Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1195.90 down $4.70 (comex closing time)
Silver: $16.13 unchanged (comex closing time)
In the access market 5:15 pm
Gold $1199.00
silver $16.22
Gold/silver trading: see kitco charts on right side of the commentary.
Following is a brief outline on gold and silver comex figures for today:
The gold comex today had a poor delivery day, registering 0 notices served for nil oz. Silver comex registered 33 notices for 165,000 oz .
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 257.05 tonnes for a loss of 46 tonnes over that period.
In silver, the open interest fell by only 501 contracts even though Wednesday’s silver price was down by 13 cents. The total silver OI continues still remains relatively high with today’s reading at 163,517 contracts. The front month of March contracted by 139 contracts.
We had 33 notices served upon for 195,000 oz.
In gold we had a fall in OI as gold was down by $3.40 yesterday. The total comex gold OI rests tonight at 403,134 for a loss of 1990 contracts. Today, surprisingly we again had 0 notices served upon for nil oz.
Today, inventory stays at 760.80 tonnes/ i.e. no change for the gold inventory at the GLD
In silver, /SLV we had no change in inventory at the SLV/Inventory
325.992 million oz
We have a few important stories to bring to your attention today…
1. China reports on slower growth
2.Cornerstone Corporation pegs Chinese growth at less than 3%
3. In Japan 43% of tax revenues go straight to pay interest on debt.
This is unsustainable.
4. The ECB raises Greece’s ELA by another .5 billion/up to 68.6 billion euros.
5. The 4th largest bank in the Ukraine goes bell up
6. Turkey’s lira plummets to record lows as their economy spins out of control
7. The USA shale industry reports its first bond default
8. Challenger and Christmas report a huge 19% increase in job cuts
9. Jobless numbers increase.
10. The ECB officially launches its QE as the euro plummet to 1.1020
we have these and other stories for you tonight.
Let us now head over to the comex and assess trading over there today.
Here are today’s comex results:
The total gold comex open interest fell by 1990 contracts today from 405,124 down to 403,134 as gold was down by $3.40 yesterday (at the comex close). We are now in the contract month of March which saw it’s OI fall by 3 contracts falling to 150. We had 0 notices filed on yesterday so we lost 3 contracts or an additional 300 oz will not stand for delivery in March. The next big active delivery month is April and here the OI fell by 4,834 contracts down to 22,739. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 66,444. The confirmed volume yesterday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 117,310 contracts even with mucho help from the HFT boys. Today we had 0 notices filed for nil oz.
And now for the wild silver comex results. Silver OI fell by 501 contracts from 164,018 down to 163,517 with silver down by 13 cents with respect to Wednesday’s trading. We are now in the active contract month of March and here the OI fell by 139 contracts down to 997. We had 39 contracts served yesterday. Thus we lost 100 contracts or 500,000 oz will not stand. The estimated volume today was poor at 10,955 contracts (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in at 29,068 contracts. We had 33 notices filed for 165,000 oz today.
March initial standings
March 5.2015
Gold
Ounces
Withdrawals from Dealers Inventory in oz
114,790.651 oz (Scotia)
Withdrawals from Customer Inventory in oz
6,352.851 oz (HSBC,Manfra)
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
nil
No of oz served (contracts) today
0 contracts (nil oz)
No of oz to be served (notices)
150 contracts (15,000 oz)
Total monthly oz gold served (contracts) so far this month
1 contracts(100 oz)
Total accumulative withdrawals of gold from the Dealers inventory this month
114,790.651 oz
Total accumulative withdrawal of gold from the Customer inventory this month
22,942.9 oz
Today, we had 1 dealer transactions
Dealer withdrawals:
i) Out of Scotia had one withdrawal: 114,790.651 oz
total dealer withdrawal: 114,790.651 oz
we had 0 dealer deposits:
we had 2 customer withdrawals
i) Out of HSBC: 3890.346 oz
ii) Out of Manfra: 2462.505
total customer withdrawal: 6,352.851 oz
we had 0 customer deposit:
total customer deposits; nil oz
We had 0 adjustment
Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account.
To calculate the total number of gold ounces standing for the March contract month, we take the total number of notices filed so far for the month (1) x 100 oz or 100 oz , to which we add the difference between the open interest for the front month of March (150) and the number of notices served upon today (0) x 100 oz equals the number of ounces standing.
Thus the initial standings for gold for the March contract month:
No of notices served so far (1) x 100 oz or ounces + {OI for the front month (150) – the number of notices served upon today (0) x 100 oz} = 15,100 oz or .4696 tonnes
we lost 300 oz of gold that will not stand in this March contract month.
