Monday, April 29, 2013

Gold and silver shine/Gold continues to bleed from GLD vaults in London

Good evening  Ladies and Gentlemen:

Gold closed up $14.80 to $1468.40 (comex closing time).  Silver rose by $.42   to $24.18 (comex closing time). 

In the access market at 5 pm gold and silver  rose :

gold: $1475.00
silver: $24.60

At the comex, the open interest in silver fell  by a healthy 6834 contracts to 148,154 contracts) as it is still  holding firm at elevated levels . The open interest on the gold contract fell by 3,623 contracts to 416,206. The total amount of gold ounces standing for April rose quite sharply to at 36.18 tonnes as somebody badly needed some physical gold.  Silver rose by 5,000 oz to finish the month at 3,770,000 oz 

Today, physical gold continues to leave London with 2.41 tonnes of gold departing for the shores of China/and or Russia.  Silver saw an advance of almost 1/2 million oz.

Cyprus announced that 90% of depositors over 100,000 euros will lose their hard earned cash:  37.5% will go for worthless Bank of Cyprus shares, 22.5% will be held as a buffer and 30% will be held "temporarily" as an additional buffer.  Trust me, they will never get back that money.

We had good commentaries today from Mark Grant, Ambrose Evans Pritchard, Jim Sinclair, Peter Cooper, Chris Hart, Dave Kranzler, Eric Sprott, Rob Kirby, James Turk and Eric King.

 We will go over these and other stories but first.........................

Let us now head over to the comex and assess trading over there today:

The total gold comex open interest fell by 3623 contracts today  from 419,829  down to 416,206,  with gold falling by $8.20 on Friday. It looks like we had  short covering.  The front April OI is now off the board. We had 562 notices filed late  Friday night, even though we had only 9 contracts outstanding, so we  gained 55,300  additional oz of gold which will  be standing for the April gold contract month. The next non active contract month is May and here the OI rose by 66 contracts to 1514. The next big contract month is June and here the OI fell by  6,356 contracts from 250,714 down to 244,358.  The estimated volume today was fair at 127,729.   The confirmed volume on Friday was  huge at 267,492 contracts.

The total silver comex OI fell  by a hefty 6834  contracts from 154,988 down to 148,154  with silver's $0.34 fall on Friday. No doubt we lost some paper players who refused to roll.  Those that remain are stoic and ready to take on the bankers at their crooked game.The front non active delivery month of April is now off the board. We had 2 delivery notices filed today (we had only 1 remaining to be filled), so in essence we  gained 1 silver contracts standing for delivery in April.  The next big delivery month for silver is May and here the OI fell by 13,852 contracts to stand at 9,346. We are 1 day away from first day notice for the May silver delivery month  (Tuesday April 30/2013).   The estimated volume today was good, coming in at 64,187 contracts which equates close to 321 million oz of silver. The world produces 700 million oz per year ex China ex Russia so in essence today's volume equates to 45.8% of annual silver production. We had confirmed volume on Friday at 115,355 contracts which is a huge volume day . (577 million  or 82.4 % of annual silver production)

Comex gold/April contract month:

April 29.2013      April gold.

April comex gold  Final

Withdrawals from Dealers Inventory in oz
Withdrawals from Customer Inventory in oz
 66,885.276 oz
Deposits to the Dealer Inventory in oz
Deposits to the Customer Inventory, in oz
49,194.875 (Scotia)
No of oz served (contracts) today
 576  (57,600  oz)
No of oz to be served (notices)
off the board
Total monthly oz gold served (contracts) so far this month
11,632  (1,163,200)
Total accumulative withdrawal of gold from the Dealers inventory this month
169,318.45  oz
Total accumulative withdrawal of gold from the Customer inventory this month

1,010,666.2  oz  

We had huge activity at the gold vaults.
The dealer had 0 deposits and 0  dealer withdrawals.

We had 1 customer deposits on Friday:

2. Into Scotia:  49,194.875 oz

total customer deposit: 49,194.875 oz

We had 1 customer withdrawal:

i) Out of Scotia:  66,885.276 oz

We had 2  adjustments 

i)  It seems I struck a nerve with the CFTC on that 76,315.116 oz deposit into HSBC dealer  (it was also deposited into the customer account)

today they adjusted out 76,315.116 oz out of HSBC dealer

2*.  They adjusted another 4752.114 oz out of the dealer JPMorgan and into the customer account of JPMorgan.  No gold entered the customer from outside.

(see JPMorgan report on this below)

Thus the dealer inventory  rests tonight at 2.151 million oz (66.9) tonnes of gold.
The total of all gold declines again at the comex and this time breaking below 8 million oz as it rests at 8.049 million oz or 250.0 tonnes.

The CME reported that we had 562 notices filed for 56200 oz of gold on Friday. 
We had only 9 contracts outstanding so we gained 553 contracts or 55300 oz of additional gold  will stand for delivery.   The total number of notices so far this month is thus 11,632 contracts x 100 oz per contract or 1,163,200 oz of gold.

Thus  we have the following gold ounces standing for metal:

1,1,632 contracts x 100 oz per contract  =   1,163,200 oz or
36.18 tonnes of gold.

and this should be the final April report.  They can issue a delivery slip late tonight for tomorrow but that would be rare.


*JPM Reclassifies Another 4.7K Ounces Of Gold Into Eligible

Tyler Durden's picture

It's that time again when we cautiously peek at cell H25 of thedaily CME Group Metal Depository Statistics worksheet to find if, following Friday's dramatic and volatile trading session in gold, someone, anyone decided to submit a delivery ticket to the JPM vault located at 1 Chase Manhattan Plaza, and reduce the already near record low gold inventory which at last check was just over 5 tons, and just one 163K troy ounce delivery request would lead to all commercial gold at the JPM vault to run down to zero. Not this time.
As it turns, in a carbon copy of Friday's internal conversion, inwhich 17.5k ounces of gold were selectively converted from Registered to Eligible status (for all those sticklers about nomenclature definition, this is how easy it is to convert one into the other and vice versa and how meaningless said designations really are), on Friday JPM decided to do some more redefinition, and converted another 4.7k ounces of gold from registered into eligible, pushing up the total by a fractional amount to 163.8k ounces, still just a hair's breath away from the all time record low reported last Thursday.
And as a tangent, it is perhaps just as notable that HSBC just saw 76K ounces of its registered gold, or 17% of the total gold stored underneath Bryant Park, exit through the front door, destination unknown, leaving just 378K ounces of registered gold with the London-headquartered bank best known for aiding and abetting international money laundering, without admitting or denying it of course.
The second daily internal conversion in a row:
And the total JPM eligible gold as reported by Comex:
Thus, we look forward to tomorrow's update to see how much more "registered" gold JPM will convert into eligible, or if nobody will continue to demand delivery after the biggest "run" on JPM's vault in history.


April 29.2013:  April silver: 

Final figures for April gold.

Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventory 686,718.17 ( CNT Scotia)   
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory  598,743.30  (CNT)
No of oz served (contracts)2 contracts ( 10,000 oz)  
No of oz to be served (notices)off the board
Total monthly oz silver served (contracts) 754  (3,7670,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month3,818,843.5 oz
Total accumulative withdrawal of silver from the Customer inventory this month6,159,668.2 oz

Today, we  had good activity  inside the silver vaults.

 we had 0 dealer deposits and 0  dealer withdrawals.

We had 1 customer deposits:

i) Into CNT: 598,743.30 oz

Total deposits:  598,743.30  oz

We had 2 customer withdrawals:

1) Out of CNT:  5506.27 oz
ii) Out of Scotia;  681,211.90 oz
total customer withdrawal:  686,718.17 oz

we had 0  adjustments:

Registered silver  at :  37.411 million oz
total of all silver:  166.05 million oz.

The CME reported that we had 2 notices filed for 10,000 oz of silver  for the non active contract month of April.  If you will recall, we had only 1 notice left to be filed upon, so in essence we gained 1 contract or an additional 5,000 oz of silver will stand for the April contract month.

Thus the total number of silver ounces standing in this non active delivery month of April is as follows:

754 contracts x 5000 oz per contract = 3,770,000

we gained 5,000 oz  silver ounces standing in the April contract month.

This has turned out to be a very good delivery month for silver for what is usually a quiet month as April is a non active month.  The standings should be final.


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.

Now let us check on gold inventories at the GLD first:

April 29.2013:



Value US$50.963  billion

april 26.13:



Value US$51.217  billion

april 25.2013:



Value US$50.841   billion

april 24.2013:



Value US$50.177   billion

April 23.2013:



Value US$49.648 billion

April 22.2013:



Value US$50.575  billion.

april 19.2013:



Value US$50.731  billion.

April 18.2013:



Value US$50.752   billion

april 17.2013:



Value US$50.770  billion.

Monday, we lost 2.41 tonnes of gold which followed  we  another 7.65 tonnes of gold lost of Friday.  Thursday we lost 2.71 tonnes of gold  which followed  4.21 tonnes on Wednesday which followed  18.35 tonnes of gold lost on Tuesday. The registered  vaults at the GLD will eventually become a crime scene as real physical gold will depart for eastern shores leaving behind paper obligations to the remaining shareholders.  As you can see, the bleeding of physical gold from this locale continues unabated.

As a reminder the total comex gold had inventories of around 11 million oz in 2011. Today it held just above 8 million oz. (8.049 million oz)


And now for silver:

april 29.2013:

Inception Date4/21/2006
Ounces of Silver in Trust334,607,098.000
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

Inception Date4/21/2006
Ounces of Silver in Trust334,124,167.000
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.


April 25.2013:

Inception Date4/21/2006
Ounces of Silver in Trust331,757,790.600
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.


april 24.2013:

Inception Date4/21/2006
Ounces of Silver in Trust331,757,790.600
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.


