Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1208.65 up $25.55 (comex closing time)
Silver: $17.04 up 46 cents (comex closing time)
In the access market 5:15 pm
Gold $1203.80
Silver: $16.97
Gold and silver had a good day as finally they were released from the shackles of month end options expiry on comex, LBMA and OTC contracts.
Gold/silver trading: see kitco charts on the right side of the commentary.
Following is a brief outline on gold and silver comex figures for today:
The gold comex today, we surprisingly had a poor delivery day, registering only 1 notices served for 100 oz. Silver comex registered 0 notices for nil oz .
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 249.165 tonnes for a loss of 54 tonnes over that period. Lately the removals have been rising!
end
In silver, the open interest fell by only 152 contracts, even though Tuesday’s silver price was down by 8 cents. The total silver OI continues to remain extremely high with today’s reading at 170,105 contracts. The front April month has an OI of 130 contracts for a gain of 20 contracts. We are still close to multi year high in the total OI complex despite a record low price. This dichotomy has been happening now for quite a while and defies logic. There is no doubt that the silver situation is scaring our bankers to no end.
We had 0 notices served upon for nil oz.
In gold we again have a continuing collapse of OI as we enter the next active delivery month of April . The total comex gold OI rests tonight at 387,585 for another loss of 296 contracts. With June gold almost equal to April gold in price, it just does not make sense why so many would liquidate their positions. As options expired on the OTC market, gold and silver were allowed to rise. We had 1 notice served upon for 100 oz.
Today, we had no changes in gold inventory at the GLD/ Gold Inventory rests at 737.24 tonnes
In silver, /SLV we had another huge withdrawal of 1.918 million oz of silver inventory / the SLV/Inventory, at 321.975 million oz
We have a few important stories to bring to your attention today…
1, Today we again had some short covering again in the silver comex complex with the silver OI falling by only 152 contracts despite the continued whacks on it. Gold OI fell again by 296 contracts. The huge rise in gold/silver after options expiry on the OTC will no doubt see increases in OI tomorrow.
(report Harvey/zero hedge)
2. Greece will likely default in two weeks. Today its FinMin after talks did not go over too well, told his parliamentarians that they could use Bitcoins instead of Euros/Drachma.
(zero hedge)
3.Japan delivers many huge misses including the big Tanken manufacturing index/the Nikkei falters badly by 172.15 points or .9%
(zero hedge)
4. Yemeni rebels are in a town bordering the Bab al Mandeb strait. Saudi Arabia is reading to invade.
(zero hedge)
5. Huge explosion in the oil patch as state owned Mexican Pemex Oil platform explodes
(zero hedge)
6. The private ADP report was released today and employment sank
(courtesy ADP)
7. ISM manufacturing also faltered
(ISM)
8. The Atlanta Fed lowered it’s estimate on first quarter GDP to 0.00%
from .2%
(Atlanta Fed/zero hedge)
9. For the first time in its history, California orders water cuts as the drought continues.
(courtesy zero hedge)
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 another 296 contracts from 387,881 down to 387,585 as gold was down by $1.70 yesterday (at the comex close). As I mentioned above, the complete collapse of OI as we enter an active delivery month makes no sense.The fact that we have a middle eastern war, troubles in Ukraine and in Greece and then to have a complete collapse in OI is beyond comprehension. We are off contract month of March. We are now in the active delivery month of April and here the OI fell by 1926 contracts down to 5,422. The next non active delivery month is May and here the OI rose by 44 contracts up to 542. The next big active delivery contract month is June and here the OI rose by 900 up to 262,620. June is the second biggest delivery month on the comex gold calender. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 72,411 (Where on earth are the high frequency boys?). The confirmed volume yesterday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 126,173 contracts. Today we had 1 notices filed for 100 oz which is most unusual for a second day delivery notice.
And now for the wild silver comex results. Silver OI fell by only 152 contracts from 170,257 down to 170,105 despite the fact that silver was down by 8 cents, with respect to Tuesday’s trading . It certainly seems that we have some resolute longs who refuse to part with their silver contracts. We are off the active contract month of March. We are now in the non active delivery month of April and here the OI rose to 130 for a gain of 20 contracts. we had 0 notices filed yesterday so we gained 20 contracts or an additional 100,000 oz of silver will stand for delivery in April. The next big active delivery month is May and here the OI dropped by 1417 contracts down to 99,117. The estimated volume today was poor at 15,508 contracts (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in at 42,880 contracts which is good in volume. We had 0 notices filed for nil oz today.
April initial standings
April 1.2015
Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
32.15 oz (Brinks)1 kilobar
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
nil
No of oz served (contracts) today
1 contracts (100 oz)
No of oz to be served (notices)
5421 contracts(542,100) oz
Total monthly oz gold served (contracts) so far this month
4 contracts(400 oz)
Total accumulative withdrawals of gold from the Dealers inventory this month
oz
Total accumulative withdrawal of gold from the Customer inventory this month
2443.40 oz
Today, we had 0 dealer transaction
total Dealer withdrawals: nil oz
we had 0 dealer deposit
total dealer deposit: nil
And the farce on kilobars continues!!
we had 1 customer withdrawals
i) Out of Brinks: 32.15 oz (1 kilobar)
total customer withdrawal: 32.15 oz (1 kilobar)
we had 0 customer deposit:
total customer deposit: nil oz
We had 1 adjustment
from Delaware vault:
197.991 oz was removed from the customer and this landed into the dealer account of Delaware;
.
