Chinese production of gold rises to 403 tonnes/3rd LTRO repayment only 5 million euros/Venezuela devalues its currency by 46%/USA trade deficit narrows to 38 billion dollars.

Good morning Ladies and Gentlemen:

Gold closed down $4.40 to $1666.00 while silver held up pretty good rising by 4 cents to $31.43. The closing access market for our two precious metals were as follows:

gold: $1667.20
silver: $31.43

Early Friday morning, the boys showed up at their regular time bashing gold down. It then rose up to the comex opening where it was hit again.  However silver held firm rising at one point to 20 cents above par.  However it too fell when gold remained below par for the rest of the comex session. Both gold and silver are manipulated constantly by our bankers as the supply/demand relationship of these two precious metals are thrown out  the window. Thus technical analysis on the trading patterns of gold and silver are really worthless.

In physical news, the Chinese announced that their production in 2013 is 403 tonnes of gold. They keep every oz of production.  China announced this week that their importation of gold amounted to 835 tonnes.
Together, these two sums of gold have the following purpose:

1) is used by Chinese citizens for jewellery and for hoarding (as inflation is certainly present here)
2) for official reserves.

The last official reserves for China was issued in 2009 at 1054 tonnes.  It is expected that another revising of its official reserves will be either late this year or next.

The annual production of gold for all nations was reported on last week.  It totaled 2800 tonnes of which Russia's production was 200 tonnes and now China is 403 tonnes.  Both Russia and China  keep all of their gold production and thus only 2197 tonnes is available to the world for jewellry and hoarding purposes.

India has imported over 800 tonnes of gold on an annual basis but produces a very tiny 2.8 tonnes of gold.
The Indian citizens appetite for gold continues to rise unabated despite opposition from the government as they are witnessing a huge current account deficit of which the gold importation had a major effect.  The government is trying to raise duties and taxes trying to quell gold's demand.

Together, China and India import 1635 tonnes of gold, leaving very little gold for the rest of the world for jewellery and hoarding. (562 tonnes).

The COT report released in gold showed a huge drop in commercial longs.  Are they losing their "hedging" vehicle?

Friday night saw another 3.01 tonnes of gold leave the GLD vaults.

In paper news, the 3rd LTRO repayment only amounted to 5 million euros.  We will have to wait until the end of February to see what happens when the 2nd LTRO schedule is allowed to be repaid for the first time.

Venezuela devalued its currency by a huge 46% due to a shortage of USA dollars.  Inflation will run rampant in that country.

In USA news, the trade deficit narrowed to 38 billion dollars. And finally Dan Norcini points out that the USA bought this year more debt than what the treasury issued.  Very strange!!





We will discuss these and many other stories but first let us head over to the comex and assess trading today............

The total comex gold open interest fell by 2628 contracts falling from 432,394 down to 420,766.  The active February gold contract delivery month saw it's OI fall by 73 contracts from 2135 down to 2062.  We had 0 delivery notices filed on Thursday so we lost 73 contracts or 7300 oz of gold standing for the February contract month.  The non active March gold  month gained 160 contracts up to 1324. The next active gold contract month (April) saw it's OI fall by 3,433 contracts from 253,813 down to 250,380.  The estimated volume on Friday was poor at 93,731.  The confirmed volume on Thursday was much better at 181,184.

The total silver comex OI remains at high lofty levels, coming to rest this weekend at 150,111 although it fell 1451 contracts from Thursday. The non active front February contract month saw it's OI rise by 17 up to 34 contracts.  We had 4 delivery notices on Thursday, so in essence we gained  21 contracts or 105,000 oz of additional silver standing for February.  We are 3 weeks away from first day notice.  The active silver March contract month saw it's OI fall from 70,865 down to 66,757 for a loss of 4108 contracts. The estimated volume was fair on Friday as it came in at 40,445 contracts, compared to a huge volume on Thursday at 67,807. 

Comex gold/February contract month:

Feb 8.2013    

Gold	Ounces
Withdrawals from Dealers Inventory in oz	96.45 (HSBC)
Withdrawals from Customer Inventory in oz	nil
Deposits to the Dealer Inventory in oz	nil
Deposits to the Customer Inventory, in oz	3375.75 (HSBC)
No of oz served (contracts) today	0    (nil  oz)
No of oz to be served (notices)	2062  (206,200) oz
Total monthly oz gold served (contracts) so far this month	10,322  (1,032,200 oz)
Total accumulative withdrawal of gold from the Dealers inventory this month	96.45
Total accumulative withdrawal of gold from the Customer inventory this month	75,941.547

We had little activity at the gold vaults.

The dealer had no deposits but did have one    withdrawal.

i) out of HSBC dealer vault:  96.45 oz.

We had 1   customer deposit:

i) Into HSBC:  3375.75 oz


total deposit:   3375.75 oz



We had 0  customer withdrawal:



total withdrawal: nil oz

We had 1 big adjustments:

i) from the JPM vaults:  255,756.56 oz of gold leaves the dealer and enters the customer.  This equates to 7.9 tonnes of gold.  This is probably a settlement.

Thus the dealer inventory rests tonight at 2.669 million oz (83.04) tonnes of gold.

The CME reported that we had 0 notices filed for nil oz of gold today.   The total number of notices so far this month is thus 10,322 contracts x 100 oz per contract or 1,032,200 oz of gold.  To determine how much will stand for February,  I take the OI standing for February (2062) and subtract out today's notices (0) which leaves me with 2062 notices or 206,200 oz left to be served upon our longs.

Thus the total number of gold ounces standing in this  active month of February is as follows:

1,032,200 oz (served ) + 206,200 oz (to be served upon) = 1,238,400 oz or 38.51  Tonnes.



we lost 73 contracts or 7300 oz of gold.

Silver:

February 8.2013:   The February silver contract month

Silver	Ounces
Withdrawals from Dealers Inventory	801,018.56 (Brinks)
Withdrawals from Customer Inventory	629,415.01 (Brinks, scotia)
Deposits to the Dealer Inventory	nil
Deposits to the Customer Inventory	311,160.91
No of oz served (contracts)	0  (nil oz)
No of oz to be served (notices)	34  (170,000  oz)
Total monthly oz silver served (contracts)	76  (380,000  oz)
Total accumulative withdrawal of silver from the Dealers inventory this month	984,015.06
Total accumulative withdrawal of silver from the Customer inventory this month	1,542,444.01

Today, we  had huge activity  inside the silver vaults.

 we had no dealer deposit and one dealer withdrawal.

i) Out of Brinks:  801,018.56 oz

We had 3  customer deposits of silver:

1) Into Delaware:  982.80 oz
ii) Into HSBC:  305,200.91
iii) Into Scotia:  4977.20




 total customer deposit:  311,160.91 oz









we had 2 customer withdrawals:



i) out of Scotia:  626,412.71 oz
ii) Out of Delaware: 3002.30



total customer withdrawal:  629,415.01  oz

we had 2  adjustments:

i) a counting error where 10,327.000 is added to Brinks
ii) from CNT vault, 20,002.6 oz  is removed from the customer and added to the dealer.

