Thursday, May 2, 2013

Comex gold declines/GLD inventory declines by 6 tonnes again/gold and silver rise/ECB lowers interest rate signalling gold /silver to rocket northbound

Good evening  Ladies and Gentlemen:

Gold closed up $21.40 to $1467.70 (comex closing time).  Silver rose by 49 cents to $23.79  (comex closing time). 

In the access market at 5 pm gold and silver are the following :

gold: $1467.40.
silver: $23.86

Gold and silver got a little boost this afternoon after the release of the ECB report where the ECB cut lending rates by 1/4% down to 1.2%. They also cut the marginal lending rate by 1/2%.  Initially the euro rose but then cooler heads prevailed and the Euro fell and gold and silver skyrocketed. We now have the entire globe in a recession as the need for stimulus through government purchases will remain of prime importance.  

At the comex, the open interest in silver rose 2259 contracts to 145.736 contracts as we had new players entering the silver arena taking on the bankers. The silver OI is  holding firm at elevated levels . The open interest on the gold contract rose by 2800 contracts to 423,887. It is interesting that the gold deliveries for May has now exceeded 5 tonnes at 5.766 tonnes and this is an off month for gold. 

Today, physical gold continues to leave London with 6.02 tonnes of gold departing the GLD for the shores of China/and or Russia. The game ends when the last physical ounce held at the GLD departs. 

In paper stories China announced another drop in their PMI.  Europe also reported poor PMI numbers with Germany recording a drop well below 50.00 at 48.1.  The rest of Europe remains well below the magical 50 barrier where above 50 means growth and below 50 recession.

The USA reported a drop in jobless claims which stimulated the USA markets.
It also recorded a lower trade deficit but that was due to lower imports and that is not good for the USA economy.
 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 rose by 2800 contracts today  from 421,087  up to 423,887,  with gold falling by $25.90 on Wednesday. The front non active delivery month of May saw its OI fall by 392 contracts.  However we had 394 delivery notices filed for yesterday.  Thus we actually gained 2 contracts or an additional 200 oz will stand for May's delivery.     The next active contract month is June and here the OI rose by 1488 contracts to 246,433. June is the second biggest delivery month in gold's calender.  The estimated volume today was fair at 149.074.   The confirmed volume on Wednesday was a little better at 184,676 contracts.

The total silver comex OI rose  by a hefty 2259  contracts from 143,477 up to 145,736  despite  silver's fall in price of 88 cents  yesterday. It seems that one big raid days, we have some new players entering the arena willing to play with the crooked bankers, and the older longs refuse to buckle under the weight of the attack.   The front active silver delivery month of May saw it's OI fall by 32 contracts.  We had 357 delivery notices filed yesterday so we gained  325 contracts or 1.625 million additional oz will stand.  The next  delivery month for silver is June and here the OI fell by 65 contracts to stand at 422. The next big active contract month is July and here the OI rose by 1508 contracts to rest tonight at 80,256.   The estimated volume today was very good, coming in at 50,620 contracts.  The confirmed volume yesterday was extremely  good at 65,964.

Comex gold/May contract month:

May 2/2013

Withdrawals from Dealers Inventory in oz
Withdrawals from Customer Inventory in oz
 29,994.181 oz (HSBC.JPM)
Deposits to the Dealer Inventory in oz
Deposits to the Customer Inventory, in oz
128,099.009 (HSBC)
No of oz served (contracts) today
 23 (2300  oz)
No of oz to be served (notices)
149 (14,900)
Total monthly oz gold served (contracts) so far this month
1705  (170,500)
Total accumulative withdrawal of gold from the Dealers inventory this month
Total accumulative withdrawal of gold from the Customer inventory this month

347,415.47 oz  

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

We had 1 customer deposits today:

Into HSBC:  128,099.009 oz (this arrived as a withdrawal form HSBC yesterday)
thus no new gold entering.

total customer deposit: 128,099.009 oz

We had 2 customer withdrawals:

i) Out of HSBC:  5,966.51 oz
ii) Out of JPM*:  24,027.671 oz

total withdrawal:  29,994.181 oz oz

We had 2 big  adjustments 

1.From the HSBC vault:  63,838.832 oz is adjusted out of the dealer account into the customer account

2.  From JPMorgan:  57,860.329 oz is adjusted out of the dealer and back into the customer account.

*JPMorgan's eligible account (customer account) slightly rises to 195,338.61 or only 6 tonnes of gold. 

Thus the dealer inventory  rests tonight at 1.981 million oz (61.61) 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 8.099 million oz or 251.1 tonnes.

Ladies and Gentlemen:  gold is leaving the comex vaults.

The CME reported that we had 23 notices filed today for 2300  oz of gold today.
To calculate the quantity of gold ounces that will stand, I take the OI standing for May  (172) and subtract out today's notices (23) which leaves us with 149 notices or 14,900 oz left to be served upon our longs. 
Thus  we have the following gold ounces standing for metal in May:

1705 contracts x 100 oz per contract  or  170,500 oz (served)  +  149 notices or 14,900 oz (to be served upon)  =  185,400 oz or 5.766 tonnes of gold.
This is extremely high for a non active month.  We gained an extra 200 oz standing for May today.



May 1.2013:  May silver: 

Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventory 358,244.711(Delaware ,CNT  )   
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory nil
No of oz served (contracts)219 contracts ( 1,095,000 oz)  
No of oz to be served (notices)915  (4,575,000 oz)
Total monthly oz silver served (contracts) 2082  (10,410,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal of silver from the Customer inventory this month640,820.4

Today, we  had good activity  inside the silver vaults.

 we had 0 dealer deposits and 0  dealer withdrawals.

We had 0 customer deposits:

Total deposits:  nil  oz

We had 2 customer withdrawals:

1) Out of Delaware:  349,682.821 oz

ii) Out of CNT:  8561.89

total withdrawal:  358,244.711 oz

we had 1   adjustments:

i) Out of CNT:  719,687.83 oz was adjusted out of the customer and back into the customer account

Registered silver  at :  45.466 million oz
total of all silver:  166.081 million oz.

The CME reported that we had a small 219 notices filed for 1,095,000.  To calculate the number of ounces that will stand in silver, I take the OI standing for May (1134) and subtract out today's notices (219) which leaves us with 915 notices or 4,575,000 oz 
Thus the total number of silver ounces standing in this  active delivery month of May is as follows:

2082 contracts x 5000 oz per contract (served) = 10,410,000 +  915 contracts x 5000 oz =  4,575,000 oz ( to be served)  =  14,985,000 oz.

Two important points today:

1.  we gained 1.625 million oz of silver standing.
2. We have now surpassed what was outstanding on first day notice  14,860,000 oz.  It looks like Blythe's paper fiat does not interest our longs.