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 1 contract 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 (4) x 100 oz or 400 oz , to which we add the difference between the open interest for the front month of April (5422) and the number of notices served upon today (1) x 100 oz equals the number of ounces standing.
Thus the initial standings for gold for the April contract month:
No of notices served so far (4) x 100 oz or ounces + {OI for the front month (5422) – the number of notices served upon today (1) x 100 oz which equals 542,100 oz or 16.87 tonnes of gold.
we lost 1926 contracts or 192,600 oz of gold that will not stand for delivery in April
Total dealer inventory: 659,031.595 oz or 20.498 tonnes
Total gold inventory (dealer and customer) = 8,010,640.894 oz. (249.16) tonnes)
Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 54.0 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
April silver initial standings
April 1 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
nil oz
Withdrawals from Customer Inventory
nil oz
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
nil
No of oz served (contracts)
0 contracts (nil oz)
No of oz to be served (notices)
130 contracts(650,000 oz)
Total monthly oz silver served (contracts)
0 contracts (nil oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal of silver from the Customer inventory this month
429,177.29 oz
Today, we had 0 deposits into the dealer account:
total dealer deposit: nil oz
we had 0 dealer withdrawal:
total dealer withdrawal: nil oz
We had 0 customer deposits:
total customer deposits: nil oz
We had 0 customer withdrawals:
total withdrawals; nil oz
we had 1 adjustments:
Out of Delaware:
277,219.376 oz was adjusted out of the dealer at HSBC into the customer account of Delaware
Total dealer inventory: 70.292 million oz
Total of all silver inventory (dealer and customer) 176.650 million oz
.
The total number of notices filed today is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in March, we take the total number of notices filed for the month so far at (0) x 5,000 oz = 0 oz to which we add the difference between the open interest for the front month of April (130) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the April contract month:
0 (notices served so far) + { OI for front month of April(130) -number of notices served upon today (0} x 5000 oz = 650,000 oz standing for the April contract month.
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:
April 1/2015/ no changes in gold inventory at the GLD/Inventory at 737.24 tonnes
march 31.2015/ no changes in gold inventory at the GLD/Inventory at 737.24 tonnes
March 30/no changes in gold inventory at the GLD/Inventory at 737.24 tonnes.
March 27/no changes in gold inventory at the GLD/Inventory at 737.24 tonnes
March 26 we had another huge withdrawal of 5.97 tonnes of gold. This gold is heading straight to the vaults of Shanghai, China/GLD inventory 737.24 tonnes
March 25.2015 we had a withdrawal of 1.19 tonnes of gold from the GLD/Inventory at 743.21 tonnes
March 24/ no changes in gold inventory at the GLD/Inventory 744.40 tonnes
March 23/we had a huge withdrawal of 5.37 tonnes of gold from the GLD vaults/Inventory 744.40 tonnes
march 20/we had no changes in inventory at the GLD/Inventory at 749.77 tonnes
March 19/we had no changes in inventory at the GLD/Inventory 749.77 tonnes
March 18/ we had a withdrawal of .9 tonnes of gold from the GLD/Inventory at 749.77 tonnes
March 17.2015: no change in gold inventory at the GLD/Inventory 750.67 tonnes
March 16/no change in gold inventory at the GLD/Inventory 750.67 tonnes
April 1/2015 / we had no changes in gold/Inventory at 737.24 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 : 737.24 tonnes.
end
And now for silver (SLV): April 1.2015: we had a huge withdrawal of 1.913 million oz of silver from the SLV vaults/Inventory 321.975 million oz
March 31.2015: no changes in inventory at the SLV/Inventory at 323.88 million oz
March 30.2015: no changes in inventory at the SLV/inventory at 323.888 million oz.
March 27. we had a huge withdrawal of 1.439 million oz leave the SLV/Inventory rests this weekend at 323.888 million oz
March 26.2015; no change in silver inventory/SLV inventory 325.323 million oz
March 25.2015:no change in silver inventory/SLV inventory 325.323 million oz
March 24.2015/ we had another withdrawal of 835,000 oz of silver from the SLV/Inventory rests tonight at 325.323 million oz
March 23./we had a huge withdrawal of 1.174 million oz of silver from the SLV vaults/Inventory 326.158 million oz
March 20/ no changes in silver inventory/327.332 million oz
March 19/ no change in silver inventory/327.332 million oz
March 18/ no change in silver inventory/327.332 million oz
March 17/ no change in silver inventory/327.332 million oz
March 16/no change in silver inventory/327.332 million oz
April 1/2015 we had a huge withdrawal of 1.913 million oz of silver inventory at the SLV/inventory rests at 321.975 million oz
end
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 7.0% percent to NAV in usa funds and Negative 7.1% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.2%
Percentage of fund in silver:38.4%
cash .4%
( April 1/2015)
Sprott gold fund finally rising in NAV
2. Sprott silver fund (PSLV): Premium to NAV falls to + 0.27%!!!!! NAV (April 1/2015)
3. Sprott gold fund (PHYS): premium to NAV rises -.37% to NAV(April 1/2015
Note: Sprott silver trust back into positive territory at +0.27%.
