Saturday, February 23, 2013

Moody's lowers the boom on UK/Spain comes in with a huge 10.2% Deficit/GDP.Gold deliveries up to 40.3 tonnes/Silver at record levels of OI surpassing 156,000

Good morning Ladies and Gentlemen:


Gold closed down $5.80  to $1572.40 .  Silver lost 24 cents to $28.46.
However in the access market gold zoomed higher as did silver due to Moody's lowering the credit rating on the UK. (see below)

Here are the final closing prices of gold and silver:

Gold:  $1581.50
Silver: $28.76


During the comex session, the bankers no doubt were very disturbed with silver's high open interest.   The bankers get to see the figures Thursday night before we see them at 1:30 pm, the following day, as these are the rules of the house.

 It is totally incompatible in the silver comex market to see tightness in supplies,  record levels of silver eagle sales, high deliveries of silver in active months as well as higher deliveries than normally seen in non active delivery months, and finally record levels of open interest for the entire silver comex complex and yet see falling prices for that metal.  Below you will see that gold deliveries now exceed 40 tonnes of gold, and silver is at 2.25 million oz. The holders of silver longs seem to be impervious to pain.  How can they withstand the huge continual drubbing of silver and still stand in there?  We will surely find out next week.


In other news, the big story occurred late in the day when Moody's downgraded the UK and thus another country is knocked off it's triple A rating.This sent the pound   spiraling down. Spain, early Friday morning was greeted with a huge 10.2% deficit to GDP. The stock market (Ibex) rejoiced with a big gain of 165 points or 2.05%..Go figure!!!


Late last night another big withdrawal of gold of some 9.7 tonnes leaves the GLD gold vaults  .  Something big is going on over there, where Peter must pay Paul and that Paul may be Paul Chan.

In silver, the reverse, where 2.03 million oz was added.

Early in the session, the putback in the second LTRO was only 61 billion euros.
That set the Euro/USA currency cross down and it never regained.

On Sunday/Monday we will have the Italian election and see if a hung parliament is the order of the day.


  
Before we examine the major stories which will have an influence on gold and silver, let us now head over the comex and see how trading fared today:




The total comex gold open interest as expected rose by 62 contracts from 446,758 up to 446,820.
The comex has burnt too many players so not too many are entering the paper gold arena.  The active contract month of February saw it's OI surprisingly rise by a huge 667 contracts from 1106 up to 1773.  We had only 22 delivery notices filed yesterday so in essence we gained 689 contracts or a monstrous gain of 68,900 additional gold ounces will stand in February,  The gain is 2.14 tonnes of gold. The non active March contract saw it's OI rise by 11 contracts up to 1276.  The next big active delivery month is April and here the OI fell by 742 contracts from 262,295 down to 261,533.  The estimated volume Friday was relatively weak at 130,504.  The confirmed volume on Thursday was a huge 237,586.


The total silver comex OI stunned the living daylights out of our bankers by rising by a huge 1548 contracts up to 156,435 from Thursday's level of 154,887. No doubt a raid was signaled by the banking cartel once last night's silver OI was read to the boys. The non active February silver contract month saw it's OI fall from 11 contracts down to 2 for a loss of 9 contracts.  We had 8 delivery notices filed on Thursday so in essence we lost 1 contract or 5000 oz of silver standing. We are 4 trading days away from first day notice on the March silver contract month.  Here the OI fell by 7,142 contracts from 41,729 down to 34,587.  The March OI is still very high and is a great concern to the bankers as they must force these silver leaves to either fall or roll into May. The estimated volume on the silver comex was good at 51,646.  The confirmed volume on Thursday was enormous at 105,536.

Comex gold/February contract month:
Feb 22.2013    




Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
127,637.056  (HSBC, Scotia)
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
59,321.10 (, HSBC)
No of oz served (contracts) today
 1582   (158,200  oz)
No of oz to be served (notices)
191 (19,100) oz
Total monthly oz gold served (contracts) so far this month
12,872  (1,287,200 oz) 
Total accumulative withdrawal of gold from the Dealers inventory this month
63,755.606
Total accumulative withdrawal of gold from the Customer inventory this month


 
210,692.31 




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



We had 1 big   customer deposits:


1) Into  HSBC:  59,321.1 oz


total deposit: 59,321.1    oz



We had 2 huge  customer withdrawals and they were dandies:


i) Out of Scotia;  64,099.975 oz

ii) Out of HSBC;   63,537.081 oz


total customer (eligible) withdrawals  127,637.056 oz






We had 2 humdingers of adjustments:

i) out of JPMorgan vault, 35,233.300 oz was adjusted out of the customer account and into the dealer account at JPM

ii) out of HSBC vault, 99,710.512 oz was adjusted out of the customer account and into the dealer account at HSBC

somebody needed gold badly in a different jurisdiction.



Thus the dealer inventory rests tonight at 2.702 million oz (84.01) tonnes of gold.

The CME reported that we had 1582 notices filed for 158,200 oz of gold today.   The total number of notices so far this month is thus 12,872 contracts x 100 oz per contract or 1,287,200 oz of gold.  To determine how much will stand for February,  I take the OI standing for February (1773) and subtract out Friday's notices (1582) which leaves me with 191 notices or 19,100 oz left to be served upon our longs.

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

1,287,200 oz (served ) + 19,100 oz (to be served upon) = 1,306,300 oz or 40.63  Tonnes.



we gained 68,900 oz  of gold standing for the February delivery month and thus we have almost the amount standing from the beginning of the month.  Somebody on Friday was in great need of gold.






Silver:



February 21.2013:   The February silver contract month




Silver
Ounces
Withdrawals from Dealers Inventorynil oz 
Withdrawals from Customer Inventory 474,597.610 oz (Brinks, CNT, JPM,Scotia)
Deposits to the Dealer Inventorynil
Deposits to the Customer Inventory  871,417.93 (JPM, CNT,
No of oz served (contracts)0  (nil oz)  
No of oz to be served (notices)2  (10,000  oz) 
Total monthly oz silver served (contracts) 448  (2,240,000  oz) 
Total accumulative withdrawal of silver from the Dealers inventory this month1,829,181.4
Total accumulative withdrawal of silver from the Customer inventory this month2,821,925.9


Today, we  had some activity  inside the silver vaults.

 we had 0 dealer deposit and 0 dealer withdrawal.



We had 2 customer deposits of silver:

i) Into CNT:  25,296.67 oz 
ii) Into JPM:  846,121.26 oz




 total customer deposit: 871,417.93  oz









we had 3  customer withdrawals:

i) out of Brinks:  172,864.07 oz
ii) Out of CNT:  240,420.86 oz

iii) Out of JPM:  992.80 oz
iv) Out of Scotia; 60,319.88 oz

total customer withdrawal:  474,597.610 oz






we had 0  adjustments:



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

  
Registered silver remains today at :  37.274 million oz
total of all silver:  160.813 million oz.




The CME reported that we had 0 notices filed for nil oz of silver for the February contract month. To obtain what is left to be served upon our longs, I take the OI standing for February (2) and subtract out today's notices (0) which leaves us with  2 notices or 10,000 oz left to be served upon our longs. 

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

2,240,000 oz (served)  +  10,000 oz (to be served upon)  =  2,250,000 oz

We  lost 5,000 oz of silver standing for February.

As I promised you, the total silver ounces that are standing for February is advancing and has  exceeded 2.0 million oz for two consecutive non active delivery months.











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:


Gold trust  Feb 22/2013  (Gld)







Tonnes1,280.67

Ounces41,174,947.45

Value US$64.889  billion





Feb 21.2013:








Tonnes1,290.31

Ounces41,484,641.62

Value US$65.398  billion







Feb 20.2013




Tonnes1,299.19

Ounces41,770,374.36

Value US$66.307  billion





Total Gold in Trust:   Feb 19/2013:













Tonnes1,319.96

Ounces42,438,170.44  

Value US$68.185  billion  





Feb 15.2013:


Tonnes1,322.97

Ounces42,534,954.30

Value US$68.535   billion





Today we saw another massive 9.64 tonnes of gold liquidated from the GLD today. It looks to me like the custodians are raiding the cookie jar.  In three days over 39 tonnes of gold was removed from warehouses. I think that shareholders of GLD should be quite concerned.