When you see massive deposits and withdrawals you know that there is turmoil inside the silver vaults. 

  

Registered silver remains today at :  36.261 million oz

total of all silver:  157.3910 million oz.

The CME reported that we had  0 notices filed for nil oz of silver for the February contract month. To obtain what is left to be served upon our longs, I take the OI standing for February (34) and subtract out Friday's notices (0) which leaves us with 34 notices or 170,000 oz left to be served upon our longs. 

Thus the total number of silver ounces standing for delivery in silver is as follows:

380,000 oz (served)  +  170,000 oz (to be served upon)  =  550,000 oz

We  gained 105,000 oz of silver standing for February.

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.

Total Gold in Trust:   Feb 8.2013:

Tonnes1,326.89

Ounces42,660,782.25

Value US$71.133   billion

feb 7.2013:

Tonnes1,329.90

Ounces42,757,579.81

Value US$71.284   billion

Feb 6.2013:

Tonnes1,328.09

Ounces42,699,500.65

Value US$71,455   billion

Feb 5.2013:

Tonnes1,328.09

Ounces42,699,500.65

Value US$71.424  billion.

Feb 4.2013:

Tonnes1,328.09

Ounces42,699,500.65

Value US$71.104    billion

Feb 1.2013:

Tonnes1,328.09

Ounces42,699,500.65

Value US$71.235     billion 

we lost a monstrous  3.01 tonnes of gold at the GLD Friday.

and now for silver:



Feb 8:2013:

Ounces of Silver in Trust	335,858,876.200
Tonnes of Silver in Trust	10,446.38

Ounces of Silver in Trust	335,036,944.900
Tonnes of Silver in Trust	10,420.81

feb 6.2013:

Ounces of Silver in Trust	335,036,944.900
Tonnes of Silver in Trust	10,420.81

 Feb 5.2013

Ounces of Silver in Trust	335,175,993.900
Tonnes of Silver in Trust	10,425.14

feb 4.2013:

Ounces of Silver in Trust	335,175,993.900
Tonnes of Silver in Trust	10,425.14

we  gained 822,000 oz of silver at  the SLV Friday. 

end

And now for our premiums to NAV for the funds I follow:

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 to a positive 3.1 percent to NAV in usa funds and a positive 3.3%  to NAV for Cdn funds. ( Feb 8 2013)   

2. Sprott silver fund (PSLV): Premium to NAV rose to 2.50% NAV  Feb 8./2013
3. Sprott gold fund (PHYS): premium to NAV  fell to 2.55% positive to NAV Feb 8/ 2013..

 Now we witness the Central fund of Canada  gaining big time in its positive to NAV, as we now see CEF at a positive 3.1% in usa and 3.3% in Canadian.This fund is back in premiums to it's former self with respect to premiums per NAV. 

The silver Sprott fund announced a big silver purchase and this reduces the premium to NAV temporarily. 

It looks like England may have trouble in finding gold and silver for its clients.

It is worth watching the premium for gold at the Sprott funds which is a good indicator of shortage as investors bid up the premiums.






 

end

Friday night saw the release of the COT report where we get to see position levels of our major players.  The report is always based on a Tuesday to Tuesday week. 

Let us now head over to the gold COT:  ( levels ending Feb 5)

Gold COT Report - Futures
Large Speculators			Commercial		Total
Long	Short	Spreading	Long	Short	Long	Short
192,806	55,341	24,811	145,291	319,898	362,908	400,050
Change from Prior Reporting Period
11,703	1,186	-1,224	-14,485	-6,975	-4,006	-7,013
Traders
184	74	66	60	44	276	159
	Small Speculators
	Long	Short	Open Interest
	61,074	23,932	423,982
	-2,730	277	-6,736
	non reportable positions		Change from the previous reporting period
COT Gold Report - Positions as of				Tuesday, February 05, 2013

Our large speculators:

Those large speculators who are long in gold, loved the lay of the land and these guys poured it on by adding a massive 11,703 contracts to their long side.

Those large speculators who are short in gold, added 1186 contracts to their short side.

Our commercials:

Those commercials who are long in gold and are close to the physical scene, dumped a massive 14,485 contracts from their long side.  Very unusual. 

Those commercials who have been short in gold, covered a rather large 6975 contracts.
Our small specs:

Those small specs that are long in gold, pitched 2730 contracts from their long side

Those small specs that are short in gold added a tiny 277 contracts to their short side.

Conclusion;

The commercials went net short by a rather large 7,510 contracts.  This has to be construed as bearish.  (However keep in mind that the commercials are engaging in collusive criminal activity.)

And now for our silver COT:

Silver COT Report: Futures
Large Speculators			Commercial
Long	Short	Spreading	Long	Short
42,449	6,588	35,724	46,293	98,239
-640	-1,697	2,094	889	2,568
Traders
80	26	50	35	41
Small Speculators		Open Interest		Total
Long	Short	151,512		Long	Short
27,046	10,961			124,466	140,551
637	15	2,980		2,343	2,965
non reportable positions		Positions as of:		138	101
		Tuesday, February 05, 2013		© SilverSeek.com

Please note the difference between the gold COT report and the silver COT:

Our large speculators:

Those large speculators that are long in silver, pitched a tiny 640 contracts from their long side
Those large speculators that are short in silver, covered 1697 contracts from their short side.

Our commercials;

Those commercials that are long in silver and are close to the physical scene added (in total contrast to gold) 889 contracts to their long side.

Those commercials that are short in silver, added a huge 2568 contracts from their short side as nobody else could supply the paper.

Small specs:

Those small specs that have been long in silver added 637 contracts to their short side.
Those small specs that have been short in silver added a tiny 15 contracts to their short side.

Conclusion;

  The bankers were trying to convince some of the speculators to go short and this was to no avail.  The only guys supplying the short paper are the commercials and on Friday they went net short another 1679 contracts.  They did this with silver price on the low side.  However because of the added net short position of the bankers in silver we must say that a bearish tone is still present.

end

And now for the major physical stories we faced today:

First gold trading from Europe and Asia courtesy of Goldcore.

1. Gold in euros surges 1.8%.  This is closely watched by European traders.
2. Soros thinks that we may have an EU collapse just like we witnessed in the uSSR
3. Chinese production soars again and now has surpassed 400 tonnes at 403 tonnes per year.
The Chinese keep every single oz of production.  China has already reported an increase of imports of gold into China at 835 tonnes.  Thus production and importation of gold in China comes to 1238 tonnes of gold. The world produces on an annual basis 2197 tonnes of gold (ex China ex Russia which keeps all production).  

4.  Goldcore asks the question as to why the silver manipulation probe has not been resolved in the same manner as the libor scandal with the huge fines to our bankers.  They are asking are the banks making huge profits by manipulating silver (and of course gold)?