April 23.2013:

Ounces of Silver in Trust336,007,785.800
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.


april 19.2013:

Ounces of Silver in Trust336,007,785.800
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.


april 18.2013

Ounces of Silver in Trust336,007,785.800
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.


april 17.2013

Ounces of Silver in Trust336,007,785.800
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.


April 16.2013:

Ounces of Silver in Trust336,007,785.800
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.


april 15.2013

Ounces of Silver in Trust337,505,197.400
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.


 april 12.2013:

Ounces of Silver in Trust337,505,197.400
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.


 april 11.2013:

Ounces of Silver in Trust337,505,197.400
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.


Today we  gained .483 million oz silver at the SLV. I am pretty sure that this addition was a paper trade and no real silver is involved. I doubt very much if the SLV has any appreciable silver left. Please note the difference between silver and gold.  Physical gold is leaving GLD;  physical silver is not leaving SLV because there is none!


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  at negative 1.0% percent to NAV in usa funds and a negative 1.2%  to NAV for Cdn funds. ( April  29.2013)   

2. Sprott silver fund (PSLV): Premium to NAV fell to -0.05% NAV  April 29/2013
3. Sprott gold fund (PHYS): premium to NAV  fell to- .21% positive to NAV April 29/ 2013.


And now for the major physical stories we faced today:  

Your gold trading commentary from  Europe early Monday morning:

gold and silver shortages around the globe.

Gold And Silver Coin And Bar Shortages Globally

GoldCore's picture

Today’s AM fix was USD 1,472.50, EUR 1,125.51 and GBP 947.80 per ounce.
Friday’s AM fix was USD 1,462.25, EUR 1,123.43 and GBP 947.79 per ounce.
Gold fell $7.00 or 0.48% Friday to $1,467.30/oz and silver finished down 1.65%. Gold and silver both gained for the week at 4.74% and 3.11%, respectively.
Gold rose another 1% overnight in Asia, consolidating on last week's 4% gain. 
The slight rebound in prices from multi-year lows has as of yet failed to dampen the global appetite for bullion, causing a shortage in the physical supply of gold coins and bars.
Recent bleak U.S., European and Chinese growth data is also supporting gold due to concerns of recessions and of a global depression.
Central banks including the Federal Reserve and the ECB are set to continue with ultra loose monetary policies which will support gold.
The ECB has kept its main interest rate at a record low of 0.75% since July 2012 and may reduce interest rates to 0.5%, either this week or in June. This will further deepen negative real interest rates in most countries in the Eurozone.
The Fed alone is set to keep interest rates near 0% and continue its current pace of bond buying at a whopping $85 billion a month. 
Ultra loose monetary policies will support gold as it is a hedge against currency devaluations and inflation and stagflation - all of which are real risks.
Premiums for gold and silver bars have jumped higher all over the world. They have surged to multi-year highs in Asia. Reuters reports overnight that premiums are surging due to "strong demand from the physical market, which has led to a shortage in gold bars, coins, nuggets and other products."
Shortages of gold and particular silver coins and bars is not confined to the small coin and bar market and there are also supply issues in the larger bar market with kilo bars being increasingly difficult to secure.
Swiss refineries are struggling to meet global demand for refined gold bars.  They have been cleared out of their stock of kilo gold bars – the preferred form of gold bullion amongst many store of wealth, affluent buyers in Europe and Asia. Buyers have been told that they will have to wait until late May prior to receiving delivery on paid for product.
Shortages are most prevalent in the silver coin and bar market where premiums have surged. 
Silver coins and bars can now not be bought from the largest bullion dealers in the U.S. who have been cleared out of stock in recent days. Unlike after Lehman Brothers where there were shortages and delays of 3 to 4 weeks, there is no guidance being given as to when certain gold and silver coins and bars will be available again.
Canada home to 10% of Swiss bullion – The Globe and Mail
Sinclair: The Rig Is Up – JS Mineset
For breaking news and commentary on financial markets and gold, follow us onTwitter.

(courtesy Goldcore)


pay special attention to the section on USA exports of gold

For the last few months 4 billion usa dollars worth of gold is exported.

The USA produces around 240 tonnes per year or 24 tonnes per month.

At 1500.00 usa per oz, this equates to 1.15 billion dollars of production.

The only way the USA can export gold is to take it's own reserves and send 

them off to China and India.

It would be illegal this is USA is taking its gold reserves and selling them 

without congressional approval.

(The commentary courtesy of Chris Hart/Sunday Times, Johannesburg/GATA Chris Powell)

Gold price suppression sneaks into South African press

Gold Price Setters Battling Asia's Demand
By Chris Hart
Sunday Times, Johannesburg
Sunday, April 28, 2013
Last week the gold price fell $200 an ounce in two trading days, almost reaching the $1,300/oz level (though it recovered by $150/oz this week).
The previous time gold was under such concentrated selling pressure was in the eye of the 2008 global financial crisis. Liquidation for cash was the immediate priority.
However, the rebound from its $680/oz low in the wake of that selling was a spectacular rally that peaked at just above $1,900/oz in September 2011.
Since then, gold drifted gently downwards until the sudden selloff just over a week ago. Calling an intermediate bottom now is as dangerous as trying to catch a falling knife.

However, the composure of the gold market starts to change when the metal suddenly becomes cheap.
The main price-setting centres of gold are in London and New York. The main centres of demand are in China and India.
Indian demand has a strong tendency to rise substantially on price pullbacks -- as is already evident with this decline.
Chinese demand has accelerated over the past few years and is expected soon to exceed that of India.
Furthermore, official selling by western central banks (mainly in Europe) has dried up and has been replaced by central bank buying mainly by emerging countries. Net central bank purchases in 2012 stood at the highest level since 1964.
Of major interest is the state of the physical market. Over the past six months, gold has been subjected to relentless selling and has frequently been "bombed" -- where a large number of contracts are dumped on the New York Commodities Exchange (Comex) over a very short period.
On April 12 the market was bombed with more than 500 tons of gold in a manner that caused great downward price pressure and panicked the market into selling.
The bombing of the gold market has been a frequent trading feature over the last two quarters. But the persistence of concentrated selling over the past two quarters has been unusual.
At the same time interesting data regarding physical stocks has emerged.
The Comex physical inventory has been drained substantially over the past two quarters, a reversal of the trend over recent years. At the same time, Chinese gold imports through Hong Kong have soared.
U.S. trade data also reflects a level of gold exports way beyond any domestic production. This means it is probable the supply comes from leasing, where gold has been borrowed and sold into the market.
The drop in Comex inventories, U.S. gold trade data and Hong Kong trade data suggest the mobilization of physical gold has resulted in a large transfer from western to eastern vaults.
Demand is soaring for gold at retail level in the form of sales of coins and gold bars at the U.S. and Perth mints, among others. Indian jewelry demand also showed a strong pick-up in recent weeks and has risen further following the take-down in the gold price.
The consequence is that there appears to be a battle between the price-setting centres of London and New York and the demand centres of India and China. Against the backdrop of strong physical demand, the underlying fiscal conditions and complementary monetary policy remain highly supportive of the gold price.
In terms of quantitative easing (QE), or money printing, the Japanese are virtually matching the scale of what the US Federal Reserve is doing but in an economy only one-third the size.
Central banks, including the the Bank of England, the European Central Bank, the Swiss National Bank, and the Bank of China, are almost in a competition to debase their currencies.
One consequence of QE is the escalation of debt levels, which is creating some systemic stress. Already monetary policy has exhausted its interest-rate tool. Languishing economies and rising debt levels mean countries are trapped in their low interest-rate environment.
The bottom line is that over-indebtedness will ultimately result in higher inflation or deflation. These are systemic problems where gold provides one of the better chances of protection.
However, a rapidly rising gold price is undesirable as an indicator that reflects systemic distress. So over the short term, the price will be suppressed and there will be more bull and bear phases, but the overall investment strategy remains to buy the dips. While another low in the short term is possible, the gold price is now in a good buying area.
Chris Hart is the chief strategist for Investment Solutions.

Emma Simons of the UK Telegraph writes that there is not one piece of evidence that the gold market is rigged.  This is immediately refuted by Chris Powell

(courtesy Chris Powell/GATA)

'Not one piece of evidence' that gold market is rigged? Really?

1:30p ET Sunday, April 28, 2013
Dear Friend of GATA and Gold:
For years your secretary/treasurer has been alerting the London Telegraph to documentation of the gold price suppression scheme and begging the newspaper to report it.
While the newspaper's brilliant international business editor, Ambrose Evans-Pritchard, has declined to get into the issue, he has acknowledged it from time to time. And another financial writer at the paper, Thomas Pascoe, has gotten into it in detail several times in recent years:
So it is disappointing that another Telegraph financial writer, Emma Simon, would assert in commentary published Saturday that "there is not one piece of evidence" that the gold market is rigged:
Your secretary/treasurer wrote to her yesterday in protest, remarking, in part:
"My organization, the Gold Anti-Trust Action Committee, has been collecting and publishing such evidence for many years and I would be glad to describe it to you in detail.