Total dealer inventory: 700,002.664 oz or 21.77 tonnes
Total gold inventory (dealer and customer) = 8.264 million oz. (257.05) tonnes)
Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 46 tonnes have been net transferred out. However I believe that the gold that enters the gold comex is not real. I cannot see continual additions of strictly kilobars.
end
And now for silver
March silver initial standings
March 5 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
nil oz
Withdrawals from Customer Inventory
562,707.81 oz (HSBC)
Deposits to the Dealer Inventory
5,163.10 oz (HSBC)
Deposits to the Customer Inventory
600,667.45 oz (Scotia)
No of oz served (contracts)
33 contracts (165,000 oz)
No of oz to be served (notices)
964 contracts (4,820,000)
Total monthly oz silver served (contracts)
1665 contracts (8,325,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal of silver from the Customer inventory this month
1,088,153.2 oz
Today, we had 1 deposit into the dealer account:
i) Into HSBC 5,163.10 oz
total dealer deposit: 5,163.10 oz
we had 0 dealer withdrawal:
total dealer withdrawal: nil oz
We had 1 customer deposit:
i) Into Scotia: 600,667.45 oz
total customer deposit: 600,667.45 oz
We had 1 customer withdrawals:
i) Out of HSBC: 562,707.81 oz
total customer withdrawal: 562,707.81 oz
we had 0 adjustment
Total dealer inventory: 68.855 million oz
Total of all silver inventory (dealer and customer) 178.215 million oz
.
The total number of notices filed today is represented by 33 contracts for 165,000 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 (1665) x 5,000 oz = 8,325,000 oz to which we add the difference between the open interest for the front month of March (997) and the number of notices served upon today (33) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the March contract month:
1665 (notices served so far) + { OI for front month of March( 997) -number of notices served upon today (33} x 5000 oz = 13,145,000 oz standing for the March contract month.
we lost 100 contracts or 500,000 oz will not stand for delivery in March.
for those wishing to see the rest of data today see:
http://www.harveyorgan.wordpress.com orhttp://www.harveyorganblog.com
end
The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.
***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:
i) demand from paper gold shareholders
ii) demand from the bankers who then redeem for gold to send this gold onto China
vs no sellers of GLD paper.
And now the Gold inventory at the GLD:
March 5 no change in gold inventory at the GLD/760.80 tonnnes
March 4/ no change/inventory 760.80 tonnes
March 3 we had another 2.69 tonnes of gold withdrawn from the GLD. Inventory is now 760.80 tonnes.
March 2 we had 7.76 tonnes of withdrawal from the GLD today and this physical gold landed in Shanghai/Inventory 763.49 tonnes
feb 27.2015 no change in gold inventory at the GLD/Inventory at 771.25 tonnes
Feb 26. no change in gold inventory at the GLD/Inventory at 771.25 tonnes
Feb 25. no change in gold inventory at the GLD/Inventory at 771.25 tonnes
Feb 24.2015: no change in gold inventory at the GLD/Inventory at 771.25 tonnes
Feb 23.2015: no change in gold inventory at the GLD/Inventory at 771.25 tonnes
Feb 20/we had another good addition of 1.79 tonnes of gold into the GLD. Inventory 771.25 tonnes
Feb 19/ a huge addition of 1.5 tonnes of gold into the GLD/Inventory 769.46
Feb 18/ a small withdrawal of .3 tonnes/no doubt to pay for fees/Inventory 767.96 tonnes
Feb 17/no changes in gold inventory at the GLD/Inventory 768.26 tonnes
March 5/2015 / no change in inventory
inventory: 760.80 tonnes.
The registered vaults at the GLD will eventually become a crime scene as real physical gold departs for eastern shores leaving behind paper obligations to the remaining shareholders. There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat (same banks).
GLD : 760.80 tonnes.
end
And now for silver (SLV):
March 5 no change in inventory/725.992 million oz
March 4 a slight reduction of 126,000 oz of silver/SLV inventory at 725.992 (probably to pay for fees)
March 3 a small deposit of 328,000 oz of silver into the SLV/Inventory at 726.118 million oz.
March 2/ no change in silver inventory tonight; 725.734 million oz
Feb 27.2015 no change in silver inventory tonight: 725.734 million oz
Feb 26. no change in silver inventory at the SLV/Inventory at 725.734 million oz
Feb 25. no changes in silver inventory/SLV inventory at 725.734 million oz
Feb 24.we had an addition of 1.435 million oz of silver to the SLV/SLV inventory at 725.734 million oz
Feb 23 no change in silver inventory/324.299 million oz
Feb 20 no change in silver inventory/324.299 million oz
Fen 19/ we had a huge addition of 4.082 million oz of silver into the SLV/Inventory 324.299 million oz
Feb 18.2015/ no change in silver inventory at the SLV/Inventory at 320.327 million oz
Feb 17 no changes in silver inventory at the SLV/Inventory at 320.327 million oz
March 5/2015 no change in silver inventory at the SLV/ SLV inventory remains at 325.992 million oz
end
Not available yet/will update later tonight
And now for our premiums to NAV for the funds I follow:
Note: Sprott silver fund now for the first time into the negative to NAV
Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 6.9% percent to NAV in usa funds and Negative 6.8% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.8%
Percentage of fund in silver:37.8%
cash .4%
( March 5/2015)
Sprott gold fund finally rising in NAV
2. Sprott silver fund (PSLV): Premium to NAV falls to + 2.33%!!!!! NAV (March 5/2015)
3. Sprott gold fund (PHYS): premium to NAV rises to +.26% to NAV(March 5 /2015)
Note: Sprott silver trust back into positive territory at +2.33%.