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:

May 2.2013:



Value US$50.482   billion

May 1.2013:



Value US$50.265 billion

april 30.2013:



Value US$50.915  billion

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

Today, we lost another 6.02 tonnes of gold.  Yesterday 3.31 tonnes was lost which followed  2.14 tonnes of gold lost Tuesday.I think the Serious Fraud squad in London should investigate this huge fraud on the shareholders of GLD (and SLV)

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. There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat  (same banks)

As a reminder the total comex gold had inventories of around 11 million oz in 2011. Today it held just above 8 million oz. (8.099 million oz)


And now for silver:

May 2.2013:

Inception Date4/21/2006
Ounces of Silver in Trust336,055,837.000
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

May 1.2013:

Inception Date4/21/2006
Ounces of Silver in Trust336,055,837.000
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 30.2013:

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.

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  neither gained nor lost any  oz of silver at the SLV. 
Note the difference between silver and gold.


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 1.5% percent to NAV in usa funds and a negative 1.8%  to NAV for Cdn funds. ( May 2.2013)   

2. Sprott silver fund (PSLV): Premium to NAV fell to +0.62% NAV May 2/2013
3. Sprott gold fund (PHYS): premium to NAV  rose to+ .27% positive to NAV May 2/ 2013.


And now for the major physical stories we faced today:

first your gold/silver trading from Europe/Asia early this morning.

(courtesy Goldcore)

China Gold Mania - Coins, Bars and Jewelry Sales Surge 108%

-- Posted Thursday, 2 May 2013 | Share this article | 4 Comments
Today’s AM fix was USD 1,456.00, EUR 1,106.22 and GBP 935.07 per ounce.
Yesterday’s AM fix was USD 1,469.50, EUR 1,113.60 and GBP 942.95 per ounce.

Cross Currency Table – (Bloomberg)
Gold fell $17.30 or 1.17% yesterday to $1,458.70/oz and silver slid to $23.24 and finished down 2.60%.
Gold remains under pressure despite very robust demand and anaemic supply globally.
This suggests that speculators in the futures market continue to hold the upper hand. While this may continue in the short term and lead to further short term weakness in the price, the long term supply demand fundamentals will almost certainly lead to higher prices. We continue to believe gold will surpass its real inflation adjusted high of $2,400/oz in the coming years.
The U.S. Federal Reserve's decision to maintain its loose monetary policy will support gold as the Fed's money-printing to buy assets will stoke inflation – it is not a question of if, rather when.
Gold will also be supported by the ultra loose monetary policies from the ECB and the Bank of England.
The Fed reiterated it would continue to buy $85 billion worth of bonds every single month to support the sickly and weakening US economy.
Stocks fell on the statement and gold tracked other markets lower despite renewed worries over the Chinese, Eurozone and U.S. economies after the latest economic data showed the real risk of a global recession or depression.

Gold in USD, 2 Year – (Bloomberg)
There continues to be difficulty in securing physical bullion in large volumes, particularly in the small coin and bar market and particularly in the silver market.
The Shanghai Commission of Commerce said today that sales of gold and jewelry jumped 108% from a year earlier, leading all other categories.
This past May Day weekend saw retail sales rise by as much as 20%, most of it thanks to people shopping for gold jewelry.

Gold in Euros, 2 Year – (Bloomberg)
According to the Shanghai Commission of Commerce, retailers in the city reported total sales of 3.37 billion yuan ($539 million) between Monday and yesterday, up 18.8% from the same period of last year.
Sales of gold jewelry and even gold bars rose as gold prices fell and started to look more affordable. Demand may continue or increase as this is the start of wedding season in China.
In Asia, supply remains tight and premiums are high at $3 over spot in Hong Kong.

Gold in GBP, 2 Year – (Bloomberg)
Hong Kong retailers report they were swamped over the three-day May Day holiday by tens of thousands of mainlanders in search of one thing: cheap gold.
There were long queues outside many shops and the China Gold Association reported that gold sales had tripled on many days.
Investors are now waiting for the US non-farm payrolls report for April scheduled for release on Friday. Given the US economy is weakening, the number is likely to come in weaker than expected which should lead to safe haven demand for gold.


The following story states that Italy should use its gold reserves to force a change in EMU policy.
Only one problem I would suppose:

Italy probably has leased out all of its gold and cannot get it back

Anyway, here is Ambrose Evans Pritchard discussing the gold reserves at the Bank of Italy:

(courtesy Ambrose Evans Pritchard)

Italy should use its gold reserves to force a change in EMU policy
By Ambrose Evans-Pritchard
Last updated: May 2nd, 2013
Telegraph UK
The World Gold Council has advised Italy to deploy its 2,000 tonnes of gold to break free of EMU austerity dictates.
By using the reserves – the world's fourth largest – to collateralise the first chunk of any losses for bondholders, Italy could raise €400bn or so on the capital markets and determine its own future for a while.
Italy did this in 1974 when it borrowed $2bn from the Bundesbank, using gold as collateral.
Portugal did the same thing to borrow $1bn from the BIS in the 1975-1977, and India used its gold to borrow from Japan in 1991.
A joint WGC-Ipsos survey found that 61pc of Italian business leaders, and 52pc of the general public would support the idea, with only a small minority opposed.
The report said:
With Italy still facing significant financial challenges, national assets – such as gold reserves – present an opportunity to buy some vital breathing space.
Gold-backed sovereign debt, or ‘gold-backed bonds’, is issued debt that is underpinned by gold collateral. By using a portion of their gold reserves in this way, sovereign states could borrow more cheaply, without selling an ounce.
This use of gold would help sovereign governments to regain the confidence of the bond markets and lower funding costs. Nations could raise between four and five times the value of their gold reserves – a bond 20% collateralised by gold could raise around 80% of Italy’s two year refinancing needs.
This would buy time for growth to take hold. It would lower sovereign debt yields without increasing inflation and would give Italy time and resources to work on economic reform and recovery. Using gold for the purposes of sovereign debt issuance would allow greater flexibility beyond austerity.
This is exactly the sort of thinking that is needed in the occupied EMU states, and Italy has been under occupation since the ECB effectively toppled the elected the government in the coup d'etat of November 2011 – with the active collusion of President Napolitano, a former Stalinist who later transferred his ideological mania to the EU Project.
Such a plan has been proposed by Alessandro di Carpegna Brivio at Camperio Sim.
However, it would require the new premier Enrico Letta to tell Europe to jump in the lake, since "reflation in one country" would violate the EMU club rules.
Mr Letta is highly unlikely to do so. He is a child of the EU Project – literally, since he grew up in Strasbourg. He formed his views in the entourage of Prodi and Andreotti.
His drive for growth is as meaningless as Hollande's vow to relaunch growth in France. Hollande in fact did the opposite. He is tightening fiscal policy by 2pc of GDP this year in a counter-cyclical fashion, during a recession, because he is so steeped in EU insiderism that he cannot bring himself to say boo to the pedants in Brussels and Frankfurt (though some members of the Socialist Party clearly can).
My worry is that the World Gold Council plan would merely prop up the unworkable EMU structure for longer, and then leave Italy even more vulnerable having played its last card.
It would not resolve the fundamental problem, which is that Italy has lost unit labour competitiveness steadily for fifteen years. To try to claw this back with an "internal devaluation" is very destructive and would test social cohesion to breaking point.
What Italy should do is to tell Germany that it will no longer participate in EMU unless the North reflates with an "internal revaluation" to close part of the gap. It should deploy its gold reserves to make this threat more credible.
Germany would know that Italy has the means to stabilise the Italian bond market after liberation. Italy is perfectly capable of doing this – and in my opinion would benefit – since it has a primary budget surplus of 2.5pc of GDP and would not face a funding crisis.
It would then be a matter of whether Germany has more to gain or lose by allowing such an even unfold.
Let the Holy Roman Emperor come to Canossa.
Read more by Ambrose Evans-Pritchard on Telegraph Blogs