And now for silver:


Feb 22.2013:



Ounces of Silver in Trust340,886,515.400
Tonnes of Silver in Trust Tonnes of Silver in Trust10,602.76



Feb 21.2013:

Ounces of Silver in Trust338,856,290.000
Tonnes of Silver in Trust Tonnes of Silver in Trust10,539.61



Feb 20.2013:


Ounces of Silver in Trust338,856,290.000
Tonnes of Silver in Trust Tonnes of Silver in Trust10,539.61


Feb 19: 2013:


Ounces of Silver in Trust338,276,212.400
Tonnes of Silver in Trust Tonnes of Silver in Trust10,521.57


Feb 15.2013:
Ounces of Silver in Trust338,276,212.400
Tonnes of Silver in Trust Tonnes of Silver in Trust10,521.57



Feb 14.2013:
Ounces of Silver in Trust337,406,018.600
Tonnes of Silver in Trust Tonnes of Silver in Trust10,494.50



Feb 13.2013:


Ounces of Silver in Trust337,406,018.600
Tonnes of Silver in Trust Tonnes of Silver in Trust10,494.50




feb 12.2013:
Ounces of Silver in Trust337,406,018.600
Tonnes of Silver in Trust Tonnes of Silver in Trust10,494.50



Feb 11.2013:



Ounces of Silver in Trust337,406,018.600
Tonnes of Silver in Trust Tonnes of Silver in Trust10,494.50



Feb 8.2013:


Ounces of Silver in Trust335,858,876.200
Tonnes of Silver in Trust Tonnes of Silver in Trust10,446.38








 Ladies and Gentlemen:  please note the difference between gold and silver.
Whereas GLD had over 9.7 tonnes of gold removed again from the gold vaults, silver added another 2.03 million oz.  

Both vehicles, the GLD and SLV are frauds and there should be a proper audit of both of these metals and a thorough analysis of encumbrances on them. 

end






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





Sprott and Central Fund of Canada. 




(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)




1. Central Fund of Canada: traded to a  positive 1.4 percent to NAV in usa funds and a positive 1.0%  to NAV for Cdn funds. ( Feb 22 2013)   

2. Sprott silver fund (PSLV): Premium to NAV rose to 1.15% NAV  Feb 22/2013
3. Sprott gold fund (PHYS): premium to NAV  fell to 0.36% positive to NAV Feb 22/ 2013.



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

It looks like England may have trouble in finding gold and silver for its clients.
It is worth watching the premium for gold at the Sprott funds which is a good indicator of shortage as investors bid up the premiums.






 






end





And now the COT report which is always from a Tuesday until Tuesday night.
Thus the report is from February 15 through until the Feb 22.

Let us now head over to the gold COT:



Gold COT Report - Futures
Large Speculators
Commercial
Total
Long
Short
Spreading
Long
Short
Long
Short
195,870
92,219
30,882
158,900
290,982
385,652
414,083
Change from Prior Reporting Period
1,929
25,113
6,361
4,327
-24,244
12,617
7,230
Traders
187
100
74
60
45
276
197


Small Speculators




Long
Short
Open Interest



61,638
33,207
447,290



-415
4,972
12,202



non reportable positions
Change from the previous reporting period

COT Gold Report - Positions as of
Tuesday, February 19, 2013


This is an explosive report.

Our large specs:

Those large specs that have been long in gold added 1929 contracts to their long side
Those large specs that have been short in gold added a monstrous 25,113 contracts to their short side.

Our commercials:

Those commercials that have been long in gold added 4327 contracts to their long side
Those commercials that have been short in gold covered a monstrous 24,244 contracts and the supplier of that paper was the large specs.

Our small specs:

Those small specs that have been long in gold added a tiny 415 contracts to their long side
Those small specs that have been short in gold added another 4972 contracts to their short side.

Conclusion:  hugely bullish for two reasons:

                1: the commercials went net long by a wide margin of 28,571 contracts.  This must be a record..

                 2. the large specs went hugely net short and they will be annihilated.

Gold will rise next week.






And now for our silver COT:


Silver COT Report: Futures
Large Speculators
Commercial
Long
Short
Spreading
Long
Short
39,057
12,601
34,909
54,208
92,164
-1,148
4,468
1,162
2,026
-6,815
Traders
74
40
54
39
39
Small Speculators
Open Interest
Total
Long
Short
155,353
Long
Short
27,179
15,679
128,174
139,674
496
3,721
2,536
2,040
-1,185
non reportable positions
Positions as of:
137
114

Tuesday, February 19, 2013
  © SilverSeek.com  




Silver COT Report: Futures
Large Speculators
Commercial





Our large specs:

Those large specs that have been long in silver decided to cough up 1148 contracts from their long side
Those large specs that have been short in silver added a huge 4468 contracts to their short side

Our commercials;

Those commercials that have been long in silver added 2026 contracts to their long side
Those commercials that have been short in silver from the beginning of time covered 6815 contracts from their short side.

Our small specs;

Those small specs that have been long in silver added 496 contracts to their long side
Those small specs that have been short in silver added a huge 3721 contracts to the short side.

Both large and small specs provided the necessary paper.

Conclusion:  Hugely bullish for silver for again 2 reasons:

1. the commercials went net long by 8851 contracts
2. the specs went net short by a huge margin.

the specs will be annihilated.
 Silver will advance in price but the commercials are very worried about the deliveries.
Let us see how this will play out next week.



And now for the major physical stories we faced today:

Gold and silver trading from Europe early this morning:


Goldcore's key phrase:  "bye bye USA Petrodollar, buy buy gold"

(courtesy Goldcore)





GoldCore Insight - Currency Wars: Bye Bye Petrodollar – Buy, Buy Gold



-- Posted Friday, 22 February 2013 | Share this article | Source: GoldSeek.com

Today’s AM fix was USD 1,580.00, EUR 1,196.15 and GBP 1,034.78 per ounce.
Yesterday’s AM fix was USD 1,568.50, EUR 1,189.34 and GBP 1,030.96 per ounce.
Gold climbed $12.30 or 0.79% yesterday in New York and closed at $1,576.90/oz. Silver surged to a high of $28.88 and finished with a gain of 0.53%. Euro gold climbed back to €1,196/oz and platinum lost $32.50 to $1,613/oz.

Cross Currency Table – (Bloomberg)
Gold recovered on Friday, adding to gains yesterday on news that the U.S. economy is still faltering and concerns that the U.S. Fed’s QE will continue despite assertions to the contrary.
The U.S. economic growth stalled in Q4, and the jobless rate rose up to 7.9% this January.
Investors will look for clues in Bernanke’s testimony before the U.S. Congress on Tuesday and Wednesday. However, the fiscal cliff drop is still dangerous as the U.S. government will embark on spending cuts, debt limits and the U.S. Fed has every reason to keep its stimulus package in place.
Smart money bought the dip yesterday, especially in China where premiums in Shanghai were nearly $20/oz over market prices.
In the Eurozone, the EU commission said today that Europe will not recover until 2014.
Fearful investors continued liquidating positions in ETFs like SPDR Gold Trust, which saw its largest one day fall in positions yesterday in the past year and a half.

Gold Spot $/oz, 5 days – (Bloomberg)

GoldCore Insight - Currency Wars: Bye Bye Petrodollar – Buy, Buy Gold

Currency wars are probably one of the greatest risks posed to the wealth of nations today.
In September 2010, Guido Mantega, Brazil's finance minister, warned that an "international currency war" had broken out, as governments around the globe peg their currencies and devalue their currencies against each other.
His comments were echoed by senior Russian and Chinese officials.
The G20 said last week that there would be no currency wars and some central bankers such as the ECB's Mario Draghi have recently dismissed talk of "currency wars" as excessive.
Sir Humphrey, the wily civil servant in 'Yes Prime Minister', always stressed how important it was “to never believe anything until it is officially denied.”
Competitive currency devaluations are in effect a continuation of currency debasement. Debasement is simply the devaluing of one's currency or money. In ancient and medieval history it used to be done through the clipping of gold and silver coins.
Today it is done through excessive money creation through the printing of, and indeed the electronic creations of billions and billions of dollars, pounds, euros and other fiat currencies. Indeed, today central bankers are creating billions and billions of electronic money simply by pressing a few buttons on a computer.
Currency wars are set to deepen as most industrial nations in the western world are close to insolvent and look on the verge of recessions – potentially deep ones.
The fiscal situation of the U.S., the largest economy in the world, is appalling with the national debt having increased from $5.7 trillion in 2000 to over $16.5 trillion today.
Besides the U.S. national debt of over $16.5 trillion, the U.S. has off balance sheet debt or unfunded liabilities of between $70 trillion and $100 trillion.
The U.S. will never be able to pay these debts back and so it will attempt to inflate them away through currency devaluation. This poses risks to the global reserve currency status of the dollar - especially as the world moves to a multi polar world where India, Russia, Brazil and China exert their increasing economic and political power.
XAU/GBP Currency – (Bloomberg)

XAU/EUR Currency – (Bloomberg)

This is why it is important to consider the energy money nexus and to look holistically at the world of energy and money as Chris Sanders has done in this interesting insight.
Currency wars and the threats posed to the U.S. dollar as the global reserve currency of the world, make owning physical gold essential to all who wish to preserve wealth in the coming years.