Sprott physical gold trust is back into positive territory at +.26%
Central fund of Canada’s is still in jail.
end
And now for your more important physical gold/silver stories:
Gold and silver trading early this morning
(courtesy Mark O’Byrne)
“Cyber Security Loophole”- Bank Hackers “Unfettered Access” To Accounts
By Mark O’Byrne March 5, 2015 0 Comments
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– Bank accounts at majority of banks in Britain and Ireland are vulnerable to hacking says Financial Times
- Two-step authentication process used by most banks is inadequate
- Vulnerabilities identified similar to those that were used by hackers to steal up to $1 billion across Eastern Europe
- UK regulator says bank customers must be reimbursed, banks are responsible for security
- Highlights risks to deposits and systemic risk should such vulnerabilities be exploited in cyber-warfare or indeed for monetary gain
The vulnerability of banks and the global banking system – reliant as it has become on computer systems, information technology and the internet – was highlighted yet again in an important article in the Financial Times on Tuesday which was largely ignored elsewhere.
The FT reports that it has come into possession of documents and correspondence between the Financial Conduct Authority (FCA) and a cyber security firm, Bronzeye that identify “serious security issues” at British high street banks.
“Britain’s markets watchdog, the Financial Conduct Authority, was warned last July about a loophole in the cyber security of one of Britain’s biggest banks that could give hackers unfettered access to customer accounts,” reports the FT.
Bronzeye identified a weakness in the two-step authentication process used by most banks and reported it to the FCA in July of last year. It is apparently similar to the flaw that allowed hackers to raid up to $1 billion from around 100 banks, predominantly in Eastern Europe.
Bronzeye identified one “large British bank”, the name of which was redacted in the documents, that had “22 critical vulnerabilities”. One of these flaws could “stop the bank in it’s tracks”, according to the firm.
Oddly, the bank refused to work with Bronzeye to fix the problem.
On the surface it would appear that banks customers need not concern themselves with these developments. The FCA has made it clear that banks must absorb the costs of raids on customers accounts by hackers.
“We are focused on ensuring the right outcomes based on our three operational objectives. We expect firms to provide redress for consumers impacted by cyber crime, consumers should not lose out as a result of cyber crime. Management and oversight of the systemic cyber risks lie with the Bank of England and Prudential Regulation Authority supervision,” they said.
While this is encouraging we believe that this story again exposes systemic risks to the banking system. If the accounts of a number of banks were targeted en masse in a coordinated act of cyber-warfare or cyber-terrorism it could severely impact and even disable individual banks and their deposit accounts and indeed the entire western banking system through contagion.
We have covered previously how governments across the world have been infecting the systems of their rivals with malware. Although generally they have not exploited the breaches to date.
It is likely that groups and governments hostile to the West have also identified such simple vulnerabilities in the western banking system but decided it was not in their interest to exploit them … yet.
Recently we pointed out how an international hacking group stole $300 million from bank accounts and how the global digital banking system is not secure . We also pointed out how cyber war poses risk of bail-ins to banks and deposits.
We are not suggesting that readers should dash out and empty their bank accounts. We are simply identifying risks to the system of which people should be aware and that they take reasonable precautions including diversification of deposits and diversification from deposits.
Having all your eggs in a deposit account is no longer prudent.
Academic and independent research and indeed the modern and historical record shows how physical gold is the safest asset-class in the world. An allocation of some of one’s portfolio to physical gold is insurance against technological and systemic risks posed to all virtual wealth today – whether that be digital bitcoin or electronic currencies in deposit accounts.
These risks have never been seen before and yet are largely unappreciated and ignored by brokers, financial advisors and bankers.
How To Own Gold – 7 Key Must Haves
MARKET UPDATE
Today’s AM fix was USD 1,199.75, EUR 1,086.04 and GBP 786.46 per ounce.
Yesterday’s AM fix was USD 1,204.25, EUR 1,082.67 and GBP 785.19 per ounce.
Gold fell 0.32% percent or $3.80 and closed at $1,199.40 an ounce yesterday, while silver slipped 0.49% or $0.08 to $16.18 an ounce. Gold steadied around $1,200 this morning in trading in the UK and Ireland after a three days of slight losses.
Brent crude was flat on Thursday, managing to hold above $60 a barrel as investors brushed aside bearish U.S. inventories data to focus on the lack of a deal in talks over Iran’s nuclear program and the risk of conflict between Israel and Iran.
Investors await the European Central Bank (ECB) policy meeting outcome at 12:45 GMT today to learn more details of Draghi’s bond buying bonanza equalling 1.1 trillion euros.
The non farm payrolls a key U.S. economic indicator is scheduled for release on Friday. Market participants are hoping for a clue as to when the U.S. Federal Reserve’s interest rate hike may occur.
Not all Fed governors are on plan for a June-September 2015 rate hike. Chicago Federal Reserve Bank President, Charles Evans, told a local Rotary Club, “Given uncomfortably low inflation and an uncertain global environment, there are few benefits and significant risks to increasing interest rates prematurely.”
Evans told reporters after the presentation that, “a rate hike will be not be appropriate until “early 2016” which is gold supportive.
Spot gold was up 0.1 percent to $1,200.65 an ounce in late morning trading in London, after dipping one percent in the previous three sessions on a strong dollar and robust U.S. economic data.