"Perhaps most telling is this secret report from the International Monetary Fund, written in March 1999, confirming that Western central banks conceal their gold swaps and leases lest disclosure impair their surreptitious interventions in the currency and gold markets:
"The Bank for International Settlements, which trades gold secretly on behalf of its member central banks, even advertises secret interventions in the gold market among its services to members:
"There is so much more, including admissions from former U.S. and European central bankers, in our general documentation archive:
"Please follow up here. Your assertion that there is no evidence of gold market rigging is terribly mistaken, unfair to readers, and damaging to GATA."
Any acknowledgment of this protest will be reported to you, but please don't expect anything. A couple of weeks ago your secretary/treasurer wrote to the two reporters and the editor responsible in this Bloomberg News story --
-- for contriving rationalizations for the gold price smash while omitting central bank intervention, asking if they would be interested in receiving documentation of that intervention and asking, if they were not interested, for a statement from them to that effect. Of course there has been no reply.
But we'll keep at it. Progress is slow but as was indicated by today's newspaper commentary from South Africa --
-- the more distant a news organization is from London and New York, the more financial journalism can be honest about the gold market.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


Please pay attention to today's interview of Jim Sinclair by Eric King and a second interview with eric Sprott:

(courtesy Eric King/Kingworldnews/Jim Sinclair/Eric Sprott)

New Sprott and Sinclair interviews at King World News

1p ET Sunday, April 28, 2013
Dear Friend of GATA and Gold:
Sprott Asset Management CEO tells King World News that the gold price smash engineered by central banks will just prolong gold's bull market. "You tell me how desperate central banks are going to be," Sprott says, "and I can tell you how high the price is going to go." An excerpt from the interview is posted at the King World News blog here:
And mining entrepreneur and gold advocate Jim Sinclair tells King World News that assets in the banking system will be devalued or seized and that only getting out of the system will preserve wealth. "The price of gold is going to significant new highs," Sinclair says, "and that drive to new highs will be as a result of a continued move into physical gold. Because the manipulative tool of the paper market has been revealed as a fraudulent determiner of price, the physical gold price will now be free to move to levels that even you and I will be surprised at, and it will be maintained at that level for generations." An excerpt from Sinclair's interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


from Jim Sinclair on the above interview:

Sinclair – The Elites Frightening Plan To Control The Masses

Posted  by  & filed under King World News.
Dear CIGAs,

Today legendary trader Jim Sinclair told King World News that the elites plan to use the coming financial chaos and destruction to control the masses.  Sinclair spoke about the “Great Unwind,” what this means for gold, and how investors can protect themselves from what is in front of us.  Below is what Sinclair, who was once called on by former Fed Chairman Paul Volcker to assist during a Wall Street crisis, had to say in this remarkable interview.

Sinclair:  “The enormous violence in the markets is obscuring a very clear message.  The message from Cyprus, that has also been written in various white papers and signed by central banks, the FDIC, Bank of England, and the BIS, is to get out of the system.
What happens to readers around the world is of primary importance to King World News and to myself.  The meetings that I have already had, and future meetings still to take place around the world, have been for the purpose of keeping investors from having large portions of their wealth destroyed or stolen from them.

People have to understand that going forward large deposits by ‘non-insiders’ are no longer going to be permitted.  The goal of this pre-arranged wealth destruction is to equalize the ‘new rich’ and the ‘upper middle-class.’  Those not on the inside, with the right families and the right companies, are not going to be tolerated in the ‘New Paradigm’ of currency and metal that we are now moving into.

So the only means of being able to protect yourself will be to understand the answer to the question, ‘What is the final end game for the most powerful families that are in fact running countries and markets?’….


Cyprus depositors who exceeded 100,000 euros at our two major Cypriot banks will receive basically nothing for their hard earned money:

i) 37.5% of the money is to be converted into class A shares of the bankrupt Bank of Cyprus
ii) an additional 22.5% is to be held as a buffer for possible conversion in the future
iii) 30% will be temporarily frozen and held as a deposit as the Bank of Cyprus.

Not sure what happens to the remaining 10%.

This is far worse than expected:

courtesy Jim Sinclair:

My Dear Extended Family,  

Courtesy of

Today legendary trader Jim Sinclair told King World News that today is a day of financial infamy as Cyprus depositors have now officially been flushed.  Sinclair also stated that history will show this day as being as serious as the flushing of Lehman Brothers.  Below is what Sinclair, who was once called on by former Fed Chairman Paul Volcker to assist during a Wall Street crisis, had to say in this remarkable interview.

Eric King:  "Jim, we now know the answer to the 'Cyprus Solution.'"

Sinclair:  "Yes, Cyprus depositors have now been flushed.  The Bank of Cyprus, the island's largest bank said it has converted 37.5% of deposits exceeding 100,000 euros into a Class A share, with an additional 22.5% held as a buffer for possible conversion in the future.

Anther 30% will be temporarily frozen and held as a deposit.  So the amount of money that has been taken from the Cyprus depositors is an all practicality almost their entire accounts.  Major depositors funds have now been taken in grand style. 

Depositors everywhere are now defined as lenders to the banks.  Today is a day of financial infamy.  History will see this event as serious as the flushing of Lehman Brothers.... 

Click here to read the full article on

 or here:

Cyprus depositor expropriation will rank with Lehman collapse, Sinclair says

8:37p ET Sunday, April 28, 2013
Dear Friend of GATA and Gold:
Gold mining entrepreneur and gold advocate Jim Sinclair tonight tells King World News that the expropriation of bank depositors in Cyprus will prove as significant as the collapse of Lehman Brothers in 2008. "Get out of the system now or you will pay the penalty," Sinclair says. " Depositors everywhere will have their money stolen at some point." An excerpt from the interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


Gold plunge was not a natural market event but an intervention, Kirby tells Schall

8:45p ET Sunday, April 28, 2013
Dear Friend of GATA and Gold:
Rob Kirby of Kirby Analytics in Toronto, consultant to GATA, tells financial journalist Lars Schall that the recent plunge in paper gold prices was so extreme that it could not have a natural market event but only a central bank intervention. Kirby calls the intervention "an act of desperation" that only sparked a great increase in purchases of real metal. The interview is 18 minutes long and can be heard at Schall's Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Journalist Guillermo Barba writes that there is a sharp increase in demand for the Mexican silver coin, the Libertad:

(courtesy GATA/G. Barba)

Guillermo Barba: Silver coin demand rises sharply in Mexico

12:03a ET Monday, April 29, 2013
Dear Friend of GATA and Gold:
Mexican financial journalist Guillermo Barba reports tonight that demand for his country's silver Libertad coins has exploded, according to information provided to him by the Bank of Mexico.
For April through the 23rd of the month, Barba writes, the central bank had sold 174,055 Libertad coins, more than were sold in the first three months of this year altogether -- 169,928 coins total in those three months, 46,693 in January, 80,929 in February, and 42,306 in March.
Last year, Barba adds, demand for the silver Libertad was down by 60 percent.
Barba's report is posted in Spanish at his Internet site, Global Financial Intelligence, here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


'Buying panic' underway in gold and silver, Turk says

4:30p ET Monday, April 29, 2013
Dear Friend of GATA and Gold:
GoldMoney founder and GATA consultant James Turk today tells King World News that a "buying panic" is underway for real gold and silver and it may be accelerated if Barrick Gold is unable to restart its Pascua-Lama mine project on the Chile-Argentina border and the bullion bank that allowed Barrick to hedge so much imagined production from the project asks for its metal back. An excerpt from the interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


Silver coins and bars are on a rampage!!

(courtesy Peter Cooper/Arabian money)

Silver prices rebound again as retail buyers snap up coins and bars at bargain prices

Posted on 29 April 2013

It’s not just gold that is selling well since the bear market raid a couple of weeks ago. Singapore’s Silver Bullion Pte told Bloomberg today that its holdings of bars have fallen to just 54 ounces from 60,000 ounces two and a half weeks ago.
Apparently restocking now takes around six weeks against less than half that before the price correction. Silver prices are down 20 per cent this year but this is encouraging bargain hunters rather than putting investors off buying.
ETP holdings upHoldings in silver-backed ETPs stood at 19,353.38 tons on April 26, that’s actually up 2.3 per cent on the end of the year, according to data compiled by Bloomberg. Investors don’t sound too worried about falling silver prices either. They know silver is the most volatile of commodities and just live with it, knowing that this is also the price paid for higher long term returns.
Silver has of course outperformed its sister gold since 2000 though neither has gone anywhere exciting since peaking in 2011. The inflation anticipated in the early days of money printing just has not showed up in anything except a doubling of the US stock market and a house price upturn.
But the buyers of precious metals sense that inflation is still coming down the pike. ArabianMoney certainly felt China is already into a hyperinflation event with the cost of staple foods rising way above average salary increases (click here).
The port workers in Hong Kong have just turned down a seven per cent salary rise and are striking for a 23 per cent increase. That has shades of the UK miners in the early 70s. What comes next? The Bank of Japan and Fed are now printing $1.4 trillion and $1 trillion respectively, and how much of that is gold and silver?Devaluation protectionHoarding gold and silver is an obvious protection from money printing by the central banks. Switching paper for something sold when the cental banks have just tried to smash the bullion market as another distraction from their devaluation of paper money is only common sense.
It’s interesting to see the technical chartists getting gold and silver prices completely wrong again because they have no way of taking fundamentals like money printing into account. For once the man-in-the-street seems to be getting things right.
The next issue of the ArabianMoney newsletter (subscribe here) will take a look at how to leverage up in gold and silver without taking on too much risk.


MONDAY, APRIL 29, 2013

The Global "Fractional" Paper Bullion Market Is Collapsing

I wrote last week that there was a scramble going on globally by entities seeking to take physical possession of the gold on which they have a legal claim, most of which is sitting either in alleged "allocated" big bank bullion vaults or in alleged "allocated" accounts in Comex custodial warehouse vaults.

I also demonstrated mathematically, using the reported numbers on the CME website for precious metals futures open interest and warehouse gold/silver stocks, that the amount of gold represented by Comex futures open interest far exceeds the amount of deliverable gold on the Comex (the analysis is even more extreme for silver).  In fact, if less than just 10% of the buyers of June gold contracts demand delivery, the Comex won't have enough gold to cover the legal claims.  For silver (July silver) it's even more extreme.