Sprott physical gold trust is back into negative territory at -.37%
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 Goldcore/Mark O’Byrne)
Gold Flat In Quarter In Dollars But 11% and 5% Higher In Euro and Pounds
By Mark O’Byrne April 1, 2015 0 Comments
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Gold flat in quarter in dollars but 11% and 5% higher in euro and sterling
Gold essentially flat with fall of just $2 or 0.0017% in dollar terms
Euro was the worst performing major currency in Q1
Gold one of strongest currencies after silver, dollar and Swiss franc
Silver surges 6.5% in dollars and 19% and 12% in euros and pounds
Oil and most commodities declined on economic concerns
U.S. stocks eked out minor gains to new record highs and look toppy
Gold performance impressive given strength of dollar and equities, oil collapse and negative sentiment
Gold was essentially flat with a fall of just $2 or 0.0017% in dollar terms in the quarter. While gold was essentially flat in the quarter in dollar terms, it is important to note that gold was 11% and 5% higher in euro and sterling terms – building on the respective 13% and 6% gold price gain seen in 2014.
Silver surged and was third strongest market relative to other major markets globally – including currencies, financial assets, stocks and commodities – rising 6.4% in dollar terms and 19% and 12% in euro and pounds.
Gold in US Dollars – Q1, 2015 (Thomson Reuters)
The euro fell 11.2% relative to the basket of assets following the ECB’s foray into the uncharted territory of the ‘QE Bazooka’ and uncertainty over the future of Greece in the Euro zone and over the future of the euro itself.
While the euro experienced sharp decline, gold priced in euros rose substantially from around €978 to over €1100 per ounce.
Other poorly performing currencies include the Canadian dollar (-8.3%), Australian dollar (-6.0%), British pound (-4.6%), New Zealand dollar (-3.5%). The Japanese yen was flat with a 0.1% fall.
Gold performed its traditional role as hedge against currency depreciation over the period with all currencies which performed poorly seeing gold price gains. It is important to note that gold buyers buy gold in local currencies and have exposure in and to local currencies. Therefore it is important for non-U.S. investors to focus on gold in local currency terms.
Gold in Euro – Q1, 2015 (Thomson Reuters)
Gold priced in Canadian dollars was also up considerably – from around $1375 to $1500 per ounce.
In Australian dollars gold rose from around $1450 to just over $1550. In British pounds gold was up from around £760 to slightly below £800 per ounce.
The New Zealand dollar saw a slight increase over the same period from roughly $1540 to around $1590 per ounce.
The strongest performing assets were generally those which have been the beneficiaries of ultra loose monetary policies by the Fed, BOE, ECB and the BOJ. The Nikkei 225 was up 10% and the DAX by 23% (see chart below).
The Nikkei 225, the DAX and the U.S. dollar were the strongest performing markets followed by silver and a mix of U.S. stocks and bonds and the Swiss franc.
Gold in British Pounds – Q1, 2015 (Thomson Reuters)
Platinum fell 5.5% and palladium 7.9% in the first quarter.
Commodities, and energy and agricultural commodities in particular, fared poorly. Rice, orange juice, wheat, oats, sugar, coffee and lean hogs all had sharp declines ranging from -8.7% to -27%.
Crude oil and natural gas fell 15.9% and 8.6% while copper and lumber fell -1.8% and -19.4% respectively, further demonstrating developing weakness in the global economy.
Certain commodities performed well – generally ones which have seen losses in recent months. Cotton, feeder cattle and heating oil saw gains.
Stocks and bonds were higher with the S&P, Dow, Russell 2000, Nasdaq 100, 30 year bonds and 10 year notes were up between 4% and 0.2%.
It is testament to gold and silver’s inherent strength that they have outperformed many paper assets, even assets which have been positively targeted by the Fed and other central banks and boosted by loose monetary policy – such as major stock indices and bond markets.
The very marginal decline of gold priced in dollars has led to some more negative comment about gold’s “quarterly fall.” This is contributing to poor and indeed negative sentiment towards gold in western markets. This is bullish from a contrarian perspective and suggests we have bottomed or are close to bottoming.
Much analysis focuses on gold solely in dollar terms and discusses gold with the continuing assumption of a recovery and global economic growth. Recent data calls this into question and suggests that the recovery in the real economy is meager at best.
The resilience of gold in the first quarter against the backdrop of a strong dollar, record highs in stock markets, the collapse of oil and gas prices and negative sentiment towards the precious metal is encouraging.
The assets that performed well in Q1 were, by and large, those that are bloated with monetary stimulus – primarily stocks and bonds. These bubbles are increasingly vulnerable and will likely burst – the question is when rather than if. Then, gold’s financial insurance attributes will again protect those who have diversified into it.
7 Key Gold Must Haves
MARKET UPDATE
Today’s AM fix was USD 1,181.25, EUR 1,099.50 and GBP 800.36 per ounce.
