklessness and by the cowardice and corruption of mainstream financial news organizations.

Now that the rigging is as obvious in silver as it has been in gold, will anyone in the mining industry speak out? Will anyone in a mainstream financial news organization dare to pose a few specific, critical questions to governments and central banks and report their answers or refusals to answer?

Or must opposing this cosmic injustice still be left to the amateurs of GATA?

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

END

 

 My good friend Andrew Maguire and this is a must listen to commentary on gold/silver:

(courtesy Andrew Maguire/Goldseek.com/

Ted Butler..
Amazing:  this goes to the heart of what happened to silver pricing and how today’s reading of open interest in silver hardly budged lower despite the huge whacking.
a must read…
(courtesy Ted Butler)

Has The Worm Turned?

Theodore Butler

|

March 3, 2017 – 9:23am

A timely question from a long-time subscriber resulted in crystalizing an idea that was on the distant periphery of my conscious thought. The great thing about the idea is that it fully incorporates all the data points up until now as I have been presenting them. But please be forewarned, even though all the important factual dots seem to be connected, the premise must still be considered speculative at this point. On the other hand, should the premise prove to be accurate, it could amount to no less than the game-changer in silver (and gold).

Alejandro’s question concerned whether the managed money technical funds who refused to add to short positions in silver back in the fall had to have cooperated in some way in reaching that decision. You’ll remember that for the first time in years, the technical funds didn’t add to COMEX silver short positions as they always had on similar previous price declines. I opined at the time that some type of cooperation was likely, seeing how the managed money technical funds were a subset of the investment industry that involved hundreds of billions of dollars of investor assets under management and there existed well-known industry trade associations in which mutual concerns were addressed.

Alex asked his question in such a way that it dawned on me that the funds must have cooperated in some way. Cooperation was not just likely, it was required in order to explain the technical funds’ sudden change in behavior. That’s when the lightbulb went off in my head – the failure to go short silver a few months ago could only have come from collective deliberation and cooperation on the part of a number of managed money technical funds. Let me add some background and then dissect the simple observation that some managed money traders collectively agreed to forgo shorting silver a few months ago (a decision that seems wise in hindsight).

For background purposes, let me first acknowledge that I have been steadfast from the beginning (more than 30 years ago) in my conviction that the silver manipulation that I uncovered back then and have continued to write about to this day, was the result of market actions taken by large trading entities on the COMEX, as opposed to some government-sponsored plan to suppress the price of silver or gold. To be sure, I can’t prove that governments aren’t involved in some way, such as the CFTC being prodded to investigate silver and then looking the other way when the evidence was clear; but I never believed that the government orchestrated the manipulation from the get go. The good news (to me) is that today’s theme is consistent with the silver manipulation being (mostly) a non-government run operation.

The silver manipulation has been run by large banks (with JPMorgan being the biggest bank crook since 2008) versus the managed money technical funds; with the banks running the scam and the technical funds as the victims and essential enablers. The best example that comes to mind is the decades’ old series of supposed basketball “games” between the Harlem Globetrotters and the Washington Generals. Just like the Generals served as fodder to showcase the talents of the Globetrotters, the technical funds have been little more, up until this point, than the enablers to the COMEX bank crooks.

The lynchpin to the ongoing silver scam was the near slave-like adherence of the technical funds to mechanical price signals. These funds always bought as prices were rising and sold (and sold short) when prices were falling, with particular emphasis on moving average penetrations. So mechanical and rigid were the managed money technical funds to price change that it was relatively easy to predict how they would behave in any price change environment. This can be seen in the widespread and growing attention to developments in COT reports. The technical funds’ behavior was such that on numerous past occasions I referred to them as “braindead” – not necessarily that they were stupid, just incredibly mechanical and disciplined beyond reason in their trading methodology.

However, neither did I view the technical funds as particularly bright on a collective basis, since they were invariably the patsies and victims of the banks’ ability to rig prices on the COMEX. That is, up until recently. The collective decision not to add aggressively to COMEX silver short positions may have signaled that the worm may have finally turned. If so, then the game itself will have changed.

Since there had to be active collaboration and agreement among some managed money traders not to sell short aggressively in COMEX silver futures this last go-around (there was one such trader which did short), there had to be a valid reason behind the collective decision. The inescapable and only valid reason had to be avoiding a trap in which new shorts in silver at that time would only lead to losses when prices turned higher (which occurred).

This leads to another question – could the managed money traders which did collectively decide not to short silver in a price hole do so without realizing the broader circumstances, namely, that they’ve been played like a cheap fiddle for decades by the banks? My answer is that they couldn’t see one without the other.

Along these same lines, it’s hard to overlook the circumstances of the past year as not contributing to the possible epiphany in thinking by the managed money traders. As I have recounted on a running basis, last year’s rally in gold and silver was largely driven by managed money buying and in which these traders flipped from a historically record large short position near the start of 2016, to a record long position by mid-summer in both COMEX gold and silver.

At the summer price highs, the managed money traders held a combined open unrealized profit in gold and silver of close to $4 billion, the most in history, with the counterparty commercial banks in the hole for that same amount. The banks were then able to turn the tables and get prices down yet again and the managed money profits disappeared into year end, as did the banks’ losses. This was the highest the COMEX money stakes had ever been and, therefore, was the most expensive lesson ever taught to the managed money traders. Please note, as is usually the case in these matters, it was much more a situation where large open profits evaporated, leaving small realized losses to the managed money traders after the dust settled; as opposed to it being a $4 billion loss straightaway.

Is it unreasonable to think that such a dramatic reversal of large open profits, following an endless string of previous similar experiences by the managed money traders might have woken them from their failure of not recognizing that they were the suckers at the COMEX poker table? Who knows – maybe they finally got ahold of what I’ve been writing for years. The real question all along was when were these patsies going to wake up and smell the coffee? We may have just been given the answer.

If the managed money traders have finally awoken to the realization that they were being played, as I suggest, what then would or could they do about it? Would they just quit the crooked game? Since quitting would mean voluntarily shutting down going businesses that provided many millions of dollars a year in ongoing fee income, that option would be absurd. Would the managed money traders take the counterparty banks to court to recover past losses? You or I may do that, but the managed money traders would be admitting to having been snookered all along, something not compatible with reassuring investors to continue to trust the funds in holding hundreds of billions of dollars of investor money.

The most logical (and perhaps only effective) course of action for the managed money traders to take, if they did finally wake up and realize just how the game was being played, would be to turn the tables – to change trading tactics in such a way to profit and not continue to do what has caused losses. In other words, for the managed money traders to set out to “fix them boys” – the crooked banks which had been cheating the technical funds for decades. How would the managed money traders do that? By not doing what was always done in the past and which was fully expected by the banks.

Not going short silver in the fall may have been only the start. Other documented facts since then suggest possible additional changes by the managed money technical funds. One such possible change is the recent large increase in managed money long positions put on in silver (but not in gold) on the rally from the end of December. Extrapolating through yesterday, it looks like the technical funds added 35,000 new silver longs, lifting the total managed money long position to more than 90,000 contracts.

The traditional way of looking at this would be to label the COT market structure as extremely bearish, given the very large managed money long position that would eventually be sold when the banks rigged silver prices lower. But what if the newly added longs aren’t sold and liquidated by enough technical funds this time around? It is possible that the newly added managed money silver long positions were purchased by the same or some of the same traders who just abstained from adding silver shorts a few months ago.

Let’s face it – it has been very unusual that the managed money traders have been much more aggressive in building up silver longs than gold longs over the past two months – I’ve been commenting on it endlessly. As it stands now, the managed money long position in silver is unusually large for such low silver prices. By my estimate, the average price at which the technical funds added the 35,000 net silver contracts over the past two months is around $17.30. I don’t think I recall a larger managed money silver long position at this low of a price. (Please don’t confuse this with the total managed money long position which includes an additional 60,000 contracts in the core non-technical fund variety. I’ll get into the overall money game at a different point).

If the managed money technical funds which just added 35,000 long contracts in COMEX silver futures turn out to be hoodwinked again by the banks and sell most or all of the added contracts at the lower prices arranged for by the banks, then the worm wouldn’t have turned and I may have wasted your time with today’s discussion. But if the 35,000 added contracts aren’t largely liquidated in the face of any price selloffs we may see ahead, then the indications are good that enough technical funds may have awoken to the scam and intend to act differently. Acting differently would be not to sell on the bankers’ engineered selloffs. The great thing about today’s new premise is that it is in the “either or” variety that I prefer. If the added technical funds sell out in the face of newly engineered price declines, then it’s the same old rigged game. But if the technical funds don’t sell, then we have a different game on our hands. Let me be clear – I’m not saying there won’t be selloffs, I’m saying that how the technical funds react to those potential selloffs will be all that matters.

If, by chance, the technical funds have no intention of selling out most of the recently added silver longs on lower prices, then the only reason for lower silver prices goes up in smoke. There’s little economic justification, even of the illegitimate kind, for lower silver prices apart from induced technical fund selling. If, as and when it becomes clear to the banks that no technical fund selling is likely to emerge on rigged lower prices, it shouldn’t be long before the banks stop trying to rig prices lower. Talk about a game-changer.

It is also appropriate to consider just who “them boys” might be that the technical funds may be setting out to fix. One boy certainly won’t be JPMorgan. Sure, JPM has been the big COMEX silver short for the past nine years, but it has also taken the opportunity, over the past six years, to build up the largest physical silver stockpile in history of some 550 million oz, thus immunizing the bank against any net loss on rising silver prices. There’s no way JPMorgan could not come out way ahead in a silver price rally. But the same can’t be said of the other 7 large commercial shorts on the COMEX, mostly foreign banks.