This is a global problem and not just endemic to the Comex.  Globally, the legal claim of ownership on physical gold far exceeds the amount of gold represented by paper futures, LMBA forward contracts, leased gold and vault receipts.  The latter - vault receipts - is where the big banks in London have the most severe problem, as gold this is supposed to be sitting in "allocated" accounts under the name of the legal owner who bought and paid for those bars has been largely leased out.  I'll get to that in a minute.

First, I received this comment from John Brimelow's "Gold Jottings" report, which comes from Gerhard Schubert, head of Precious Metals at Emirates NBD, the largest banking group in the Middle East.  Keep in mind that Middle Eastern buyers demand physical delivery of their gold.  Here's the quote from his latest weekly report:
I have not seen in my 35 years in precious metals such a determined and strong global physical demand for gold. The UAE physical markets have been cleared out by buyers from all walks of life. The premiums, which have been asked for and which have been paid have been the cornerstone of the gold price recovery. It is very rare that physical markets can have a serious impact on market prices, which are normally driven solely by derivatives and futures contracts…

I did speak during the week with several refineries in the world, of course including the UAE refineries, and the waiting period for 995 kilo bars is easily 2-3 weeks and goes into June in some cases. A large portion of the 995 kilo bars in the UAE goes normally into the Indian market, but a lot of the available 995 kilo bars are destined for Turkey, at this time. We heard that premiums paid in Turkey have reached anything between US $ 20 and US $ 35 per ounce.
The price hit of two weeks ago has triggered a serious scramble for physical gold and silver.  Reports like the above comment have been flooding from Europe, the Comex has had about 30% of its gold bars literally drained from the customer accounts of the Comex bank custodian vaults and the U.S. mint is running way behind on demand for silver eagles and some weights of gold eagles.  Ditto for the Canadian mint.

And then I get a call from a close friend in NYC last Friday.   His career has been in private wealth management in the private bank department of the Too Big To Fail banks.  He's been looking for work and chats with old colleagues all the time.  He called my Friday and told me he just got off the phone with a very high level private banker from a big Euro-based TBTF bullion bank, but who was at JP Morgan until about six months ago.

This guy told my friend that there is a scramble by many very wealthy European families/entities to get their 400 oz bars out of the big bank vaults. He knows this personally, for a fact.  He said the private banker community is small over there and the big wealthy families all talk to each other and act on the same rumors/sentiment.  The Bundesbank/Fed and the ABN/Amro situations triggered this move.  He knows for a fact JPM tried to calm fears about 3 months ago by sending a letter to it's very wealthy clients assuring them their bars were safe, in allocated accounts.  He said right now those same families are walking into the big banks like JPM and demanding delivery of their bars or threatening to take their $100's of millions in investment portfolios to competitors.  His wording was "these people are putting a gun to the heads of private banks and demanding their gold."

I know this information is good because I know my friend's background and when he tells me his source is plugged in, the guy is plugged in. Not only that, my friend's source said that there's no doubt that someone like a John Paulson, not necessarily specifically him, but entities like him or it may include him, have held a gun to GLD and demanded delivery of physical in exchange for their shares.

Regarding the Bundesbank/Fed situation, recall that the Bundesbank asked to have some portion of its gold sitting - supposedly - in the NY Fed vault in NYC sent back Germany. The total amount is 1800 tonnes.  After behind the scenes negotiations, the Fed agreed to ship 300 tonnes back over seven years.  To this day, the time required for that shipment has never been explained.  Venezuela demanded the return of its 200 tonnes held in London, NYC and Switzerland and received it all within about four months.

And regarding the ABN/Amro situation.  ABN/Amro offered a gold investment account product that offered physical delivery of the gold in the investment account when the investor cashes out.  About a week before the gold price smash, ABN sent a letter to its clients informing that the physical delivery of the bullion was no longer available and that all accounts would be settled with cash at redemption.

I believe it was these two events that triggered the big scramble for physical gold by wealthy families/entities who were suspicious of the integrity of their bank vault custodial arrangement anyway.

In fact, what we are now seeing is the final stages of the paper gold/silver bullion market, which has grown at a parabolic rate over that last 13 years, and includes Comex futures, LMBA forward contracts, OTC derivatives - which is an even bigger paper market than the Comex - leased gold claims/contracts and warehouse receipts.

At some point there will be an even bigger "run on the bank" by those looking for delivery of the physical gold/silver that they have been "assured" is sitting in their "trusty" bank custodian vault.  I know for myself that I have seen enough from the JPM's of the world to not trust anything they do or say.  I think a lot more people are finally coming to that same conclusion.  At some point there will be a complete collapse of trust in the paper monetary system and the price of gold/silver will really go parabolic, as the masses realize all at once - and far too late I might add - that everything that was rumored over the last 13 years about paper gold, gold leasing, etc is actually true.
And now your more important paper stories which will influence the price of gold and silver:

Your early morning sentiment on trading from Europe/Asia courtesy of zero hedge

Major points:

1. Japan and Chinese markets closed and thus Europe was muted especially with the USA/Yen cross.
2. Europe ignores bad news: Eurozone confidence numbers fall badly from 90.1 to 88.6 
(expectations 89.6)
3. Europe's business climate indicator also down: -.93 on expectations of -.91
4. Industrial confidence: -13.8 with expectations of -13.5
5. Service confidence:  -11.1 with expectations of -7.1
6. More troubling is European household savings drops to a record low of 12.2%
7. The Italian 10 year bond due to purchases by Japanese investors seeking yield drops to within 60 basis points of all time low.
8. Italy will lead the revolt against austerity as the rest of the periphery wishes to continue on their same drunken path.
9. Details from Bloomberg, Soc Gen and Jim Reid of Deutsche Bank

(courtesy zero hedge)