(from the Shanghai Daily)

Housewives' gold rush keeps price from falling

By Wang Yanlin (Shanghai Daily)

A "TUSSLE" to determine gold prices has connected two groups of people who could hardly be more different - Wall Street moguls and Chinese housewives, with the latter turning out to have the edge.

According to "Voice of China" radio program, one of this year's most popular phrases may be "Chinese housewives" - as a major force which reportedly spent 100 billion yuan (US$16 billion) over the past two weeks purchasing 300 tons of gold and thus helping to sustain gold prices at US$1,468 an ounce.

The "Chinese gold rush" has prevented short selling, where gold is sold and then bought back when prices fall. The practice was seen as a possible bid to shore up the US dollar - gold is often regarded as a means of safeguarding wealth against a weak dollar - and to maintain stable interest rates in the US.

China's latest hunger for gold began in middle of last month following a decline in global gold prices after Cypriot authorities made a commitment to sell excess reserves.

On April 12 and April 15, international gold prices dropped by 15 percent, from US$1,560 per ounce to US$1,330 an ounce.
Research note

Some critics said the fall in gold prices was a well-planned scheme drawn up by investment bankers to bolster the US economy, as two days before the price slump, Goldman Sachs released a research note saying gold's prospects for the year had eroded and recommending investors to sell short.

Before Goldman Sachs, investment banks including Barclays, Societe Generale and Deutsche also projected gold had ended its 12-year bullish performance. Societe Generale even predicted an outright crash, saying "gold may have had its last hurrah."

On April 13, China National Gold Group, the country's biggest gold producer, slashed the bullion price from 313 yuan per gram to 298.5 yuan per gram, the lowest level in two years.

This triggered the enthusiasm of Chinese shoppers, who swarmed into jewelry shops desperate to get their hands on a bargain. In most Chinese cities, gold bars were selling like hot cakes and some even reported empty inventory during the May Day holiday.

According to media reports, some people even spent more than 10 million yuan in purchasing gold, a product considered to bring good fortune in China in addition to its value as a long-term investment.
Large rebound

The number of Chinese gold buyers and the money they spent caught out those investment bankers who had bet on prices continuing to fall.

"A large rebound in gold prices is unlikely barring an unexpected sharp turn in the US recovery," analysts at Goldman Sachs had written in its research note.

But to their disappointment, gold prices rose by more than 10 percent yesterday compared with that on April 16.

Guo Tianyong, a professor at Central University of Finance and Economics, said that was likely the result of its latest analysis of the gold market, taking the "Chinese housewives" into consideration.

"Chinese people have a natural love for gold, but such a craze is a reflection of the very limited investment channels available in China," Guo said.

However, the effect may be shortlived. Credit Suisse analyst Tom Kendall said gold wasn't going to rise in a sustained fashion for a long period of time.

He told Reuters: "These buyers are price sensitive and they are not going to be buying indefinitely if the price goes up."

Major points:

1.  The HSBC PMI in China  (another PMI report) declined to 50.4 from last month's 51.6
2.  China is definitely slowing down
3.  Most of Asia is seeing their PMI's drop (except S Korea)
4. German PMI dropped from 49.0 to 48.1, the lowest since December
5.  France's PMI rose slightly from 44.0 to 44.4 although at an already depressed level.
6. Spain's PMI rose slightly from 44.2 to 44.7 again at already depressed levels.
7. Italy's PMI much better at 45.5 from last month's 44.5
8. Greece doing much better with a PMI of 45.0 rising from last month's 42.1
9. Interestingly, PMI price inputs are falling (see graph below) indicating deflation.
10.  It is this deflation at the ECB must deal with today.

Your key figures for Europe this morning:

A quick run through European markets:
  • Spanish 10Y yield down 5bps to 4.1%
  • Italian 10Y yield down 5bps to 3.85%
  • U.K. 10Y yield up 2bps to 1.67%
  • German 10Y yield up 1bps to 1.21%
  • Bund future down 0.08% to 146.46
  • BTP future up 0.28% to 116.27
  • Euro down 0.1% to $1.3167
  • Dollar Index up 0.26% to 81.69
  • Sterling spot up 0.07% to $1.5566
  • 1Y euro cross currency basis swap down 1bps to -22bps
  • Stoxx 600 down 0.14% to 296.5

11.  Discussion from Soc Gen .

12.   Jim Reid of Deutsche Bank

         i) discussion on the possible rate cut in Europe
         ii) the FOMC decision.