We do not endorse the opinions of guest contributors but where we find an argument interesting and potentially valuable to our clients and the public in helping to protect and grow wealth we share it.
end


And this early morning gold discussion courtesy of Bullion vault.
(courtesy Bullion vault)


Gold Bounces in Asia on "Decent Demand", But "Lower Conviction" Seen in Market



-- Posted Friday, 22 February 2013 | Share this article | Source: GoldSeek.com

BullionVault
London Gold Market Report
From Ben Traynor

THE U.S. DOLLAR gold price dipped back below $1580 per ounce towards the end of Friday morning in London, slipping a little after making gains earlier in the day, though it remains substantially down on the week following falls on Wednesday and early Thursday.

Silver meantime held above $28.80 an ounce for most of Friday morning, 3.4% down on the week, as European stock markets regained some ground lost yesterday. Commodities also edged higher while US Treasuries dipped.

"[Gold's] recovery continued in Asia today amid decent demand," says UBS analyst Joni Teves.

"It has been a welcome break from the persistent selling over the past week."

Heading into the weekend, gold looked set for a 1.9% weekly drop by Friday lunchtime in London.

This would be gold's second weekly drop in a row, after the metal fell to seven-month lows following Wednesday's publication of the latest Federal Reserve policy meeting minutes, which show policymakers discussed the possibility of reducing the size of their ongoing quantitative easing bond purchases.

"After the Fed, people seemed to have a little less conviction that we are going to see indefinite low Dollar rates, which have attracted a lot of interest in commodities, especially precious metals," one Hong Kong trader told newswire Reuters this morning.

"But the macro[economic] picture hasn't changed tremendously and the underlying demand is still strong."

"A [gold price] bounce driven by physical demand and/or short-covering over the next few trading sessions is possible," counters a note from Credit Suisse, "but should be viewed as another chance to sell in our view."

ANZ bank meantime has announced a cut in its 2013 average gold price forecast to $1690 an ounce, down from more than $1800. Based on afternoon prices at the London Gold Fix, the gold price has averaged just under $1660 an ounce so far this year.

The world's largest gold exchange traded fund SPDR Gold Trust (ticker: GLD) continued to see outflows of gold bullion held to back its shares yesterday. A further 8.9 tonnes of gold was sold out of the GLD Thursday, making a total of more than 34 tonnes since a week ago – the biggest weekly outflow from the GLD in 18 months.

By contrast, the world's biggest silver exchange traded fund iShares Silver Trust (ticker: SLV) saw weekly inflows in the week ended Thursday, adding 81.2 tonnes.

During last month's Fed policy meeting, Fed chairman Ben Bernanke "minimized concerns that the central bank's easy monetary policy has spawned economically-risky asset bubbles" according to a report today by Bloomberg, which cites "three people with knowledge of the discussions".

Over in Europe meantime, economic sentiment and business conditions have improved this month, according to Ifo survey data published Friday. The Ifo  Expectations index also edged higher.

"All in all, today's Ifo index nicely illustrates the green shoots in the German economy," reckons ING economist Carsten Brzeski.

"Even if the current harsh winter weather might delay the blossoming out somewhat, growth should return, leaving the contraction of the fourth quarter quickly behind...the crisis is over. At least in Germany."

Germany's economy however shrank by 0.6% in the fourth quarter of 2012 on a seasonally adjusted basis, according to official data published Friday. The German economy is expected to grow by 0.5% during 2013, according to new forecasts published today by the European Commission, which previously projected 0.8% growth this year for Germany.

France's economy is forecast to grow by 0.1% - down from 0.4% forecast three months ago – while the economy for the Eurozone as a whole is projected to shrink by 0.3%, with Spain contracting 1.4% and Italy shrinking 1.0%.

Bank of England governor Mervyn King met with People's Bank of China governor Zhou Xiaochuan Friday to discuss the creation of a Sterling-Renminbi currency swap arrangement.

"London is growing rapidly as a center for [Renminbi-denominated] business," said King.

"The establishment of a Sterling-Renminbi swap line will support UK domestic financial stability."

The currency swap arrangement "cements London as the western hub for the fast-growing Renminbi market," added Britain's chancellor George Osborne.

Ben Traynor

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben can be found on Google+

(c) BullionVault 2013

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

-- Posted Friday, 22 February 2013 | Digg This Article | Source: GoldSeek.com



end


These guys are one big joke..they go after these two individuals for providing leaks and yet they do it over and over again giving information to JPMorgan et al in order for them to bomb gold and silver.


CFTC sues Nymex over information leaks

 Section: 
By Kara Scannell
Financial Times, London
Thursday, February 21, 2013
WASHINGTON -- The Commodity Futures Trading Commission is suing the New York Mercantile Exchange, a unit of CME Group, and two former employees for allegedly giving secret customer trading information to an external broker.
The case is the first time the CFTC has sued Nymex since the 1980s, an official said. It reflects a growing push by regulators to hold exchange operators responsible for alleged misconduct.
The CFTC alleges that from early 2008 until November 2010 William Byrnes and Christopher Curtin, the former employees on CME ClearPort Facilitation Desk, provided a broker with order flow information, including "the identities of the parties to specific trades, the brokers involved in trades, the number of contracts traded, the prices paid, the structure of particular transactions, and the trading strategies of market participants."
CME Nymex was accused of failing to fully investigate a 2009 customer complaint alleging that someone named "Billy" was divulging customer information. Mr Byrnes was identified by the exchange but was never questioned, the CFTC alleges.
It was only after a second complaint, the CFTC alleges, that the CME investigated and fired Mr Byrnes.
Mr Curtin is now vice-president of the control desk, a customer relations platform, for ELX Futures. A spokeswoman for ELX had no immediate comment. Mr Byrnes could not be immediately reached for comment.
The CME said the lawsuit was "disappointing because it relates to incidents that CME Group has already addressed and handled appropriately, and involved no harm to any customer or the markets."
It added that it had fired the relevant employees after its own review in 2010, but the CME did not address the CFTC claim that it did not act when first alerted to the possible wrongdoing a year earlier.
CME said: "We simply do not believe the CFTC's claims in this case are fair to Nymex."
The Nymex energy exchange hosts flagship contracts including US crude, natural gas, and heating oil futures. Its ClearPort platform processes swaps derivatives, largely in energy, for backing by the exchange clearinghouse.
CME acquired Nymex in August 2008.
The CME ClearPort desk is responsible for facilitating customer transactions reported for clearing.
The Securities and Exchange Commission sued NYSE Euronext last year for giving customer flow information to some clients over others. NYSE paid a $5 million penalty, the first time in its history, to settle, without admitting or denying wrongdoing.
In November 2012 CME sued the CFTC in a rare legal move as it sought the right to bundle trade reporting for swaps with other services, calling a pending commission rule "arbitrary and capricious."
The exchange operator withdrew the suit after CFTC dropped its insistence that swaps traders be given a choice of venues to report their transactions.

end




High costs are hurting all mines.  Look at what happened to IAMGOLD:

(courtesy Kitco)