Yesterday’s AM fix was USD 1,179.25, EUR 1,098.84 and GBP 797.95 per ounce.
Gold in USD – 1 Day
Gold dropped 0.11 percent or $1.30 and closed at $1,184.20 an ounce yesterday, while silver lost 0.36 percent or $0.06, closing at $16.65 an ounce. Overnight in Singapore, gold prices again fell marginally to touch a low of $1,181 per ounce prior to small gains in London this morning.
Gold closed very marginally lower in dollar terms yesterday and for the quarter. This is somewhat negative from a technical and sentiment perspective, however strong fundamentals and robust global demand are likely to support.
Did Wall Street players “paint the tape” and ensure a lower quarterly close to keep animal spirits in the gold market muted and encourage momentum traders to go short? We cannot tell but it would be somewhat naive to completely discount that possibility given the shenanigans banks have been found guilty of in recent months and years.
It is important to remember that no matter what manipulation may take place in futures markets, Asian and global physical demand including central bank demand will dictate the price of gold in the long term. Patience will reward those who retain an allocation to physical gold in the coming years.
Updates and Award Winning Research Here
end
This is novel: The Icelandic Government is planning to have only its central banks create money, not ordinary banks:
(courtesy the Telegraph/GATA)
Iceland looks at ending boom and bust with radical money plan
Submitted by cpowell on Wed, 2015-04-01 00:31. Section: Daily Dispatches
From Agence France-Presse
via The Telegraph, London
Tuesday, March 31, 2015
http://www.telegraph.co.uk/finance/economics/11507810/Iceland-looks-at-e…
Iceland’s government is considering a revolutionary monetary proposal — removing the power of commercial banks to create money and handing it to the central bank.
The proposal, which would be a turnaround in the history of modern finance, was part of a report written by a lawmaker from the ruling centrist Progress Party, Frosti Sigurjonsson, entitled “A Better Monetary System for Iceland.”
“The findings will be an important contribution to the upcoming discussion, here and elsewhere, on money creation and monetary policy,” Prime Minister Sigmundur David Gunnlaugsson said.
The report, commissioned by the premier, is aimed at putting an end to a monetary system in place through a slew of financial crises, including the latest one in 2008.
According to a study by four central bankers, the country has had “over 20 instances of financial crises of different types” since 1875, with “six serious multiple financial crisis episodes occurring every 15 years on average.”
Mr Sigurjonsson said the problem each time arose from ballooning credit during a strong economic cycle.
He argued that the central bank was unable to contain the credit boom, allowing inflation to rise and sparking exaggerated risk-taking and speculation, the threat of bank collapse, and costly state interventions.
In Iceland, as in other modern market economies, the central bank controls the creation of banknotes and coins but not the creation of all money, which occurs as soon as a commercial bank offers a line of credit.
The central bank can only try to influence the money supply with its monetary policy tools.
Under the so-called Sovereign Money proposal, the country’s central bank would become the only creator of money.
“Crucially, the power to create money is kept separate from the power to decide how that new money is used,” Mr Sigurjonsson wrote in the proposal.
“As with the state budget, the parliament will debate the government’s proposal for allocation of new money,” he wrote.
Banks would continue to manage accounts and payments, and would serve as intermediaries between savers and lenders.
Mr Sigurjonsson, a businessman and economist, was one of the masterminds behind Iceland’s household debt relief programme launched in May 2014 and aimed at helping the many Icelanders whose finances were strangled by inflation-indexed mortgages signed before the 2008 financial crisis.
The small Nordic country was hit hard as the crash of US investment bank Lehman Brothers caused the collapse of its three largest banks.
Iceland then became the first western European nation in 25 years to appeal to the International Monetary Fund to save its battered economy.
Its GDP fell by 5.1 percent in 2009 and 3.1 percent in 2010 before it started rising again.
* * *
end
Turd Ferguson has come to the conclusion that Paul Mylcreest is correct in that there is a direct correlation between the Nikkei and the shorting of gold:
(courtesy Turd Ferguson/TFMetals/GATA)
TF Metals Report: It’s all about that yen
Submitted by cpowell on Tue, 2015-03-31 16:06. Section: Daily Dispatches
2a SAKT, Tuesday, April 1, 2015
Dear Friend of GATA and Gold:
The TF Metals Report’s Turd Ferguson today provides more evidence in support of London-based market analyst Paul Mylchreest’s December study —
http://gata.org/node/14822
— concluding that gold was yoked in an algorithmic short/long trade with the Japanese stock index, only Ferguson sees it as a trade with the Japanese yen.
Ferguson writes: “If you’re baffled why ‘fundamentals don’t seem to matter,’ it’s because the fundamentals don’t matter. There are very few human traders of size left and the computers control everything. In this environment, arcane notions such as supply/demand and company fundamentals are insignificant. The primary drivers to these ‘markets’ are changes to the USD/JPY.”