Sentiment Muted With Japan, China Closed; Event-Heavy Week Ahead

Tyler Durden's picture

With China and Japan markets closed overnight, activity has been just above zero especially in the critical USDJPY carry, so it was up to Europe to provide this morning's opening salvo. Which naturally meant to ignore the traditionally ugly European economic news such as the April Eurozone Economic Confidence which tumbled from a revised 90.1 to 88.6, missing expectations of 89.3, coupled with a miss in the Business Climate Indicator (-0.93, vs Exp. -0.91), Industrial Confidence (-13.8, Exp. -13.5), and Services Confidence (-11.1, Exp. -7.1), or that the Euroarea household savings rates dropped to a record low 12.2%, as Europeans and Americans race who can be completely savings free first, and focus on what has already been largely priced in such as the new pseudo-technocrat coalition government led by Letta. The result of the latter was a €6 billion 5 and 10 year bond auction in Italy, pricing at 2.84% and 3.94% respectively, both coming in the lowest since October 2010. More frightening is that the Italian 10 year is nowjust 60 bps away from its all time lows as the ongoing central bank liquidity tsunami lifts all yielding pieces of paper, and the global carry trade goes more ballistic than ever.
What is most curious, as the FT points out in "Italy will lead eurozone revolt against austerity" is that now that so-called austerity is dead in Europe, and the peripheral countries are set to return to their "drunken-sailor" spending ways that got them in trouble in the first place, the market can't applaud loud enough. Of course, when all global debt is now backstopped by the money printing bad banks formerly known as central banks, what is there not to like. After all Bernanke and his merry academic men are surely in control of the world with an iron fist, and there is no risk of anything bad happening ever again.
Finally, Friday's takedown of gold has so far proven to be quite ineffective and whoever decided to pound the yellow metal precisely as Europe closed on Friday will have to redo it all over again, seemingly providing a much better entry point to everyone who bought at the lows following the now laughable smackdown whose only purpose is to take out the entire bidstack in what can only be classified as not rational "best execution" selling, but banging some close or another, an activity that once upon a time used to be illegal.
Bloomberg's bulletin summary of the notable highlights:
  • Fed unlikely to change asset purchases, will likely put off tapering for now, analysts and strategists say
  • ECB may lower refinancing rate this week; any such move largely discounted, investors will be looking for additional credit-easing measures, analysts and economists say
  • Euro area economic confidence decreased more than forecast in April as the 17- nation currency bloc struggles to emerge from a recession and the bailout of Cyprus renewed debt-crisis concerns
  • Minutes from the latest Swedish central bank meeting revealed a growing preoccupation with the krona as the strengthening currency pushes down inflation
  • GBP rose to strongest in 10 weeks vs USD after an industry report showed U.K. house prices increased this month, boosting optimism the economy is gathering pace
  • Enrico Letta’s government is poised to be installed starting today, as the end of two months of political turmoil in Italy was marred by the shooting of two policemen outside the prime minister’s office in Rome
  • Italy’s 10Y borrowing costs declined to a 2 1/2-year low at an auction today, drawing 3.94% vs 4.66% at a March sale of that maturity
  • Europe may accelerate a shift away from its austerity- first agenda this week as the new Italian government changes course and a German-Spanish investment pact underscores a renewed focus on combating record unemployment
  • Greek lawmakers passed a bill including plans to fire 15,000 workers by the end of next year as the government of Prime Minister Antonis Samaras cleared the latest hurdle to receiving international aid payments
  • JPMorgan was the top payer among investment banks last year, awarding its senior employees a fifth more than Goldman, according to a report that also highlights a growing divide between firms based in the U.S. and Europe
  • China’s securities regulator plans to raise the minimum proportion equity funds should have in shares, a move that  may drive investments into the worst- performing major Asian stock market in the past year
  • Global sovereign yields mostly lower, led by Australia and Italy. EU sovereign spreads to Germany tighten
  • Japan, China closed for holiday. European equity markets mostly higher, U.S. index futures gain. WTI Crude, gold, copper gain
A quick recap of macro events from SocGen:
A decline in the VIX index, higher stocks and a bounceback in the JPY have been the exception rather than the norm in not too distant history, but this is precisely how currency and risk assets closed last week and are squaring up to this week's fireworks featuring the FOMC, ECB and US non-farm payrolls. With so much event risk concentrated into 48 hours, today and tomorrow should see a fairly slow and lethargic start to proceedings with May Day public holidays across Europe set to drain liquidity from currencies and bonds.
The EUR has enjoyed a decent month so far and is only trailing GBP and NZD as third-best performer in the G10, not bad considering the worsening economic outlook and speculation that the ECB could cut rates on Thursday. Our call on the ECB is for no change in rates, but we are not ruling out an expansion of the non-standard policy tools to help improve lending to the real economy. M3 data on Friday showed a further slowdown to 2.6% yoy in March with lending to non-financial corporations in particularly bad shape. It is not just the EUR but also eurozone equities that are doing well. In local currency terms, the Eurostoxx 50 is up 2.44% this month compared to a 1% gain for the S&P and 0.1% for the FTSE. This does pale of course in contrast to the 12% surge in the Nikkei, but then the ECB is not inflating its balance sheet the way the BoJ is. Let's see whether the ECB thinks economic conditions have worsened enough to warrant fresh action. EC confidence indicators are set to reaffirm a bleak picture in early Q2 and inflation in Germany is set to have slowed to 1.4%. This means that real rates in Germany have tightened by over 50bp since the start of the year. With foreign demand slowing, president Draghi will not be inclined to tolerate a stronger EUR. That means EUR/USD remains a sell on rallies. However, as US data proved last week, it may be down to the ECB to force a breakthrough below 1.2950. How long it stays there could be contingent on the message from the FOMC and payrolls. US 10y yields are plumbing 2013 lows and disappointment over non-farm payrolls would put the debate over Fed tapering on ice.
The full summary from the Jim Reid team at DB:
Turning to markets, Asian equities are mixed overnight despite a negative US lead on Friday as Q4 GDP in the US (more below) came in weaker-than-expected. Japanese and Chinese markets are closed overnight. The Hang Seng is flat but the ASX 200 is +0.5% and the KOSPI is down -0.4% as we type. A reported slowdown in Chinese industrial profits is perhaps also not helping sentiment. Chinese industrial corporate profits are up 12.1% YTD in March, down from a stronger 17.2% print in February. Asian credit markets are firm with IG CDS spreads a touch tighter in overnight trading. New issues remain the dominant theme for EM Asia. Spot Gold is up at $1470/oz after a +0.5% rally overnight.
Recapping Q1 US GDP from Friday, the advanced reading came at +2.5% annualised. This compares with market estimates of 3.0%. Government and net exports were a drag to the headline, which shaved 50bps and 80bps from growth, respectively. Household spending offered some relief although business investments remain cautious. Our US economists think that given the softer-than-expected print on Q1 GDP and broad-based views among economists that the economy will downshift in Q2, two sets of data, namely employment and various production surveys such as regional PMIs and national ISMs, will take on particular significance in the near term.
At a micro level company results remain relatively average to disappointing with top line misses firming up as a key trend for Q1 for US corporates. We’ve now seen just over half of the S&P 500 firms reported. While EPS trend remains solid with nearly ¾ of those beating expectations, only 45% of those have topped analysts’ sales revenue estimates. If this wasn’t enough the initial signs from European reporting is even worse with EPS and sales revenue beat:miss ratio running at 44%:56% and 34%:63%, respectively.
Earnings seem to be outweighed by liquidity and more confidence in the European story at the moment. Indeed a new government in Italy was formed on Sunday which ended the political stalemate of the past two months. Enrico Letta was sworn in on Sunday as the new PM after having managed to form a broad PD-PDL coalition with Berlusconi. In the latest, Berlusconi told the media yesterday that Letta had agreed to his demand to use the first Cabinet meeting to eliminate a property tax on first homes and to reimburse last year’s payment.
Away from Italy, there seems to be increasing hints of austerity relaxation in Europe. Rajoy’s government last Friday approved a plan to delay Spain’s deficit reduction target to within the EU limit of 3% of GDP to 2016 instead of 2014. The plan was also endorsed by the European Commission. Elsewhere, Schaeuble said he will use a meeting with Spanish Economy Minister Guindos later today to push for a bilateral investment program that sidesteps the EU Commission.
Staying in Europe, Cyprus has started the conversion of cash deposits into bank equity as a prerequisite for external aid. The Bank of Cyprus on Sunday said it had converted 37.5% of deposits exceeding EUR100k into "class A" shares, with an additional 22.5% held as a buffer for possible conversion in the future. Another 30% would be temporarily frozen and held as deposits (Reuters).
Despite it being a blockbuster week for data and central bank meetings it is also a shortened week for various key markets globally given 1st May Labour Day and variations thereof. Markets in Hong Kong, Singapore, Germany, Spain, and Italy will be closed on Wednesday. For those in China, it is a three day holiday which only sees the Shanghai Stock Exchange returning on Thursday. Japan is closed overnight and also on Friday for bank holidays.
Besides the key events of the week mentioned at the start, we also have the Chicago PMI (Tuesday), ADP Employment and ISM manufacturing (Wednesday), Trade balance (Thursday) and ISM services (Friday) this week in the US. In Europe we will get some Euroland confidence numbers today followed by inflation and German unemployment tomorrow. The European Commission’s will also release its latest economic forecast for the EU on Thursday. In Asia all eyes will be on the official Chinese PMI on Wednesday followed by the final HSBC variant on Thursday. Company earnings wise we have 137 S&P 500 companies and 84 Stoxx600 companies in Europe (including some of the major financial institutions) reporting this week.


Your currency discussion to start the week, with the Pound, Yen and Euro rising.
The Italian bond market sees huge strength which is lifting the Euro.

(currency discussion/Marc to Market)

Dollar Softens at Start of Eventful Week

Marc To Market's picture

The US dollar is trading heavily against the major and most emerging market currencies.  Even though Tokyo markets were closed, the dollar extended its pre-weekend losses against yen in Asian activity before steadying in the European morning.  The euro and peripheral debt markets have reacted positively to the new Italian government and the apparent acceptance of Spain's announcement that two more years to achieve the 3% budget deficit target.  
Italy's bond and stock markets have been outperforming over the last couple of weeks and continue to do so today.  The 10-year bond auction was easily absorbed at yields not seen in nearly 3-years.  The equity market is leading European bourses higher with a 1.5% gain to bring the month to date advance closer to 10%.    This has helped lift the euro, which tested the $1.3100 area in early European turnover, before consolidating.  

For its part, sterling has extended its recent gains and is trading at the best level against the dollar in eleven weeks.  The technical objective near $1.5600 and the 100-day moving average near $1.5630 area are seen as the next main hurdles.  
This week is eventful but shortened by the mid-week May Day holiday and the Japanese Golden Week.  It  features the ECB and Federal Reserve meetings, new EU macro forecasts, a new batch of PMI surveys, and the US auto sales and jobs report.  The backdrop for this week's activity is important.  There are three main characteristics of this macro economic backdrop.  

First, the US economy has softened in recent weeks and measured price pressures have eased. 
Second, Europe is backing off from the austerity push that has characterized fiscal policy in recent years.  This is taking place as European interest rates have fallen significantly and premiums over Germany have narrowed.  
Third, the Bank of Japan will be doubling its purchases of Japanese government bonds and doubling the average maturity of its purchases.  This has yet to trigger capital outflows from Japan.  Institutional investors may begin deploying this year's strategic allocation after this week's Golden Week Holiday.  This may coincide with foreign investors slowing their purchase of Japanese shares after buying more than $60 bln worth this year already and seeing a more than 50% rally since the election was called in mid-Nov last year.
The ECB meeting may be the most interesting event this week.  The ECB indicated earlier this month that if economic data worsened, it was prepared to cut the refi rate.  Several ECB officials seemed to echo these sentiments.  However, it took evidence that European locomotive, Germany, was stumbling in the form of a three surveys (ZEW, PMI and IFO), to swing the consensus in favor of a 25 bp rate cut this week. Today's CPI reports from both German and Spain underscore that price pressures are easing.  
While we have anticipated a rate cut by the ECB here in Q2, we are wary of how far and fast the pendulum has swung in favor of a move this week.  We see two important reasons why the ECB may choose to wait a month.  First, next month the ECB updates its economic forecasts.  For some, perhaps even including the BBK, it may be preferable to wait for these new updates. The EC will also update its forecasts on May 3, to be followed by new policy recommendations at the end the month.
This may not be a deciding factor, if it weren't for the second reason.  The ECB, even when led by some one whose national origins lie with a southern European country, wants countries to pursue disciplined fiscal policy.  Spreadsheet errors notwithstanding, the ECB institutionally wants European countries to get their fiscal house in order, if for no other reason, it is needed for the proper transmission of monetary policy.  The time that the ECB bought in the form of the LTROs and OMT are not being used by national leaders to restructure and win the confidence of investors.
With the EC President recently suggesting that the austerity agenda has gone as far as it can, and the IMF softening its push for austerity, the ECB is the last of the Troika committed to austerity.   A rate cut now would be seen as sign of approval.
This ECB meeting will be held in Bratislava, the capital of Slovakia.  Although we do not put much significance in that, for an institution that puts much emphasis in appearances, this would seem to be another objection.
Some also may suggest that the ECB could cut rates to give a little help to the new Italian government.   The new government may be the most pro-Europe one that was possible, but among first things the new prime minister signaled was that there has been too much austerity, and among the first measures it enacts may be a repeal of the unpopular property tax.  The next payment is due in June.
In absolute and comparative terms, the Federal Reserve's meeting will be a non-event.  We expect some recognition of the weaker economic data,  but do not expect a substantive change.  The Fed's leadership and an overwhelming majority of the FOMC favor the continued purchase of $85 bln of long-term assets a month.  Those favoring a tapering off of purchases are likely to be quieted by the recent softness of the economic data.  This may give those favoring a stronger Fed response more of the media spotlight.
The ECB and FOMC meetings, however, may steal the thunder from the economic data.  The market has already taken on board that the weakness in the euro area economy continued not just in Q1 (where some national GDP figures will be published this week), but also into Q2.  Meanwhile, economist forecasts for US data have erred recently to the upside and the risk is that improvement in the labor market slowed.   Auto production has been an important part of the US manufacturing recovery, and while auto sales are faring much better than in Europe, they appear to be steadying. 