High Costs In 2013 Will Continue To Be A Hurdle For IAMGOLD


By Alex LĂ©tourneau of Kitco News


Thursday February 21, 2013 9:54 AM



(Kitco News) - In what has been a theme with several miners reporting lower fourth-quarter and year-end results, high costs in 2012 heavily affected IAMGOLD’s (TSX: IMG)(NYSE: IAG) earnings.
The company did expect costs to rise in 2012, but IAMGOLD President and Chief Executive Officer Stephen Letwin did not expect the rise to be as steep as it was.
"The magnitude of the cost increases did surprise everyone," Letwin said in a conference call in conjunction with a quarterly earnings release Thursday morning. "We expect to have less cost impact after 2013."
It will be challenging for the company as it transitions from soft-rock mining to hard-rock mining…



-END-



A great article on gold form Ambrose Evans Pritchard.  Normally a death cross is a signal to sell.
The UK reporter believes that every whack in gold is a signal for the Chinese to buy gold and they have been doing so in buckets:


(courtesy Ambrose Evans Pritchard/UKTelegraph)



FEBRUARY 21ST, 2013 15:07

Gold’s Death Cross is a buy signal for China


Gold price has dropped below $1,600 for first time in six months
It is a treacherous moment for gold bugs.
The first whiff of future tightening from the US Federal Reserve has sent bullion into a nose-dive, triggering a much-feared “Death’s Cross” sell signal on gold futures.
Gold has dropped by over $100 an ounce in ten days, touching $1556 this morning. The HUI index of gold mining stocks broke down weeks ago – as so often leading gold itself by a few weeks – and has already crashed to levels last seen in 2009.
Goldman Sachs has cut its long-term forecast to $1,200. Credit Suisse and UBS are bearish.
Citigroup says the great bull market of the last 12 years is over. The “long cycle” has peaked. Economic recovery has yanked away the key support. So long as there… Read More

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Andrew Maguire, the whistleblower believes the banker smackdown was aimed to prevent a gold and silver breakout and this was orchestrated by the BIS;

(courtesy Kingworldnews/Maguire/Eric King/GATA)


Maguire: Smashdown was aimed to avert gold and silver breakout and BIS arranged it

 Section: 
1:12p PT Friday, February 22, 2013
Dear Friend of GATA and Gold:
In the second installment of King World News' interview with him today, London metal trader and silver market whistleblower Andrew Maguire describes a vast scheme of naked shorting of gold in the futures markets, asserts that the recent smashing of monetary metals prices was done to avert their upward breakout, and charges the Bank for International Settlements with coordinating the scheme. An excerpt from the interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


end

Looks like the USA is going to have more controls put on them

(courtesy GATA)



VIA MAT won't vault for U.S. taxpayers anymore but no effect on GoldMoney

 Section: 
12:46p PT Friday, February 22, 2013
Dear Friend of GATA and Gold:
GoldMoney today acknowledges the VIA MAT vaulting company's decision to stop providing services to people with U.S. tax obligations but produces a letter from VIA MAT affirming that this will have no application to the company's services to GoldMoney:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

end

Andrew Maguire  (and I) believe that Eastern central banks have used the recent whacking of gold to acquire hundred of tonnes of metal.

Gene Arensberg a great technical analyst believes that the precious death crosses in gold did not cause a fall in gold but a big rise.

I urge to you to follow Gene's commentary on this

(courtesy Andrew Maguire/Gene Arensberg/Kingworldnews)



Powerful contra-indications for gold from whistleblower Maguire and GGR's Arensberg

 Section: 
12:34p PT Friday, February 22, 2013
Dear Friend of GATA and Gold:
London metal trader and silver market whistleblower Andrew Maguire today tells King World News that Eastern central banks have used the recent smashdown in gold to acquire hundreds of tonnes and that the smashdown is actually a "bubble short position" likely subject to a "violent" reversal. An excerpt from the interview is posted at the King World News blog here:
Meanwhile over at the Got Gold Report, Gene Arensberg notes the recent big reduction in gold holdings by the exchange-traded fund GLD and finds that the four most recent big reductions in GLD holdings were quickly followed not by a "death cross" apocalypse but by rising gold prices. Arensberg's commentary is posted in the clear at the Got Gold Report here:
And market analyst Al Jolson's outlook has been posted at YouTube here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

end

And now for our major paper stories which will have a major influence on the price of gold and silver:

Major points;

1. A disappointing putback  on the second LTRO of only 61 billion euros.  The Euro/dollar cross crashes through 1.32.

2. German confidence on the IFO indicator, rises.

3.Fear in Italy of a hung parliament in this Sunday's election

4. European PMI continue to deteriorate or remain at its nadir especially the French mfg and service numbers.

5. Details form Bloomberg and Deutsche Bank.

(your overnight market sentiment courtesy of zero hedge)

Overnight Sentiment: Dull Levitation Returns

Tyler Durden's picture




A listless overnight session with just the previously noted first disappointing LTRO-2 repayment and the now traditional big beat out of the "other" German confidence indicator, IFO, which beat expectations of 104.9, rising to a 10 month high of 107.4 to attempt to push the economy out of the recessionary slump (just don't mention yesterday's PMI), and nothing on today's US calendar is a fitting way to end the week, and further shows that markets are once more completely oblivious to the risks of the Hung Parliament outcome that this weekend may bring in Italy should the Berlusconi juggernaut maintain its momentum. The EURUSD and the US futures have disconnected once more, with almost all of yesterday's market weakness filled in the overnight session as the good old low-volume levitation returns. Here are the few news items worth reporting.
From BBG:
  • Treasuries decline, curves little changed as yen declines vs. dollar; EUR/USD fell overnight, touching lowest since Jan. 10 as European Commission says euro- area’s economy will shrink for a second year in 2013.
  • Euro zone’s GDP will contract 0.3% this year vs. prediction in November for 0.1% growth, EC forecast today, with unemployment rising to 12.2%, up from previous 11.8% est., 11.4% last year
  • ECB said banks will return EU61.1b of its second LTRO next week, half the amount forecast by economists
  • With Italian elections due Feb. 24-25, voters may push the nation away from Mario Monti’s austerity policies; Italy election risks not priced in, analysts say
  • Bernanke minimized concerns that the Fed’s easy monetary policy has spawned economically-risky asset bubbles in comments at a meeting with dealers and investors this month, according to three people with knowledge of the discussions
  • China’s new home prices rose in most cities the government tracks for a third month, adding pressure on leaders to intensify policy-tightening efforts to prevent asset bubbles and inflation as the economy rebounds
  • China stocks fell, with Shanghai composite headed for steepest weekly loss in 20 months
  • Overseas investors cut Japanese bond holdings for a fourth week on bets Prime Minister Shinzo Abe will succeed in ending deflation and weakening the yen
  • Nikkei rises 0.7%; European stocks rise, U.S. equity-index futures lower. Italian and Spanish bonds gain. Energy, precious metals higher
Market recap:
  • Spanish 10Y yield down 3bps to 5.17%
    Italian 10Y yield down 4bps to 4.45%
  • U.K. 10Y yield up 4bps to 2.14%
  • German 10Y yield up 2bps to 1.59%
  • Bund future down 0.04% to 143.32
  • BTP future up 0.14% to 111.7
  • EUR/USD up 0.14% to $1.3208
  • Dollar Index down 0.18% to 81.31
  • Sterling spot up 0.11% to $1.5271
  • 1Y euro cross currency basis swap little changed at -20bps
  • Stoxx 600 up 0.62% to 286.64
DB's summary of the past day:
The last 36 hours has certainly told us that the market is still extremely sensitive to any concerns about the withdrawal of liquidity and also to growth. The Fed worried some with a hint of the possibility of slowing QE at some vague point in the future and the flash European PMI numbers were simply pretty bad. It’s impossible to extrapolate from one PMI release but our view has been that the European economy has until around Q2 to prove it can get the momentum that consensus economists expect. If we don't get this then risk is due for a sharp correction until the OMT is eventually activated. So yesterday's numbers are a worry and the next round of European data is going to be even more scrutinised.
Before all that we have the small matter of the Italian elections to contend with. Voting runs from 7am Sunday to 2pm Monday (GMT), with early exit polls coming out soon after. DB’s Marco Stringa will be holding a call at 4pm (GMT) to help make sense of these numbers with the actual result expected late on Monday  night. We'll post the dial-in details on Monday. The key numbers to look out for will be how the parties stack up towards the 158 seats needed for a majority in the Senate. Since the last polls were published on February 8th there are some unconfirmed reports (The Economist) that suggest the centre-right's momentum seems to have tailed off somewhat, with reports that the populist Five Star Movement has apparently been gaining ground. DB’s view on the post-election government continues to be a PD-led centre-left coalition with Monti’s centre; however recent trends have increased the risk of a hung parliament and all the uncertainty that will bring. It looks set to be a fascinating start to next week!
Taking a closer look at the flash PMIs, the euro area composite PMI fell 1.3pts to 47.3 (vs an improvement to 49.0 expected). In France, although manufacturing improved (up 0.6pts to 42.9) services fell to the lowest level since February 2009 (down 0.9pts to 42.7) against expectations for a 0.9pt improvement in both indices. On a more positive note, German manufacturing PMI moved back into expansionary territory (50.1 vs 49.8 previous) for the first time since February 2012, as new export orders rebounded strongly on the back of Asian demand. In addition, the services PMI is still well in expansion mode despite the monthly fall (54.1 vs 55.7 previous). Our economists write that the flash numbers suggest that on average the PMI in the 'non-core' countries weakened on the month in both manufacturing and services by a greater extent than in the core countries.
Returning to Thursday’s US session, the S&P500 continued its decline (-0.63%) after posting its biggest one day fall since November on Wednesday. Indeed the move across the last two sessions has managed to pretty much erase February’s gains, but its performance is still better than other major indices including the Stoxx600, Shanghai Composite, Hang Seng, DAX and CAC40 all of which are trading at levels lower than where they started the month. US data flow didn’t help matters yesterday with jobless claims (362k vs 355k expected), the Markit flash PMI (55.2 vs 55.5 expected), and Philly Fed (-12.5 vs 1.0 expected) all printing weaker than expected. Existing home sales for the month of January increased +0.4% to 4,920k (vs -0.8% expected). Interestingly, the inventory of existing homes for sale fell to the lowest level since 1999.
The weakness in commodities extended for another day as concerns about a macro tightening in China weighed on the CRB commodities index (-1.17%) with crude (-1.79%) and copper (-1.53%) leading losses.
Despite all the concerns about the “tapering’ of Fed purchases, 10yr USTs finished the day back below the 2% mark (1.977%). The VIX (+3.68%) continued its upward March, as did the Dollar index which closed at near six-month highs.
Turning to Asia, the Hang Seng (-0.47%) continues to underperform on fears of Chinese policy tightening. Government data overnight showed that new home prices rose an average of 0.8% in January from a year earlier (+0.7%mom), breaking 10 straight months of declines. The same survey showed that home prices rose in 53 out of 70 cities in January. DB’s Jun Ma writes that he is not overly concerned about the probability of any aggressive macro policy tightening in the near future, but stricter implementation of anti-property speculation policies in a number of cities seems possible. The Shanghai Composite is steady (+0.05%) following yesterday 3% drop. Elsewhere equities are broadly higher with gains seen on the Nikkei (+0.3%) and ASX200 (+0.7%). The yen is trading slightly weaker against the USD (- 0.15%) on relatively thin news flows.
Looking at the day’s calendar, in Europe the dataflow includes the German IFO survey and final Q4 GDP, Italian retail sales and consumer confidence. The European Commission publishes its latest economic growth forecasts. In the US, with no major data releases scheduled, the focus will be on President Obama and Japanese PM Abe who will be holding talks on security and trade at the White House. The two leaders will discuss Japan’s potential entry into the Transpacific Partnership, which is being negotiated between the US and other Pacific nations with the aim of bring down trade barriers. So a fair bit going on, but all eyes will be on Italy as we head into this weekend's elections.