Subtracting JPM’s short position (28,000 contracts) from the net short position of the 8 largest traders leaves the 7 remaining traders short by 72,000 contracts, the equivalent of 360 million oz. That’s an average short holding of more than 10,000 contracts or 50 million oz each and not one of these 7 short sellers in a miner hedging future production or an entity that owns physical silver (how could they since JPM scarfed up all of the available metal). Every dollar movement in silver has a collective impact of $360 million in open or unrealized gains or losses. A $3 jump in the price of silver would create unrealized losses to the 7 big shorts of nearly $1.1 billion. While such unrealized losses have been sustained by these traders in the past, that’s not to say it wasn’t a time of stress for them. But now add in the possibility that the technical funds might not sell out on prices rigged lower and the equation changes drastically.

If the technical funds don’t sell on lower prices, it’s hard for me to see how some of the big 7 silver shorts and possibly all of them, once they realize that the game has changed, won’t panic and – for the very first time ever – rush to buy back silver short positions. This is a variation of my double cross premise, with both JPMorgan and the newly awaken technical funds putting it to the 7 large COMEX silver shorts. Should this all kick-in in earnest, it’s hard to see how silver prices won’t truly explode.

I even see a connection with the recent activity in gold which, in contrast to silver, has not seen as big a buildup in new managed money long positions, although that process appears to have started. I would still call the gold market structure extremely bullish for the reasons I’ve described for the past two months, namely, the lack of massive buying (yet) by the managed money traders indicated low risk and high profit potential to come. But in considering that the technical funds may have awoken in silver from a three-decade slumber, it also occurs to me that the same funds may have also come to realize that silver is the more critical market for positioning purposes and made a conscious collective decision to build up the silver long position first, because it is the most price sensitive.

The great thing about all this is that it must play out one way or the other – either the newly-added technical fund silver long positions will be liquidated at lower prices or they won’t be. If the added positions are liquidated at lower prices, then it would be safe to conclude that the technical funds haven’t learned as much as I’ve suggested. If, however, possible lower prices don’t result in the liquidation of these new long positions, then it is hard for me to see why silver prices would stay depressed and won’t in time race higher. It would be accurate to say that this is an equation where the price could move quite disproportionately to the upside, despite the appearance of a bearish market structure. For that reason, I am further resolved against selling at this time.

(Author’s note – this excerpted commentary was released to subscribers on Wednesday, March 1, just prior to the sharp and sudden price drop the next day. If anything, the price decline goes to the heart of the question – “will the managed money technical funds sell heavily into engineered price declines?” Future COT reports will tell the tale).

Ted Butler

March 3, 2017

end

 

Your early FRIDAY morning currency, Asian stock market results,  important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight

 
 

1 Chinese yuan vs USA dollar/yuan MUCH WEAKER AT  6.8978(HUGE DEVALUATION SOUTHBOUND   /OFFSHORE YUAN WIDENS HUGELY SURPASSING ONSHORE   TO 6.9067/ Shanghai bourse DOWN 11.71 POINTS OR .36%   / HANG SANG CLOSED DOWN 175.35 POINTS OR 0.74% 

2. Nikkei closed DOWN 95.63 POINTS OR 0.49%   /USA: YEN FALLS TO 114.34

3. Europe stocks opened ALL MIXED     ( /USA dollar index RISES TO  102.08/Euro DOWN to 1.0513

3b Japan 10 year bond yield: RISES TO    +.078%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 114.46/ 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::  52.70  and Brent: 55.26

3f Gold DOWN/Yen DOWN

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“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 DOWN for WTI and DOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.349%/Italian 10 yr bond yield DOWN  to 2.119%    

3j Greek 10 year bond yield RISES to  : 7.06%   

3k Gold at $1227.00/silver $17.64(8:15 am est)   SILVER MOVES AWAY FROM RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 5/100 in  roubles/dollar) 58.79-

3m oil into the 52 dollar handle for WTI and 55 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 A HUGE   DEVALUATION SOUTHBOUND   from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 114.46 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  1.0116 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0670 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  +.349%

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 2.501% early this morning. Thirty year rate  at 3.088% /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

All Eyes On Yellen After US Futures, Euro Stocks Rebound On Latest French Polls

World stocks pulled back from all time highs, and European bourses initially followed U.S. futures and Asian shares lower, however both European risk sentiment as well as E-Minis rebounded after an Odoxa poll showed Macron overtaking Le Pen in the 1st round for the first time, and that the addition of Juppe instead of Fillon may see a 2nd round run-off between Macron vs Juppe, leading to a slump in Bund futures to session lows, and a bounce in European stocks. The Bloomberg Dollar Index (BBDXY) was set to break its longest winning streak since May, as Janet Yellen prepared to weigh in on the path for interest rates at 1pm today.

Meanwhile, as reported yesterday, the Fillon presidential campaign is all but over, after authorities raided his home, many Republicans disavowed him, and earlier this morning his spokesman announced his resignation.

However, today’s main even is not in Europe, but in Chicago, where at 1pm all eyes will be on Fed chair Yellen to see if she will confirm the recent dramatic hawkish turn in Fed sentiment. As DB’s Jim Reid puts it, there is no doubt that this week’s main story has been the big rates repricing. President Trump’s speech was hotly anticipated and closely watched but ultimately has still left many questions unanswered. Instead markets have been busy scurrying to reassess Fed tightening expectations following a chorus of hawkish Fed commentary over the last few days.

 

As a result, since the close last Friday the market has gone from essentially pricing in a low-ish probability of a March Fed rate hike to now debating when the second rate hike of 2017 might be with March now not far off fully priced. The final nail in the coffin might could be Yellen’s speech this afternoon when she is due to  speak on the economic outlook at an event in Chicago. The speech is due at 1pm ET and it would be a very bold move to contradict the recent guidance provided by her Fed colleagues this week. In addition to Yellen, we will also hear from Vice-Chair Fischer at 12:30pm ET, as well as Evans, Lacker and Powell prior to that. So there’s plenty to get through.

Asia started off week, with South Korean equities tumbling with the won on reports that China will curb tourism to the country. The euro and the yen initially strengthened, paring weekly losses caused by increasing confidence that the Federal Reserve will raise rates this month, however the Yen has since slumped on the abovementioned risk-on news out of Europe. The 10-year Treasury yield was flat after climbing for the past four days and gold edged lower.

Investors are awaiting justification from Yellen for the recent advance in the dollar and stocks suggesting increasing odds for tighter monetary policy. Rallies in equities and commodities predicated on stronger economic growth failed to keep pace even as reports showed a pickup in European inflation and a tighter U.S. jobs market. A report from Japan showed a gauge of consumer prices rose for the first time since December 2015.

“After the gains in the past few days, people are happy to wait to see what next week holds,” said Ben Kumar, a London-based investment manager at Seven Investment Management, which oversees about 10 billion pounds ($12 billion). “The narrative is that we’re in a rate hiking cycle now and any disruption to that will be perceived negatively.”

The dollar index was poised for its fourth straight weekly gain, though it was about 0.1 percent lower on Friday. “The U.S. dollar has been snapped up across the board as a March Fed hike is heavily priced in,” said Sean Callow, a senior currency strategist at Westpac. “All it took was about a hundred comments from Fed officials, but markets have finally decided that “fairly soon” means less than two weeks and that perhaps 3 hikes this year means 3 hikes this year.”

Expectations of a Fed rate hike soured the party on Wall Street, however, as financials led major U.S. indices lower. That weakness spilled over to Europe where the benchmark STOXX 600 fell for a second day dragged lower by industrials and consumer-related stocks.

The total market value of global stock markets hit an all-time high of $56.7 trillion earlier this week, having added more than $4 trillion since Donald Trump’s election as U.S. president last November. More than half of those gains were down to the rally in U.S. stocks, into which investors have pumped money for four of the past five weeks, according to the latest data from Bank of America Merrill Lynch and fund tracker EPFR.

In Europe, economic data continued to point to a brightening recovery as activity in euro zone businesses grew at its quickest pace in nearly six years in February and job creation reached its fastest in almost a decade. Rising euro zone inflation, along with easing anxieties over elections in France and growing talk of a March U.S. rate rise, put Germany’s benchmark 10-year government bond yield on track for its biggest weekly rise since November’s U.S. election.

Yields on 10-year Treasuries rose 2 bps to 2.450percent. The two-year yield, the coupon most sensitive to Fed actions, touched 1.336 percent on Thursday, the highest since 2009.

In commodities, oil prices rose as the dollar edged away from a multi-week high, though gains were held in check by unchanged Russian output for February, a sign of its weak compliance on a global deal to cut supplies. Benchmark Brent crude futures were up 0.4 percent at $55.29 a barrel after closing down 2.3 percent in the previous session. WTI futures gained 16 cents, or 0.3 percent, to $52.77.