Now it is Europe's turn to record a record low savings rate as the disposable income
drops to its lowest ever!!

please study the graphs!

(courtesy zero hedge)

Euro Area Savings Rate Drops To Record Low, Disposable Income Has Biggest Drop Ever

Tyler Durden's picture

A month it was the US which saw its savings rate plummet to the lowest since the start of the Second Great Depression...
And now it is the Euro Area's turn to see its savings crumble to 12.2% in Q4 2012, from 12.8% previously, the lowest in, well, ever, since the adoption of the Euro:
Why? Gross disposable income just imploded, dropping at the lowest "growth" rate ever. Notably, wages were a far bigger detractor to income than taxes.
And the same on a per capita basis. Bloodbath:
We know: austerity's fault (just ignore absolutely everything else that is broken in Europe). See how easy that was?
Source: Eurostat


A  superb short and succinct commentary from Mark Grant outlining the perils inside of Europe.
He discusses and gives examples of how various sovereigns conveniently leave out contingent liabilities put on by the sovereign state which must be included in official figures but are not.  On Thursday, Mark Grant gave a thorough analysis of France and instead of its official debt to GDP of 90% in reality it is 158%.

He outlines how the sovereign in Europe is joined to the hip with their banks. In Spain their real estate blew up 4 years ago and yet  the banks are continually receiving loans from the ECB but guaranteed by the sovereign state as the banks continual securitize their real estate loan portfolios to the ECB in order to receive the necessary cash to continue functioning. As real estate values lower, then more security must be provided and since banks no longer have any more securities, the sovereign must provide the necessary cash to the ECB.  This is happening throughout all of Europe. It is a powder keg!!

(courtesy Mark Grant/Out of the Box and onto Wall Street)


What Is Killing Europe

Tyler Durden's picture

From Mark Grant, author of Out Of The Box, a follow up to our  "A Few Quick Reminders Why NOTHING Has Been Fixed In Europe (And Why LTRO 3 Is Not Coming)" from March 2012.
What is Killing Europe

The bigger the real-life problems, the greater the tendency for people to retreat into a reassuring fantasy-land of abstract theory and technical manipulation.

Many people have little or no understanding of what is presently taking place in Europe. This is because it is reported nowhere, discussed in public by no one and carefully hidden in the data supplied by the European Central Bank.

What I will discuss today is the prime mover, in my opinion, of the destabilization of the European economies and yet, like the debt to GDP ratios on the Continent; just because it isn’t counted does not mean that it does not exist. I will endeavor to explain it as simply as possible.

A bank in some European country such as Spain lends money but the collateral, Real Estate or commercial loans, are going bad. The bank then securitizes a large pool of this collateral and pledges it at the ECB to receive cash. In many cases to take the pool the country has to guarantee the debt. So Spain, in my example, guarantees the loan package which is then pledged at the ECB and is a contingent liability and which is not reported in the debt to GDP ratio of the country but nowhere else that you will find either. “Hidden” would be the appropriate word.

Then as time passes the loans get even worse so that the ECB demands cash or more collateral because they will not be taking the hit; thank you very much. The bank cannot afford to post more collateral so that the country, Spain, must post the collateral and add an additional guarantee for the new loan or they must post cash which is oftentimes the case.

Consequently as time passes and more cash has been spent the country, Spain, begins to run out of capital and the 10.6% deficit figure, that Spain announced recently, is not anywhere close to the actual reality so that they will get forced to officially borrow more money from the ESM as the sovereign guarantee of bank debt becomes unsustainable.

What is happening is then becoming clearer as the nations of Europe are running out of capital as they endeavor to support their banking institutions. The breadth and depth of this problem is nowhere to be found but the effect is unmistakable.  The European nations are going bankrupt.

The problem is that Europe pretends to be asleep. The difficulty then is that you cannot wake them up.

The longer that time passes; the worse the situation. The countries cannot afford to pay their known bills. The banking crisis worsens. The debt at the ECB must get paid which worsens the finances of the sovereigns. It is a death spiral unless the economies pick-up and experience real growth which is just not happening. Soon the problems will become bad enough that they will hit the fan once again and this time; there will be real Hell to pay.

You can expect this for Spain, Greece, Portugal, Cyprus, Slovenia, Ireland et al and in short order. I have used Spain as the example today because their stated 10.6% economic decline is only a fraction of their real issue. Again, what is not counted or what is not stated does not ease the burden of what must be paid. They may proclaim fantasy but they are living in reality. The famous windmills are becoming unhinged.

I have no issue with myths. I just have difficulty when governments fly them as banners of truth


A very important document was leaked to the German Newspaper Handlesblatt as the Bundesbank declared war on Draghi's bailout mechanism, the ESM / OMT. The document was prepared by the BB in order for them to make a decision on whether it is legal under German law for Germany to bailout out other nations who run into financial difficulty, like Spain, Italy and Cyprus. The German high court is to make its decision in June, but probably delay the release until after the September elections.

A decision to outlaw the OMT will kill the Euro as Germany can no longer be the guarantee of the OMT and they are the only nation in the EMU capable of providing a guarantee to the ECB:

the key paragraph:

"Germany’s constitutional court will rule on the legality of the bond rescue plan on June 12. It gave a provisional go-ahead last September for other parts of the EMU rescue machinery, but limited Germany’s bail-out share to €190bn (£160bn). Crucially, it warned that the Bundestag may not alienate its tax and spending powers to any supra-national body or be exposed to “unlimited” liabilities.

If the court rules against OMT, it means the end of the euro. The stakes are so high that I don’t see how they could just pull the trigger,” said Mats Persson from Open Europe."

(courtesy Ambrose Evans Pritchard/UK Telegraph/and special thanks to Robert H for sending)

Bundesbank declares ‘war’ on Mario Draghi bond bail-out at Germany’s top court
Germany’s Bundesbank has issued a devastating attack on the bond rescue policies of the European Central Bank, rendering the eurozone’s key crisis measure almost unworkable.
The Draghi plan mobilized the ECB as lender of last resort and led to a spectacular fall in borrowing costs across the EMU periphery, buying nine months of financial calm.
By Ambrose Evans-Pritchard
6:46PM BST 26 Apr 2013
Telegraph UK
The hardline central bank - known as the temple of monetary orthodoxy - told Germany’s top court that the ECB’s pledge to shore up Italian and Spanish debt entails huge risks and violates fundamental principles. “It is not the duty of the ECB to rescue states in crisis,” it wrote in a 29-page document leaked to Handelsblatt.
The Bundesbank unleashed a point by point assault on every claim made by ECB chief Mario Draghi to justify emergency rescue policies - or Outright Monetary Transactions (OMT) - unveiled last summer to stop Spain’s debt crisis spiraling out of control.
The Draghi plan mobilized the ECB as lender of last resort and led to a spectacular fall in borrowing costs across the EMU periphery, buying nine months of financial calm. The credibility of the pledge rests entirely on German consent. Analysts say the crisis could erupt again at any moment if that is called into question.
“The report borders on economic warfare,” said Harvinder Sian from RBS. “We think there is going to be fear and dread in the market that the court will reject OMT.”
The document said OMT entails the purchase of “bad bonds”, violates ECB independence and entails a high risk of heavy losses in the “not unlikely” event that debtor states are forced out of EMU.
It said Greek debacle had shown that conditions cannot be enforced, and, in any case, is “very questionable” whether it is desirable to drive down the borrowing costs of profligate states.
To cap it all, the Bundesbank said the ECB has no mandate to uphold the “current composition of monetary union”. Its task is to uphold price stability and let the chips fall where they may.
While the Bundesbank's president, Jens Weidmann, has openly criticized the Draghi plan before, the aggressive language in the report shocked economists. The document was submitted in December but was not revealed until Friday.
Germany’s constitutional court will rule on the legality of the bond rescue plan on June 12. It gave a provisional go-ahead last September for other parts of the EMU rescue machinery, but limited Germany’s bail-out share to €190bn (£160bn). Crucially, it warned that the Bundestag may not alienate its tax and spending powers to any supra-national body or be exposed to “unlimited” liabilities.
If the court rules against OMT, it means the end of the euro. The stakes are so high that I don’t see how they could just pull the trigger,” said Mats Persson from Open Europe.
He said the Draghi plan is a legal hot potato because it is, by definition, unlimited. “The previous rulings by the court have all been predicated on this point.”
German historian Michael Stürmer said the tough report is a bid by the Bundesbank to “reassert its primacy”. “They have told the ECB in no uncertain terms that it is exceeding its mandate. Angela Merkel may be smiling because this helps her set limits in Europe.”
Prof Sturmer said the forthcoming ruling - wider than just the Draghi plan - is “much more serious” than last September’s judgment, limited to an injunction brought by eurosceptic groups. “This is about issues of sovereignty. I don’t think the Court will dare to issue a ruling before the elections in September. They will procrastinate,” he said.
The court has some jurisdiction over ECB policy because it intrudes on the German Grundgesetz, or Basic Law. “Once the ECB starts bailing out states it is moving into dangerous waters,” he said.
The court made a glancing reference to OMT in September, stating that ECB bond purchases “aimed at financing the members budgets is prohibited, as it would circumvent the ban on monetary financing”.
The bond markets ignored the leaked report on Friday, confident that the court will once again find some formula to avert a crisis. It could cite a clause in the Lisbon Treaty stating that the ECB has a duty to “support the general economic policies in the Union”, which would include saving the euro.
“They might refer the case to the European Court but that would leave the Sword of Damocles hanging over the market for another two years,” said David Marsh, author of books on the Bundesbank and EMU. “I think use of OMT is practically impossible until this is resolved.”
Sovereign bond strategist Nicholas Spiro said markets are “sick and tired” of the eurozone debt crisis and have stopped paying attention to the detail. “There is this ravenous hunt for yield and they think there is all this money coming from Japan. But it has long been unclear whether OMT is real or just a myth, and the eurozone’s underlying economic crisis is still getting worse. The window of opportunity created by Draghi has been wasted.
“If the court sides with the Bundesbank in any way the whole house of cards could come crashing down.”