end



Only 61 Billion euros was returned in the second LTRO and that should basically be the total  amount that will be returned prior to the 3 year term.  This was less than half expected and this caused the Euro to slide.

the most important passage from zero hedge: 

"The result was an immediate slide in the EUR currency as questions once again arise: were European banks just faking it; is European liquidity suddenly (and still) insufficient and do banks still need much more ECB support than expected; is the ECB balance sheet contraction now officially over especially with rumblings yesterday by assorted ECB officials that a negative interest rate is conceivable, and with JPM now expecting another rate cut imminently by Draghi? Most importantly: is this time not different after all?"

Details on the LTRO second repayment of only 61 billion euros

(courtesy zero hedge)

Euro Slides As First LTRO-2 Repayment Less Than Half Expected

Tyler Durden's picture




A month ago, on January 25 when the window to commence LTRO repayments was opened, European banks, with much pomp and circumstance, announced that 278 banks repaid a greater than expected €137.16 billion of the €1+ trillion in LTRO funding disbursed in early 2012. This was taken as a sign of European bank stress dissipation and financial stability, and furthermore served to push the EUR much higher on expectations that the ECB balance sheet would rapidly contract even as every other central bank balance sheet was expanding. It also ignored the fact that ongoing broad economic weakness in Europe required and still requires a weaker currency, not a stronger one (however too weak, and you get "redenomination risk", etc, etc). As it turns out, like everything out of Europe, the "strength" indicated by the first LTRO2 repayment was merely a sham, and moments ago when the ECB announced the results of the second 3 year LTRO repayment option, the news was a big dud: instead of the €122.5 billion expected to be paid back, European banks repaid just under half of this amount or €61.1 billion, spread among 356 banks - an average of just €0.17 billion per bank.
The result was an immediate slide in the EUR currency as questions once again arise: were European banks just faking it; is European liquidity suddenly (and still) insufficient and do banks still need much more ECB support than expected; is the ECB balance sheet contraction now officially over especially with rumblings yesterday by assorted ECB officials that a negative interest rate is conceivable, and with JPM now expecting another rate cut imminently by Draghi? Most importantly: is this time not different after all?
And for reference, here is Goldman's take:
€63 put-back falls short of expectations

Today (February 22) at 11:00 GMT, the ECB announced the LTRO funds to be returned next week through the (fifth) weekly put-back option, and the first for the LTRO-2.

Banks repaid €63 bn of LTRO funds (LTRO-2: €61 bn and LTRO-1 €2 bn); this falls well short of expectations (e.g. FT reported a consensus of €130 bn) and the initial repayment of LTRO-1.

The cumulative repayment now stands at €212 bn (21% of initial take-up), leaving the LTRO cash in the system at €807 bn.

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

Banks used the initial repayment option to send a ‘health signal’ and repaid €137 bn of LTRO-1. The initial repayment of LTRO-2 was “only” €61 bn.

Our expectation is for the repayment tempo to stabilize in future and we see a ‘repayment corridor’ of €0-5 bn per week as a base case expectation. This allow banks to gradually reduce the use of term ECB funds as we move through 2013.

Signaling and maturity are crucial

Without time pressure, a put-back decision is driven by economics. We believe that for peripheral banks LTRO money continues to offer an attractive reinvestment proposition. Moreover, we believe the banks will use 4Q2012 results to outline a longer term path of repayments, in order to signal their ‘resilience’.