Ferguson’s commentary is headlined “It’s All About that Yen” and it’s posted at the TF Metals Report here:
http://www.tfmetalsreport.com/blog/6726/its-all-about-yen
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
The following commentary from Bill Holter is an extremely important piece as he discusses the 3 main problem areas that can blow up the entire financial scene right now:
(courtesy Bill Holter/Miles Franklin)
The Greatest Show on Earth!
It is pretty much a given that we are living the end times of a three ring financial circus. If you doubt this, only a small amount of research on your part will confirm this. The odds in my opinion are quite high we will witness some sort of military confrontation as usually occurs when business deals go bad. The three leading acts today are Greece, Ukraine and special guest under the Big Top is Austria. We don’t want to slight the tensions in the Middle East but that is already in the military stage, today let’s look more closely at the financial stage.
Greece has already begun raiding public pensions to run even day to day operations. The current estimate is they will run out of cash before the end of April. It is no wonder they are having high level meetings with Moscow and will meet with Mr. Putin this coming Monday. It has been said they are not looking for a handout. This may be so but they will certainly be talking about running a pipeline through their country. As I have said all along, broke is broke, they simply cannot make payment on what they have already borrowed from the West.
The West, led by Germany may be able to restructure terms or even offer the Greeks more current cash. Any deal made will not solve anything as whatever Greece accepts (if they do) will also need to be paid back. Paying one credit card off with another one does not lower your balance, on the contrary, the total balance rises and this is the problem. Greece as recently as 2010 was the shining star of Europe, just as a bank rated AAA on a Friday afternoon is bankrupt on Monday morning, so went Greece.
What is being missed here is Greek debt is held widely by German and French banks …and by the ECB itself. When Greece does finally default, these already undercapitalized banks will capsize, but this is only part of it. Just as happened back in 2008, there may be 10 times the amount of CDS (insurance) written versus their debt, now we are talking $3.5 trillion. Do you know of any entity on the planet that could make good on this policy?
Before finishing on Greece, James Turk did an interview yesterday with King World news where he theorizes there will shortly be a “crossover” of debt owed the ECB and Greek banking deposits. The banks have bled down to 130 billion euros while the ECB holds nearly 100 billion worth of Greek debt. James believes a “bail in” of Greek banks will occur before the bank balances are too small to cover the debt. http://kingworldnews.com/ecb-to-steal-greek-bank-deposits-as-greece-to-default-within-two-weeks-sending-shockwaves-around-the-world/ . I believe this “crossover” has already happened. I say this because many of the deposits are small. I just don’t believe there are enough large deposits left to steal in order to cover the debt owed the ECB. Can they really bail in small deposits of widows or retirees without a massive proletariat revolt? I can envision small depositors of all ages out in the streets with pitchforks hunting down anyone who even looks like a banker!
Another financial tent which will fold is Ukraine. The situation here is less cut and dry than Greece because Russia is involved. A little refresher for you, Russia lent Ukraine $3 billion+ at the end of 2013. They did this to try to help stabilize the country, within two months “their guy” was out and “our guy” was in. Ukraine has payments due on debt in June and they do not have the funds (nor their gold as this has already been pilfered). This debt held by Russia comes due at the end of this year and because it was written under “English law”, any restructuring must be approved by Russia. The odds of Russia allowing a restructuring are virtually zero because they know any extra funds will be used to restart Ukraine’s assault on the Russian population of the east. The risk of a default by Ukraine has risen greatly. Just as with Greece, it is not only so much about the amount of debt itself, it’s about how much CDS “insurance” has been written. Just as Greece is just another link in the derivatives chain, so too is Ukraine. Any default will involve $1 trillion plus when derivatives are taken into account, are there a spare trillion or more (or even multiples of this) for any of these links should they break?
It is much more complicated than this but Russia will not aid the West at their own expense. Please understand this, it is not about the money for Russia, the entire episode is about leverage, both financial and political. You can add the leverage gained of debt problems to the fact Russia is a huge supplier of gas to Europe, who do you think Europe will side with when push comes to shove?
Under the Big Top but receiving the least amount of attention or press coverage is Austria and their banking problems. It seems the collapse of Hypo-Alpe Adria bank is reaching the next level, it was only a matter of time. Pfandbriefbank Oesterich AG is the next potential casualty http://www.zerohedge.com/news/2015-03-27/black-swan-2-next-critical-chapter-austrian-banking-system-story . They have a 600 million euro payment in June (lots of June deadlines?) but won’t be able to make this without invoking “guarantees”. One of these guarantees comes from the state of Carinthia itself, already unwilling and they say unable to perform. This is not even a large number, but, it affects the whole system in a domino effect where bank A owes bank B who owes bank C and down the line.
You should look at this as an illustration of just how thin the margins really are, a 600 million euro shortfall can have such a large impact? The fear is if Hypo doesn’t pay, Pfandbriefbank will not be able to either. What is really interesting is the 2 year debt of Pfandbriefbank is trading at around 95 cents, down nearly 15% since just last week. The debt market is already smelling this one out! Also please keep in mind that Austria was supposed to be one of the “strong” European countries (rated AAA) and Hypo was highly rated right up until their announcement of impairment, what other overnight surprises might we see?