Spot silver slipped 0.1 percent to $16.16 an ounce, while palladium was up 0.1 percent at $828.50 an ounce and platinum was steady at $1,180.45 an ounce.
end
This ought to be good!!
(courtesy GATA/UKTelegraph)
UK frauds office launches investigation into Bank of England auctions amid rigging fears
Submitted by cpowell on Thu, 2015-03-05 00:17. Section: Daily Dispatches
By Andrew Trotman and James Titcomb
The Telegraph, London
Wednesday, March 4, 2015
The Serious Fraud Office has launched an investigation into the Bank of England’s money-market auctions amid fears they may have been hit by the rigging scandal that has engulfed the City.
The SFO revealed on Wednesday night that it is “investigating material referred to it by the Bank of England concerning liquidity auctions during the financial crisis in 2007 and 2008.”
It is unclear whether the probe, the first targeting the Bank in the SFO’s 28-year history, will focus on traders outside the BoE or officials inside the central bank. …
… For the remainder of the report:
http://www.telegraph.co.uk/finance/economics/11450714/SFO-launches-inves…
end
Does Rob McEwen really not wonder why gold isn’t at $5,000 already?
Submitted by cpowell on Thu, 2015-03-05 16:52. Section: Daily Dispatches
11:54a ET Thursday, March 5, 2015
Dear Friend of GATA and Gold:
If there’s a tougher and shrewder entrepreneur and executive in the gold mining business than Rob McEwen, founder of Goldcorp and now CEO of McEwen Mining, GATA doesn’t know of one. But McEwen’s remarks this week at the PDAC conference in Toronto, at least as conveyed by the National Post, suggest that he’s not tough and shrewd enough — that in the crucial respect he’s just like the rest of management in the gold-mining industry, unable to put 2 and 2 together even as the equation is flashing in neon lights right in front of him.
According to the National Post, whose report is appended in part below, McEwen is maintaining a prediction of a gold price of US$5,000 despite the monetary metal’s poor performance in recent years.
Of course timing is everything and nothing else matters much, since over infinite time gold both may rise to many multiples of its current price as well as fall to zero. But according to the National Post, McEwen told the conference that gold’s time is or should be now, that gold is at a “turning point” because certain prices are going wild, like a condominium in New York that recently sold for $95 million and a painting that sold for almost $330 million.
“It sends a message,” McEwen is quoted as saying, “that money is not that valuable anymore.”
Indeed. So if New York condos and mere paintings can rise in price to tens of millions of dollars, why hasn’t gold followed along?
More to the point, why aren’t McEwen and other gold mining executives even asking?
Of course GATA long has been providing the answer to gold’s failure to perform as ordinarily would be expected: Largely surreptitious intervention by central banks in the gold market to suppress the monetary metal’s price and thereby support government currencies and bonds and maintain government power.
The purpose, history, and much of the documentation of this longstanding central bank policy are summarized by GATA here —
http://www.gata.org/node/14839
— while GATA’s full documentation file is here:
http://www.gata.org/taxonomy/term/21
Even some central bankers themselves acknowledge such market intervention in general and call it “financial repression.” Is it likely to end any time soon when even Rob McEwen can’t figure it out or can’t bring himself to talk about it even when he has a large audience whose livelihood is at stake?
Does McEwen deny the documentation? Or is even he too scared of the central bankers and his own company’s bankers?
If he is too scared, what’s the point of his being in the gold business?
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
Koos Jansen explains to the world the wild gold financing deals
This is long so take your time:
(courtesy Koos Jansen)
Chinese Gold Financing Deals Explained
https://www.bullionstar.com/blogs/koos-jansen/chinese-gold-financing-deals-explained/
end
Bill tackles the crazy financing orchestrated by the Greek government to fund the IMF loan.
a must read…
(courtesy Bill Holter/Miles Franklin)
What could possibly go wrong?
The latest news out of Greece is truly a head scratcher. After agreeing with the Eurozone to a four month extension, the new plan to get them from here to there can only be described as insane. In order to roll over current debt, Greece plans to “borrow” from public pensions!
They had a T-bill auction yesterday which was supported by funds from their public retirement fund, the method employed was comical. What Greece has decided to do is to pledge securities into the “repo” market to raise cash, this cash is then used to bid at auction …the new funds then are used to pay down past debt. Do you see how this works? As a graduate of the venerable University of MCV (University of My Cousin Vinny), I will try to explain it to you on street level terms.
While business is good, you live a little better than what your income would provide. You do this with confidence because each year has been at least as good if not better than the year before, so living a little large and adding debt to your balance sheet is not a great concern. Then you start living even further beyond your means. As time passes, the leader of the local gangs asks you if your gang would like to join? Of course you want be part of this well known and prestigious group of gangs but one of the preconditions is your business must be good. It doesn’t matter what your businesses are, what does matter is you can make money and not be a drag on the other gangs. Knowing that you already owe some out of town loan sharks what do you do?