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


Dollar Consolidates After Big Week

Marc To Market's picture




The North American market will put the finishing touches on what has been a generally constructive week for the US dollar. Ironically, the one notable currency that it slipped against is the Japanese yen.  Many had come away from the G20 meeting thinking it gave a green light to sell the yen.
We read the G20 statement a bit differently. We did not see a significant change from the G7 statement earlier and the draft of the G20 statement. Japanese officials have already moved back into compliance with the general rules of foreign exchange engagement as they have evolved since the Plaza and Louvre Agreements by refraining from offering bilateral targets. Under the rules, countries are indeed allowed to use monetary and fiscal policy to pursue domestic goals.
For the better part of three weeks now, the dollar-yen rate has been in a range. The 20-day moving average, which has supported the dollar since the mid-Nov election announcement in Japan has been successfully tested again yesterday and earlier today, coming in just below JPY93.00. Local press reports suggest that Japanese exporters are reviewing their internal budget rates and are revising from JPY75-80 to JPY85-90.
There have been several notable developments in Europe.  The most important is that the European banks are prepaying a much smaller than expected amount of the second LTRO than anticipated.  Banks are returning 61.1 bln euros next week.  Surveys found consensus expectations near 125 bln euros.  This means that the passive tightening in the euro area financial conditions is not as great as the market had discounted and the euro returned to yesterday's lows. Euribor rates have eased a few basis points and the 2-year interest rate differential between the US and Germany, which we argue continues to track the euro-dollar exchange rate has move more in the US favor.  At eleven basis points it is the most since mid-Jan.
The German IFO sentiment survey was stronger than expected, though perfectly consistent with other surveys, like the ZEW and PMI which show Europe's largest economy is recovering after a dismal Q4 when it contracted by 0.6%.  
The EC revised its forecasts and now see the euro zone contracting by 0.3% this year.  Of particular interest, France's forecast was cut to 0 from 0.4%.  This will add pressure on the government to slash its 0.8% forecast.  The key is whether it is given another year to meet its deficit target, as it seems to want or whether Germany, Austria, Slovakia and Finland's arguments that it would undermine the EMU's credibility if it did not make the 3% target this year. 
The other country that is on the edge is Spain.  The EC calculation show Spain  having run a budget deficit of 10.2% last year, the most in three years.  It projects a deficit this year of 6.7%, which seems a Herculean task.  There has been some suggestion that Spain could be given more time to reach its deficit targets, but given the lack of progress last year and some backtracking this year,  it too may undermine credibility. 
The uncertainty surrounding the weekend Italian election may have lent Spanish bonds some support (they have fared better than Italy's for example in recent weeks), but pressure may return after the political uncertainty in Italy eases, even if it take a bit more time.  Although there is an official poll ban, the informal ones show the center-left PD (Bersani) recovering from some recent slippage, Berlusconi's right coalition largely flat.  Monti, who in the run-up to the vote has been critical of the PD, appears to be slipping. Grillo's protest movement is holding its own, though below 20%.   Meanwhile, the graft scandal in Spain sees the King Carlos son-in-law and palace guard testify today.
The Reserve Bank of Australia's minutes were not as dovish as the market had anticipated and Governor Stevens' comments earlier today along similar lines.  The take away is that the RBA is content in a wait and see mode, which means that, barring any significant surprises,  a rate cut in March and April seems unlikely.  
The April 24 release of Q1 CPI may be the most important data point for a Q2 rate cut. Regarding the Australian dollar itself, Stevens acknowledged it was over-valued, but not hugely, and was surprised it was not lower.  The tenor differed by the RBNZ which had a greater sense of the over-valuation of the Kiwi and brandished its intervention option.  Further afield, note that Stevens' term expires shortly after the Sept 17 election.
The Aussie has fallen four cents over the past four weeks.  It appears to have found a near-term bottom--and a double one at that in the $1.0220 area.  The key now is the $1.0370-5 area.   A move above there would confirm the double bottom and signal scope for another 1.0-1.5 cent recovery. 

end

Oh my goodness:  Spain announced that it's 2012 budgetary deficit instead of falling below 9% of GDP ends up at 10.2.% of GDP.

Pundits say that a major part of the increase was the 3.2% increase in costs in setting up the bad bank plus the bailouts of Bankia.

(courtesy zero hedge)


Spain's "Inverse Austerity" Leads To Multi-Year High Budget Deficit

Tyler Durden's picture




For a country that laments the imposition of draconian "austerity" measures, now allegedly in their third year, which have so far seen government revenues slide, while spending rises, Spain sure has a problem with figuring out how it is supposed to work. Yet while the world was shocked back in December 2011 when Spain quietly announced its budget deficit would jump from 6% to 8.5%, before finally settling on 8.9% of GDP, today's announcement that the 2012 Spanish deficit was a whopping 10.2% of 2012 GDP hardly caused any commotion. Apologists will quickly say that this budget gap was boosted by the 3.2% increase due to setting up the bad bank, and rolling bank bailouts, and of course they will be right: just as all those economists were right to say that when one excludes all the negatives, US Q4 GDP was in fact positive. Or, indeed, as Goldman said to ignore this week's negative initial claims and new housing starts data: after all they too were negative. In fact, when one excludes all the negative trading days in 2013, the stock market has not had a down day yet. As for Spain, too bad the country can't have its broke bank cake and eat the budget surplus that would result "if only" things were different.
From Bloomberg:
Rescuing lenders including Bankia SA (BKIA) added 3.2 percentage points to the budget gap last year while rising unemployment and falling asset prices crimped government income, the commission said today. The deficit will narrow to 6.7 percent of gross domestic product this year before growing in 2014 to 7.2 percent -- more than twice its 2.8 percent target -- as temporary austerity measures expire.

European Union Economic and Monetary Affairs Commissioner Olli Rehn will comment on the economic outlook at a Brussels news conference starting at 11 a.m. as Spain lobbies for more time to reorder its finances. The nation has missed all its deficit targets since overspending surged to 11.2 percent of GDP in 2009 after the end of a decade-long property-fueled boom.

Spain escaped a full bailout last year after the European Central Bank pledged to backstop the single currency, causing the yield on its 10-year benchmark bond to drop about 250 basis points from a euro-era high of 7.75 percent in July.

The commission also said “the budgetary performance in 2012 was blighted by considerable shortfalls of both indirect and direct tax revenues.”

The commission raised its budget-deficit forecasts from November, when it saw shortfalls of 6 percent and 6.4 percent for 2013 and 2014. European officials left unchanged their view that the Spanish economy will contract by 1.4 percent this year and forecast a 0.8 percent expansion in 2014. Unemployment will rise to 27 percent this year from 25 percent in 2012 and remain at that level in 2014, the commission said.
Further confirming Spain's confusion vis-a-vis just what "austerity" is, and how it is supposed to work was the debt:
Spain’s debt load more than doubled to 88 percent of GDP last year compared with its pre-crisis level. It will surge to 101 percent next year, according to the commission.
Here's the thing: in austerity debt goes down, not up, so can we please stop attributing to austerity what simple political malfeasance, kickbacks and outright criminality will explain any day?
Finally, Europe's response - give it more time to do the opposite of what it is supposed to be doing:
In July, euro finance chiefs gave Spain an extra year to bring the shortfall back within the European limit of 3 percent of GDP. The plan was to achieve 6.3 percent in 2012, 4.5 percent this year before complying with the rules in 2014.
So to summarize: do more of what has failed to work for the past three years, in fact encourage Spain to do so, pretend the country is cutting its deficit when it is in fact balooning it, and avoid all structural reforms. Surely this will end well in a time when the banks are supposedly repaying the ECB's excess trillions in liquidity (if at a far lower pace than originally expected). And when the ECB's house of cards support beneath the European bond market fails next, everyone will again be absolutely shocked to find that things are worse than ever before.



end



Comments from the Italian/Reuters/WallStreet/Financial times/  N.Y.Times/newspapers on the Italian election:





Italy:



Monti's comments further dim prospects for coalition with center-left: The FT noted that an outburst by outgoing technocrat Prime Minister Mario Monti on Thursday seemed to further dim the prospects for a coalition with the center-left. Monti branded his center-left opponents as communist "reincarnations". The paper added that earlier, Freedom Party head Nichi Vendola dismissed the chances of forming a coalition that would include Monti and his centrists. Recall that analysts believe that such a coalition represents the best chance for Italy to maintain its structural reform push.
Last flurry of election stories do not break any new ground:
"Leftist may hold key to stable rule in Italy": Reuters
"Italy risks voting for more instability": FT
"Italian Voters Face Chances of Chaotic Results": WSJ
"Monti’s Austerity Pushes Italians Toward Parliamentary Upheaval": Bloomberg
"Plastered, Rome Is Ready for the Elections": WSJ
"The Rise of a Protest Movement Shows the Depth of Italy’s Disillusionment": NYT





end


The stock markets on Monday will not like the following:

(courtesy zero hedge)




Farewell Eng£AAAnd: Moody's Downgrades The UK From AAA To Aa1

Tyler Durden's picture




And another AAA-club member quietly exits not with a bang but a whimper:
  • MOODY’S DOWNGRADES UK’S GOVERNMENT BOND RATING TO Aa1 FROM AAA
Someone must have clued Moody's on the fact that the UK is about to have its very own Goldman banker, which means consolidated debt/GDP will soon need four digits. In other news, every lawyer in the UK is now celebrating because come Monday Moody's will be sued to smithereens.
Cable not happy as it tests 31 month lows, which however also explains why the Moody's action has another name: accelerated cable devaluation. Those who heeded our call to short Cable when Goldman's Mark Carney was appointed are now 1000 pips richer. Also, please sacrifice a lamb at the altar of Goldman: It's the polite thing to do.