To refresh your memory, Austrian bank problems were triggered when Switzerland broke their peg with the euro. Many real estate loans were taken out in Swiss francs because the interest rate was so low. Once the franc revalued higher, many of these loans were greater in value than the underlying real estate itself through no fault of the borrower other than to have borrowed in francs. Obviously another area where the revaluation has done damage is to the bank’s balance sheets. The lenders are now effectively short francs while those whom have sold derivative insurance against a lower euro or higher franc are now sitting on huge losses. Trust me when I use the term “chain reaction” because this is already in motion!
This “three ring circus” as I have dubbed it is by no means all there is, it does however have a finite time frame. Greece and Ukraine owe monies before the end of June. Pfandbriefbank also has a payment due in June. Will any of these payments actually get done? None of them? I’d like to point out the obvious here, in neither of these three situations does the ability to pay exist without “help” from another source. How long will these “sources” be available and what happens when they are no longer? To this point it has been a hell of a show, it is best not to stay to watch the final act! Regards, Bill Holter
end
And now for the important paper stories for today:
Early Wednesday morning trading from Europe/Asia
1. Stocks generally higher on major Chinese bourses /Japan and Australia lower/yen falls to 120.08
1b Chinese yuan vs USA dollar/yuan slightly strengthens to 6.1985
2 Nikkei down by 172.15 or 0.90%
3. Europe stocks in the green/USA dollar index up to 98.35/Euro rises to 1.0760
3b Japan 10 year bond yield .38% (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 120.08/ bad Tanken index as their economy falters.(see below)
3c Nikkei still barely above 19,000
3d USA/Yen rate now just above the 120 barrier this morning
3e WTI 47.27 Brent 55.09
3f Gold up/Yen down
3gJapan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa.
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil down for WTI and down for Brent this morning despite the fact a proxy civil war continues in Yemen
3i European bond buying continues to push yields lower on all fronts in the EMU
Except Greece which sees its 2 year rate rises to 22.53%/Greek stocks down by .60% today/ still expect continual bank runs on Greek banks.
3j Greek 10 year bond yield: 11.53% (up by 40 basis point in yield)
3k Gold at 1185.00 dollars/silver $16.57
3l USA vs Russian rouble; (Russian rouble down 1/4 rouble/dollar in value) 57.98 , rising even with the lower brent oil price
3m oil into the 47 dollar handle for WTI and 55 handle for Brent
3n Higher foreign deposits out of China sees hugh risk of outflows and a currency depreciation. This scan spell financial disaster for the rest of the world/China may be forced to do QE!!
30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF
3p Britain’s serious fraud squad investigating the Bank of England/ the British pound is suffering
3r the 7 year German bund still is in negative territory/no doubt the ECB will have trouble meeting its quota of purchases and thus European QE will be a total failure.
3s Eurogroup reject Greece’s bid for more euros of bailout funds as proposal is to vague. The ECB increases ELA by 1.5 billion euros up to 71.3 billion euros. This money is used to replace fleeing depositors.
3t
4. USA 10 year treasury bond at 1.91% early this morning. Thirty year rate well below 3% at 2.51%/yield curve flatten/foreshadowing recession.
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy zero hedge/Jim Reid Deutsche bank)
Whiplash Session Sees Furious Buying Of Futures To Defend 50-DMA As New Quarter Begins
It has been another whiplash, rollercoaster, illiquid session which saw US equity futures tumble early overnight driven by a bout of USDJPY and Nikkei selling, only to regain all losses as European, and BIS, traders walked in, and promptly BTFD. In fact at last check, it was as if all the fireworks that took place just a few short hours ago and sent the ES as low as 2037, and below what has become the key support level, the 50-DMA…
… never happened.
So here is what happened: overnight Asian stocks mostly fell with the exception of Chinese bourses, following a negative Wall Street close which saw the DJIA post its first quarterly decline for 2yrs. Nikkei 225 led the rout after breaking below 19,000, following a disappointing BoJ Tankan survey, with saw capex expectation at the lowest since Q1’ 2013. This prompted a sharp technical-led slump across US index futures which saw both the S&P 500 (-0.8%) and DJIA (-0.8%) E-mini futures break below their 50 DMAs. Hang Seng and Shanghai Comp rose, the latter posting yet another fresh 7yr high underpinned by higher than expected Chinese Official/HSBC Mfg. PMIs.
On the first trading day of the month and quarter European indices trade higher, supported by a series of better than expected PMI releases, window dressing heading into the new quarter and a recovery after yesterday’s close lower. Core Europe has now caught up with the UK after early outperformance in the FTSE 100 as the index was supported by positive single stock news and core Europe underperformed the UK due to lingering concerns surrounding Greece. Notably, Eurostoxx trade at the highest level since 2008. The markets will now be looking for any details that emerge from a working group call between the Eurogroup and Greece after an official said yesterday that he hopes for deal at the 1500 call although creditors have said there will be no deal at hand and there will be no negotiating.