Market Snapshot

  • S&P 500 futures down 0.1% to 2,379
  • STOXX Europe 600 down 0.4% to 375l03
  • MXAP down 0.7% to 143.90
  • MXAPJ down 1% to 461.55
  • Nikkei down 0.5% to 19,469.17
  • Topix down 0.4% to 1,558.05
  • Hang Seng Index down 0.7% to 23,552.72
  • Shanghai Composite down 0.4% to 3,218.31
  • Sensex down 0.1% to 28,812.01
  • Australia S&P/ASX 200 down 0.8% to 5,729.60
  • Kospi down 1.1% to 2,078.75
  • German 10Y yield fell 0.8 bps to 0.309%
  • Euro up 0.2% to 1.0525 per US$
  • Brent Futures up 0.3% to $55.26/bbl
  • Italian 10Y yield rose 1.5 bps to 2.139%
  • Spanish 10Y yield fell 1.1 bps to 1.691%
  • Brent Futures up 0.3% to $55.26/bbl
  • Gold spot down 0.5% to $1,227.56
  • U.S. Dollar Index down 0.2% to 102.05

Top Overnight News from Bloomberg

  • Dollar Index Moving in Sync With Swaps Has 2017 High in Sight
  • Apple’s U.K. Suit Against Qualcomm Adds to Global Patent War
  • Consol Hires Credit Suisse, BofA to Find Buyer for Coal Business
  • Concordia, Actavis Face Antitrust Charges Over Drug Prices
  • BHP Said to Start Sale of Cerro Colorado Copper Mine in Chile
  • Baidu’s CEO Wants China’s Help on Robot Cars And a Local SpaceX
  • Gazprom Says Europe’s Appetite for Gas Keeps Getting Bigger
  • Geely Chairman Says He Plans to Abandon Bid for Lotus Owner
  • Costco Drops as Weak Results Renew Brick-and-Mortar Concerns
  • Source Energy Seeks to Raise C$300m in Initial Offering
  • Morgan Stanley Names Germany-Austria Investment Banking Duo: HB
  • Lockheed in Talks With Spain, Belgium, Others on F-35s: Reuters
  • Ford Cuts Russian Prices on Stronger Ruble: Kommersant Reports

Asia equity markets traded lower across the board following the losses on Wall St. where all 3 major US indices pulled back from record highs and notable profit taking was observed in financials. ASX 200 (-0.8%) closed in the red after weakness in commodities while Nikkei 225 (-0.5%) was pressured as exporters felt the brunt of a firmer JPY. Shanghai Comp. (-0.4%) and Hang Seng (-0.7%) conformed to the soured sentiment after the PBoC conducted a net weekly drain of CNY 280b1n vs. a net injection of CNY 155b1n the prior week, while mixed Caixin Services and Composite PMIs also failed to inspire. 10yr JGBs were mildly supported amid the negative risk sentiment, although upside was capped in government bonds after the BoJ reduced its purchases in the super-long end.

Top Asian News

  • Asia’s Ugly Duckling of the Year Is the Peso, Thanks to Duterte
  • Kuroda’s Core Price Gauge Rises for the First Time in a Year
  • China Roils South Korean Stocks With News of Travel Curbs
  • UCF Consortium Said in Late-Stage Talks to Buy Hong Kong Life
  • JD.Com Finance Spinoff to Fund War Chest, Investments, CFO Says
  • Gresik Copper Smelter Restarts on March 2: Mitsubishi Materials
  • Hong Kong Developers Slump as Fed Concern Dents Earnings Outlook
  • Sumitomo Mitsui Unit to Sell $1.7 Billion of Parent Shares
  • S.Korean Embassy in China Issues Safety Advisory to Koreans
  • Wistron Gets More Orders to Assemble IPhones: Economic Daily

In Europe, equities initially traded lower on Friday as markets saw profit taking after the ramp higher seen so far through 2017. On a sector specific breakdown, the defensive Utilities sector was in the green, with materials among the worst performers as the complex continues to be weighed upon by the stronger USD. However, as noted above, risk staged a sharp rebound following the release of the Odoxa poll which showed Le Pen fading fast in both the first and second round of the French election. Elsewhere in commodities, energy has experienced a quiet session so far with no notable newsflow and tight price action Fixed income markets continue to see a divergence between Gilts and Bunds, with the former outperforming in a similar fashion to yesterday amid touted short covering. Elsewhere the periphery yields sit around parity, with price action appearing particularly contained.

Top European News

  • U.K.’s Services Engine Loses Steam with Growth at Five-Month Low
  • SocGen Sued by Ex-Banker It Accused of Cheating on FX Trade
  • LSE Boosts Dividend as Takeover by Deutsche Boerse Crumbles
  • Rutte Warns of Dutch Chaos If Populist Wilders Wins Election
  • CGG Seeks $1.9 Billion Bond-to-Equity Swap Amid Debt Crunch
  • Euro-Area Economy Expands Most Since 2011 as Recovery Broadens
  • WPP Drops After Projecting Slower Growth, Weak New Business
  • Sessions Removes Himself from Russia Inquiry Over Meeting Envoy
  • Syngenta Sees Clear Path for EU Approval of ChemChina Deal

In currencies, the Bloomberg Dollar Spot Index retreated less than 1 percent after a five-day rally. the euro strengthened 0.1 percent to $1.0518 as of 10:02 a.m. in London. The British pound slipped 0.3 percent, falling for a sixth day, its longest losing streak since Dec. 2015. The yen rose 0.1 percent to 114.29 per dollar. The currency is still down 1.9 percent this week, its biggest decline this year.  The big data release this morning was the UK services PMI, which fell against expectations from 54.5 to 53.3. The market was already looking for some moderation here, but the larger than expected fall heightened the nervousness over the Brexit impact on the economy’s leading driver. Cable pushed through 1.2250 with a little more verve, while EUR/GBP has pushed above 0.8600, but there is plenty of interest to buy the Pound at these levels, so the path lower should not be as aggressive as seen in previous episodes. Tight trade in EUFt/USD and USD/JPY, as the hawkish Fed mood continues to keep the USD on the front foot. Flow based resistance contain further USD upside to a modest degree, as Japanese exporters sit in front of 115.00 (114.50-80), while option bids from 1.0500 deter specs from attacking 1.0500 for now.  USD bulls have also turned their attentions onto the commodity currencies, where the AUD and NZD were notable losers yesterday. Pressure on the AUD has relented a little to produce some stabilisation in the mid 0.7500’s, while NZD/USD continues to hold off 0.7100 for now. USD/CAD has already pushed through 1.3400, and we anticipate the market to continue to trade off the cautious BoC tone this week to grind higher to 1.3500 initially.

In commodities, gold slipped 0.5 percent to $1,228.16 an ounce. It’s down 2.3 percent for the week, after four straight weeks of advances. Oil gained less than 0.1 percent to $52.63 a barrel. Copper was little changed, after Thursday’s 1.4 percent drop. Iron ore fell 2.9 percent. Gold and Silver have made some notable losses as the March Fed rate hike propels the USD higher, and Treasuries lower. The yellow metal is now below USD1230.0, dropping close to USD20.0. However, losses in Silver have eclipsed this, having fallen from circa USD18.40 to USD17.70 or so, where we trade at present. Base metals have also taken a dip, but to a more modest degree, but Copper has dipped under USD2.70 again. These moves are modest in context, given the strikes in Chile, but supply issues having more of a positive on Nickel specifically as the Philippines looks at bans on iron ore exports to encourage domestic processing. Nickel up 1.0% today. Zinc gains are not too far behind. WTI is back in the middle of the USD50-55 range, with the compliance issue (among non OPEC members) back at the forefront of market sentiment.

Looking at the day ahead, we will get service and composite PMIs in the US along with the February ISM nonmanufacturing print which is expected to hold steady at 56.5. The Fedspeak will arguably be the bigger focus however with Yellen’s speech at 1pm GMT set to be watched closely. Evans and Lacker both speak in a panel at 3.15pm GMT, Powell speaks at 5.15pm GMT and Fischer at 5.30pm GMT.

US Event Calendar

  • 9:45am: Markit US Services PMI, est. 54, prior 53.9
  • 9:45am: Markit US Composite PMI, prior 54.3
  • 10am: ISM Non-Manf. Composite, est. 56.5, prior 56.5
  • 10:15am: Fed’s Evans and Lacker Speak on Panel in New York
  • 12:15pm: Fed’s Powell Speaks on Innovation and the Payments System
  • 12:30pm: Fed Vice Chair Fischer Speaks in New York
  • 1pm: Yellen Gives Economic OUtlook Speech in Chicago

DB’s Jim Reid concludes the overnight wrap

There is no doubt that this week’s main story has been the big rates repricing. President Trump’s speech was hotly anticipated and closely watched but ultimately has still left many questions unanswered. Instead markets have been busy scurrying to reassess Fed tightening expectations following a chorus of hawkish Fed commentary over the last few days.

Indeed since the close last Friday the market has gone from essentially pricing in a low-ish probability of a March Fed rate hike to now debating when the second rate hike of 2017 might be with March now not far off fully priced. The final nail in the coffin might well be Fed Chair Yellen’s speech this evening when she is due to speak on the economic outlook at an event in Chicago. The speech is due at 6pm GMT and you’d have to imagine that it would be a bold move to contradict the recent guidance provided by her Fed colleagues this week. That isn’t all though as we will also hear from Vice-Chair Fischer at 5.30pm GMT as well as Evans, Lacker and Powell prior to that. So there’s plenty to get through.

In summary the last 24 hours in markets has seen a continuation of bonds selling off. 2y yields closed last night at 1.308% and +2.4bps higher on the day although did actually touch 1.336% intraday. You would have to go back to June 2009 to find the last time we visited those lofty heights. 10y yields were up a similar amount to 2.478% and Bloomberg’s calculator (which as we’ve highlighted slightly overstates things) now has the probability of a March hike at 90% this morning from 80% a day ago and just 40% this time a week ago.

After one of the most dovish Fed member’s, Lael Brainard, talked up a hike as likely to be “appropriate soon”, Fed Governor Powell added yesterday afternoon that “we’re as close to our mandates as we’ve been in a very long time” and that “the case for a rate increase in March  has come together and I do think it’s on the table for discussion”. Our US economists now expect the Fed to hike this month and also expect Yellen to likely indicate as much in her speech tonight. They  expect the Fed to then pull the trigger again in June and September before holding off in December to announce the tapering of balance sheet reinvestments at the beginning of next year.