Full report below:

see zero hedge for the full report.




end




Osborne's response to the downgrade:

(courtesy zero hedge)



UK's George Osborne Responds To Moody's Downgrade

Tyler Durden's picture





Osborne's statement was prepared well in advance, which means Moody's action was not only prepared and distributed long ago but it got the blessing of both the UK government and Goldman Sachs. And why not: so far it has achieved precisely what it was intended to: crush the Pound. The next question: when does talk of GBP-EUR parity begin?
Moodys has just downgraded Britain’s credit rating from AAA to Aa1

The Chancellor George Osborne released the following statement after the UK lost its AAA credit rating with agency Moody's:

Tonight we have a stark reminder of the debt problems facing our country - and the clearest possible warning to anyone who thinks we can run away from dealing with those problems.

Far from weakening our resolve to deliver our economic recovery plan, this decision redoubles it.

We will go on delivering the plan that has cut the deficit by a quarter, and given us record low interest rates and record numbers of jobs.

As the rating agency says, Britain faces huge challenges at home from the debts built up over many many years, and it is made no easier by the very weak economic situation in Europe.

Crucially for families and businesses, they say that ‘the UK's creditworthiness remains extremely high’ thanks in part to a ‘strong track record of fiscal consolidation’ and our ‘political will’.

They also make it absolutely clear that they could downgrade the UK’s credit rating further in the event of ‘reduced political commitment to fiscal consolidation’.

We are not going to run away from our problems, we are going to overcome them.

– George Osborne



A powerful commentary from Wolf Richter:  Europe can no longer live with the Euro

(courtesy Wolf Richter/www.testosteronepit.com)





By Midyear, Europe 'Can No Longer Live With This Euro'

testosteronepit's picture





“I’m sitting on cash,” Felix Zulauf said when he was asked in aninterview where he was putting his money. With decades of asset management experience under his belt, he’d founded Zulauf Asset Management in Switzerland in 1990. But now he was worried—and has turned negative on just about everything.
In Europe, growth would be weak. In the US, “everyone” was expecting decent growth, but he saw the possibility of a “great disappointment.” Developing nations wouldn’t grow as fast as in recent years. The Chinese were taking their money out of the country. “They have antennas for problems at home,” he said. The markets were expecting the world economy to recover, but he suspected that neither the economy nor corporate earnings would develop as hoped. Once the distance between “wish” and “reality” became apparent, “it could cause a crash.”
Timeframe? This year. Optimism might hang in there for a while; the second quarter would be more problematic. Over time, downdrafts in some markets could reach 20% to 30%. Despite the incessant insistence by Eurozone politicians that the worst was over, he didn’t see “any normalization.” The structural problems were still there, they’ve only been hidden, “drowned temporarily in an ocean of new liquidity.”
“Look at the economic data,” he said. “There is no visible improvement.” As if to document his claim, the Eurozone Purchasing Managers Index was released. It dropped again after three months of upticks that had spawned gobs of hope that “the worst was over.” Business activity has now declined for a year and a half. New orders, a precursor for future activity, fell for the 19th month in a row. While Germany was barely inpositive territory, France’s PMI crashed to a low not seen since March 2009 and was on a similar trajectory as in 2008—when it was heading into the trough of the financial crisis!
Sure, the financial markets calmed down, but only because the ECB pulled the “emergency brake” by declaring that it would finance bankrupt states so that the euro would survive. It was a signal for the banks to buy sovereign debt. Borrowing from the ECB at 1%, buying Spanish or Italian debt with yields above 5%, while the ECB took all the risks—”a great business for the banks,” he said. As a consequence, the banks were once again loaded up with sovereign debt. “The problems weren’t solved but kicked down the road,” he said.
Politicians would muddle through. Government debt would continue to rise. But next time something breaks, the pressure would come from citizens, he said. Standards of living have been deteriorating. Many people have lost their jobs. Real wages have declined. “We’ve sent millions into poverty!” People were discontent. And it was conceivable that “someday, they could go on the street and attack these policies.”
But, but, but... hasn’t Chancellor Angela Merkel emphasized that the euro would be important for peace in Europe? “The euro doesn’t create peace,” he said, “but discontent.”
Countries were devaluing their currencies to gain an advantage. This “race to the bottom” could escalate to where governments would impose limits on free trade. The devaluation of the yen would hit other countries. In Germany, it would pressure automakers, machine-tool makers, and others. By midyear, he said, “Europe will reach a point when it can no longer live with this euro.”
It would have to be devalued. France’s President François Hollande was already agitating for it. “And he has to because the French economy is in a catastrophic condition. It’s no longer competitive. France is becoming the second Spain.”
But didn’t the ECB emphasize that the exchange rate was irrelevant for monetary policy? And wasn’t the Bundesbank resisting devaluation?
“The policies of the Bundesbank are unfortunately dead,” he said, and its representatives were only “allowed to bark, not bite.” Monetary policy at the ECB was made by Draghi, “an Italian.” He’d push for the “lira-ization of the euro,” he said, “not because he likes it, but because he has no choice.” It was the only way to keep the euro glued together. “Mrs. Merkel knows that too, but she cannot tell the truth; otherwise citizens would notice what’s going on.”
Given this dreary scenario, what could investors do? Long-term, equities were a good choice, he said, but this wasn’t the moment to buy.
Gold? That it was down from its peak a year and half ago was “normal,” he said. Currently, gold funds were forced to liquidate, which could cause sudden drops, but it also signified “the end of a movement.” He expected the correction to end by this spring. “Long-term, the uptrend is intact,” he said.
Bonds? They had a great run for 30 years but were now “totally overvalued”—in part due to central banks that had bought $10 trillion in debt “with freshly printed money” over the past five years. Debt markets were completely distorted, but central banks would be able to hold the bubble together for “a while longer.” So he admitted, “Last summer, I sold all long-term debt.”
But where the heck was he putting his money now? That’s when he made his sobering remark, “I’m sitting on cash.”
The Fed is growing deposits far faster than banks can deploy them, or than the economy can use them. It is growing them far faster than anybody wants or needs. And now there are “hundreds of billions of dollars of potential fuel unused,” as Bloomberg pointed out. A potential for big problems. Read....The Fed Is Blowing A Dangerous Bank Deposit Bubble.
end  



Your early Friday morning currency crosses;  (8 am)

 

 Friday morning we  see tiny euro strength  against the dollar   from the close on Thursday. The yen this the morning  is a lot weaker  against  the dollar,   at 93.3 yen to the dollar .    The pound, this morning is a touch stronger against the USA dollar remaining in the 1.52 column at  1.5272. The Canadian dollar is weaker  against the dollar at 1.0197.   We have a  risk is on   situation  this morning with the major European bourses in the green . Gold and silver are higher  in the early morning, with gold trading at $1580.00 (up $1.60) and silver is $28.81 up 2 cents in early morning European trading.

The USA index is up 7 cents at 81.43.



Euro/USA    1.3174  down .0017
USA/yen  93.30 up .160
GBP/USA     1.5272 up .0013
USA/Can      1.0197 up .0020

end





And now your closing Spanish 10 year bond yield:

down up in yield:





SPANISH GOVERNMENT GENERIC BONDS - 10 YR NOTE

GSPG10YR:IND

5.150.05 1.00%
As of 02/22/2013.



yesterday's yield






SPANISH GOVERNMENT GENERIC BONDS - 10 YR NOTE

GSPG10YR:IND

5.200.01 0.27%
As of 02/21/2013.


end.




AND NOW OUR ITALIAN 10 YEAR BOND YIELD:  A drop IN YIELD

Italy Govt Bonds 10 Year Gross Yield

GBTPGR10:IND

4.450.05 1.09%


yesterday's yield

ITALY GOVT BONDS 10 YEAR GROSS YIELD

GBTPGR10:IND

4.500.07 1.51%
As of 02/21/2013



Your 6:00 pm closing Tuesday currency crosses:


The Euro rose a bit this afternoon from this morning's weakness finishing at 1.3189.
The yen weakened again this afternoon  to finish at 93.38 .   The pound was ravaged with the news of the Moody's downgrade as  it's downward spiral continued  settling at 1.516.  The Canadian dollar weakened some more   against the dollar closing at 1.0213
  The USA index decreased from the morning session  with the final index number up  11 cents to 81.47. 