(courtesy zero hedge)

And now your more important paper stories which will influence the price of gold and silver:

Sentiment Muted As ECB May Or May Not Cut Refinancing Rate

Tyler Durden's picture

The overnight macroeconomic news started early with China where the second, HSBC Manufacturing PMI declined from 51.6 to 50.4, below estimates of 50.5, yet another signal of a slowdown in the country (where one can argue the collapse in copper prices is having a far greater impact), and where the Composite closed down 0.17% after its Mayday holiday. China wasn't the only one: India dropped to 51.0 from 52.0 in March, and Taiwan dipped to 50.7 from 51.2, offset however by the bounce in South Korean PMI from 52.0 to 52.6, the best in two years (a number set to tumble as Abenomics steal SK's export thunder).
The focus then shifted to Europe, where virtually everyone was once again in contraction mode, as German Mfg PMI declined from 49.0 to 48.1, the lowest since December, if a slight beat to expectations (while VDMA industry body said March Machine orders dropped 15% Y/Y so little optimism on the horizon), France rose modestly to 44.4 from already depressed levels of 44.0, Spain PMI also rose from 44.2 to 44.7, Italy PMI at 45.5 from 44.5, Poland at 46.9 from 48.0, a 45-month low. At least Greece seems to be doing "better" with the Mfg PMI "rising" to 45.0 from 42.1. Across the reports, the biggest decline was in input prices following the recent clobbering in commodities, which in turn is translating into price deflation.
It is this deflation that the ECB will try in an hour to offset by any means possible, although it most likely will engage in a cosmetic 25 bps cut in the refinancing, if not deposit, rate at least according to the vast majority of analysts. That such a cut will have no impact on the actual economy is so obvious, there is no point in even discussing it.
Needless to say, the above mentioned countries' bonds no longer reflect the economic reality, and all merely anticipate future monetizations by various global central banks, once again dropping to record, or near-record lows.
For the most part, the Fed, the BOJ and the BOE monetizations are all priced in. The next big catalyst will be the ECB, which however will unlikely engage in broad credit creation - a key driver needed for "growth", meaning Europe will continue to be stuck in economic depression even as its bonds rapidly approach the zero bound yield barrier.
A quick run through European markets:
  • Spanish 10Y yield down 5bps to 4.1%
  • Italian 10Y yield down 5bps to 3.85%
  • U.K. 10Y yield up 2bps to 1.67%
  • German 10Y yield up 1bps to 1.21%
  • Bund future down 0.08% to 146.46
  • BTP future up 0.28% to 116.27
  • Euro down 0.1% to $1.3167
  • Dollar Index up 0.26% to 81.69
  • Sterling spot up 0.07% to $1.5566
  • 1Y euro cross currency basis swap down 1bps to -22bps
  • Stoxx 600 down 0.14% to 296.5
SocGen's summary of the main macro events:
We set the scene earlier in the week and discussed the possible permutations across markets from the decision that the ECB governing council will take or not take today (ECB will they or won't they). Though EUR crosses squeezed higher yesterday and 10y swaps edged off their 1.445% low, but light flows like shallow rivers can sometimes mask different underlying and treacherous cross currents. The market has moved on from April and is pretty gung-ho about lower rates and/or an expansion of non-standard measures (read ECB balance sheet) so either investors are confident that ECB measures will help to boost growth, or markets are in the process of re-thinking their tactics on the USD and the Fed. The risk of disappointment is however not negligible today and a forceful ECB rebuff against the dovish rates herd would leave a sour taste for risk assets.

Credit and stock markets have continued to defy the sequence of weak US data in quite a remarkable fashion but even if the Fed and BoJ carry on greasing the risk on wheels with $160bn in liquidity each month, there must be a tipping point when even the ECB, or a soft US payrolls report, triggers some form of reality check as the S&P approaches 1,600pts.

ECB governing council meetings are twice yearly held on the road (today's one takes place in Bratislava, capital of Slovakia), but these occasions have rarely turned out to be meetings where policy changes have been agreed. Protocol, PR duties and generally greater time constraints allows for less thorough discussion compared to the routine of meetings at the ECB tower in Frankfurt. In addition, the shift in the fiscal landscape promoted very vocally by the EU and immediately shared by countries like Italy and France, may not go down well with the fiscal hawks whose fears are that further stimulus will simply lead to delay in deficit reduction.

The merits of fresh policy easing will then be discussed against a background of a principally weakening landscape in Germany, five months before the federal election, and the fragmented borrowing landscape across EU member states. But with periphery bond spreads still tightening, some council members may choose to postpone action to another day. Disappointment is certain to reverse the short squeeze which carried EUR/USD above 1.3200 yesterday for the first time in two weeks.
Finally, DB's Jim Reid summarizes the overnight events as usual
markets finally responded to some disappointing data yesterday ahead of today's ECB meeting, the holiday delayed final European PMIs and tomorrow's payrolls. The number of economists predicting a 25bps ECB cut has grown over the week from just over half to 44 out of the 70 polled by Bloomberg. 25 are expecting no change and 1 is looking for a 50bps cut! DB are looking for a 25bp cut and an additional quarter point in the summer. Our economists think that improving bank credit supply relative to demand favour a conventional monetary policy response over a new unconventional policy response for now although if the capacity for conventional easing declines the pressure to turn to unconventional policy will return.
Staying on this theme, the FOMC statement last night offered few changes but DB’s Peter Hooper pointed out that one important sentence was added which reads “The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes”. This tells us that if the recent softer tone in the data turns into a more serious economic slowdown (or a more serious drop in inflation), the next shift in policy could easily be an expansion rather than a tapering of QE. The UST 10-year yield fell 4bps to 1.629% overnight to the lowest level since the 10th of December 2012.
In terms of markets, a sell-off in the commodity complex was also a main reason behind the softer risk tone yesterday. The S&P 500 (-0.93%) fell for the first time this week, led by declines in Materials (-1.75%) and Energy (-1.64%). Brent, Copper and Gold closed -2.4%, -3.4% and -1.3% lower respectively. Oil in particular suffered from an EIA report which noted that inventories are at an 82-year high. The broader S&PGSCI index posted its second worst performance in 2013 with a -2.1% decline on the day. Credit spreads also widened with the CDX IG moving +2 ¾ bps to nearly erase its earlier gains for the week. It was a relatively quiet session in Europe given the holidays across the region. The better than-expected UK PMI (49.8 v 48.5) gave the FTSE an early boost but much of that was later offset by the commodity weakness.
The overnight session is mixed with main bourses in Japan (-0.5%), Australia (-0.6%) and Korea (-0.3%) all in negative territory. Gold continues to fall and the weakness in commodities is also not helping the AUD. The tone is equally soft in Asian credit with IG spreads modestly wider across benchmarks. New issues remain the new focus with China largest offshore oil and gas producer in the market for a $4bn bond deal.
Moving on to data matters, US data prints were still generally on the soft side yesterday. The ISM manufacturing headline (50.7 v 50.5 expected) was not as bad as feared although the report still highlighted weakness in labour market conditions given the 4pt drop in the employment index. Indeed the ADP private payroll report for April fell short of market expectations (119k v 150k expected) and probably suggests some downside risks to tomorrow’s payrolls. Auto sales also disappointed with the latest April volumes (at 14.92m v 15.22m saar expected) running below 15m saar for the first time since October last year.
Elsewhere, S&P doesn’t seem to agree with Moody’s call in downgrading Slovenia to sub-investment grade. S&P yesterday affirmed Slovenia’s A- rating with a Stable outlook and said it does not expect Slovenia to use the ESM to meet funding needs. Let’s see if this will restart the bond sale process for Slovenia.
In terms of today, initial claims and the trade balance will be the main US release on top of European PMIs. All eyes though will be on the ECB and Draghi.