(courtesy goldcore)

Gold In Euros Surges 1.8% After Draghi Warns; Soros Says EU May Collapse Like USSR

-- Posted Friday, 8 February 2013 | Share this article | Source: GoldSeek.com Today’s AM fix was USD 1,669.75, EUR 1,245.15 and GBP 1,059.55 per ounce.     Yesterday’s AM fix was USD 1,675.75, EUR 1,235.99 and GBP 1,065.86 per ounce. Cross Currency and Precious Metal Table – (Bloomberg) While gold fell in dollar terms yesterday, it surged 1.8% in euro terms from €1,235/oz, soon after the ECB interest rate decision, to €1,258/oz soon after. Some of the gains were quickly given up as determined selling was again seen but gold in euros closed nearly 1% higher on the day. Gold in EUR, 10 Day - (Bloomberg) The price gains came as Draghi warned about slowing economic growth and complacency regarding declaring an end to the financial crisis. He also warned that the euro dollar exchange rates rise could derail the recovery in Europe and signaled that an interest rate cut may even be necessary. Continuing ultra loose monetary policies in the Eurozone will support gold and should lead to higher prices in 2013. In dollar terms, gold fell $5.70 or 0.34% yesterday closing at $1,671.80/oz. Silver slid to a low of $31.28 and finished with a loss of 1.16%. Gold in USD, 10 Day - (Bloomberg) Gold is flat in most currencies today despite concerns over the health of the eurozone economy but gold is on course for a second week of gains which would be bullish from a technical perspective. Trading action was again peculiar yesterday with determined sellers capping the price at certain levels. There is a distinct feel that influential players are getting long and into position for the long awaited upward price move. China's gold production increased for a sixth year in a row and hit a record 403 tonnes in 2012, keeping its ranking as the world's largest bullion producer, reported the Shanghai Securities News. Silver continues to see determined selling at the $32/oz level. On Wednesday, the Commodity Futures Trading Commission (CFTC) fined Royal Bank of Scotland (RBS) $612 million for fixing the Libor interest rate. Given the significant delay in concluding the CFTC’s investigations of price manipulation in the silver market, many investors continue to ask the question as to whether certain banks are manipulating and capping the silver price thereby pocketing millions in profits at the expense of traders and investors. Bart Chilton, commissioner at the CFTC, said as long ago as October 2010 that “members of the public “and” publicly available documents convinced him the silver markets are tainted by violations of federal commodities law. "I do believe that there have been repeated attempts to influence prices in the silver markets," Mr Chilton said. "There have been fraudulent efforts to persuade and what I consider deviously control the price." The Financial Times recently acknowledged the Gold Anti-Trust Action Committee’s (GATA) important contribution regarding establishing transparency in the gold market. GATA has also called for transparency in the silver market and it is not before time that the CFTC fulfills their duty and announces the findings of their investigations into whether Wall Street banks have been manipulating the silver market. Manipulation or not, silver buyers will again be rewarded if they remain patient and fade out the considerable noise that emanates from the silver market. Gold in GBP, 10 Day - (Bloomberg)The EU may suffer the fate of the USSR and “collapse” according to billionaire investor George Soros. Soros said that incorrect economic and monetary policies and the monetary union itself may lead to currency wars and the collapse of the European Union. In saving the euro, the continent’s financial powers have damaged the economy of the euro zone and created dangerous new political imbalances. As a result, “we have quite a turbulent time ahead for 2013.” “I am rather concerned that the euro is in danger of destroying the European Union”. There is a real threat when the possible resolution of financial difficulties of eurozone might cause a political issue,” Soros told Dutch TV in an interview. The attempts of the European leadership to keep the common European currency are leading to the escalation of political and social issues in the EU which may eventually destroy it. Recent SEC filings show that Soros’ hedge fund had again increased allocations to gold. NEWS Gold heads for 2nd weekly rise, PGMs off 17-month peak - Reuters Gold Sideways in Asia as Outlook Unclear; Precious Metals Lower – The Wall Street Journal Gold Volatility Squeeze Means Rise to $1,900: Technical Analysis - Bloomberg 250 tonnes of gold smuggled into India in 2012: Jewellery body – Business Standard COMMENTARYCME Cuts Gold, Silver Margins – Zero Hedge Mark Mobius Bullish On Commodities - Gold, Platinum and Palladium – Business Insider Protect your wealth as the Bank of England goes for broke – Money Morning The US Monetary Base and Gold! - GoldSeek GOLDCORE Ireland: 14 Fitzwilliam Square Dublin United Kingdom: No. 1 Cornhill EC3V 3ND UK

end

Dr Lewis advises us to watch for premiums on silver bullion coins and this will be the ultimate
price indicator as the paper silver price deviates from the physical silver price:

(courtesy Dr Jeffry Lewis)

Silver Coin Dealers and the New Premium Paradigm

Dr. Jeffrey Lewis

 |

February 8, 2013 - 9:13am

   

The local silver coin dealer may prove to be the ultimate silver price indicator.

The lower the managed paper price of silver, the more physical metal is reduced due to increased demand. Furthermore, the higher the demand for silver, the higher the physical premium moves.

This is typically the case in true price discovery, but who really wins in this unprecedented dichotomy— the buyer, the seller, or the dealer?

Higher physical prices tend to beget renewed speculative interest, and yet higher miner valuation is limited because of higher input costs.

The Silver Mining Sector and Government Finance

No one can know where or when the next bubble will form, but one looks already close to bursting in government finance, so it seems almost inevitable that commodity prices will rise significantly in the near and medium term as more and more stimulus is needed to fuel this giant Ponzi.

Scrap silver flows will likely continue to flow back into industry, where it is needed more and more as the developed world continues to play catch up. At the same time, consumer income and growth, fueled by the government-sanctioned build up in credit and mortgage finance will compete with that demand.

Furthermore, the current financial era allows the U.S. central bank to set benchmark interest rates at artificially low levels, while monetizing trillions of Federal and mortgage-related debt. Also, the vast majority of government spending actually

This policy induced spending feeds through directly to greater income and spending levels throughout the economy, leading to higher prices.

While demand will be there, because of higher input costs, it therefore appears less likely that new exploration, new mines or an overall rehab of the silver mining sector will occur anytime soon. Remember that at least two thirds of physical silver is mined as a byproduct of other mining activities.

A Governor on Demand

Paradoxically, marginal physical demand from new silver buyers may be quelled somewhat in this situation. This state of affairs could even have the effect of fueling more investment demand toward silver derivatives that will only further distort the pricing relationship between paper and physical silver assets.

The last frontier would be a replay of the troubling double digit inflation of the 1970’s leading up to the fabled "Hunt Brothers induced" blow off top in 1980. The difference being that the seventies was a time when ‘everyone’ knew about inflation and where inflation was high enough to curb profits from investing in equities.

Price Discovery, Coin Dealing, And the Return to Sound Money

The irony here is that the return of true physical price discovery where silver prices are forced to align with or be expressed by real supply and demand factors could be the ultimate signal of a U.S. Dollar confidence failure, especially if the premium moves visibly and with velocity.

As U.S. investors increasingly lose confidence in their country’s paper currency, this situation marks the time when the local silver coin dealer breaks through to the modern age.

Coin dealers, like farmers to a certain extent seem to have become a dying, if not significantly aging breed. The growth in competition from Internet coin dealers has made it difficult to be profitable as a local coin dealer.