Back to markets. As well as those moves higher for Treasury yields there was a similar selloff for European bond markets yesterday too. 10y Bund yields closed up another 3.4bps at 0.313% while OATs and the peripherals were up between 1bps and 2bps. 2y Bund yields finished little changed but are still up nearly 12bps from last Friday’s low in yield of -0.956%. Where we did see some reversal though was in equities. The S&P 500 finished down -0.59% and the Dow finished -0.53% lower but still held in just above the 21,000 level. Those sectors that led the big rally on Wednesday were largely the culprits with financials, materials and industrials all underperforming. A decent selloff across commodities certainly didn’t help either. WTI Oil (-2.27%) fell by the most since January 18th following data which showed US stockpiles as rising while Gold (-1.24%) and Silver (-3.52%) were also much weaker. Base metals also had a rough time of it with Copper (-1.43%), Zinc (-2.80%) and Nickel (-2.27%) all sharply lower. EM currencies were also a big underperformer with currencies in Brazil (-1.86%), Colombia (-1.23%) and South Africa (-0.96%) in particular down sharply.

This morning in Asia we’re seeing most major bourses follow the lead from Wall Street and trade lower. The Nikkei (-0.45%), Hang Seng (-0.54%), Shanghai Comp (-0.37%), Kospi (-1.33%) and ASX (-0.82%) are all in the red as we go to print. Rates, with the exception of JGBs, have tracked the move higher in yield. There’s been some data released too this morning. In Japan the main news is a return to core inflation. Headline inflation has risen one-tenth to +0.4% yoy in January while the core excluding fresh food is now up to +0.1% yoy from -0.2%. That marks the first positive print since December 2015. The core-core  came in at +0.2% yoy and up one-tenth. The Yen (+0.25%) is a shade firmer following the data. There’s also been plenty of focus on President Trump’s attorney general Jeff Sessions overnight. It was revealed late last night that Sessions would recuse himself from investigations involving the presidential campaign and failing to disclose meetings with Russia.

Moving on. It was a much quieter day for data yesterday but there were still a couple of releases which stood out. In Europe the main focus was on the Euro area CPI report for February where headline CPI was  estimated as rising twotenths to +2.0% yoy as expected and the highest since January 2013. The core was however steady at +0.9% yoy which also matched expectations. The core has now held at that level for 3 consecutive months. Also out in Europe yesterday was the PPI print which came in at +0.7% mom for January while the unemployment rate was revealed as holding steady at 9.6% in the same month. In  the US the sole release was the latest weekly initial jobless claims print which revealed a 19k decline in claims to 223k which is the lowest since March 1973. While notable, it’s worth highlighting that that is perhaps partly influenced by last week’s Presidents Day holiday.

Looking at the day ahead, in terms of data the early release this morning is Germany retail sales before focus then turns over to the final February services and composite PMI’s in Europe including a look at the data in the periphery. We will also get those PMI’s in the US along with the February ISM nonmanufacturing print which is expected to hold steady at 56.5. The Fedspeak will arguably be the bigger focus however with the aforementioned Yellen speech at 6pm GMT set to be watched closely. Evans and Lacker both speak in a panel at 3.15pm GMT, Powell speaks at 5.15pm GMT and Fischer at 5.30pm GMT.

Before we wrap up, this Sunday the National People’s Congress meeting is due to kick off in China which is set to include Premier Li Keqiang’s proposals for economic targets. It usually lasts about 10 days but it’ll be interesting to see if we get any early headlines.

3. ASIAN AFFAIRS

i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 11.71 POINTS OR .36%/ /Hang Sang CLOSED DOWN 175.35 POINTS OR 0.74% . The Nikkei closed DOWN  95.63 POINTS OR 0.49% /Australia’s all ordinaires  CLOSED DOWN 0.78%/Chinese yuan (ONSHORE) closed DOWN at 6.8978/Oil FELL to 52.70 dollars per barrel for WTI and 55.26 for Brent. Stocks in Europe ALL MIXED ..Offshore yuan trades  6.9067 yuan to the dollar vs 6.8978  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  WIDENS CONSIDERABLY AS POBC FAILS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN WEAKER AS IS OFFSHORE YUAN COUPLED WITH THE WEAKER DOLLAR. CHINA SENDS A MESSAGE TO THE USA NOT TO RAISE RATES

3a)THAILAND/SOUTH KOREA/NORTH KOREA

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

4. EUROPEAN AFFAIRS

EU/DRAGHI

The EU inflation rate has now climbed to 2% and the Northern group wants Draghi to curtail QE.  The problem of course is that there is nobody out there that will buy Italian bonds.

 

Quite a dilemma!!

(courtesy Mish Shedlock/Mishtalk)

Draghi’s Dilemma: Eurozone Inflation Hits 2% With Italy On Bond Life Support

Via Michael Shedlock of MishTalk.com,

Eurozone headline inflation hit two percent this week, and that has the inflation hawks in Germany screaming.

Yet, ECB president Mario Draghi has promised to maintain QE asset purchases, and Italy has no other real buyer for its bonds.

What’s Draghi to do?

eurozone-inflation-2017-03

Headline Inflation Hits Two Percent

A milestone.

Annual inflation in the eurozone accelerated to hit 2 per cent for the first time since January 2013 last month, underscoring a sharp rise in prices driven by higher energy costs in the single currency area.

February’s year on year inflation reading, which rose from 1.8 percent and was in line with analyst estimates, comes as inflation hit 2.2 per cent in Germany last month and registered over 3 per cent in Spain.

The eurozone’s core inflation measure, however, which strips out volatile energy and food prices, remained unchanged at 0.9 percent and has remained stubbornly below 1 percent since August 2013.

Inflation Dilemma Headache

With rising inflation, ECB hawks set to crank up pressure for a move towards exiting aggressive monetary easing. This poses a Policy Dilemma for Draghi.

Mario Draghi will get a clear message from European Central Bank hawks next week: drop the doom and gloom.

After four years of weak growth and below-target inflation, price pressures have returned more quickly than the bank expected. Eurostat, the European Commission’s statistics bureau, on Thursday reported that prices rose 2 per cent in the year — rising above a central bank target of “below but close to” 2 percent for the first time since January 2013.

The central bank continues to hold interest rates at historically low levels and has promised to buy €780bn worth of bonds this year as part of its landmark quantitative easing program. Both the rate cuts and the QE program have been a long-running source of irritation, notably among the German political and economic establishment. Influential voices in Berlin have seized on higher German inflation — the country’s annual price rises reached 2.2 per cent in February — to call for rate rises.

Mr. Draghi has so far pledged that he would be ready to cut rates even lower and buy more bonds. His promise is that interest rates would “remain at present or lower levels for an extended period of time”.

ECB Dissent

Last month, Yves Mersch, a member of the ECB’s executive board, asked: “How much longer can we continue to talk about ‘even lower rates’ as being a monetary policy option? Considering the importance of credibility for a central bank, as mentioned, there should be no delay in making the necessary gradual adjustments to our communication.”

Jens Weidmann, Bundesbank president, said this week that the central bank would need to raise its forecasts for inflation this year by as much as half a percentage point from a projection of 1.3 per cent, made in December.

What’s Draghi to Do?

The short answer is nothing.

The long answer is Draghi will likely say something like wage growth is weak, energy prices are transitory, and the ECB will instead focus on core HCIP (Harmonized Index of Consumer Prices, roughly equivalent to the CPI in the US).

Thus Draghi won’t hike,  and he is not even likely to taper bond purchases yet.

Italy on Life Support

Italy is on life support and needs a buyer for its bonds. Italy’s 10-year bonds yield 2.138%. Germany’s 10-year bond yield is 0.324%.

The spread between 10-year Italian bonds and 10-year German bonds is 181 basis points (1.81 percentage points).

If there was no risk of default, the yields would be the same. Italian bonds are at a premium for a reason.  And if the ECB stopped buying Italian bonds, the spread would grow dramatically.

 

END

 

EU

My goodness:  The EU is now threatening member states with fines if they fail to accept refugees

(courtesy zero hedge)

part A

Deutsche Bank Shares Re-Tumble On $10 Billion Capital Raise

Following unconfirmed sources earlier warning about a major capital raise for the world’s most sysetmically dangerous bank, Bloomberg reports that Deutsche Bank AG is nearing a plan to boost capital by more than 10 billion euros ($10.6 billion) through an equity offering and the partial sale of its asset management unit, according to people with knowledge of the discussions.

The measures, which executives may review as soon as this weekend, would be a way for the bank to boost capital buffers instead of by selling its Postbank unit, said the people, who asked not to be identified because the plans haven’t been announced. Deutsche Bank is now leaning toward reintegrating the consumer banking business, the people said.

It’s also studying management changes, including a new role for Chief Financial Officer Marcus Schenck, some of the people said. The firm is weighing recombining its investment banking and trading divisions, with Schenck gaining some oversight of the business, some of the people said. The supervisory board is scheduled to meet for two days starting March 16 to discuss potential measures, three people said earlier Friday.