Alongside any indication of progressive in Greek talks, markets now turn their attention to the release of several pieces of tier 1 US data with ADP, Manufacturing PMI, ISM Manufacturing and DoEs all due. Focus will be on the employment sub-component of these data points ahead of US NonFarm Payrolls due on Easter Friday. Attention will also be paid to any details on Iranian nuclear talks after a German Delegation source said this morning that Iranian talks have led to no deal as of yet, however if all parties show willingness to compromise, an agreement could be reached soon. Furthermore, heading into the North American crossover, Iran’s Deputy foreign minister Araghchi says he hopes a deal will be reached by tonight.
In-line with gains in stocks USD/JPY has seen a bid, reversing overnight JPY gains which was attributed to safe-haven flows following a sharp-sell off across both Asian stocks and US index futures. Recent upside in the pair has led to a break back above 120.00 and this means that current prices sit close to large expiries due to roll off at tomorrow’s 10am NY cut including ~2.6bln at the handle. Despite this morning’s USD strength there has been little movement in commodities markets this morning, another factor which has provide the FTSE with room for upside.
WTI crude futures fell overnight after last week’s API crude oil inventories showed a larger than previous build in oil stockpiles (+5.2mln vs. Prev. +4.8mln). Recent USD strength has also led to fresh lows heading into the US crossover and ahead of today’s DOE inventories which are expected to show a build of 4.2mln. In the metals markets, Iron ore printed a fresh 10- year lows as problems of overcapacity continue to plague the market, and although gold and silver trade lower, they trade above yesterday’s lowest levels.
In summary: European equities advance, reversing earlier losses. Banking, construction, ealth stocks lead gains. JPMorgan says mkts too pessimistic on Greece. Danish, French stocks outperform in Europe. Gold rises, while U.S. equity index futures, oil decline. Talks on Iranian nuclear deal continue. Mortgage applications, manufacturing PMI, construction spending, ISM manufacturing, vehicle sales data due later.
Market Wrap
S&P 500 futures down 0.0%
Stoxx 600 up 0.4% to 398.7
US 10Yr yield up 1bps to 1.92%
German 10Yr yield up 1bps to 0.19%
MSCI Asia Pacific down 0.3% to 145.8
Gold spot up 0.2% to $1185.8/oz
Eurostoxx 50 +0.4%, FTSE 100 +0.5%, CAC 40 +0.6%, DAX +0.4%, IBEX +0.5%, FTSEMIB +0.5%, SMI +0.4%
Asian stocks fall with Shanghai Shenzhen CSI 300 outperforming and the Nikkei underperforming.
MSCI Asia Pacific down 0.3% to 145.8
Nikkei 225 down 0.9%, Hang Seng up 0.7%, Kospi down 0.6%, Shanghai Composite up 1.7%, ASX down 0.5%, Sensex up 0.5%
Simon Withdraws $16.8b Offer for Macerich After Rejection
Sony Sells Half Stake in Olympus to JPMorgan Securities
Alibaba Logistics Ally ZTO Express Sees Possible IPO in 2017
Chinese Group in Talks on Debt Funding for Philips Deal
Euro up 0.12% to $1.0744
Dollar Index up 0.01% to 98.37
Italian 10Yr yield up 2bps to 1.27%
Spanish 10Yr yield down 2bps to 1.19%
French 10Yr yield up 1bps to 0.49%
S&P GSCI Index down 0.1% to 396.4
Brent Futures down 0.2% to $55/bbl, WTI Futures down 0.7% to $47.3/bbl
LME 3m Copper up 0.2% to $6051/MT
LME 3m Nickel up 0.8% to $12500/MT
Wheat futures up 1% to 516.8 USd/bu
Bulletin Headline Summary
Better than expected Eurozone PMIs and window-dressing support a bid in European equities and support USD/JPY which breaks back above 120.00
Markets will now be looking for any details that emerge from a working group call between the Eurogroup and Greece at 1500 local time although creditors said there will be no deal at hand and there will be no negotiating
Treasury yields higher overnight as U.K. manufacturing grew at its fastest pace since last summer and negotiations with Iran over its nuclear program reach “consensus on major points.”
U.K. manufacturing grew at the fastest in eight months in March, reinforcing the health of the recovery as politicians clash over economic management before the general election
Iran and world powers pressed ahead with talks to draft the outline of an agreement to end the 12-year standoff over the country’s nuclear program, with diplomats saying more work needs to be done before any announcement
A Chinese manufacturing gauge rebounded in March, suggesting stimulus efforts have started to bolster factories in the world’s second-largest economy
Signs of inexperienced investors’ growing influence on China’s $6.5t stock market have already shown up in the outperformance of China’s equivalent of penny stocks and a jump in share-price volatility to the highest level in five years.
European Central Bank policy makers will consider extending their lifeline to Greek banks on Wednesday after the country’s lenders lost deposits for a sixth month
Yemen’s Houthis seized an army base overlooking a key shipping lane in the Red Sea, while Saudi Arabia said its bombing campaign has contained the rebel advance toward the port of Aden
Sovereign 10Y yields mixed, Greece 10Y mostly steady at 11.34%. Asian stocks mixed, with Nikkei lower. European stocks rise, U.S. equity-index futures increase. Crude, gold and copper fall
DB’s Jim Reid starts us off on the new quarter
We kick off in China this morning where the early morning PMI indicators are out. Sentiment is a touch better after the official March PMI improved 0.2pts to 50.1 (vs. 49.7 expected). At the same time the final March HSBC manufacturing reading was revised up to 49.6, from 49.2 previously in the flash print. Despite the better than expected numbers, our China economist Zhiwei Zhang doesn’t see this data as reflecting signs of economic recovery, reiterating that growth still faces headwinds from the property slowdown and the fiscal slide. Over in Japan meanwhile, the Tankan survey was largely disappointing with the Q1 large manufacturing index reading unchanged at 12 (vs. 14 expected) and the small manufacturing index reading of 1 down versus the previous reading and expectations of 4.