Now we learn that Italy's NPL's  (non performing Loans) are rising in the same fashion as Spain but two years later.

Very troubling for the new government just sworn in:

(courtesy zero hedge)

What Italian Banks Can Learn From Spain's Bad Loan Devastation

Tyler Durden's picture

We have commented numerous times on the inexorable rise in Spanish non-performing loans (NPLs). Since the Spanish economy started to weaken at the end of 2006, NPLs have been rising sharply; but the subsequent collapse of the Spanish property market exacerbated the matter further, causing a spike in NPLs in 2007 and 2008. Since then, the Euro area crisis and subsequent sharp rise in unemployment have led NPLs at Spanish banks to make new record highs. However, they are not alone.
Italian banks did not suffer a property market collapse and so the rise in NPLs started later than in Spain and was not as severe. However, as JPMorgan notes, the sharp rise in unemployment we have seen since mid 2011 has led to an acceleration in NPLs at Italian banks (and this is a problem is unsustainable). What should be most worrying for incoming PM Letta, is that from the respective troughs for each country (the trough for Spain was a lot earlier than for Italy, about two years in actual fact), Italy is looking eerily similar.
The rise in NPLs at Spanish banks over the past two years has had a lot to do with the recession and rise in unemployment. To the extent that Italian unemployment has only started to rise sharply a year and a half ago, the future path for NPLs at Italian banks looks set to follow that of Spain. So why aren't bond spreads blowing wider? Answer below...
Non-Performing Loans as a share of total loans at Spanish and Italian banks

Cumulative rise in NPLs as a share of total loans starting from the trough for each country. For Spain this is Nov 2006 and for Italy this is Dec 2008.

But, of course, none of this matters for now. As politicians look on at their relative sovereign spreads and reflect on a job well-done.

The reason, however is simple...
Across countries France, Italy and Spain saw the highest deposit inflows in March at €16bn, €15bn and €11bn respectively. In principle, these deposit inflows boosts the surplus funds that peripheral banks have to repay existing LTRO borrowing, but it appears that these deposit inflows are channeled into domestic government bond markets instead.Both Spanish and Italian banks bought large amounts of domestic government bonds in March, €16bn and €11bn. This brings their Q1 purchases to around €30bn each. French banks follow with €16bn of domestic government bond purchases in Q1.
So, what happens when there is no more money for the local banks to reach-around and buy domestic bonds with? Or the domestic pension funds are 100% allocated to sovereign debt? There is a limit (both in the purchasing power of the marginal buyer, and the extent to which the marginal seller re-appears based on any real valuation measures)...
Charts: JPMorgan


Tax collections in Greece are rising as the country levels taxes on real estate.  The entire economy seems to be heading underground due to the heavy load of taxes and thus GDP will falter terribly. Also in the mix is the layoff of 15,000 government workers who no doubt will not be able to find jobs.  The economy in Greece will be heading southbound:

(courtesy zero hedge)

As It Gets Its Latest European Lifeline, Life In Greece Is About To Get Even Harder

Tyler Durden's picture

A few hours ago, Greek lawmakers approved a reform law to unlock about €8.8 billion of rescue loans from the European Union and the International Monetary Fund. The law, which was a condition for further aid installments, passed easily with the solid backing of the three parties comprising Greece's ruling coalition, by 168 to 123 votes. Next, euro zone officials will meet on Monday to approve overdue payment of 2.8 billion euros ($3.65 billion) in rescue loans, finance minister Yannis Stournaras said. Euro zone finmins will then meet on May 13 to release a further 6 billion euro installment, he added. The use of proceeds? To have enough cash to pay salaries and pensions, and of course to pay Mario Draghi for a bond that matures on May 20. The fact that Europe has gotten the green sign to hand over some pocket change to Greece, so Greece can pay for the maturity on Greek bonds by the ECB was the good news (for someone, unclear exactly who). The bad news, for Greece, starts now.
As BBC reports, some 15,000 state workers will lose their jobs by the end of next year. Naturally, in light of the recent epic backlash against austerity (or fauxterity as penned previously) whose corpse has already promptly been trampled in Spain, and now in Italy, Greece would like to get back on the gravy train as well. Yet they are being denied, and the result is indignation at what the people rightfully see as B-class European citizen treatment.
As MPs debated the measures inside parliament, several hundred demonstrators outside took part in a protest called by Adedy, the civil service trade confederation, and the private sector GSEE union.

They were demonstrating against what the unions called "those politicians who are dismantling the public service and destroying the welfare state".

Critics say the law, which is part of a larger package of measures, will only add to Greece's record unemployment rate of 27%.

They say many of those who will lose their jobs are older workers already struggling to support their families and make ends meet.
It's only downhill from there too. As Kathimerini adds the tax burden for all Greeks is about to go through the roof. Literally:
Besides regular income taxes and numerous other obligations being faced by Greek taxpayers, the taxation of real estate property has become the focus of attention after the ministry’s decision to demand the payment of the 2011 and 2012 property tax (FAP) in seven monthly installments this year.

Taxing property is seen as the only safe and efficient way to boost revenues, given that indirect taxation is bringing ever-smaller amounts of money into state coffers due to the drop in consumption. In this context, the fiscal adjustment as far as revenues are concerned this year will rely on taxing property.

The measures of the multi-bill are projected to generate an additional 5.9 billion euros in state revenues for the period from 2013 to 2017. The state stands to gain in excess of 6 billion euros from the measures with the addition of a planned increase in teachers’ working hours that is expected to save 103 million euros from the budget spending of 2013 and 2014.

The settlement of debts to tax authorities is expected to fetch 2.73 billion euros in these five years; the application of the extraordinary special property levy, to be paid again this year through electricity bills, will bring in an estimated 1.9 billion euros; the settlement of debts to the social security funds will result in the collection of 795 million euros in the period from 2013 to 2016 according to labor industry estimates; and the extraordinary levy on photovoltaic systems will add 490 million euros this and next year to state revenues.

The property tax to be paid again via power bills will be broken down in five installments, with the last due in February 2014. Its rate will be 15 percent lower than in the two previous years, as the number of properties to be taxed has grown considerably with the inclusion of properties rented to the state, 17 percent of the surface of camping enterprises and even unfinished buildings that are connected to the power grid.
What this means, logically, is that tax revenues in Greece are about to go inversely parabolic as even more resentment builds against austerity, as increasingly less people pay any taxes, and as more workers migrate to the shadow "cash-based" economy, where no taxes are paid at all.
In fact, that is already starting. As the Greek Finance Ministry reported earlier today, after reporting better than expected tax revenues in January and February (+1.8% and +7.8% above target, respectively), March tax revenues plunged, missing the Troika target by a massive 9.3%. Prepare the negative misses to get worse and worse.
Of course, where things get really funny is that as the Finance Minister (not the one with the Swiss bank account, the current one) reported, should the Greek recession prove to be worse than forecast, no new austerity measures would be imposed.
And just like that, Greek GDP craters by 100% in 5....4...3....


Early Monday morning currency crosses;  (8 am)

Monday morning we  see good euro strength against the dollar from the close on Friday  with this time trading well above  the  1.30 mark at 1.3082. . The yen this  morning, temporarily stops  with its bleeding  against  the dollar for now,  trading below the 98 column early in the session  at  97.89 yen to the dollar.  . The pound, this morning is a lot stronger against the USA dollar, climbing above  the 1.55 column at 1.5523. The Canadian dollar is also a lot stronger  against the dollar at 1.0141.   We have the sentiment this morning with a mainly  risk on situation with all of our European  bourses  in the green.   The Nikkei exchange was closed Monday .  Gold and silver are up  in the early morning, with gold trading at $1473.00 (up $19.40 )  and silver is at $24.30 up 54 cents in early morning European trading.

The USA index is down 24 cents at 82.16.

Euro/USA    1.3082  up  .0056
USA/yen  97.891  down .120
GBP/USA     1.5523 up .0045
USA/Can      1.0141 down .0022


And now your closing Spanish 10 year bond yield: (lower by 13 in yield)

(excess USA, and Japanese funds are finding their way into Spanish and Italian bonds driving down their yield)



4.160.13 2.92%
As of 11:59:00 ET on 04/29/2013.


Your Italian 10 year bond yield;  (down .15 in yield )

Italy Govt Bonds 10 Year Gross Yield


3.910.15 3.62%
As of 11:59:00 ET on 04/29/2013.