The bounce back from the earlier drop has been erased…

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

 

UKRAINE/

This is deadly:  The Soros backed ultra nationalistic party in the Ukraine  (we will call it Maidan) has now orchestrated a coal blockade from the rich mineral eastern Ukraine from reaching the western Ukraine.  The goal is for Soros to buy the rich minerals at pennies on the dollar.  This will bring in the Russians

(courtesy Johnson/SHTFPlan.com)

Soros-Backed Group Organizes Massive Coal Blockade In Ukraine

Via Jeremiah Johnson (nom de plume of a retired Green Beret of the United States Army Special Forces) of SHTFPlan.com,

As we have mentioned here throughout the beginning of this year, Ukraine has been (and continues to be) a major “flash point” that holds dire consequences for a Europe already in tatters.  Ukraine is also a major spot of contention between Russia and the United States.  To recap, presently we have a President intent on a new era of relations between Vladimir Putin and his government.  The problem lies in what the U.S. has done in the past five year under the Obama-directed State Department (courtesy of Victoria Nuland).  That State Department was aided and abetted by none other than Senators John McCain and Lindsey Graham.

As mentioned in other articles, the situation in the Eastern Ukrainian provinces is serious.  Although the Minsk accords provided for an official ceasefire between the Kiev government under President Petro Poroshenko and the separatist militias in the Donbass region, the former has been clearly guilty of violating it repeatedly.  These violations have taken the form of prohibited armored vehicles and artillery barrages in numerous cities.

At the very beginning of the U.S.-sponsored coup d’état that ousted legally-elected President Viktor Yanukovych and sent him fleeing to Russia, the Maidan movement (comprised of Ukrainian ultra-nationalists) began protests and riots that led to fighting.  Maidan was (and is) being both encouraged and supported financially by none other than George Soros.  The intent for Ukraine with Soros is no different: to crush the opposition of separatists and enable the U.S.-installed government to rail Ukraine into NATO and the IMF.

Once this has been accomplished, Soros has the “master plan” of taking over a large portion of the Eastern provinces because of the tremendous amounts of minerals and natural resources he wishes to buy for “pennies on the dollar” and then bleed the country white while taking the profits out of the country.  As of this writing, Maidan is at it again.

According to an article released by RT News, Maidan has organized a blockade of coal shipments.  This is not a small shutdown by any means.  The article, entitled Maidan 2.0: Ukrainian Nationalists Provoking Political Crisis with Coal Blockade, by Valentyn Ogirenko has reported that approximately 74,000 cargo cars have been prevented from crossing any lines between the separatists and the Poroshenko government. On average, an open railroad car holds 115 tons of coal.  This amounts to approximately 8,117,000 tons of coal.  That is a staggering amount.  So staggering, as a matter of fact, that Kiev has claimed it is an emergency.

Drone captures endless lines of coal cars held up by blockade of rebel E. (VIDEO) https://on.rt.com/8437 

Here is an excerpt from that article:

“The blockade organizers boasted over social media that they have stopped some 74,000 cargo cars from crossing the disengagement line between Kiev-controlled and rebel-held parts of Ukraine.  Thousands of wagons filled with coal cannot leave the Donbass area, Donetsk Region, as pro-Kiev activists block train lines leading to government-controlled territories. The nationalists argue that buying coal from mines controlled by the rebels in the East is equivalent to treason. However, without the necessary coal supplies Ukrainian power plants are threatened with closure.  Kiev has declared a state of emergency for the nation’s energy industry.”

RT also conducted an interview with a former U.S. diplomat to Ukraine concerning the significance of it by the name of Jim Jatras.  His comments pertain to the Ukrainian nationalists (Maidan).  This next excerpt shows the delicate nature of the crisis and what it means overall, as explained by Mr. Jatras:

“Frankly, I think they [Maidan and the Ultra-nationalists] are not sure what to do. They know that this is extremely damaging to the Ukrainian economy, as of February 15 they said they had 40 days reserve and we’re going to be coming up on the exhaustion of those reserves very quickly. The Prime Minister Mr. [Volodymyr] Groysman has said that 300,000 jobs are potentially going to be lost here if they are not able to maintain coal supplies – this is 12 percent of the country’s production. They cannot sustain this. You would think that this kind of illegal activity – there is no legal authority for this blockade – would be something that the government would step in. I can only imagine that they don’t do it because they feel too weak to do it. They are afraid of the kind of ultranationalists that are behind this, and that if they try to take forceful action against them, it will provoke a resort to violence that they may not be able to handle.”

This is serious business, and even more in that Maidan wants to stop the flow of coal into the Donbass and Eastern Ukraine, yet it is hurting the interests of the entire country.  Keep in mind: we haven’t even mentioned the activities of outside influences, such as the U.S. and Russia.  The U.S. has an arms package (approved in both 2015 and 2016 by the Congress and prodded by Obama) that is expected to deliver weapons, munitions, and other military supplies to the Kiev government this year, in 2017.

On the other side of the Ukrainian border, Russia is continuing to supply the separatists who (as mentioned in other articles) are Ukrainians of Russian ethnic derivation who feel a strong sense of allegiance to Russia and wish to separate (as Crimeans voted to do so prior to the Russian annexation of 2014).  In addition, Sputnik News just released a piece on 2/20/17 by Sergey Averin entitled Quarter of Russians back potential recognition of Donbass republics.  In a poll, over half of Russians think that the Russian government should help the separatists of Lugansk and Donetsk.

In addition to this, Vladimir Putin ordered agencies in Russia last week to accept the documents and passports issued by these two separatist regions of Ukraine, along with visa-free travel to Russia if they possessed such documents.  Sergey Lavrov, the Russian Foreign Minister said this was necessary for the war-torn areas to provide relief to those residents who wished to flee to Russia.

The U.S. is not yet officially weighing in on this, as before the elections the support was for the Kiev government.  Now we have an American President who is determined to reset the relations with Russia, and U.S. policy, while not in Tartarus as is was last year, is still in limbo.  Until the President clarifies the direction the State Department will travel and reigns in the rogue Congress such as Sen’s. McCain and Graham (who serve the MIC, or Military Industrial Complex first and then the United States, if it isn’t inconvenient).

In the meantime, fighting is still occurring in the Eastern provinces and now we have Maidan (a Soros-backed destabilizing organization) coming to the forefront again.  It will take some shrewd diplomacy and perhaps some restructuring within the Ukrainian government (internally) to bring these troubles to a rest.  Make no mistake, though: It is far from over and is a powder keg that can escalate and involve other countries in Europe, as well as spark action between Russia and the United States.

 

 

end

 

The Ukraine Tax Chief (equivalent of the director of the IRS) is gunning for an Oscar as he “suffers” a heart attack when informed of his arrest over a 75 million dollars theft:

(courtesy zero hedge)

Ukraine Tax Chief Gets Heart Attack After Arrest Over $75 Million Theft

While much of the media attention remains glued to Russia for various reasons, a more notable development took place in neighboring Ukraine overnight, where on Friday Ukrainian state agencies tried to arrest the head of the tax and customs service Roman Nasirov, i.e., the equivalent to the head of the IRS, over the embezzlement of around $75 million. However, their efforts were hindered when the man, Roman Nasirov, was allegedly struck by a heart attack during the detention attempt and was shown stretchered into an ambulance and taken to Kiev’s Feofania hospital late on Thursday.

Anti-corruption prosecutor Nazar Kholodnytsky said investigators believe 38-year-old Nasirov helped exiled lawmaker Oleksandr Onishchenko deprive the state of 2 billion hryvnias ($75 million) in tax revenue linked to a gas deal, Reuters reports. The crackdown was seen as a landmark case following patchy anti-graft efforts from the Western-backed authorities.

“Detectives and a prosecutor went to Feofania,” Kholodnytsky said on television channel 112. “Nasirov was notified of the allegation by a detective. I will find out if he was conscious or not.” Nasirov has previously denied all allegations of graft against him. His office would not immediately comment on the matter.

Prime Minister Volodymyr Groysman said Nasirov had been relieved of his duties while the case is pending. “It is in our interest that the investigation be impartial and effective. This issue is very important for Ukrainian society today,” he said in a government meeting.

Meanwhile, Nasirov’s theatrical performance did not receive high marks: Ukraine prosecutor Kholodnytsky was openly skeptical about Nasirov’s sudden hospitalization. “I, like many Ukrainian citizens, have doubts about the unexpected transfer to hospital, as this has become a historic tradition for the Ukrainian political elite and top management.” He cited the example of a former transport minister who in 2008 was found by investigators in a hospital after they sought to detain him on corruption charges.

If Nasirov is found guilty, it would be the first successful prosecution of a senior official for graft since the 2014 uprising that ushered in a Western-backed leadership promising to tackle endemic corruption. Ukraine has been accused of Wastern overseers of taking no measures to crack down on sprawling crony capitalism and embezzlement inside the country.

“This is the destruction of the unwritten corrupt status quo in the country,” said pro-European lawmaker Serhiy Leshchenko in a post on Facebook. “Nasirov will be a valuable witness to the misuse of state money by those in the highest ranks.”

 

Stop-start reforms over the past three years have raised concerns that Ukraine’s political elite lacked the will to eradicate a deep-rooted system of cronyism and bribe-taking. Nasirov’s lawyer, Andriy Kuzmenko, confirmed that he was being investigated for embezzlement and said he could face up to six years in prison.

 

Opposition lawmakers and the finance ministry have previously called for Nasirov to be investigated for abuse of office. In 2016, Nasirov clashed with an activist appointed to reform the graft-plagued customs of Odessa over her accusation that he had blocked her attempts to fire corrupt officials.

In an online wealth declaration tool aimed at boosting transparency, he disclosed last October that he and his wife held cash in euros and dollars worth $2.2 million and owned Swiss watches, diamond jewelry, fur coats and fine porcelain among other items. He told Reuters in an interview he had earned this money in the financial sector before taking office.