There simply is not much margin in bullion coins or for the customer looking to get the most from their metal. This may well change when true price discovery returns to the silver market.

end


Adrian Ash from England gives his perspective on events this week:

(courtesy Adrian Ash /Bullion vault)

Nothing At All, Then All at Once

by Adrian Ash

Bullion vault

Where money was tight, suddenly it's all arrived at once. Just like trouble does... EVERYWHERE we look, investors suddenly see nothing but blue skies, plain sailing ahead. Their change of heart makes us nervous. New York's S&P index is back where it stood in July 2007 – right before the global credit crunch first bit, eating more than half the stock market's value inside 2 years... Japan's Nikkei index has jumped by one third since mid-Nov., thanks to export companies getting a 20% drop in the Yen – the currency's fastest drop since right before the Asian Crisis of 1997... And here in the UK – where the FTSE-100 stock index just enjoyed its strongest January since 1989, when house prices then suffered their biggest post-war drop – average house prices are rising year-on-year, even as the economy shrinks... The common factor? Zero interest rates and money creation on a scale never tried outside Weimar Germany or Mugabe's Zimbabwe. Only the Eurozone has stood aside so far, and even then only a little. And yet gold and silver – the most sensitive assets to money inflation – are worse than becalmed. Daily swings in the silver price haven't been this small since spring 2007. Volatility in the gold price has only been lower than Thursday this week on 15 days since the doldrums of mid-2005. Back then the Dollar also steadied and rose after multi-year falls. Industrial commodities outperfomed 'safe haven' gold too – a pattern echoed here in early 2013 by the surge in the price of useful platinum over industrially 'useless' gold. Perhaps the flat-lining points to better times ahead. Gold after all is where retained capital hides when things are bad – a store of value to weather the storm. Or it may signal itchy feet in the 'hot money' crowd, now moving back into stocks and shares instead. But we can't shake the feeling that something awful is afoot. Gold and silver aren't making headlines today. Just like they didn't before the financial crisis began. "Japan is on an unsustainable path of a strong Yen and deflation," wrote Andy Xie – once of Morgan Stanley, now director of Rosetta Stone Advisors – back in March 2012. "The unprofitability of Japan's major exporters and emerging trade deficits suggest that the end of this path is in sight. The transition from a strong to weak Yen will likely be abrupt, involving a sudden and big devaluation of 30 to 40 percent." Already since the Abe-nomic revolution announced in November the Yen has dropped more than 20% versus the Dollar. But "there is plenty of liquidity still parked in the Yen," Xie noted this week. Quite apart from the shock toAmerica's trade deficit which surging shale-oil supplies deliver, "The Dollar bull is due less to the United States' strengths than the weaknesses in other major economies," he adds. And reviewing the last two major counter-trend rallies in the Dollar's otherwise permanent decline, "The first dollar bull market in the 1980s triggered the Latin American debt crisis, the second the Asian Financial Crisis. Neither was a coincidence." Neither of those crises coincided with a bull market in gold or silver. Savers worldwide chose Dollars instead as the hottest emerging-market investments collapsed. But then neither of those slumps saw emerging-market central banks so stuffed with money, nor gold and silver so freely available to their citizens. China's gold imports almost doubled last year, with net demand overtaking India for the world's #1 spot at last. This week the People's Bank of China pumped a record CNY860bn into the money markets ($140bn), crashing Shanghai's interbank interest rates by almost the whole one-percent point they had earlier spiked ahead of the coming New Year's long holidays. The disparity, meantime, between the doldrums in precious metals and the bull market in Dollar-Yen trading can be seen by glancing at the US derivatives market. Yesterday the CME Group cut margin requirements on gold and silver futures. It raised the margin payments needed to play the Yen's lightening drop. One of those moves is likely bullish, short-term. But you'd to borrow money to choose. Western pension funds are meanwhile pulling out of commodities, and just as liquidity floods back into the market. Both the Wall Street Journal and theFinancial Times report how big institutions have quite hard assets "after finding they did little to protect their portfolios against inflation risk and the unpredictable returns of stocks." One of the biggest commodity hedge funds, Clive Capital has shrunk from $5 billion under management two years ago to less than $2bn today. And yet European banks – the major source of credit to commodities traders – are now reviving their commodities lending. "The sector came close to panic 18 months ago," says the FT. But now "The banks want to be again my best friend," says a Swiss executive. "Funding concerns have now substantially dissipated," says SocGen's head of natural resources and energy finance, Federico Turegano. There's plenty of money around to borrow, in short. Whether in Chinese banking, currency betting or commodities trading, where there was very little at all, suddenly it's all turned up at once. Which is just how trouble arrives. All that central-bank liquidity and quantitative easing has so far left consumer-price inflation unmoved, too. Adrian Ash Adrian Ash is head of research at BullionVault – the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver vaulted in Zurich on just 0.5% dealing fees. (c) BullionVault 2013

end

And now for your important paper stories which will certainly have an influence on gold and silver.

First, overnight sentiment

Important points:

1 Chinese growth at 25% for the year but had 5 more days in the calender year. If you believe their figures exports came in at 12.5% but imports only 3.4%

2.  The yen soared over night (trading at 8 am at 92.441 yen per dollar) as Japanese official Aso stated the yen has depreciated too much

3. the big news, only 5 billion euros were repaid from the LTRO (estimated repayment being 7 billion euros)

4,  Early Spanish, Italian bond yields and other data

5. Deutsche banks provides the details

(courtesy zero hedge/Deutsche Bank) 

Sentiment Muted As Northeast Braces For "Historic" Blizzard

Submitted by Tyler Durden on 02/08/2013 07:15 -0500

• Bank of England
 
• BOE
 
• Bond
 
• China
 
• European Central Bank
• headlines
 
• High Yield
 
• Initial Jobless Claims
 
• Japan
 
• Jim Reid
 
• LTRO
• Monetary Policy
 
• Nikkei
 
• Price Action
 
• Reuters
 
• SocGen
 
• United Kingdom
 
• Yen

It was a busy session for Chinese "data" (more on the laughable validity of Chinese economic releases shortly), after China released January export and import data, which rose 25% and 28.8% from a year ago respectively. Futures were delighted by the data, until someone pointed out that January 2013 had some five more working days than 2012 due to the calendar shift of the Chinese new year, and that adjusted for this effect exports were a far more modest 12.5% while imports rose only 3.4%. Credit growth in January also rose to a record, with aggregate financing of 2.54 trillion, including new local-currency loans of 1.07 trillion, exceeding forecasts, as China dumped gobs of money into the economy, while somehow quite mysteriously inflation came right on top of the expected 2.0%. The Yen soared overnight following comments from Taro Aso who said that the Yen had depreciated too fast. Heading to Europe, the biggest news so far was the latest ECB LTRO repayment which saw some 21 banks repay €4.992 billion, less than the estimated €7.0 billion, and far less than the first announcement repayment of €137 billion.

Contrary to Draghi's promises that as a result of LTRO repayments, excess liquidity is still abundant, the excess cash in the Eurosystem is now in line with the market operation reduction, and any incremental balance sheet tightening as a result of LTRO shrinkage is priced in by now, and is offset by Draghi's inflation-cautionary words from yesterday.