The Euro rose throughout the afternoon closing at 1.3092 .  The yen remained the same  in the afternoon closing at 97.89.  The pound weakened this afternoon after its  advance earlier in the morning, closing  at 1.5491.  The Canadian dollar firmed up a bit this afternoon  against the dollar closing at 1.0116.

The USA index fell  from the morning session with the final index number down 28 cents to 82.52

Euro/USA    1.3092 up  .0066
USA/Yen  97.89    down .129
GBP/USA     1.5491  up .0014
USA/Can      1.0116  down .0047


Your closing figures from Europe today. 

i) England/FTSE up31.60  points   or 0.49%  

ii) Paris/CAC up 58.63 or 1.54% 
iii) German DAX: up 58.74 or 0.75%
iv) Spanish ibex up 153.90 points  or 1.85%

v) Italian bourse (MIB) up 364.43 84.50  points or 2.2%

and the Dow up 106.20 (0.72%)  


And now for your important USA stories:

The student loan bubble just popped

(courtesy zero hedge)

Student Loan Bubble Cracks With Pulled Sallie Mae Bond Deal

Tyler Durden's picture

In 2007 a small number of French hedge funds imploded over sudden losses stemming from highly leveraged bets made on the unstoppable subprime mortgage market. At the time, a few saw the writing on the wall; but many simply wrote it off as just another over-levered hedge fund and the subprime mortgage market was 'fine'. Fast forward six years and as we have discussed numerous times (most recently here and here) there is a bubble, potentially far bigger than subprime, in student loan debt. As one of the last remaining outlets for state-sanction credit creation, this is a big deal; but, of course, the popping of the bubble (or even a slight leak) is eschewed since there is so much 'reach for yield' and the Fed's got your back. That is until this week. As WSJ reportsSallie Mae (SLM), the nation's largest non-government student lender just cancelled a $225 million debt offering as investors  decided they simply were not getting paid enough for risk - amid rising student loan defaultsSimply put, there's a limit to what investors will tolerate.

SLM was offering a stunningly low 3.5% interest on the deal and investors snubbed it, "There are certain limits that can't, or shouldn't, be crossed if you're an investor," adding that, "we're beginning to see what the tolerances are." This is a significant shift since SLM and other issuers of debt backed by student loans sold $7.8 billion worth of securities this year through last week, up from $5.7 billion in the same period of 2012. With the portion of student borrowers who are late on their debt payments by 90 days or more climbing to 31% in 2012, from 24% in 2008; we wonder if this is the tipping point for the student debt in 2013 that was generally ignored in subprime in 2007, until it was too late.

Via WSJ,
Student-loan company Sallie Mae SLM -1.35% canceled a $225 million bond offering on Thursday after about two weeks on the market, according to people familiar with the deal. The move may mark a line in the sand: Investors whose thirst for yield has revived all manner of riskier asset classes decided they weren't getting paid enough to buy at the offered price amid rising student-loan defaults.


Sallie Mae pulled the plug on an offer for $225 million in bonds.

The yield hunt has revived the markets for securities backed by troubled mortgage loans and loans to borrowers with less than pristine credit, known as subprime. But even in these markets, there are boundaries.

"There are certain limits that can't, or shouldn't, be crossed if you're an investor," said Christopher Sullivan, chief investment officer at the United Nations Federal Credit Union. "Now we're beginning to see what the tolerances are."

Investors were demanding more interest than the 3.5% coupon Sallie Mae was offering on the bonds,...

Sallie Mae and other issuers of debt backed by student loans sold $7.8 billion worth of securities this year through last week, up from $5.7 billion in the same period of 2012, according to Bank of America Merrill Lynch data.

Securities backed by student loans have become popular for the extra yield they provide over safer debt, despite a significant rise in defaults on such loans. Overall, the portion of student borrowers who are late on their debt payments by 90 days or more climbed to 31% in 2012, from 24% in 2008, the Federal Reserve Bank of New York said in a recent report.

In the case of the canceled Sallie Mae offering,rising defaults could have crimped the cash flow of the federally backed loans supporting the new securities, because more defaults would mean less excess, or residual, income after holders of the original loans were paid.


Investors have been buying up securities backed by everything from troubled mortgages to loans to subprime borrowers looking to buy cars. Analysts expect the amount of securities backed by assets sold this year to outpace last year's $197 billion total.

Good reason for the Dow being up 106 points today:

(courtesy zero hedge)

Dallas Fed Implodes: Biggest Drop And Miss On Record Send Market To Intraday Highs

Tyler Durden's picture

If this doesn't send the S&P to new all time highs nothing will. Moments ago the Dallas Fed reported its April General Business Activity report and in short it was the biggest miss to expectations on record, plummeting from 7.4 to -15.6, on expectations of a 5.0 print and the lowest since July 2012. It was also the biggest one month drop on record. Since all of this will be attributed to balmy spring weather in New Zealand, extra rainfall in the Russian Steppes, the US sequester, evil European fauxterity, Cyprus deposit confiscation, and of course, Bush, there is no point in commenting on this disaster at all. And why comment: judging by the market's response which is now at the day's highs, it is not as if anyone even pretends any data matters. The only hope now for those expecting a 20,000 on the DJIA is that the ISM due out soon, will print at 0 and everything will be permanently fixed. In other news the daily prayer to praise St. Bernanke begins at 11 am when POMO ends. Please orient yourself to face the Marriner Eccles building when bowing down.
Biggest miss on record:
The breakdown of the components:
From the report:
Texas factory activity was flat in April, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell from 9.9 to -0.5. The near-zero reading indicates output was little changed from March levels.
Ebbing growth in manufacturing activity was reflected in other survey measures as well. The capacity utilization index came in at 2.7, down from 5.5, and the shipments index fell to zero after rising to 10.6 in March. The new orders index fell nearly 14 points to -4.9, posting its first negative reading this year.
Perceptions of broader business conditions worsened in April.The general business activity index plummeted from 7.4 to -15.6, reaching its lowest level since July 2012. The company outlook index turned negative as well, declining from 9.6 to -2.2. Labor market indicators remained mixed. The employment index has been in positive territory so far in 2013 and moved up to 6.3 in April. Twenty percent of firms reported hiring new workers compared with 14 percent reporting layoffs. The hours worked index pushed further negative, from -2.4 to -6.5.
Price pressures abated in April. The raw materials price index dropped from 19.1 to 2.5, posting its lowest reading since last July. The finished goods price index dipped to -3 after posting positive readings throughout the first quarter. The wages and benefits index edged down from 18.5 to 17.7, although the great majority of manufacturers continued to note no change in compensation costs. Looking ahead, 34 percent of respondents anticipate further increases in raw materials prices over the next six months, while 21 percent expect higher finished goods prices.
Expectations regarding future business conditions fell markedly in April. The index of future general business activity fell 22 points to -6.7, its first negative reading in five months. The index of future company outlook also plunged, dropping from 21.6 to 6. Indexes for future manufacturing activity fell slightly this month.
The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected April 16–24, and 94 Texas manufacturers responded to the survey. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.


No need to comment on this!!

At $72.8 Trillion, Presenting The Bank With The Biggest Derivative Exposure In The World (Hint: Not JPMorgan)

Tyler Durden's picture

Moments ago the market jeered the announcement of DB's 10% equity dilution, promptly followed by cheering its early earnings announcement which was a "beat" on the topline, despite some weakness in sales and trading and an increase in bad debt provisions (which at €354MM on total loans of €399.9 BN net of a tiny €4.863 BN in loan loss allowance will have to go higher. Much higher). Ironically both events are complete noise in the grand scheme of things. Because something far more interesting can be found on page 87 of the company's 2012 financial report.
The thing in question is the company's self-reported total gross notional derivative exposure.
And while the vast majority of readers may be left with the impression that JPMorgan's mindboggling $69.5 trillion in gross notional derivative exposure as of Q4 2012 may be the largest in the world, they would be surprised to learn that that is not the case. In fact, the bank with the single largest derivative exposure is not located in the US at all, but in the heart of Europe, and its name, as some may have guessed by now, is Deutsche Bank.
The amount in question? €55,605,039,000,000Which, converted into USD at the current EURUSD exchange rate amounts to $72,842,601,090,000....  Or roughly $2 trillion more than JPMorgan's.
The good news for Deutsche Bank's accountants and shareholders, and for Germany's spinmasters, is that through the magic of netting, this number collapses into €776.7 billion in positive market value exposure (assets), and €756.4 billion in negative market value exposure (liabilities), both of which are the single largest asset and liability line item in the firm's €2 trillion balance sheet mind you, and subsequently collapses even further into a "tidy little package" number of just €20.3. 
Of course, this works in theory, however in practice the theory falls apart the second there is discontinuity in the collateral chain as we have shown repeatedly in thh past, and not only does the €20.3 billion number promptly cease to represent anything real, but the netted derivative exposure even promptlier become the gross number, somewhere north of $70 trillion.
Which, of course, is the primary reason why Germany, theatrically kicking and screaming for the past four years, has done everything in its power, even "yielding" to the ECB, to make sure there is no domino-like collapse of European banks, which would most certainly precipitate just the kind of collateral chain breakage and net-to-gross conversion that is what causes Anshu Jain, and every other bank CEO, to wake up drenched in sweat every night.
Finally, just to keep it all in perspective, below is a chart showing Germany's GDP compared to Deutsche Bank's total derivative exposure. If nothing else, it should make clear, once and for all, just who is truly calling the Mutually Assured Destruction shots in Europe.
But don't worry, this €56 trillion in exposure, should everything go really, really bad is backed by the more than equitable€575.2 billion in deposits, or just 100 times less. Of course, a slighly more aggresive than normal bail-in may be required in case DB itself has to followin the footsteps of Cyprus...


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