 

RUSSIA

Putin is angry on the malicious campaign by the Obama unknowns to damage USA/Russia ties:

(courtesy zerohedge)

Russia Slams “Malicious Campaign” Waged By Unknown Americans To Damage Ties

With the Russian ambassador’s meetings seemingly a daily fixture in the CIA/FBI-leaked NYT or WaPo front page news, Russia warned on Friday that efforts to restore relations with the U.S. are being harmed by a “malicious campaign” waged by unknown Americans over meetings between its ambassador and President Donald Trump’s administration.

In an interview in Moscow, Deputy Foreign Minister Sergei Ryabkov, the political controversy over Russian Ambassador Sergey Kislyak’s contacts with U.S. officials is “harming our relations which are already in a bad condition, having been deliberately destroyed by the Obama administration.” He added that “it’s clear that the current situation hinders the restoration of these relations on a positive path of development.”

Russia seeks “practical cooperation in areas where such cooperation is needed” with the U.S., including on counter-terrorism, nuclear non-proliferation, economic investment and a settlement to the Syrian war, Ryabkov said adding that “we’ll continue to work hard” to restore relations.

Over the past week, controversy over meetings with the ambassador prompted AG Jeff Sessions to recuse himself Thursday from investigations into alleged Russian interference in the U.S. presidential election, and led to Michael Flynn’s ouster as national security adviser last month Bloomberg adds.

Following years of confrontation with the U.S. under President Barack Obama, Russian officials saw hope for better ties when Trump took office. However, the Kremlin is becoming increasingly frustrated over the lack of progress after Trump heaped praise on President Vladimir Putin during the campaign and pledged to work with him, including in fighting terrorism.

Russian Deputy Defense Minister Alexander Fomin said Tuesday that Trump should make good on his pledge to mount a joint fight against Islamic State in Syria and there’d been “enough talk about it.” In his first speech to Congress on Tuesday, Trump didn’t mention Russia or Putin even as he declared that the U.S. is “willing to find new friends, and to forge new partnerships, where shared interests align.”

Meanwhile, also on Friday, Kremlin spokesman Dmitry Peskov said the U.S. ambassador’s presence at peace talks in Astana, Kazakhstan, has been the only contact on Syria so far. Speaking in a conference call, Peskov said that “there haven’t been any other substantive contacts, nor any movement in terms of interaction and cooperation in fighting terrorism

“That’s regrettable, but on the other hand, it’s probably explained by the early stage” of new U.S. administration.
He also said taht the Kremlin has nothing to add to U.S. President Donald Trump’s description of U.S. controversy over Russia ties as “witch hunt.”

On the topic of a planned increase in U.S. defense spending, Peskov said that Russia isn’t concerned as long as the strategic balance is not affected, and also noted that Russia isn’t interfering in French presidential election campaign.

6.GLOBAL ISSUES

INDIA

The demonetization of the rupee bills has crushed Indian small business

(courtesy zerohedge)

Indian Economy Collapses As ‘Demonetization’ Crushes Small Business

The Sales Managers Index (SMI) is one of the earliest monthly indicators of Indian economic activity. February’s data shows the catastrophic after-effects of the December demonetization policy which was intended to crack down on corruption and ‘black money’.

The February Headline SMI has fallen to an index level of 60.2 in unadjusted terms, the lowest level in over 3 years.

Source: WorldEconomics.com

Managers are reporting a big drop in monthly sales for both the consumer and industrial sectors, with small to medium size businesses that predominantly deal with cash transactions, being hardest hit.

Source: WorldEconomics.com

Furthermore, the cash policy has had the effect of forcing up the overall Prices Charged Index (53.6) to levels not seen since spring 2013, when the Rupee was valued at ?53.92 against the USD, it is now trading at ?67.29. Some panel members are expecting the currency to continue to fall.

Source: WorldEconomics.com

Higher inflation in the consumer goods and services sectors, represented by the Prices Charged Index for Services (54.7), is pushing the valuation of the Rupee to even greater levels of undervaluation on the World Price Index (WPI) scale. The WPI under valuation level for the Indian Rupee is currently -41% using February data. Businesses are taking advantage of the situation created by such an undervalued currency, with the majority of panel members feeling that the current FX level is becoming advantageous for their businesses.

Overall, February SMI data suggests an erratic situation for Indian businesses as they meet market challenges with considerably lower levels of confidence, slower monthly sales and higher prices caused by the currency situation.

 

END

Mexico

 

Wilbur Ross talks about a sensible NAFTA deal and all of a sudden the Mexican Peso rises and the dollar falls:

(courtesy zero hedge)

Peso Surges, Dollar Tumbles After Wilbur Ross Comments

The Mexican Peso surged back below 20/$ this morning after new Commerce Secretary Wilbur Ross comments on the potential for peso recovery in a “sensible” NAFTA deal. Along with comments on Germany and Euro weakness, Ross also sent the USD index markedly lower (after 5 straight days higher).

Ross said…

“The peso has fallen a lot mainly because of the fear of what will happen with Nafta. I believe that if we and the Mexicans make a very sensible trade agreement, the Mexican peso will recover quite a lot,”

And the peso ripped…

 

Ross also mentioned Germany’s trade advantages due to a weak Euro which extended Euro strength…

 

and pushed the dollar index lower…

 

Notably the border adjustment tax remains an open question; Ross notes that there is a need to do something to balance budget, reconciliation may be only way to get things through Congress.

 

 

end

7. OIL ISSUES

Production rises greater than 9 million barrels per day on a continual rise in rig counts.  Thus expect production to further increase in size. Almost all of the gains came from the Permian basin.  Exxon is also entering the shale business as it bets big on this type of production

(courtesy zero hedge)

Production, Rig Count Surge As Exxon Bets Big On U.S. Shale

US oil rig counts rose for the 7th straight week (up 7 to 609) to the highest level since October 2015.

With production surging back above 9mm b/d – the highest in a year – the trend in the rig count implies considerably more production to come…

 

And it’s all in the Permian…

And with rig counts rising (in the Permian), production shows no signs of slowing, as OilPrice.com’s Nick Cunningham notes,ExxonMobil’s new CEO Darren Woods announced a dramatic shift towards shale drilling this week, a new strategy that will prioritize drilling thousands of smaller wells while reducing spending on the massive projects that the oil major has long been accustomed to pursuing.

Mr. Woods gave a presentation to investors on March 1, selling his vision after recently taking over from Rex Tillerson, who left to become U.S. Secretary of State. Exxon will now ramp up spending on shale drilling, after watching dozens of smaller companies profit from the surge in production in Texas, North Dakota and elsewhere over the past decade.

Exxon will dedicate a quarter of its 2017 spending budget on shale, putting $5.5 billion into the effort. “More than one quarter of the planned spending this year will be made in high-value, short-cycle opportunities, including in the Permian and Bakken basins,” Exxon wrote in a March 1 statement. The oil major says that it has 5,500 wells in its queue for drilling in the Permian and the Bakken shales, each with a return of 10 percent or more at $40 per barrel.

Exxon was able to build up this inventory of shale wells with the $6.6 billion it spent in January to double its Permian acreage.

The shift towards shale should pay off over time, with a portfolio of thousands of tiny shale wells making up a growing share of the oil major’s production portfolio. By 2025, Exxon says that its production from the Permian and the Bakken could amount to 750,000 barrels per day, or about a fifth of its total output.

Credit Suisse is optimistic about Exxon’s fortunes, arguing that free cash flow should improve. “[I]f [ExxonMobil] can hold onto the cost savings from 2016, deliver Permian growth and maintain capex control in the legacy assets, then the unlevered fcf yield could rise toward 6.5 percent in the $60′s Brent,” Credit Suisse analyst Edward Westlake wrote ahead of the latest presentation.

 Still, other oil companies offer more attractive prospects to investors than Exxon these days. Reuters notes that only five of the 25 Wall Street analysts that follow Exxon recommend a “buy” rating, while 17 of them have awarded the “buy” rating to Chevron. “Darren Woods did an effective job in laying out the story, but he was hamstrung by his predecessor’s mistakes and the market’s increasingly skeptical sentiment on the stock,” said Pavel Molchanov, a Raymond James analyst.

To be sure, the last few years have not been kind to any energy company, but Exxon has had a rough go by any standard. The breakdown in relations between Russia and the West over Crimea in 2014 led to Russian sanctions, forcing Exxon to pull out of its Russian ventures. As a result, Exxon watched more than $1 billion it spent on drilling in Russia go down the drain, not to mention the untold billions that could have come from producing in the Russian Arctic.

Exxon also saw its total debt quadruple since the end of 2012, rising to well over $40 billion by the end of last year. Rising debt, and a steadfast refusal to ever touch its dividend led S&P to downgrade Exxon’s credit rating last year. Exxon held the AAA credit rating since 1949. Microsoft and Johnson & Johnson are the only other companies to still hold onto that top rating.

The oil major also failed to fully replace the oil that it produced over the past two years. The reserve-replacement ratio is a key metric for Wall Street analysts trying to gauge the future prospects of oil companies. If the reserve-replacement ratio falls under 100 perce nt, it means that the volume of oil under a company’s control shrank, which would dampen future profitability. Exxon reported a reserve-replacement ratio of just 65 percent in 2016 and 67 percent in 2015. Before 2015, Exxon had gone more than two decades with a greater than 100 percent ratio. 

The struggle to find and book new reserves can be partly attributed to lower oil prices, which make high-cost reserves unprofitable. Exxon recently removed 3.3 billion barrels of Canadian oil sands from its books because the oil is not profitable to produce at today’s prices, for example. But it also highlights the growing difficulty that the oil majors are having at making major new discoveries. Low oil prices are forcing cutbacks in exploration budgets, which is making new discoveries more difficult. In the last two years, the global oil industry logged the lowest volume of new discoveries in seven decades. On top of that, it is also the case that there are simply fewer and fewer major oil fields left to discover.