Perhaps the key development that Europe is waking up to is that the upcoming Italian vote will likely be inconclusive and the risk of a second ballot is rapidly growing as Berlusconi cuts Bersani's lead (more on that shortly as well).

Finally, trading today will be slower than usual as Nemo is finally found in the shape of some 12 inches of snow blanketing the Northeast.

A quick recap of European key markets as US traders trickle in on this Nemo-shortened day:

MARKETS

• Spanish 10Y yield down 11bps to 5.31%
• Italian 10Y yield down 5bps to 4.53%
• U.K. 10Y yield down 1bp to 2.1%
• German 10Y yield little changed at 1.61%
• Bund future up 0.04% to 142.87
• BTP future up 0.28% to 110.92
• EUR/USD up 0.1% to $1.3412
• Dollar Index down 0.25% to 79.99
• Sterling spot up 0.32% to $1.5766
• 1Y euro cross currency basis swap little changed at -21bps
• Stoxx 600 up 0.64% to 285.69

Key events on the calendar today as summarized by SocGen:

The EUR was offered across the board yesterday as ECB president Draghi conveyed his latest views on the economy and bank liquidity. In so far as the message on the exchange rate went, Draghi never tried to deliberately stop the currency's ascent, but the assertion that the currency appreciation could alter the inflation outlook was enough to send bulls scrambling. In practice, the ECB will now mull over its inflation forecast and any changes that the appreciation may have caused will be communicated in March. That does not necessarily make the EUR a sell in the short-run, but the resistance above 1.3500 in EUR/USD, after yesterday, will have become more congested. Note the rally too in euribor and bunds and a corresponding fall in yields and narrowing in yield differentials as the EBC reasserted its commitment to tenders with full allotment. The ECB stated that excess liquidity will stay over EUR200bn after the2nd LTRO payment later this month, which caused yield differentials to compress and EUR/G10 to deflate. Unless we observe a sudden worsening in incoming macro data over the coming weeks, there should still be enough pockets of support for the EUR to stop the corrective price action from morphing into a deeper pullback. Technically, a weekly close below 1.3375 would initiate a deeper move towards 1.3250. Watch euribor futures for price leadership.

A fairly busy calendar today will see the ECB announce the weekly LTRO repayment amounts. A potentially big day for the CAD lies ahead as employment data for January are published. For the EUR/CAD, a strong jobs report would squeeze down towards 1.3200 with a return to 1.30 not an unrealistic short-term target.

Finally, the full recap of overnight events comes from DB's Jim Reid:

It was a busy day for policy makers across the globe with Draghi and Carney – as well as the Fed and the BoJ – making headlines over the last 24 hours.

Starting with Draghi whose overall message at the post-ECB press conference seemed to be that monetary policy will remain accommodative. Like last month, Draghi talked about the remaining market fragility and reiterated that credit is yet to flow to the real economy. The ECB President didn’t appear too concerned about LTRO payments, but his comments that the euro’s strength was creating downside risk to inflation and an implicit downside risk to growth was taken to be “dovish” enough to send EURUSD down 0.92%.

Interestingly, Draghi mentioned that the ECB had “taken note” of the Irish government’s proposal to liquidate the Irish Bank Resolution Corporation and swap promissory notes for longer-term Irish government bonds. The move was seen by some as a form of monetary financing, but Draghi stopped short of offering an opinion, commenting instead that “this is not the last word on Ireland”.

In the UK, BoE governor-elect Mark Carney played down suggestions that he would rapidly press for changes in the monetary policy framework at the BoE. Regarding the inflation-targeting regime, he said that the “bar for alteration is very high” but he did hint at a potential change in the BoE’s communication policy to something more akin to that of the Fed.

Turning to the Fed, Board governor Jeremy Stein made an interesting speech warning on potential overheating in some parts of the credit market including high yield bonds and mortgages. Stein made a number of observations including the fact that the annualised pace of pay-in-kind bond issuance in the fourth quarter of 2012 was comparable to the highs from 2007. Stein also mentioned that the past year had set a new record in the use of loans for dividend recapitalizations.

In Japan, the PM’s push for a new governor to lead a policy shake-up at the BoJ has run into resistance from his own cabinet, according to Reuters. The report suggests that members of Abe’s government prefer former deputy BoJ governor Toshiro Muto, who advocates more asset purchases but has also warned that excessive financing of public debt could backfire through a rise in bond yields. Meanwhile, PM Abe prefers Asian Development Bank President Haruhiko Huroda who has been a sharp critic of the outgoing BoJ governor’s policies (Reuters). The article cites a source close to Abe as saying that the final choice of BoJ governor “will be a close call with a lot of complexities involved”.

Returning to the markets, it was a rather mixed day for European equities which saw a small bounce as Draghi spoke. The Stoxx600 (-0.22%) was unable to hold into gains however, with a weak tone in US equities (S&P500 -0.2%) weighing on the European close.

Italian stocks underperformed again (MIB -1.22%) as one of the final updates before the polling blackout is due to kick in on Saturday showed that Berlusconi had pulled to within 3.6% of the pro-reform centre-left (vs a 3.7% gap on Wednesday). The ECB and BoE remained on hold as widely expected. Datawise it was a relatively quiet day. German industrial production rose 0.3% in December (vs +0.1% expected). In the US, initial jobless claims fell 5k to 366k, leaving our US economists calling for a 180k rise in non-farm payrolls this month.

Turning briefly to the overnight session where the focus has been on Chinese and Japanese trade reports. Starting with the Chinese data, December exports grew 25.0%yoy (vs 17.5% expected). Import growth also surprised to the upside (28.8% vs 23.5%) as the trade surplus grew to $29.15bn (vs $24.7bn expected). In Japan, the December current account deteriorated to JPY264bn (vs JPY144bn expected) with Bloomberg reporting that this is the first consecutive monthly current account deficit since 1981. In terms of markets, Asian equities are enjoying solid gains ahead of the Lunar New Year break with the Hang Seng, KOSPI and Shanghai Composite up 0.3%, 0.8% and 0.8% respectively, helped by the stronger Chinese trade data. The Nikkei (-1.5%) is the notable underperformer overnight weighed by the abovementioned BoJ headlines and with USDJPY 0.30% lower overnight (93.35).

Looking at the day’s data docket, the highlights include German and US trade reports. The EU leader’s summit will continue today with a goal of agreeing a medium-term budget.

end



Great commentary on whether Japan's need to reflate, will bring on a full fledged currency war:

(courtesy zero hedge)

Will Japan's "Attempted" Reflation Succeed And Will It Spill Over Into Full-Fledged Currency War?

Submitted by Tyler Durden on 02/07/2013 21:36 -0500

• Bank of Japan
 
• Bond
 
• Central Banks
 
• China
 
• ETC
 
• Fail
 
• Federal Reserve
 
• Global Economy
 
• Goldman Sachs
 
• goldman sachs
 
• Gross Domestic Product
 
• Japan
 
• Monetary Policy
 
• Nominal GDP
 
• Real Interest Rates
 
• REITs
 
• Sovereign Debt
 
• Swiss Franc
 
• Swiss National Bank
• Trade Balance
 
• Yen

Yesterday we presented a simplistic analysis of why for Japan "This Time Won't Be Different", a preliminary observation so far validated by the just announced Japanese December current account deficit which was not only nearly double the expected 144.2 billion yen, printing at some 264.1 billion yen, but was only the first back-to-back monthly current account deficit since 1985.