First off you hire Golden Suks to help you with some creative accounting and enter into a few contracts with them so you have something to show when you open the books for your entry audit. “Sure we owe Clive down the street but Guido owes us and will pay Clive directly if his interest rate starts to rise, so it’s all good!”. This is where it gets interesting, you are accepted in as one of the gangs but business begins to slow and even your crew starts holding back on you. Normally you get a 25% “tribute” on anything they steal or conjure up, but now, even on deals you find out about you aren’t getting what you used to. This is a problem, a BIG one!
You see, while living above your means you had to keep borrowing more from your loan shark. He never really pushed you and was willing to let you just pay interest because you had always paid on time. This begins to change as business slows, now your source of cash became less willing to lend. What do you do? Simple, you decide to go to other loan sharks and take on more loans because as the saying goes, “you only live once and you might as well have fun doing it”. This of course is akin to normal people paying off one credit card with another but it’s OK as long as you can keep borrowing more.
Along the way another problem arose, you had to for appearance sake give a monthly stipend to the families of deceased “soldier’s”. You did this out of cash flow and even gave some of them cars and houses. You don’t want to kick out the spouses and children of those who had provided for you so you go to the local pawn shop with deeds and titles. The pawn shop gives you some cash and the families still get to use the cars and houses, problem solved!
Then the problems really begin, the other bosses just so happened to have a meeting at a resort where three or four of your loan sharks were vacationing. Your name came up and each one found out you were in debt to ALL of them. You tried to divert attention but it turned out this news got back to the other bosses, your whole charade then came down. As news normally does, it spread like wildfire. Everybody knew you were broke which lead to other consequences. Even your own gang was rebelling and the tribute money dried up to a trickle. It was a good run but now it’s over.
Enough parody, what Greece is doing now by borrowing against unencumbered (though probably worthless) pension treasury securities is ridiculous. If this is their plan, the people will riot further, run their banks until they all close and destroy the country. They are pledging pension assets to raise cash …and are using this cash to bid for their own bonds. They must issue new bonds in order to pay for maturing old bonds! What will happen when they need to actually make the repo payment in order to get the pension assets back? Where will this money come from? And when they can’t come up with the money, even their retirement plan becomes unfunded. I do want to make another obvious point, what good will Greek treasuries be to the new holders who lent money against them to begin with? What could possibly go wrong?
As I have said many times before, “broke is broke” and cannot be solved with more liquidity which will ultimately need to be paid back. This is the broad systemic problem, liquidity cannot (never could) fix a solvency problem. More liquidity only creates more debt and only buys some time while making the overall problem larger and larger. At some point in time, the money either gets paid back or “bankruptcy” is admitted.
Before finishing I would like to make one other point. Greece is no different than the EU itself, the U.S., the IMF, Britain or any other Western fiat Ponzi. The only difference is that Greece got “caught” first and did not have the ability to print their own money. While “printing” has allowed the fraud(s) to be covered up and smoothed over, sooner or later the debt must be paid back…and this is the game. The debt cannot be paid back and never was expected to really be paid back, rolling debt over and over and over was the plan. The funniest thing to me is all of this supposedly is “already in the market”. In other words, all of this is “priced in”! At a time where “risk” of all sorts has never been higher, there is virtually zero premium for any risk. In the simplest of terms, we live in a world gone mad!
No one looked to the end game because it was so much fun while playing the game. I have no idea what the “event” will be but please remember this, huge forest fires all begin with one thing in common, a very small spark or something to ignite it. They all start small and all grow out of control. This, is the collective global monetary system we live with and why so many nations are preparing to exit the game. Regards, Bill Holter
And now for the important paper stories for today:
Early Thursday morning trading from Europe/Asia
1. Stocks mostly lower on major Chinese bourse/higher in Australia, India and Japan / the yen falls to 120.16
1b Chinese yuan vs USA dollar/ yuan strengthens to 6.2665
2 Nikkei up 48.24 or 0.26%
3. Europe stocks all higher // USA dollar index up to 96.18/
3b Japan 10 year yield huge rise to .41%/ (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.60/everybody watching the huge support levels of 117.20 and that level acting as a catapult for the markets.
3c Nikkei still above 17,000/
3e The USA/Yen rate still below the 120 barrier this morning/
3fOil: WTI 51.93 Brent: 61.18 /all eyes are focusing on oil prices. This should cause major defaults as derivatives blow up.
3g/ Gold down /yen down;
3h/ Japan is to buy the equivalent of 108 billion usa dollars worth of bonds per MONTH or $1.3 trillion
Japan’s GDP equals 5 trillion usa/thus bond purchases of 26% of GDP
3i 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 (see Von Greyerz)
3j Oil up this morning for WTI and down for Brent
3k Tomorrow’s job report important to the world as they see if the USA is also faltering
3l Greek 10 year bond yield :9.63% (down 1 basis points in yield)
3m Gold at $1202.00 dollars/ Silver: $16.22
3n USA vs Russian rouble: ( Russian rouble up 1/2 rouble / dollar in value) 61.22!!!!!!.
3 0 oil into the 51 dollar handle for WTI and 61 handle for Brent
3p Draghi’s day has arrived and will tell the world how he will buy 60 billion euros of bonds each month
3Q SNB (Swiss National Bank) still intervening again driving down the SF/window dressing/Swiss rumours of intervention to keep the soft peg at 1.05 Swiss Francs/euro and major support for the Euro.