That brings us back to shale. Exxon’s new play on shale has multiple benefits. Shale drilling is relatively low-risk, requiring low upfront costs while providing quick returns. Even through production starts to fizzle after only a few years, the company can make a return and recycle cash. In today’s low price environment, companies no longer want to tie up cash in long-term projects. Moreover, with megaprojects now viewed as a much greater risk than they were a decade ago, the oil majors and their shareholders want much more exposure to short-cycle shale drilling.

After decades of priding itself on being a pioneer of complex engineering and producing where others could not, Exxon will now be going where everyone else is going: into the shale patch.

8. EMERGING MARKETS

end

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

Euro/USA   1.0546 UP .0040/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 ALL MIXED  

USA/JAPAN YEN 114.46 UP 0.116(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 1.2226 DOWN .0046 (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 1.3414 UP .0025 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU)

Early THIS FRIDAY morning in Europe, the Euro ROSE by 40 basis points, trading now WELL BELOW the important 1.08 level FALLNG to 1.0546; 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 DOWN 11.71 POINTS OR 0.36%     / Hang Sang  CLOSED DOWN 175.35 POINTS OR 0.74%    /AUSTRALIA  CLOSED DOWN 0.78%  / EUROPEAN BOURSES MIXED

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 FRIDAY morning CLOSED DOWN 95.63 POINTS OR 0.49% 

Trading from Europe and Asia:
1. Europe stocks  ALL MIXED 

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 175.35 POINTS OR 0.74%       / SHANGHAI CLOSED DOWN 11.71  OR 0 .36%/Australia BOURSE CLOSED DOWN 0.78/Nikkei (Japan)CLOSED DOWN 95.63 POINTS OR 0.49%  /  INDIA’S SENSEX IN THE RED

Gold very early morning trading: $1226.80

silver:$17.69

Early FRIDAY morning USA 10 year bond yield: 2.501% !!! UP 2 IN POINTS from THURSDAY 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  3.088, UP 1 IN BASIS POINTS  from THURSDAY night.

USA dollar index early FRIDAY morning: 101.94 DOWN 21 CENT(S) from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING

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And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield: 3.95% DOWN 1/10  in basis point yield from THURSDAY 

JAPANESE BOND YIELD: +.078%  UP 2  in   basis point yield from THURSDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.678%  DOWN 3 IN basis point yield from  THURSDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.10 DOWN 3 POINTS  in basis point yield from THURSDAY 

the Italian 10 yr bond yield is trading 42 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.356% UP 4 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR FRIDAY

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

Euro/USA 1.0508 DOWN .0028 (Euro DOWN 28 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 114.49 UP: 0.379(Yen DOWN 38 basis points/ 

Great Britain/USA 1.2262 DOWN 0.0007( POUND DOWN 7 basis points)

USA/Canada 1.3389 UP 0.0036(Canadian dollar DOWN 36 basis points AS OIL FELL TO $52.74

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This afternoon, the Euro was UP by 50 basis points to trade at 1.0557

The Yen FELL to 114.54 for a LOSS of 19 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 23  basis points, trading at 1.2251/

The Canadian dollar FELL  by 27 basis points to 1.3414,  WITH WTI OIL RISING TO :  $53.14

The USA/Yuan closed at 6.8953/
the 10 yr Japanese bond yield closed at +.078% UP 2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 1 IN basis points from THURSDAY at 2.509% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.0960 UP 1  in basis points on the day /

Your closing USA dollar index, 101.93 DOWN 15 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 FRIDAY: 1:00 PM EST

London:  CLOSED DOWN 8.09 OR 0.11% 
German Dax :CLOSED DOWN 32.21 POINTS OR 0.27%
Paris Cac  CLOSED UP 31.33 OR 0.63%
Spain IBEX CLOSED UP 82.50 POINTS OR 0.85%
Italian MIB: CLOSED UP223.83 POINTS OR 1.15%

The Dow closed UP 2.574 OR 0.01%

NASDAQ WAS closed UP 9.53 POINTS OR 0.16%  4.00 PM EST
WTI Oil price;  53.14 at 1:00 pm; 

Brent Oil: 55.59  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  58.46 UP 39/100 ROUBLES/DOLLAR 

TODAY THE GERMAN YIELD RISES TO +0.356%  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:$53.21

BRENT: $55.78

USA 10 YR BOND YIELD: 2.482%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 3.073%

EURO/USA DOLLAR CROSS:  1.0617 up .01103

USA/JAPANESE YEN:114.04   down 0.313

USA DOLLAR INDEX: 101.41  down 74  cents ( HUGE resistance at 101.80 maintained)

The British pound at 5 pm: Great Britain Pound/USA: 1.2288 : up 17 BASIS POINTS.

German 10 yr bond yield at 5 pm: +.356%

END

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

TRADING IN GRAPH FORM

Stocks Shrug Off Dismal Data, Hawkish Fed As ‘Animal Spirits’ Spike To Record High

Reflecting on the week – a week that saw 7 Fed speakers go full hawktard and drive rate hike odds at a pace never seen before, a week in which hard data tumbled to pre-election lows as ‘soft’ surveys all hit record highs, a week in which Small Cap stocks tumbled red (but but but they’re domestic focused) as bank stocks soared, a week in which The Dow spiked to 21,100 on the back of the biggest retail ETF inflows in 3 years, and a week that saw a virtual currency’s price top gold’s for the firs time ever – we thought this was appropriate… (NSFW!!)

 

Animal Spirits (the gap between hope for the future and the current reality) has never been higher…

Year-to-Date, Gold still leads the major asset classes (bonds unchanged) but bank stocks are beating precious metals…

 

Dow up for the 5th week of the last 6 – perfectly glued to 21,000; Small Caps managed to scramble to unchanged for the week…

 

VIX was crushed to a 10 handle in order to keep the Dow 21,000 Dream Alive…

 

Financials were best on the week (with Staples and Utes lower)…

 

But Deutsche Bank was damaged…

 

A big short squeeze after Trump’s address to congress and that was it…

 

The Dollar’s best week of 2017 – but som every odd price action, especially after the hawkish spech by Yellen…

 

Gold’s worst week of 2017 and Silver’s worst week of 2017, even with modest bounce back this afternoon… Crude’s biggest weekly drop since mid-Jan

 

Notably the other fear index improved this week as the global USD-XXX basis swap shifted higher bythe most since Dec 2015 (rate hike)…

 

Yields rose across the entire complex this week… (but the curve notably flattened) – long bond outperformed…

 

30Y Yield’s biggest weekly spike since the election (twice tagging 3.10% today before fading back lower after Yellen (not what one would have expected on the hawkish tone)..

 

2Y Yield’s biggest weekly spike since Nov 2015 (before the telegraphed Dec rate hike)

Fed Funds Futures biggest weekly drop since June 2015…

 

As rate hike hopes soared to 96%…

 

The Mexican peso rallied for the 4th of the last 6 weeks, erasing most of its weakness post-Trump (helped today by Wilbur Ross’ comments).

 

Bitcoin soared to a new record high at $1292 (up 6 of the last 7 weeks and up 17 of the last 22 weeks) surpassing the price of an ounce of gold for the first time…

 

Finally if Yellen was so hawkish, then explain this…

 

end

 

Janet’s long awaited speech:  Again she states that a March rate hike is on the table if the economy evolves as expected:

nothing but B.S.

(courtesy zero hedge)

Yellen: March Hike Appropriate If Economy Evolves As Expected – Live Feed

Yellen live feed, courtesy of the WSJ:

Yellen did not rock the hawkish boat as some were worried, and instead signaled the central bank is likely to raise short-term interest rates at its March meeting, and suggested more increases are likely this year if the economy performs as expected. She also indicated the Fed expects to raise rates again this year, saying it likely will move more than it did over the past two years, when it raised rates once in 2015 and 2016 each.

The key passage in her speech: “it will be appropriate to gradually increase the federal funds rate if the economic data continue to come in about as we expect… Indeed, at our meeting later this month, the [Federal Open Market] Committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate.”

In other words, next week’s payrolls report is suddenly very, very important, although even that may not be too critical since “the economy has essentially met the employment portion of our mandate and inflation is moving closer to our 2% objective,” Yellen said.

Here is the key segment from Yellen’s speech (link):

Our individual projections for the appropriate path for the federal funds rate reflect economic forecasts that generally envision that economic activity will expand at a moderate pace in coming years, labor market conditions will strengthen somewhat further, and inflation will be at or near 2 percent over the medium term. In short, we currently judge that it will be appropriate to gradually increase the federal funds rate if the economic data continue to come in about as we expect. Indeed, at our meeting later this month, the Committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate.

And Yellen on the future of R* aka the netural funds rate:

My colleagues and I generally anticipate that the neutral real federal funds rate will rise to its longer-run level over the next few years. This expectation partly underlies our view that gradual increases in the federal funds rate will likely be appropriate in the months and years ahead: Those increases would keep the economy from significantly overheating, thereby sustaining the expansion and maintaining price stability.

The highlights

  • YELLEN: MARCH HIKE APPROPRIATE IF ECONOMY EVOLVES AS EXPECTED
  • YELLEN SEES NO EVIDENCE FED HAS `FALLEN BEHIND THE CURVE
  • YELLEN SAYS RISKS FROM ABROAD `APPEAR TO HAVE RECEDED SOMEWHAT
  • YELLEN CALLS HIRING QUITE SOLID, ECONOMIC OUTLOOK ENCOURAGING

* * *

The last week has seen March rate-hike odds suddenly explode from low 20s to over 90% as Harker, Dudley, Williams, Bullard, Kaplan, Brainard, and Powell unleashed hawkish hell. However, this morning Fed’s Evans noted the need for accomodation, and Bullard was notably dovish, as the market prepares for Yellen to either prick the Trump bubble or play along.