In short - at least in the first month of Abe's great reflation attempt, not only did trade post another whopper of a deficit, but so did the broader current account implying that much more Yen weakness will be needed to generate the structural reforms sought by the new Prime Minister.

But perhaps we are wrong and this time Abe will succeed where he, and so many others, have failed before. And, as is now widely understood, perhaps Japan will succeed in finally launching the necessary and sufficient currency war that would be part and parcel of Japans great reflation, as even various G-8 members have recently acknowledged.

The question is will it, and when?

One attempt at an answer comes from the fine folks at Bienville Capital who have compiled the definitive pros and cons presentation on what Japan must do, and how it will play out, at least if all goes according to plan.

What not even this presentation addresses is what happens if Japan is, in the end, successful in reflating, in the process beggaring all its neighbors, radically shifting the economic lay of the globe, and launching full blown currency war - far worse than anything seen to date, including the dark days of the 1930s.

Below are the highlights:

• Monetary policy in Japan is undergoing a monumental change. For the first time in Japan’s post-bubble era beginning in 1990, it appears policymakers intend to drive real interest rates into negative territory. As a result, we believe the yen could continue to weaken and that Japanese equities could be in the early stages of a powerful rally
• On October 30, 2012 the Bank of Japan and Ministry of Finance issued a joint statement entitled “Measures Aimed at Overcoming Deflation,” setting the stage for “powerful easing,” including what seems to be an explicit attempt to weaken the yen. On December 16th, 2012, Shinzo Abe was elected Prime Minister with a mandate to end deflation (i.e. to reflate the Japanese economy)
• Although Japan has struggled with a deflating economy for nearly two decades, the timing of these actions is not random. For a variety of idiosyncratic, macro and geopolitical reasons, the Japanese economy is faltering. Partly as a result of a strong yen, industrial production and business surveys have deteriorated, and the revenues of several national export champions have collapsed
• Due to negligible growth and deflation, the level of nominal GDP in Japan remains well below previous highs (Slide 4), a dangerous circumstance for an economy carrying the world’s largest sovereign debt burden. As history has proven, debt and deflation cannot coexist
• In return for failing to reflate the Japanese economy, the Bank of Japan is on the verge of losing its independence. At the behest of Abe, it seems likely the BOJ will confirm a new 2.0% inflation target on January 22nd. In April 2013, the BOJ’s ‘hawkish’ Governor, Masaaki Shirakawa, is set to retire, likely to be replaced with a far more ‘dovish’ candidate (Slide 5)
• In implementing monetary policy, the Bank of Japan is authorized to buy domestic and foreign assets, including equities and REITs (Slide 6). Achieving the 2% inflation target will prove difficult as domestic deflationary pressures remain. Wages, specifically, are contracting (Slide 7). Hence policy will need to be highly aggressive
• In recent years, although the BOJ has expanded its balance sheet (Slide 8), it has risen far less than other central banks since the financial crisis began (Slide 9)
• Regardless of whether the BOJ proves successful in achieving their inflation target, the expectation of aggressive policy can have a meaningful impact on the yen and Japanese equities, which remain at low levels compared to previous highs (Slide 10 & 11). Recently, equities have rallied and the yen has begun to weaken (Slide 12). But on a “real, trade-weighted basis,” the yen could fall another 20% before reaching the levels of 2007
• To be clear, the intention of the additional policy measures in Japan is to enlist the “portfolio balance channel”—that is, to drive “real” interest rates negative, forcing Japanese savers out of cash and bonds and into riskier assets (i.e. equities). The Federal Reserve has attempted this process twice recently: in 2003 and 2009 (Slide 13), both of which resulted in higher asset prices. By contrast, real interest rates in Japan have remained positive, benefitting bondholders (Slide 14). High real rates also encourages saving over consumption
• The 2003-2005 analog in Japan is interesting: monetary policy was aggressive, the BOJ’s balance sheet expanded by 25%, the yen weakened by 15% and Japanese equities rallied 125%. Of course this occurred during a period of global easing and reflation. In order to achieve today’s stated goals, the BOJ will need to be far more aggressive. For instance, in order to peg and maintain the Swiss Franc to the Euro at 1.20, the Swiss National Bank has expanded its balance sheet by 100% since August 2011
• We believe the primary risk to this theme is lack of policy follow-through—that is, policymakers fail to act to the degree they are currently suggesting, as has occurred in the past. We currently believe this risk is minimal given the determined and coordinated communications from policymakers, as well as key upcoming events (e.g. Upper House elections, etc.). However, lack of policy follow-through would invalidate the theme
• However, on a valuation basis, Japanese equities are relatively cheap (1.2x Price/Book versus 1.5x for other global indices) and yield 2.7%, more than 3x the yield from Japanese government bonds
• International mutual funds are also currently underweight Japanese equities. Goldman Sachs believes international mutual funds’ allocation to Japan is 4% below benchmark (MSCI EAFE). If portfolio managers feel pressure to “get to benchmark, ” some $60 billion could flow into Japanese equities (in addition to the estimated $20 billion of recent inflows
• Japan’s debt-to-GDP ratio is above 200%. Therefore, higher interest rates in Japan could be highly destabilizing. Today policymakers are undergoing a delicate balancing act: attempting to increase inflation and inflation expectations so that investors reallocate savings to riskier assets without causing nominal bond yields to rise. We are unsure of whether they can achieve this and continue to expect significant stress in the JGB market at some point. However, at the moment our focus has been to attempt to profit from a weakening yen and rising Japanese equities
• To be sure, these events have significant implications for the global economy. To weaken the yen, the BOJ needs to buy foreign assets, and given the size of the purchases required, the likely candidates would be US Dollar and Euro-denominated assets. Neither the US, nor Europe prefer to see a meaningful appreciation of their currencies
• A materially weaker yen also complicates the necessary global rebalancing process: the US and parts of Europe—i.e. current account deficit countries—need to move towards trade balance to achieve sustainable growth (i.e. a weaker USD and euro relative to some peers). By contrast, the surplus countries, notably China, Japan and Germany—the world’s 2nd, 3rd, and 4th largest economies—need to engineer more domestic demand, relying less on exports, or external demand, for growth. A policy-induced shift back towards export-led growth by the surplus countries would only rekindle the global imbalances that erupted in 2008
• Having virtually exhausted its ability to grow through investment, China is unlikely to sit idle as Japan weakens the yen, stealing external demand in the process
• Recently, the yen has weakened by nearly 20% versus the Korean won, one of Japan’s primary competitors, threatening Korean exports, which represent 50% of its economy
• In sum, aggressive actions by the BOJ could escalate into a full-fledged currency war. Investors should be monitoring these events closely

Full presentation:  see zero hedge for full presentation.



end




A summary of the tiny LTRO repayment and thus tiny liquidity tightening as the balance sheet of the ECB contracts.  However on the 28th of February, the second LTRO begins its repayment and expect some of the core countries to repay.