3r Britain’s Serious fraud squad investigating the Bank of England
3s China’s Premier Li lowers growth targets to China/sounded downbeat
3t German factory orders tumble 3.9%
4. USA 10 yr treasury bond at 2.13% early this morning. Thirty year rate well below 3% (2.73%!!!!)/yield curve flattens/foreshadowing recession
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid
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Euro Slides, Futures Flat Ahead Of Mario Draghi’s Press Conference And Q€ Cheat Sheet
It has been a while since we have seen the USDJPY rampathon push US equities higher, so in a day dominated by central banks (first the BOE momentarily), and then the ECB’s much anticipated announcement of the actual QE launch at the Draghi press conference at 1:30pm CET (taking place, ironically enough, in the place that was the blueprint for the Eurozone’s capital controls, Cyprus), it only makes sense that after weeks of stage fright, the USDJPY algos reminded the world they are alive and well, and proceeded to ramp the key FX pair above 120, even though the currency that everyone will be talking about today is the Euro, hugging 1.10 as of this moment, but the real question is what happens after Draghi gives the asset buying green light: has all of Q€ been priced in already in FX, and will the EURUSD resume its surge higher, or is parity next stop?
In any event, the ECB is widely expected to hold rates, with the deposit rate solidly in negative territory, as it unveils details about its asset-buying program, and just where it hopes to buy all those hundreds of billions in bonds from, including on the timeline for purchases and the legal details around them. Separately.
But before the main event, a quick recap of last night’s drama out of China, where we learned that Premier Li Keqiang has set the economic growth target at ‘around 7%’ from ‘around 7.5%’ last year. As DB summarizes, Li struck something of a downbeat tone in his report, saying that ‘the difficulties we are to encounter in the year ahead may be even more formidable than those of last year’ and that ‘China’s economic growth model remains inefficient; our capacity for innovation is insufficient, overcapacity is a pronounced problem and the foundation of agriculture is weak’. China’s the CPI target has been lowered to 3% (from 3.5%), the M2 growth target cut with the fiscal deficit largely unchanged as a percentage of GDP. DB adds that there is risk of a mini-hardlanding this year.
In terms of macro, the only meaningful hard data point was German Factor Orders which tumbled 3.9% on expectations of just a -1.0% drop, following last month’s 4.4% surge (revised up from +4.2% initially). Domestic orders declined 2.5%mom after +5.1%, while foreign orders dropped 4.8%mom after +3.8%. The decline in foreign orders predominately reflects a decline in orders from within the Euro area which declined 9.0%mom after +4.6%mom (some of the decline is related to the very volatile transport equipment category that includes airplanes). Orders from outside the Euro area were down 2.2%mom after 3.4%.
Back to markets where today’s session sees European equities (EUROSTOXX +0.40%) shrug off a negative close in Asia which came as a result of Beijing setting a 2015 GDP target of about 7.0% vs. Prev. 7.5%, the lowest in over 15yrs, with Chinese Premier Li stating he sees pressure on the economy intensifying, adding that it faces greater difficulties in 2015 vs. 2014. European markets instead trade in minor positive territory after a busy morning in terms of earnings but very light in terms of macro newsflow ahead of this afternoons ECB rate decision and press conference.
Bunds (-13 ticks) have also seen little price action today with many market participants waiting on the sidelines in anticipation of discovering the technicalities of the QE programme, including the composition of such purchases and a start date for launch, with the latest ECB sources suggesting that March 9th will see the central bank begin bond purchases
USD/JPY has seen a bout of strength during the European morning, with the pair breaking above the 120.00 handle, where a large option expiry (USD 3bln) is to expire at the 1500GMT NY cut, while elsewhere, EUR/USD continues to reside around 11 year lows, with the USD index remaining near 11 year highs. Of note, US Jobless Claims & Productivity data (1330GMT) and Factory Orders (1500GMT) may be delayed due to adverse weather conditions in Washington DC.
Elsewhere, AUD/USD has spent the European morning retracing gains, after RBA Deputy Governor Lowe deviated from the RBA’s usual jawboning saying AUD was still high given state of the economy but closer to where it needs to be. While NZD/USD has trended lower throughout the Asian and European session after RBNZ are said to be consulting on property investor loans which has led to speculation that it could open the door to RBNZ rate cuts.
WTI and Brent crude futures both trade in the green today, with some attributing a late rally yesterday to the Fed’s Beige book, which said US drilling has slowed in shale and traditional oil region, adding that companies were reducing Capex. Meanwhile, further upside was seen today as a result of continued disruption in Libya, with the country declaring force majeure on 11 of its oil fileds. In NatGas Today sees the EIA NatGas Storage Change, which is expected at -225 after another cold week in the US. Elsewhere, gold briefly broke below the USD 1,200 handle during the European morning after trading in a tight range during Asia hours, before moving back above the handle later in the session.