Today, the ECB cut its refinancing rate by 1/4% to .50% and the marginal lending rate by 1/2%

The traders for the Euro were not happy!!

(courtesy zero hedge)

ECB Cuts Refinancing And Marginal Lending Rates By 25 bps And 50 bps, Respectively

Tyler Durden's picture

While the ECB's refinancing rate cut of 25 bps was very much expected, and just took place pushing the main refi rate to a record low 0.50% (because more liquidity is just what Europe's collapsing economy needs), what was unanticipated was that the Marginal Lending Facility (which last time we checked was used by pretty much nobody) was also cut, from 1.5% to 1.0%. The deposit rate, at 0.00%, was obviously left unchanged.
From the ECB:
At today’s meeting, which was held in Bratislava, the Governing Council of the ECB took the following monetary policy decisions:
  1. The interest rate on the main refinancing operations of the Eurosystem will be decreased by 25 basis points to 0.50%, starting from the operation to be settled on 8 May 2013.
  2. The interest rate on the marginal lending facility will be decreased by 50 basis points to 1.00%, with effect from 8 May 2013.
  3. The interest rate on the deposit facility will remain unchanged at 0.00%.
The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today.
Now the question is whether Draghi will engage in non-standard measures to facilitate lending for SMEs. For this, tune in to the press conference in 45 minutes.


Europeans: get ready for depositors paying the bank for the privilege of holding your money in a bank.  Then, if the bozos confiscate these deposits (a la Cyprus) after you pay the bankers to store your euros with them, you can imagine the irony pay them a % of your holdings and then they eventually confiscate all of it.

No wonder many are seeking physical gold. Gold earns no interest but now so does paper money. At least it would be very difficult for the bankers to confiscate your gold.

(courtesy zero hedge)

ECB "Technically Ready" To Ask Depositors To Pay Banks For Holding Their Money

Tyler Durden's picture

The first relatively big bombshell has been dropped:
This has crashed EURUSD and smashed German 2Y rates into negative territory.

Bank Of Ireland Doubles Mortgage Rates, Homeowners Fear More To Come

Tyler Durden's picture

With the Bank of England cutting its wholesale interest (bank) rate to historic lows and now the ECB slashing 50bps off its key rate (as well as remonstrating on the reduction in fragmentation across European nations), it is perhaps perplexing (or simply too obvious) that a bank would raise its mortgage rates. As the Daily Mail reports, government-owned Bank of Ireland (BOI) doubled mortgage rates for 13,500 customers in the UK leaving homeowners with huge increases in their monthly payments. The bank, exploiting small print in the legacy mortgage contracts, will hike the interest cost for 1-in-14 homeowners from 2.25% to 4.99% (raising the spread over the bank rate on these loans from 1.75% to 4.49%). Anger is rife as customers complain "it's all very frustrating," adding that they thought this was a 'tracker' mortgage but BOI defends their massive rate hike on increased funding costs and the need to maintain higher levels of capitalThe disconnect between wholesale gorging provided by the Central Bank and wholesale gouging of the real economy grows ever wider it seems.

Thousands of homeowners are facing a huge increase in their mortgage repayments after the Bank of Ireland doubled rates overnight.


... will affect some 13,500 UK customers,


Which? accuses BOI of justifying the changes on the basis of 'clauses buried in the small print of mortgages' which were taken out before October 2004.

Which? executive director Richard Lloyd said this was 'wholly unfair' and said BOI was 'taking advantage of its customers by hiking rates at a time when the base rate is static'.


A typical change will see a buy-to-let mortgage holder who is currently on a rate of 2.25% - made up of the base rate plus 1.75% - see it rise to 4.99% from today, representing the Bank rate plus 4.49%.

For residential customers, changes will be introduced in two stages. From today, they will pay the Bank rate plus 2.49%. On October 1, it goes up to Bank rate plus 3.99% - currently 4.49%.


He said: 'It was sold and marketed as a tracker rate. I thought I had that margin for life. It's all very frustrating.'

BOI blames the rise on increase funding costs and the need for banks to maintain greater levels of capital. It has set up a phone line for anyone worried about the impact of the changes.

The changes affect seven per cent of BOI's UK mortgage customers, the lender has said.


'This clause was clearly referenced in the pre-sale offer document provided to the customer and the customer's intermediary prior to completion.'

It said customers were free to move to other providers and no early repayment charges would apply.

However tightened mortgage criteria and falling house prices may mean some struggling to find new deals.



This is not going to help the Spanish economy

Courtesy Ed Steer commentary/


Expat exodus from Spain as deadline for Britons to declare property and savings at home arrives

New Spanish tax laws affecting an estimated 200,000 British expats, have sparked panic, prompting some to leave the country or hand in their residence cards at town halls before today's deadline (30 April), fearing a Cyprus-style money grab.
Opponents, including Spanish politicians, have branded the new asset declaration law discriminatory, and fear an exodus of EU residents from the fragile economies of the coastal towns.
Russell Thomson, the former British Consul for Alicante, Spain, has led a petition to the EU, branding the law unlawful and discriminatory against non-Spanish residents.
Wow, you know the whole world is going to hell when you start reading stories like this one.  This article appeared on the Internet site early Tuesday afternoon BST...and it's worth reading.  I thank reader Graeme Guthrie for sharing it with us.
Read more..


A great look at what the Japanese QE policies and what effect it is having on prices inside Japan:

(courtesy Wolf Richter/

Abenomics Tries To Make Sure Japan Is Going Down Swinging

testosteronepit's picture

Anecdotal evidence has been piling up in Japan. Lamborghini sales in fiscal 2012, ended March 31, hit the highest level in 14 years. Ferrari sales jumped 40% for the first quarter. Luxury retailers forecast fat profits. “The sudden improvement in the stock market has led to a big rise in sales at our department stores for luxury brands and high-end goods like jewelry, precious metals, and watches,” said Ryoichi Yamamoto, president of J. Front Retailing Co.
The rich – beneficiaries of the Bank of Japan’s phenomenal money-printing binge – are spending, even if it’s not on products made in Japan.
Now we have the first trickle of statistical evidence. Much of it came in one fell swoop, appropriately enough, during Golden Week, which has nothing to do with gold and isn’t even a week, but a series of holidays interspersed with a few work days.Overall retail sales were down 0.3% in March from prior year, but large-scale retailers booked a 2.4% gain. Spending by households of two or more persons jumped 5.2% in March from prior year. Part of it was ascribed to warmer temperatures, the rest to the stock market.
“This is the effect of Abenomics,” explained Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co., giddily oblivious to the misery that asset bubbles leave behind, including the epic bubble in Japan that burst in 1989; to this day, the economy stumbles over its detritus. But everybody loves bubbles on the way up. They make people forget the aftermath of prior bubbles. They make economists and central bankers say stupid things. They make rational people giddy.
But Abenomics wisely didn’t take credit for the unemployment rate that inched down in March to 4.1% from 4.3% – due to women dropping out of the workforce. The number of employed people grew by 310,000 over the 12-month period, to 62.46 million, a solid improvement in a country with a declining working-age population. But that was underway before Shinzo Abe was hoisted to the perch of Prime Minister.
Another trend Abenomics couldn’t take credit for: housing starts rose 6.2% for the 12-month period through March, the third year in a row of growth. Among them, starts for rental homes soared 10.7%. Even industrial output increased in March, for thefourth month in a row, if by a less-than-hoped-for 0.2% month to month. A beginning. For the 12-month period, output was still down 7.3%. Based on the recent improvements, the Ministry of Economy, Trade and Industry increased its assessment for the future. Optimism is winding its way back into the economic fabric.
If Japan is going to go down under its load of debt, Abenomics will make sure it’s going down swinging. Two weeks ago, the Lower House passed the ¥92.6 trillion budget, of which 46.3% has to be borrowed. Once the “supplementary budgets” are thrown on top of it, half of all government expenditures have to be borrowed. Abenomics sticks to the old playbook, the one that didn’t work before: spending on public works projects will jump 15.6%. That budget feeds the corporate and individual welfare state. But no one wants to pay for it. Borrow it instead.
Alas, someone will end up paying for it. And it’s not going to be the taxpayer, as the budget makes clear. It’s going to be the direct or indirect owners of Japan’s debt, it’s going to be savers and anyone with assets. Yup, taxpayers. Abenomics is conjuring a bout of inflation.
In patriotic support, companies are busy raising prices. McDonalds announced proudly that it would jack up the price of some burgers by 25%! The first increase since 2008. Double-digit energy price increases have already whacked consumers and businesses. Now the government confirmed its success story: inflation has arrived!
The preliminary all-items index for the Tokyo area for April, a precursor for the national index, showed inflation of 0.3% month to month, reducing deflation for the 12-month period to 0.7%. Goods were up 0.4% – annualized about 5% inflation! Services rose 0.2%. Almost every item was up. Fuel 1.3%, clothes and footwear 2.2%, in one month! The national index for March, which lags the Tokyo index by a month, showed a monthly inflation of 0.2%, cutting deflation for the 12-month period to 0.9%. This is just the beginning. At this pace, Abenomics will meet the 2% inflation target early.
But the 2% target is just a cover. The BOJ will allow inflation to spiral “out of control” while keeping its iron knee on yields. Inflation will eat into the wealth of savers and retirees, the generation that benefited the most from funding much of the welfare state with debt. It will eat into wages. It will cause mayhem and pain, but gradually, rather than suddenly. In the process, it will diminish the debt's weight. Abenomics seems to have chosen that strategy as a lesser evil – because, as Vice Finance Minister Takehiko Nakao pointed out in a hilarious understatement, “A debt ratio of 245% of GDP is not really safe.”
High government debt is not a problem until it becomes one – the “Bang! moment.” That’s the fundamental conclusion by Ken Rogoff and Carmen Reinhart when they studied the now hotly debated correlation between government debt and GDP growth. Now John Maudlin tears into the mainstream media’s distortions of that debate. Read.... Outside the Box: Debt, Growth, and the Austerity Debate
And here is a powerful, musical appeal (with lyrical text in English) to the Japanese that slams politicians, bureaucrats, the nuclear industry and its shenanigans, and the mainstream media.... "humanERROR" by the Japanese rock group "Frying Dutchman"


Now the Dutch have a huge property slump:

(courtesy Ambrose Evans Pritchard/UKTelegraph)

Debt-crippled Holland falls victim to EMU blunders as property slump deepens

The eurozone’s slow suffocation is going Dutch. Each extra month of slump caused by Europe’s negligent authorities is pushing Holland closer to a debt-deflation trap.

The coalition of Mark Rutte has belatedly woken up to the danger. Last month it retreated from pro-cyclical tightening, delaying €4.3bn in budget austerity. By then Mr Rutte’s totemic worship of EU deficit targets had invited the ridicule of the official Bureau for Economic Policy Analysis (CPB), which said Dutch leaders did not seem to understand how private credit busts interact with fiscal cuts to create havoc.
“The Dutch government’s inability to acknowledge the damage done by austerity despite mounting evidence is a case of 'cognitive dissonance’,” it told the Financial Times.
Yet this is not at root a case of botched fiscal policy. It is a case of misaligned monetary policy. The Netherlands offers a salutary lesson of what can happen to a rich sophisticated economy caught in a post-bubble crunch once it has lost control of its currency, central bank and monetary levers. This would have happened to Britain without the Bank of England, and the US without the Fed.
The Dutch crisis has crept up quietly, though hedge funds have been nibbling for months. Most people lump the Netherlands together with Germany, Finland and Austria, the hardline AAA fist-thumpers who dictate terms to others.
Unemployment was very low until the dam broke. It is now soaring as fast as in Cyprus. The rate has doubled over the past two years, jumping from 7.7pc to 8.1pc in the single month of March. The economy has been in recession since early 2011.