The hawkish parade:

03/02: Powell: MARCH RATE INCREASE IS ON TABLE FOR DISCUSSION, THREE RATE INCREASES STILL FEELS RIGHT THIS YEAR but (ASSET PRICES HAVE HAD QUITE A RUN)

 

03/01: Brainard: RATE HIKE ‘WILL LIKELY BE APPROPRIATE SOON’, B/SHEET POLICY TRANSITION WARRANTED AS RATES RISE

 

03/01: Kaplan: ECONOMY IS STRONG ENOUGH FOR GRADUAL RATE RISES, MKT ANTICIPATING PROBABILITY OF INTEREST-RATE INCREASES

 

02/28: Bullard: SAYS ‘AGNOSTIC’ WHEN THE ONE HIKE WILL OCCUR, FED HAS ESSENTIALLY ACHIEVED ITS DUAL MANDATE

 

02/28: Williams:  STARTING HIKES SOONER WOULD GET US TO BASELINE FASTER,  DOESN’T SEE NEED TO DELAY ON HIKING, I DON’T THINK THE STOCK MARKET IS WAY OUT OF WHACK

 

02/28: Dudley: SAYS FED DOING PRETTY WELL ON TWO MANDATED GOALS, CASE FOR TIGHTENING HAS BECOME A LOT MORE COMPELLING, RELATIVELY NEAR FUTURE

 

02/28: Harker: 3 INTEREST-RATE HIKES ARE APPROPRIATE THIS YEAR, U.S. ECONOMY IS MORE OR LESS `BACK TO FULL HEALTH’

So what are these Fed speakers seeing in collapsing economic growth expectations that is making them so bullish the economy and hawkish on rates?

To explain in simple terms – the collapse in Fed Funds Futures signals an increasing probability of a rate-hike very soon, driven by all the jawboning, who could blame the market? But why is The Fed screaming about how great the economy is how an imminent rate hike is needed when The Fed’s own economic growth forecast is collapsing? The correlation in the chart above is 100% opposite of what one would expect – more dismal economic expectations, higher probability of a rate hike?

Perhaps this has them spooked…

 

But then we note that today the tone changed back to dovish

03/03: Evans: NEED ACCOMMODATION TO RAISE LOW INFLATION TO GOAL, CONCERNED BY SIGNS INFL EXPECTATIONS BELOW TARGET

 

03?03: Bullard: tells WSJ that economic conditions haven’t changed since Jan. to justify a March rate hike.

With markets now all but guaranteeing an interest-rate hike this month, Bloomberg’s Michael McDonough notes that Fed Chair Janet Yellen faces a quandary today when she makes her last speech before the blackout period begins ahead of the FOMC’s March 15 meeting.

  • Yellen could acknowledge the recent deterioration in hard economic data, in which many GDP proxies indicate first-quarter growth slowing to the mid-1% range, and risk markedly reducing expectations for a March rate hike. For an economy at or near full employment, wage growth still remains tepid.
  • Yellen could also ride the wave her FOMC colleagues generated this week, whereby she reiterates their calls for a rate increase occurring “relatively soon.” This outcome would at least keep the market’s implied probability of a March rate hike at its current level — 90% — or nudge it even higher. The fed fund futures implied probability for a December rate hike remained at 100% for three weeks leading up to that month’s FOMC meeting.

BI Economics continues to believe that it would be prudent to delay rate action until the second quarter. Tepid economic data justifies waiting to look at first-quarter growth results, released in April, before pulling the trigger on a second-quarter rate hike.

And as we noted earlier, Bloomberg’s Vincent Cignarella explaining why You Should Be Nervous About Janet Yellen’s Speech”

Foreign-exchange and Treasuries traders may have gotten ahead of themselves.

 

While it seems obvious based on recent economic data that the Federal Reserve will eventually need to raise rates, Chair Janet Yellen could walk back market expectations on Friday to create padding for risk events ahead of the March 15 decision.

 

If so, markets appear precariously perched. Dollar-yen has risen around 2.5 percent and the U.S. 10-year yield has climbed more than 16 basis points in just three days.

 

Short positioning in eurodollars, which are highly sensitive to the path of Fed rate hikes, is near record levels with both real and fast money extending hawkish bets, according to the latest CFTC data.

 

 

These moves have been driven by Fed speakers saying this week that rates will need to rise soon. First Fed dated overnight-interest-rate contracts have priced in close to 80 percent odds of a March increase, based on Fed effective rate of 0.66 percent. Other measures of market-implied probability approach 90 percent.

 

But not everyone is on board. Alan Blinder, former vice chair at the Fed, said on Bloomberg Radio Thursday that Yellen won’t sound hawkish and she will want to leave open the possibility of standing pat in March.

 

The Fed hasn’t been coy about its intention to hike gradually, so March is far from a slam dunk even if officials collectively see three hikes this year. Don’t forget, the Fed expected to hike four times in 2016, only to tighten once.

 

Non-farm payrolls on March 10 seems to be the main risk event ahead of the FOMC. While one data set probably wouldn’t alter the tightening trend, it could affect timing.

 

Another uncertainty is fiscal stimulus. President Trump has yet to offer specifics on tax cuts, trade and infrastructure plans that have helped spur inflation expectations.

 

Remember, one of the most profitable bets traders could have made in the last two years is that Fed forecasts would be wrong.

As RBC’s Charlie McElligott warns, with the entire investing universe seemingly lunging to one-side of the boat now and anticipating March as “done” (as Yellen’s core folks Dudley and Brainard have seemingly ‘crossed the precipice’ into the March-hike camp…on top of the data, potential for fiscal stim and the general financial conditions environment, of course), imagine the catastrophe that a significantly-bad jobs print could cause.  If the view becomes “the Fed is cornered,” Dollar longs / cyclical longs / high-beta credit longs / commodities longs would likely be punished in short-order, as too would rates shorts / EM shorts / defensive equities shorts / vol shorts.

So what will Yellen do?

(If the feed above is not working, click on image for link to Bloomberg live feed – no embed feed available from The Executives’ Club Of Chicago)

 

Yellen’s full speech below (link)

 

end

Libor rates are rising!

(courtesy Robert H on the rising Libor rates)

 

The following deadly:  a rising libor rates:

 

Robert H emails me:

Hang onto to your hats; she’s about to blow.  Another 20+ basis point jump in LIBOR rates will force the banks to jack-up mortgage rates and blow-up any consumer lead recover.  But equally importantly, it’ll destroy any investments requiring heavy leverage destroying the economics of many of the capital investments in manufacturing.  Say goodbye to commercial real estate.
But perhaps even more important where are governments going to get the income to pay higher rates on their debt????

USD LIBOR interest rate – US Dollar LIBOR

The US Dollar LIBOR interest rate is the average interbank interest rate at which a large number of banks on the London money market are prepared to lend one another unsecured funds denominated in US Dollars. The US Dollar (USD) LIBOR interest rate is available in 7 maturities, from overnight (on a daily basis) to 12 months. The table below shows a summary of the current rates of all USD LIBOR interest rates. We update these interest rates daily. If you click on the links you can see extensive current and historic information for the maturity concerned.

The US dollar LIBOR interest rate serves as a base rate for all sorts of other products such as savings accounts, mortgages and loans. Alongside the US Dollar LIBOR there are also LIBOR interest rates in 4 other currencies. See the list of links at the bottom of the page for a summary of all LIBOR currencies.

For a summary of all current LIBOR interest rates, click here.
For detailed background information about LIBOR, click here.

 USD 03-02-2017 03-01-2017 02-28-2017 02-27-2017 02-24-2017
USD LIBOR – overnight 0.68278 % 0.68167 % 0.68056 % 0.68333 % 0.68278 %
USD LIBOR – 1 week 0.71167 % 0.71111 % 0.71111 % 0.71167 % 0.71111 %
USD LIBOR – 2 weeks
USD LIBOR – 1 month 0.83000 % 0.81056 % 0.78889 % 0.78444 % 0.78056 %
USD LIBOR – 2 months 0.90500 % 0.89333 % 0.86278 % 0.85167 % 0.85167 %
USD LIBOR – 3 months 1.10000 % 1.09278 % 1.06400 % 1.05456 % 1.05400 %
USD LIBOR – 4 months
USD LIBOR – 5 months
USD LIBOR – 6 months 1.41600 % 1.40628 % 1.37489 % 1.36128 % 1.36072 %
USD LIBOR – 7 months
USD LIBOR – 8 months
USD LIBOR – 9 months
USD LIBOR – 10 months
USD LIBOR – 11 months
USD LIBOR – 12 months 1.79817 % 1.78983 % 1.75622 % 1.73983 % 1.73956 %

 

 

end

 

Mish has been following this development for us for quite some time.  It now looks like the private Pension Benefit Guarantee Corporation, the fund that guarantees pensions when the initial pension defaults, is itself penniless and millions will be affected

(courtesy Mish Shedlock/Mishtalk)

Pension Benefit Guarantee Corporation Running Out Of Cash, Millions Affected

Via Mike Shedlock of MishTalk.com,

The Pension Benefit Guarantee Corporation (PBGC), an entity created to “guarantee” pensions of private corporations, is on the verge of bankruptcy.

Teamsters and other unions are poised to take huge pension hits. Previously, airline employees have taken a hit.