(courtesy zero hedge)

Third LTRO Put-Back Post-Mortem: €5 Billion Down, €873 Billion To Go

Submitted by Tyler Durden on 02/08/2013 08:01 -0500

• Erste
 
• European Central Bank
 
• Eurozone
 
• LTRO

As reported previously, today was the third weekly LTRO putback option for European banks. At just €5 billion it was a far cry from the first week's €137 billion whopper, which as we explained, marked the peak level for the Euro, as it is all liquidity tightening from here (especially once the obligatory dose of bank stigma is thrown in) at least until Draghi shifts from unlimited off-balance sheet guarantees to very limited on-balance sheet expansion once more, a move that will see the EUR plunge. But we'll cross that bridge when we get to it. For now - here is Goldman with a summary post-mortem of what has happened so far in LTROville.

LTRO put-back: Week 3: €5 bn (cumulative repayment €146 bn; €873 bn outstanding)

€5 bn in the third put-back, €873 bn left

Today (February 8) at 11:00 GMT, the ECB announced the LTRO funds returned to it through the (third) weekly put-back option. Banks repaid €5 bn, bringing the cumulative repayment to €146 bn or 14% of the initial take-up. The cumulative amount of LTRO cash left in the system now stands at €873 bn.

Weekly put-back tempo of <€5 bn base case

Banks used the initial repayment option to send a "health signal" and repaid €137 bn. Over the past two weeks, the repayment tempo has stabilised, and we see a “repayment corridor” of €0-5 bn per week as a base case expectation.

End February: Next large put-back?

Banks have the option to begin putting back LTRO-2 funds allocation on February 28. We see this as the date of a larger put-back amount, as the banks in the core – which have opted for full repayment of LTRO-1 – get the opportunity to repay the LTRO funds in full.

Signaling and maturity are crucial

Without time pressure, a put-back decision is driven by economics. We believe that for peripheral banks LTRO money continues to offer an attractive reinvestment proposition.

Moreover, we believe the banks will use 4Q2012 results to outline a longer term path of repayments, in order to signal their ‘resilience’.

Finally, with two years remaining, LTRO remains an attractive facility for the majority of banks, which cannot achieve comparable terms in the funding market. But in a year’s time, this is unlikely to be the case. We believe a longer term exit path will be the most likely outcome.

Top bank picks: Growth and self-help

Within the Eurozone, we have a long-standing preference for BBVA and Erste, to which we have recently added BNP and UCG. These banks offer growth options (BBVA, Erste) with restructuring potential (UCG), while they all share attractive valuation levels. Outside of the Eurozone, our preference is for UBS and HSBC.

end

Nigel Farage discusses that the European Union is on "troll patrol"

Our favourite politician from the UK

(courtesy zero hedge) 

Farage Demolishes Europe's "Troll Patrol"

Submitted by Tyler Durden on 02/08/2013 13:34 -0500

• European Union
 
• None

Whether it is Euro-Skeptic MEPs, tin-foil-hat-wearing bloggers, anarchic facebook-friends, or 'V-for-Vendetta'-atavar'd twitterati, the European Union is now engaging in a social media blast to "correct their misconceptions". In what appears to be a coordinated troll-patrol, Nigel Farage notes the "very very scared" leaders of the European Union are spending taxpayers money to counter growing skepticism at the unelected leaders dragging citizens into a United States of Europe. The outspoken British MEP makes it very clear he thinks this social media smear campaign is leading towards a 'mugabe-like' banana republic, as Europe's leaders, who he believes are the "most dangerous people in Europe in 70 years," are terrified at the citizenry's realization that none of this removal of sovereignty was ever voted for. Banana Republic indeed...

end
Venezuela devalues its currency from 4.3 bolivars to the dollar up to 6.3 or a 46% devaluation:
(courtesy Reuters)

Venezuela devalues currency by 32%

Submitted by cpowell on Fri, 2013-02-08 21:43. Section: Daily Dispatches

By Eyanir Chinea
Reuters
Friday, February 8, 2013

http://www.reuters.com/article/2013/02/08/venezuela-currency-devaluation...

CARACAS -- Venezuela devalued its bolivar currency to 6.3 per dollar from 4.3 per dollar, the finance minister said today, in a widely expected move to shore up government finances after blowout government spending last year.

The measure will help ease a shortage of dollars that has crimped imports and left many supermarkets barren of staples such as flour or sugar. It is also seen pushing up consumer prices in the import-dependent OPEC nation that already has one of Latin America's highest inflation rates.

Venezuela has maintained exchange controls on the bolivar for a decade under which importers and travelers must seek dollars through a state currency board, or buy them on an illegal black market where greenbacks fetch nearly four times the official rate.

Central Bank President Nelson Merentes said on Friday the government was also eliminating a currency exchange system known as SITME, which functioned via bond swaps in parallel with the state currency control board.

The currency adjustment follows two months of silence from socialist President Hugo Chavez, who is in Havana and has not been seen in two months since a complex cancer surgery.

The inflationary impact over the coming months could dent Chavez's popularity at a time of ongoing uncertainty over whether his cancer will prevent him completing a third term in office.

The central bank said on Friday that consumer prices rose 3.3 percent in January, the country's second-highest rate since 2010, while product shortages reached their highest in close to five years.

end





And on the same topic:

( courtesyMathew Boesler/Businessinsider)

Venezuela Devalues Its Currency

Matthew Boesler | Feb. 8, 2013, 3:43 PM | 11,310 | 40

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Wikimedia Commons

Venezuela just undertook a massive currency devaluation, re-pegging the bolivar to a value of 6.3 per U.S. dollar from its previous official exchange rate of 4.3 bolivars per dollar.

The government also announced that it would shutter the Venezuelan currency exchange system known as SITME.

Given the currency devaluation underway in other economies around the world right now – perhaps most notably in Japan – a few are calling this Venezuela's foray into the global "currency war" between countries trying to devalue their currencies in order to increase export competitiveness.

However, Venezuela appears to be having a different sort of problem. The country is experiencing a shortage of U.S. dollars, which is making it hard for the country to pay for imports.

Bloomberg's Corina Pons & Nathan Crooks reported on Monday:

The government isn’t considering a devaluation at the moment given its strong balance of payments, the official said. The goal is to improve the supply of dollars while keeping in place existing currency controls, said the official, who spoke on condition of anonymity because no final decision has been made.

Last week the government took its first step to increase the supply of dollars in the economy by channeling more of its oil exports revenue to the central bank. South America’s biggest oil producer is facing shortages of goods ranging from diapers to cars as the lack of dollars crimps imports. In the black market, the bolivar has weakened 53 percent to 18.39 per U.S. dollar in the past year, according to Lechuga Verde, a website that tracks the rate.

Venezuelan President Hugo Chavez spent a ton of money (fiscal stimulus-wise) getting re-elected, and it's left the government with a pretty serious budget deficit.

As Bloomberg's Charlie Devereuz and Jose Orozco explain, "The move can help narrow the budget deficit by increasing the amount of bolivars the government gets from taxes on oil exports."