In summary: European shares gain for second day, near 7- year high as market awaits clarity on ECB’s bond-buying program. ECB officials meeting today with president Mario Draghi in Cyprus today. Sectors outperforming include oil & gas, autos, and retail. Portuguese, Spanish debt gained, pushing yields toward record lows. U.S. equity index futures gain. Oil gains with copper, gold little changed and silver declines with most food commodities. Asian stocks declined earlier as China lowered its growth projection of ~7%, lowest in more than 15 years. BOE keeps key interest rate at 0.5%; maintains asset purchase plan at GBP375MM. Greece Dec. unemployment rate 26%. Euro-area Feb. retail PMI 46.4 vs 46.6 prior. German Jan. factory orders +0.1% y/y vs survey +2.6%. France 4Q ILO unemployment 10.4%. U.S. productivity, jobless claims, consumer comfort, factory orders due later. U.S. federal offices in Washington, D.C. closed today
Market Wrap:
S&P 500 futures up 0.1% to 2098.2
Stoxx 600 up 0.5% to 392.6
US 10Yr yield up 1bps to 2.13%
German 10Yr yield up 1bps to 0.39%
MSCI Asia Pacific down 0.2% to 145.2
Gold spot little changed at $1200.7/oz
Eurostoxx 50 +0.7%, FTSE 100 +0.4%, CAC 40 +0.8%, DAX +0.7%, IBEX +0.5%, FTSEMIB +0.8%, SMI +0.2%
Asian stocks fall with the Nikkei outperforming and the Hang Seng underperforming.
MSCI Asia Pacific down 0.2% to 145.2
Nikkei 225 up 0.3%, Hang Seng down 1.1%, Kospi up 0%, Shanghai Composite down 0.9%, ASX up 0%, Sensex up 0.2%
Euro down 0.23% to $1.1053
Dollar Index up 0.2% to 96.16
Italian 10Yr yield down 1bps to 1.38%
Spanish 10Yr yield down 2bps to 1.34%
French 10Yr yield up 1bps to 0.68%
S&P GSCI Index up 0.4% to 419.2
Brent Futures up 0.9% to $61.1/bbl, WTI Futures up 0.9% to $52/bbl
LME 3m Copper up 0.1% to $5845/MT
LME 3m Nickel up 1.5% to $14155/MT
Wheat futures down 0.4% to 494.3 USd/bu
Bulletin Headline Summary
Markets remain quiet amid light newsflow ahead of the ECB rate decision and press conference later today
USD/JPY breaks above the 120.00 handle, with the USD Index remaining near 11 year highs
Looking ahead, the main event of the session sees ECB’s Draghi post rate decision press conference, with other highlights including the BoE rate decision, US Weekly Jobs Report and Factory Orders and comments from Fed’s Williams.
Treasuries lower as market awaits details of ECB’s QE program, policy announcement at 7:45am ET, Draghi presser at 8:30am. U.S. payrolls report tomorrow, est. +225k vs +267k in Jan, unemployment rate 5.6%.
China lowered its growth target to 7% from last year’s 7.5%, lowest in more than 15 years, and flagged increasing headwinds as leaders tackle the side effects of a generation-long expansion that spurred corruption and fueled debt
German factory orders fell 3.9% after a revised increase of 4.4% in December, data from the Economy Ministry in Berlin showed on Thursday
Sweden’s Swedish Riksbank bought SEK4b of notes due 2016 and 2017 at average yields of -0.160% and -0.139%, according to a statement on Thursday; investors offered SEK15b in total
As talks over the disbursement of bailout funds for Greece drag on into their seventh consecutive month, the deadlock threatens to pull the country back into a recession this quarter, or even a possible default within weeks
Hillary Clinton sought to do some damage control yesterday as she revealed that she’s asked the State Department to release the e-mails she exchanged during her four years leading the agency
U.S. Ambassador to South Korea Mark Lippert needed 80 stitches to his face after being slashed by a North Korea sympathizer demanding an end to joint U.S.-South Korea military drills
India’s support of state-controlled banks is shifting to target the most profitable lenders for capital injections, rather than propping up weaker peers, as the nation seeks to build a more robust financial system
Sovereign 10Y yields higher. Asian stocks mixed, with Nikkei higher, Shanghai and Hong Kong lower, European stocks stocks gain; U.S. equity-index futures rise. Crude and copper gain, gold little changed
Central Banks
7:00am: Bank of England sets bank rate, est. 0.5% (prior 0.5%)
7:45am: European Central Bank sets main refinancing rate, est. 0.05% (prior 0.05%)
8:30am: ECB’s Draghi holds news conference in Nicosia, Cyprus
10:00am: Fed’s Williams speaks in Honolulu
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DB’s Jim Reid concludes the overnight summary
We’re well and truly in the business end of the week now as interest and activity picks up after a slow start. All eyes are on the ECB today and in particular payrolls tomorrow but we start in China this morning where the current National People’s Congress meeting is underway. As our colleagues in China had expected earlier in the week, the main news to come out is that Premier Li Keqiang has set the economic growth target at ‘around 7%’ from ‘around 7.5%’ last year. Li struck something of a downbeat tone in his report, saying that ‘the difficulties we are to encounter in the year ahead may be even more formidable than those of last year’ and that ‘China’s economic growth model remains inefficient; our capacity for innovation is insufficient, overcapacity is a pronounced problem and the foundation of agriculture is weak’. Our China economist Zhiwei Zhang also noted that the CPI target has been lowered to 3% (from 3.5%), the M2 growth target cut with the fiscal deficit largely unchanged as a percentage of GDP. Zhiwei continues to believe that there are rising risks of a mini-hardlanding this year. In terms of market reaction, the Shanghai Comp is 1.2% lower following the news. Bourses elsewhere are mixed. The Hang Seng (-0.92%) is lower however the Nikkei (+0.17%) and Kospi (+0.21%) are modestly higher.