“The Netherlands bears striking resemblance to Spain and Ireland two or so years ago,” says Stephen Jen from SLJ Macro Partners. Holland has a fat current account surplus of 8.3pc of GDP and a savings rate of 26pc, but Mr Jen says such “virtues” did not prevent Japan succumbing to the after-shocks of its housing crash.
Holland’s errors were made long ago when tax policy and regulation combined to produced a housing bubble to match Britain’s follies under Gordon Brown.
As in Britain - or Japan when it buckled in 1990 - there is a long-term housing shortage. Rabobank says the overhang of unsold homes is 228,000. That is bad but not disastrous. The crisis stems from rampant credit, not rampant building.
Regulators let the average loan-to-value ratio of new mortgages soar to 120pc at the peak. Since mortgage interest is tax deductible, around 60pc of the entire stock of mortgages is interest-only.
Unlike the Bank of Spain, which tried to “lean against the wind”, Dutch officials saw no need for extra buffers to offset the (then) ultra-loose policies of the European Central Bank, geared to German needs when Germany was in slump. The ratio of household debt to disposable income peaked at 266pc in 2010, the highest in EMU and almost a world record.
The denoument is well under way. Dutch house prices have fallen 18pc, leaving a quarter of all mortgages “onder water”, and there is surely worse to come. Standard & Poor’s expects prices to drop 5.5pc this year, and slide again in 2014. This is infecting everything. “Consumer sentiment in the Netherlands is at much the same level now as at the depths of the global financial crisis,” said Ken Wattret, an analyst at BNP.
There has been little forced selling of property so far, which is lucky since Dutch banks are up to their necks in mortgage portfolios. They face a huge “funding gap”. The loan-deposit ratio (LTD) is 183pc, compared with roughly 70pc in the US and Japan, 100pc in Germany or 120pc in Britain.
This means that Dutch lenders - like Northern Rock before them - must rely on the capital markets to roll over debts. This is courting fate. “The persistently high LTD ratio makes Dutch banks particularly vulnerable to a scenario in which market confidence evaporates,” said the Nederlandsche Bank (DNB) in its latest stability report.
In February the government was forced to nationalise SNS REALL - the fourth biggest bank - after it came to grief in commercial property. One had assumed that the great wealth of the Dutch people would provide an ample cushion against shocks but fresh data from the ECB - if reliable - show that average net household wealth is just €170,000, compared with Germany (€195,000), France (€233,000), Italy (€275,000), Spain (€291,000) and Cyprus (€670,000), so perhaps we need to think again.
Holland’s travails would be manageable if the EMU authorities - including their own leaders - had not pushed the eurozone into a second downward leg of the Long Slump, and above all if the ECB had kept "nominal GDP" growth for the eurozone on an even keel of 5pc, which it can easily do if it wishes.
Instead, the ECB has engineered a Japan-style liquidity trap. Broad M3 money growth has slowed to 2.6pc. It contracted in March. Core inflation has fallen to a record low of 0.4pc, once austerity taxes are stripped out. This is one shock away from debt-deflation.
The effect of Europe’s contractionary policies is that nominal GDP - which is what matters for debt dynamics - is shrinking in a string of countries. It fell last year in Holland under the “production” measure. The great edifice of private and public debt is growing on a shrivelling base.
This debt-compound effect is why it is so ruinous for Europe to let the depression grind on, hoping somehow that nature will work its cure. It is why monetarists around the world are so exasperated with the ECB.
The ever-growing brotherhood of damaged nations could of course seize control of the ECB’s Governing Council and ram through a dose of Japanese "Abenomics" over the protest of the Bundesbank, which is loftily indifferent to the Taylor Rule on output gaps. That rule, by the way, shows that monetary policy is too tight even for Germany.
Yet the victims recoil. As one ex-governor told me: “We know that if we did that, we would destroy political consent for the euro in Germany, so we can’t do it.”
Well then, accept your fate.

The real rate of the Argentinian peso is 9.6 pesos to the uSA dollar and not the official rate of 5.15 pesos.

Now look what their stock exchange is doing:  up a huge 42% in 6 months:

(courtesy zero hedge)

How Much Is The Argentinian Peso Worth? That Depends

Tyler Durden's picture

While last week saw the economy minister of Argentina fumble, stumble, and finally crumble over the difficult question of what Argentinian inflation rates were (11% official versus 26% estimated), it seems the nation has another Schrodinger-like problem. While officially the exchange rate is around 5.15 Pesos to the US Dollar, in reality the black market exchange rate (or so-called Blue-Dollar purchase rate) is more like 9.6 Pesos to the US Dollar... An 86% devaluation priced into the local economy's desire to NOT hold Pesos and demand for USD liquidity. Oh, and as a side note as the S&P 500 pushes towards 1,600, think of the wealth creation... Argentina's stock market, one of the best performing in the world, is up 72% since November - that must be good, right?

Wealth Creation... We suspect this nominal index is merely reflecting the rise in the black market exchange rate of the desparate nation...

Simply put, when you bring your hard-earned US Dollars into Argentina and exchange them like any good American at the airport - you will get 5.15 (or so) Pesos for each bill... but should you hold onto that all important greenback and choose to use it for exchange in the country, you will receive 9.6 Peso's worth of value... as the real economy has discounted the value of its own currency...
Green is the 'official' exchange rate, blue is the black market exchange rate
As the President of City Bank exclaimed,
"The exchange rate can not be maintained at the levels they are now," with a parallel dollar that seems to have no ceiling , and with inflation according to the index released by Congress, around 25% annually, the only solution is devaluation. And with regard the country's president, "Kirchner has to take care of her mistakes"


Early Thursday  morning currency crosses;  (8 am)

Thursday morning we  see a little euro weakness against the dollar from the close on Wednesday  with this time still trading well above  the  1.31 mark at 1.3156. . The yen this  morning, temporarily stops  with its bleeding  against  the dollar for now,  trading well below the 98 column early in the session  at  97.33 yen to the dollar.  The pound, this morning is a little weaker against the USA dollar, rising well below  the 1.55 column at 1.5565. The Canadian dollar is also a touch weaker  against the dollar at 1.0072.   We have the sentiment this morning with a mainly  risk on situation with most of our European  bourses  in the green.(the FTSE is in the red)   The Nikkei exchange  fell as the perceived stimulus is just not functioning and of course, the reason for the yen to rise .  Gold and silver are down  in the early morning, with gold trading at $1459.30 (up $13.00 )  and silver is at $23.80 up 50 cents in early morning European trading.

The USA index is up 10 cents at 81.70.

Euro/USA    1.3156  down  .0028
USA/yen  97.33  up .023
GBP/USA     1.5565 down .0003
USA/Can      1.0072 down .0003


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

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



4.040.10 2.49%
As of 11:59:00 ET on 05/02/2013.

Your Italian 10 year bond yield;  (drop .14 in yield )

Italy Govt Bonds 10 Year Gross Yield



3.760.14 3.66%
As of 11:59:00 ET on 05/02/2013.


The Euro fell apart this afternoon closing below the 1.31 mark at 1.3062 for a huge loss on the day. The market reacted to it's 1/4 point drop but also that Draghi may initiate negative interest rates. The yen faltered in the afternoon closing at 97.95.  The pound weakened this afternoon after its  advance yesterday, closing  at 1.5536.  The Canadian dollar firmed up a bit this afternoon  against the dollar closing at 1.0073.

The USA index fell  from the morning session with the final index number up 60 cents to 82.20

Euro/USA    1.3062 down  .0116
USA/Yen  97.95    up .654
GBP/USA     1.5536  down .0034
USA/Can      1.0073  down .0002


Your closing figures from Europe today. 

i) England/FTSE up 9.42  points   or 0.15%  

ii) Paris/CAC  up 2.01   .05%
iii) German DAX: up 48 points or  .61% 
iv) Spanish ibex   down 12.60 or .15%

v) Italian bourse (MIB) down 19.38  .12%

and the Dow up 130.63 points (0.89%)  


And now for your important USA stories:

With the FOMC announcement that the Fed may increase purchases if the economy slows any more or if inflation is more subdued than normal,  Goldman announces and confirms the global slowdown is deepening and this will certainly have an effect on the  USA.