Read more: http://www.businessinsider.com/venezuela-bolivar-currency-devaluation-2013-2#ixzz2KN5QkVYQ

Your early Friday morning currency crosses;  (8 am)

 

Friday morning we  see some euro strength  against the dollar   from the close on Thursday. The yen this the morning  is very strong  against on the dollar,   at 92.441 yen to the dollar .    The pound, this morning  rose against the USA dollar, at 1.5777. The Canadian dollar remained against the dollar.   We have a  risk is off  situation  this morning with most European bourses in the green like England and the German DAX up. Gold and silver are  down  in the early morning, with gold trading at $1669.60 (down 1.60)  and silver at $31.45 (down 1 cents)

The SA index is down 20 cents at 80.08

Euro/USA    1.3402  up .0020

USA/yen  92.441 down  1.181

GBP/USA     1.5777  up .0069

USA/Can      .9978 flat

end

your closing 10 year bond yield from Spain: 

...a slight decrease in yield.

SPANISH GOVERNMENT GENERIC BONDS - 10 YR NOTE

GSPG10YR:IND

5.360.06 1.03%

 Share

As of 02/08/2013.

Thursday's yield:

SPANISH GOVERNMENT GENERIC BONDS - 10 YR NOTE

GSPG10YR:IND

5.420.03 0.55%

 Share

As of 11:59:54 ET on 02/07/2013.

end.




The Italian 10 year bond yield:

slight decrease in yield.

Italy Govt Bonds 10 Year Gross Yield

 + Add to Watchlist

GBTPGR10:IND

4.550.03 0.68%




Thursday's yield:

ITALY GOVT BONDS 10 YEAR GROSS YIELD

GBTPGR10:IND

4.580.000.00%

 Share

As of 11:59:46 ET on 02/07/2013.

end.

Your 5:00 pm closing Friday currency crosses:

The Euro continued with its morning weakness finishing at the close at 1.3360.

The yen weakened this afternoon after gaining in strength during the overnight session falling to 92.66 to the dollar after rebounding to 92.44 late Thursday night/early Friday morning. .  The pound rose slightly more  against the dollar .  The Canadian dollar fell a tiny fraction against the dollar.  The USA index lost a bit to the tune of 7 cents to 80.21. 

Euro/USA    1.3360  down  .0022

USA/Yen  9266  down .96

GBP/USA     1.5791  up .0083

USA/Can      1.0025  up .0047

end.

Your closing figures from Europe and the USA:
everybody in the green today 

i) England/FTSE up 35.51   or 0.57%

ii) Paris/CAC up 48.45 or 1.35% 

iii) German DAX: up 61.29 or .81%

iv) Spanish ibex up 160.3 points  or 2.00%

v) Italian bourse (MIB) down 229.94 points or 1.40%

and the Dow: up 48.92 points or 0.35% 


end.

And now the major USA stories of the day:




You must take the data with a grain of salt.  However what is clear is the world trade is slowing down.

Finally, one has to wonder with the data as zero hedge eloquently describes:

"Finally, we leave it up to readers to figure out how China can report a December trade surplus with the US of $18.7 billion, while the US just reported a Chinese trade deficit of $24.5 billion."

(courtesy zero hedge)

US Trade Deficit Drops To Lowest Since January 2010 As Crude Imports Plunge To 1997 Levels

Submitted by Tyler Durden on 02/08/2013 08:54 -0500

• China
 
• Crude
 
• Crude Oil
 
• Gross Domestic Product
 
• Trade Balance
• Trade Deficit

Following November's massive trade deficit surge, when the final print of $48.7 billion was far worse than the $41.3 billion expected, it was only (il)logical that the December trade number would reverse this trend to the other extreme, which it did with the December trade balance plunging from a revised $48.6 billion to a tiny $38.5 billion - the lowest deficit since January 2010, and the biggest beat to expectations of $46 billion since February 2009.

The deficit was the result of December exports which were $3.9 billion more than the $182.5 billion in November, and imports some $6.2 billion less than November's total $231.1 billion. Broken down by category, the goods deficit decreased $9.4 billion from November to $56.2 billion, and the services surplus increased $0.7 billion from November to $17.7 billion. A key driver of this move was a spike in Petroleum exports which shrunk the Petroleum product trade gap to the smallest it has been since August 2009 as the US imported the least amount of crude oil since February 1997. Whether this is due to rising domestic production, or just the ongoing collapse in end demand (which is to the US economy as electricity is China's traditional "8%" GDP) remains unclear.

The immediate result of this second consecutive data outlier in a world which as we showed yesterday trade is imploding thus putting all trade data in a very questionable light, is that Q4 GDP will now have to be revised higher due to the bean counters plug of net export data into their GDP calculation. It also means that much of the expected boost to Q1 GDP exports will actually have taken place in December, in turn pushing Q1 GDP forecasts marginally lower.

Specifically, The November to December increase in exports of goods reflected increases in industrial supplies and  materials ($3.8 billion); other goods ($0.3 billion); and foods, feeds, and beverages ($0.1 billion). Decreases occurred in capital goods ($0.4 billion); automotive vehicles, parts, and engines ($0.3 billion); and consumer goods ($0.2 billion). The November to December decrease in imports of goods reflected decreases in industrial supplies and materials ($4.2 billion); automotive vehicles, parts, and engines ($0.9 billion); other goods ($0.6 billion); capital goods ($0.3 billion); and foods, feeds, and beverages ($0.1 billion). Consumer goods were virtually unchanged.

Finally, we leave it up to readers to figure out how China can report a December trade surplus with the US of $18.7 billion, while the US just reported a Chinese trade deficit of $24.5 billion.

Full report

see zero hedge

end

and on the same theme:

So Who Is Lying (More)?

Submitted by Tyler Durden on 02/08/2013 09:53 -0500

• China
 
• Gross Domestic Product
 
• Trade Deficit

Overnight China reported great trade data which saw exports and imports soar by more than 20% each compared to 2012. Of course, when one adjusts for January calendar effects the "rise" was virtually non-existent but that was too much work for the Shanghai Composite algos. A few hours later, the US did the same, reporting even better trade data which saw the trade deficit plunge the most in nearly three years. So far so good: we just have one question - who is lying more. Because unlike all other sole-sourced economic manipulated data which is solely a function of some excel goal seek model and various spreadsheets, bilateral trade has to foot. One country's net exports have to equal its countepart's net imports and vice versa.

Which is why we compiled the net trade data between the US and China, which was trumpeted earlier to have surpassed a $300 billion ($315 billion to be exact) deficit. At least as reported by the US side. The same "data", when reported from the perspective of China amounts to a surplus of some $219 billion, a difference of $96 billion!

The chart below shows the LTM net exports to the US from China's perspective (in blue) and the net imports from China from the US point of view (in red), with the black line the resulting net difference.

In other words, either China is massively underreporting its net exports to the US or the US is boosting its net imports figure.

Or, just as plausibly, both nations are simply pulling numbers out of thin air - numbers which have a massive impact on both nations' respective GDP prints, which is data that, at least in the Old Normal, used to matter.

end

 That is all for today.

I will see you Monday night

Harvey