Later today we have the ECB policy statement and press conference where the focus looks set to be on the technical details and implementation plans of the €60bn a month QE program the central bank announced at its last meeting. As our European economics team highlighted in their last Focus Europe, big unanswered questions remain as to when exactly will the purchases begin, how the ECB will coordinate the purchasing by the NCBs, what is the precise structure of the purchasing ‚benchmark? the ECB mentioned in the recently released accounts (minutes) of the 22 January meeting, how much flexibility will this benchmark have to deal with an NCB that fails to source its allocation of bonds, will the ECB be able to source EUR60bn of securities each month and what happens if the EUR60bn objective is not reached? That’s a big list of questions that markets will look for answers for today, including in an Q&A session that will probably be dominated by it. Our economics team doesn’t expect the technical details to deflate market confidence but more info will be welcomed.
We’ll also see the latest staff forecasts. In DB’s Focus Europe they write that the prevailing market consensus numbers are a good guide and thus expect forecasts for growth to rise modestly (0.1-0.2pp), with the preliminary print for 2017 being around 1.6%. The staff inflation forecast for 2015 is likely to drop sharply, reflecting what we already know about energy prices. Inflation in 2016 might be little changed. The interesting question is, what will the first staff forecast for inflation in 2017 be? The recent SPF expectation was 1.5%. The latest Bloomberg consensus is 1.4%. The dilemma for them is too low a number will assume policy failure and extended QE beyond Sept 2016 and too high a number might not be credible. It would certainly make bond yields look ridiculously low in many countries.
In terms of markets yesterday, despite relatively solid macro data across both the US and Europe yesterday, it was a case of contrasting moves in the respective equity markets. Indeed, in the US the S&P 500 closed -0.44% whilst in Europe the Stoxx 600 and DAX both finished +0.76% and +0.98% higher respectively. You could however say that the differences between the two regions were largely eroded when you take the large currency move into account though. The Euro tumbled 0.88% versus the Dollar to $1.108 and the lowest level since 2003.
With regards to the data, in the US the February ADP employment reading came in a touch below expectations but at a still healthy +212k (vs. +219k expected). Although the reading was down from an upwardly revised January number (+251k), the reading marks the 13th consecutive print above 200k. Our US colleagues believe that the print supports a sturdy payrolls number tomorrow and underlines what’s been consistent and broad-based strengthening in the labour market for some time now. Elsewhere the ISM non-manufacturing reading improved slightly to 56.9 (vs. 56.5 expected) from 56.7 previously whilst the final February services PMI reading was revised up one-tenth to 57.1. The release of the Fed’s Beige Book didn’t offer too much in the way of surprises and instead painted a fairly positive tone. In particular, the report noted that ‘economic activity continued to expand across most regions and sectors from early January to mid-February’.
Fedspeak yesterday was a bit more interesting however. The Kansas City Fed’s George lent support to the hawks after comments that she sees a mid-year lift off as a necessary time frame and suggested that some time will pass before we see the full effects of interest rate decisions so monetary policy must be forward looking and act before the economy reaches the 2% inflation target. The Chicago Fed’s Evans meanwhile – who sits at the dovish end of the scale – perhaps unsurprisingly, was noted as saying that a rate hike would not be appropriate until early next year. However, of more surprise to us was a slight change in his tone when suggesting he would not rule out removing the ‘patient’ language, instead saying that ‘what’s more important is that our Fed communications convey a sufficient amount of conditionality’ (Reuters). Having chopped around lately, US 10y yields were more subdued yesterday and finished more or less unchanged at 2.117%.
Closer to home in Europe we saw some reasonably solid data also. Retail sales for the Euro-area in particular were strong with the +3.7% yoy reading ahead of expectations of +2.3%. In terms of the PMI’s, there were some modest downward revisions to the February prints. Euro-area services (53.7 vs. 53.9 previously) and composite (53.3 vs. 53.5 previously) were down slightly and led by Germany in particular which had a 0.8pt downward revision to its services reading to 54.7, although we note still at the highest level since September last year. The first services reading for the UK was weaker than expected (56.7 vs. 57.5 expected). Bund yields continued their rise with the 10y benchmark yield 2.1bps higher at 0.383% – the highest yield since January 27th now.
With regards to Greece, the nation successfully raised the €1.138bn it was looking for in its 6-month T-Bill auction yesterday. With around €1.4bn due tomorrow in maturities, Reuters continued to report that the government is looking at using the cash reserves of pension funds and other state entities through repo agreements to cover some short term financing. After further commentary from Spanish Economy Minister Guindos that Greece would need a third bailout package, Reuters also reported yesterday that a German finance ministry spokesman said that there is no agenda for a discussion of a third program at Monday’s Eurogroup meeting. Meanwhile the EC’s Juncker also noted ‘it is premature to talk about a third programe’.
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