(courtesy Goldman Sachs/zero hedge)

Goldman Confirms Global Slowdown Is Deepening

Tyler Durden's picture

Downward revisions to previously 'hopeful' levels for Goldman's Global Leading Indicator (GLI) suggest a significantly softer patch for global activity consistent with subdued growth in the near-term. The GLI has now been in 'slowdown' phase for four consecutive months and while it has not reached the 'contraction' phase yet, empirical results show this phase far less supportive of risk-assets than the current exuberance suggests. With Korean Exports, Global PMIs, and Industrial Metals all disappointing, the most concerning aspect is Goldman's three-key-risks (US growth, Euro 'risk', and China growth) have all upticked significantly in recent weeksafter consistently falling all year. As the Swirlogram below indicates, the 'Slowdown' is deepening.

and at the same time, the big three risks are coming back to life once again...

but US stocks are outperforming their typical slowdown phase performance... even as EM stocks, World Growth stocks, Oil, and Copper all drastically underperform...

Charts: Goldman Sachs


Two important releases today:

1. The jobless claims
2. Trade data.

The initial claims was the lowest since Jan 2008 and that was all the excuse the market needed to ramp higher.

However they ignored the trade data which showed a plummeting import levels.  if you recall in 2008 the trade deficit fall and it was the fall in imports which did the damage.  The Americans are just not spending

(courtesy zero hedge)

Initial Claims Lowest Since Jan 2008 Levels; Import Plunge Leads To Much Lower Trade Deficit

Tyler Durden's picture

Mission Accomplished it would seem. Initial claims printed at its lowest since January 2008 at 324k. This is well below expectations of 345k - the biggest beat since September 2011. California and New York dominated the data with over 70,000 claims between them (though both dropped from last week). Michigan added the most from last month's rolls with 'educational service indurtsy' job losses affecting MA, CT, and RI. Emergency Unemployment Claims appears to have shaken off its statistical aberration of 2013 and is down a modest 12k this week.

Elsewhere, in trade news that total March exports of $184.3 billion and imports of $223.1 billion resulted in a goods and services deficit of $38.8 billion, down from $43.6 billion in February, revised, and far below the expected number of $42.3 billion. This was driven, however, not by a jump in exports oreconomic strength, which declined by $1.7 billion in February, but due to a plunge in imports of $6.5 billion, typically confirming economic weakness, mostly of consumer and capital goods as the US economy slowed substantially in March.
In March, the goods deficit decreased $4.6 billion from February to $56.1 billion, and the services surplus increased $0.2 billion from February to $17.3 billion. Exports of goods  decreased $1.8 billion to $130.3 billion, and imports of goods decreased $6.4 billion to $186.5 billion. Exports of services increased $0.1 billion to $53.9 billion, and imports of services decreased $0.1 billion to $36.6 billion.
Unlike before, the import crash was not driven by a reduction in crude.
The February to March decrease in imports of goods reflected decreases in consumer goods ($3.4 billion); capital goods ($1.5 billion);industrial supplies and materials ($1.4 billion); and automotive vehicles, parts, and engines ($0.8 billion). An increase occurred in other goods ($0.9 billion). Foods, feeds, and beverages were virtually unchanged.

The February to March decrease in exports of goods reflected decreases in foods, feeds, and beverages ($1.1 billion); automotive vehicles, parts, and engines ($0.3 billion); industrial supplies and materials ($0.3 billion); capital goods ($0.3 billion); and consumer goods ($0.3 billion). An increase occurred in other goods ($0.2 billion).
Broken down by geographic sector, the biggest collapse from February in imports occured with China, where the deficit plunged from $23.4 billion to $17.9 billion. We don't even dare to match this number with what China reports its exports to the US were. We are confident it will be a ridiculous comp. Net imports from the EU rose modestly from $8.8 billion to $9.9 billion.
Finally, looking at the effectiveness of Abenomics, and the net Japanese trade deficit, imports from Japan rose from $5.9 billion to $6.6 billion. So much for that export renaissance, at least as far as exports to the US are concerned.


The official March trade report:

(courtesy Dow Jones newswires)

DJ U.S. March Trade Gap Falls 11% As Imports Slump More Than Exports
Thu May 02 08:30:19 2013 EDT
WASHINGTON--The U.S. trade deficit fell far more than expected in March as imports slumped, particularly from China.
The overall deficit contraction is likely to be a small boost to the U.S. recovery. But the fact that both exports and imports shrank could be another indication of a moderate spring slowdown.
The U.S. deficit in international trade of goods and services declined 11% to $38.83 billion from a revised $43.63 billion deficit the month before, the Commerce Department said Thursday. Economists surveyed by Dow Jones Newswires had expected the gap to shrink to $42.1 billion.
The March trade gap with the country's second largest trade partner, China, fell to its lowest level in three years. Previously-released China trade data showed a large contraction in sales to the U.S. following the national lunar new year celebration in February, which shuts down manufacturing for days.
There were also some positive signs from Europe. Demand from the euro zone's three largest economies, Germany, France and Italy, all rose by double digits despite the region's ongoing debt and financial crisis. Gallic buyers increased their consumption of U.S. products by more than 25%.
Still, the data could prove disappointing to economists.
Sales of U.S. products abroad, which fell by nearly a whole percentage point in March, is a key plank in the Obama Administration's strategy for pulling the U.S. out of its economic doldrums. Nearly all of the major categories saw a decline.
A near 3% fall in imports shows U.S. consumers are being more thrifty. Except for food and feed, purchases of international goods and services fell across the board. Consumer goods such as computers, toys, and clothes recorded some of the largest declines.
Ahead of Friday's data, analysts were expecting a shrinking deficit to give a small boost to gross domestic product, offsetting other drags on the economy. Trade had been a boost for the economy the previous four quarters. But imports, which weigh on growth, have been a drag in the first three months of the year as domestic purchases of foreign goods surged.


The real reason why the Dow rose:

It's A POMO Day

Tyler Durden's picture

Presented with no comment...
Treasuries are hitting new 5 month low yields... as stocks push to all-time highs

The disconnects are growing... (not European close and end of POMO are coincident)

Charts: Bloomberg


Well that about does it for today.
I will see on Saturday morning.


1 comment:

petedivine said...

"I think the Serious Fraud squad in London should investigate this huge fraud on the shareholders of GLD (and SLV)"

It should be apparent by now that there is no such thing as fraud in finance. Thanks for all your efforts.

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