In terms of market reaction, bourses in China have bounced on the numbers with the Shanghai Comp (+1.39%) and CSI 300 (+1.57%) both higher. It’s a different story in Japan however where the Nikkei (-0.71%) and Topix (-0.77%) have fallen. Elsewhere bourses are mixed. The Hang Seng (+0.66%) is higher while the Kospi (-0.64%) and ASX (-0.54%) are both trading softer. The latter suffering from weakness in commodity producers in particular after another fall for iron ore to a fresh ten year low. In terms of markets yesterday, US equities gave up a decent bulk of Monday’s gain to close lower and end the quarter on a more downbeat tone. The S&P 500 (-0.88%) and Dow (-1.11%) both closed more or less at their lows for the session following some mixed macro data and a decline in oil markets. Yesterday’s moves just about kept the S&P 500 in positive territory (+0.44%) YTD, however the move in the Dow means the index is now in negative territory (-0.26%) in 2015 so far. The Dollar extended its strong start to the week meanwhile, with the broader DXY +0.39%. The generally weaker sentiment supported a bid for US Treasuries, with the benchmark 10y yield closing 2.4bps lower at 1.923%. As mentioned oil played its part yesterday as energy stocks (-0.92%) declined following falls in WTI (-2.22%) and Brent (-2.10%) for their third consecutive day of losses after the mini-rally post the Middle East conflict headlines last week. In reality however, losses were fairly broad based across sectors, with all components closing in the red.
The data flow in the US was largely mixed yesterday. Following the steep decline in the February Chicago PMI reading, there was only a modest bounce back last month with the 46.3 print still the second lowest since 2009 (behind February) and also well below expectations of 51.7. The reading may well put some pressure on today’s ISM manufacturing reading. On a brighter note, the March consumer confidence print rose 2.5pts to 101.3 (vs. 96.4 expected) – the reading only a touch behind the 8-year highs seen in January. Elsewhere, the ISM Milwaukee (53.25 vs. 51.50 expected) was ahead of consensus while the S&P/Case Shiller house price index disappointed modestly (4.56% yoy vs. 4.60% expected).
Elsewhere, the Richmond Fed’s Lacker reiterated his hawkish view on Fed tightening, highlighting a strong case for a June liftoff unless data between now and then disappoints versus expectations. Like his colleagues, Lacker also noted that the pace of any subsequent move post-liftoff will be determined by data. Comments from the Kansas City Fed’s George (non-voter) somewhat mirrored Lacker’s. The Fed official said that ’it’s time’ to talk about a rate hike and that she is ‘not bothered’ by temporarily low inflation given that she expects prices to rise back towards the Fed’s target level of 2% over time.
Back to markets, it was a similar story closer to home yesterday, as equity markets declined and bond yields tightened although data was generally supportive. The Stoxx 600 (-0.64%), DAX (-0.99%) and CAC (-0.98%) all finished lower while 10y Bunds closed 2.5bps tighter and at a fresh record low of 0.180%. Peripheral bonds extended their strong start to the week, with 10y yields in Spain (-5.9bps), Italy (-7.0bps) and Portugal (-7.7bps) all lower. With one eye on Greece meanwhile, the Euro softened again and closed 0.94% weaker versus the Dollar. In terms of the data, yesterday’s Euro-area CPI estimate, as expected rose to -0.1% yoy (from -0.3%). The core was a touch softer however with the advanced reading revised down one-tenth of a percent to +0.6% yoy. The unemployment rate for the Euro-area declined to 11.3% in February (from 11.4%). In Germany data was supportive. Retail sales (+3.6% yoy vs. +3.4% expected) and unemployment (6.4% vs. 6.5% expected) extended the recent strong run of macro indicators. French consumer spending was positive too, with the 3.0% yoy print well ahead of the 2.6% expected. Finally in the UK the final Q4 GDP print was revised up to +0.6% qoq from +0.5% last month. This helped push the annualized rate up to +3.0% yoy (from +2.7%).
There was little to report in terms of progress in Greece yesterday. The Greek press (Ekathimerini) is reporting that talks between the government and Greece’s creditors may continue next week while technical teams will stay in Athens to continue to collect data. In the mean time, German Chancellor Merkel and French PM Hollande yesterday re-emphasized the time pressure for the Greek government at a joint cabinet meeting. A separate Bloomberg article has suggested that Euro-area finance officials will hold a call today to discuss the current situation and the conditions to which an aid release may be granted. According to the article, the call will take place at 3pm CET.
Meanwhile, the nuclear accord talks in Iran continue with the deadline e