Euro/USA    1.3189 down  .0002
USA/Yen  93.382  up .240
GBP/USA     1.516 down .0099
USA/Can      1.0213  up 0.0036







end.




Your closing figures from Europe and the USA:

everybody deeply in the red


i) England/FTSE up 44.16  or 0.70%

ii) Paris/CAC up 81.48 or 2.25% 

iii) German DAX:up 78.34 or 1.03%

iv) Spanish ibex up 164.5 points  or  2.05%

v) Italian bourse (MIB) up 223.73  points or 1.4%


and the Dow down: 120 up .86%



end.



And now for some USA stories:






 Looks like the sequester is on:




(courtesy zero hedge/Bank of America)


Sequester: Front-Loaded Pain, No Gain

Tyler Durden's picture




The sequester was supposed to be such a bad outcome that it would force a compromise. The across-the-board cuts were so rigid and hurt so many favored programs, BofAML notes, the “Super Committee” was almost certain to come up with a more flexible alternative. And yet, not only did the Super Committee fail to even make a proposal, the negotiations have now devolved into a blame game – the two parties are trying to pin the blame, and the political cost, onto the other party. As we have expected for some time, the sequester will very likely hit on March 1. This well likely add further downward pressure to the economy in the second quarter, with job growth averaging less than 100,000 per month and GDP growth slowing to 1%.

Via BofAML,
The Sequester Straitjacket

How big?

Federal budget accounting is incredibly opaque. There are two key complications. First, the sequester kicks in part way into a calendar year and about half way into a fiscal year, so figuring out the size of the shock requires first getting the timeframe correct. Second, it is important to distinguish between budget authority and actual spending; the latter depends on both past and present authority. The sequester cuts $1.2bn of budget authority over a nine-year period (2013-21).

Netting out about $200bn in savings from lower interest payments, that works out to about $109bn in reduced budget authority per year. However, there are three complications in calculating the actual cuts in spending this year. First, under the fiscal cliff compromise the cuts for this fiscal year don’t start until March and they are “only” $85bn. However, there are only seven months left in the fiscal year, so on an annualized basis the cuts are equivalent to a $146bn drop in appropriations. Second, the actual cuts in spending will be less than $85bn because the sequester cuts budget authority, not spending. Programs can use leftover appropriations from past budgets to cushion the immediate cuts. The CBO estimates the actual spending cuts will be $42bn.

That doesn’t sound too bad. Unfortunately there is a third complication. Currently, defense spending is running higher than the current annual cap. This overshooting has to be made up in the remaining months of the fiscal year. Thus we would not be surprised if actual defense spending drops more than the CBO estimates. Our rough bottom-line: we expect $50bn in cuts over the remaining seven months of this fiscal year, equivalent to 0.54% of GDP over that period.

How messy?

One of the most challenging things about the sequester is that it requires the cuts to be uniformly distributed at the “program, project, activity” (PPA) level. In other words, it doesn’t just cut spending, it freezes the way spending is allocated across projects. According to the Bipartisan Policy Center (BPC), this would have a dramatic impact on the allocation spending. For example, comparing Pentagon spending requests for 2013 to the sequester caps, it would cut spending on the overhaul of the USS Abraham Lincoln by 72%, but actually increase spending on the M-1 Abrams Tank by 442%. The cuts will be particularly damaging to longer term contracts. This creates a good deal of waste and expenses.

The cuts do not all hit on March 1; many will be phased in over a number of weeks. Many budget units are still triaging their spending cuts into “immediate, eventual and never.” The Defense Department is well advanced in its planning, but even they will phase in cuts over many weeks. For example, they plan to move about 80% of their 800,000 civilian employees to a four-day work week, but only starting in the last week of April.

Despite some implementation delays, we expect the bulk of the cuts for this year to be in place by the end of April. Every week that passes increases the cuts needed to meet the fiscal year target. Thus a department facing 10% cuts over the period from March to September will need to cut spending by 14% (=7/5 × 10%) if they wait two months to start.

How painful?

While the sequester makes a relatively small dent in the long-run deficit outlook, the cuts will be significant in the short run. The Federal government has about 2.2 million civilian workers with average salaries of about $75,000.There are also about 8 million contract workers, although most of these are presumably parttime. Some forecasters look for one to two million in job cuts. CBO expects about 800,000 in “full-time equivalent” employment cuts in response to the sequester by the end of 2014, and we are inclined to go with their numbers.

We think more than half of those cuts will come from reduced hours rather than layoffs. If other agencies follow the Defense Department and put 80% of their employees on four-day furloughs, that would turn 1.8 million full time workers into part timers. If that started in late April, it would save about $11bn in budget outlays. These savings are equivalent to cutting about 400,000 jobs. Presumably some contract workers would also face reduced hours rather than unemployment. Over all, we would expect actual job losses of a few hundred thousand.

We would expect job cuts to start in March, particularly from the defense budget, as it faces the toughest cuts and has the most advanced plans. Then, if the sequester is not watered down, we would expect even bigger cuts in April. For now we are penciling in 50,000 in cuts for March, 100,000 in April, and 50,000 in May, with much smaller cuts thereafter. We will revisit these estimates over time.

The shock to GDP growth will be equally noticeable. The CBO estimates a -0.5% impact on 2013 GDP. Macroeconomic Advisors (MA) recently ran the cuts through their model and estimated that the sequester would cut growth over the four quarters of this year by 0.5%, 1.3%, 0.6% and 0.1%, respectively. This is very close to what we have been assuming all along. If anything, the near-term shock could be slightly bigger than the CBO and MA exercises because they do not include the extra cuts needed to offset overspending in the first half of the fiscal year. We expect a negative shock to GDP growth over this year of 0.4%, 1.5%, 0.7% and 0.2% respectively.

Will it stick?

As we have argued before, and as press stories now confirm, Republicans have been reassessing their tactics for extracting spending cuts. Deficit hawks can choose among three spending deadlines to extract further cuts: the March 1 sequester, the expiration of the continuing resolution on March 27 and debt ceiling in May.

The sequester could be the most politically palatable path, for several reasons.

  • Both the debt ceiling and the continuing resolution are very blunt instruments for extracting concessions. Failure to extend these budget deadlines would result in a dramatic shutdown of large parts of the government. It is, in effect, throwing the budget baby out with the bath water.
  • President Obama is now in a stronger position to “call that bluff.” He won a solid victory in the election. He does not have to run for re-election. His popularity rating is much higher than that of Congress. And the public has gotten tired of brinkmanship moments in Washington, tending to put more blame on Republicans than Democrats.
  • Deficit reduction is painful, so better to get it over with now. The sequester will kick in more than a year and a half before the mid-term election. Moreover, the sequester requires no awkward negotiation.

At this stage we expect the full sequester to go through on March 1. We then expect a furious negotiation for the rest of the month, with three possible outcomes:

  1. Cut the sequester in half or more. The sequester is going to cause some ugly headlines, creating considerable pressure to scale it back. However, cutting it significantly would be a major capitulation for fiscal conservatives, particularly if they don’t want to make aggressive use of future brinkmanship moments. It would mean giving up on trying to “balance” the tax increases from earlier this year with spending cuts. We see a roughly 20% likelihood of a major watering down.
  2. No revision. As we noted above, the sequester is not only a significant cut, it is very rigid. However, we would not rule out a breakdown in the negotiations to loosen the straitjacket. Congress does not like to surrender to the President power to reallocate funds, and reaching Congressional agreement on specific reallocations may prove impossible. We see a roughly 20% chance that the straitjacket remains.
  3. Minor cuts in spending and looser rules.The one thing the two parties will probably be able to agree on is that freezing individual line items in the budget is very inefficient and there should be some flexibility in shifting funds among related programs. We anticipate a roughly 60% likelihood that most or all of the sequester sticks, but with some funding flexibility.

Front-loaded pain
We expect the sequester to add further downward pressure to the economy in the second quarter, with job growth averaging less than 100,000 per month and GDP growth slowing to 1%. Looking further ahead, however, we expect very little further fiscal tightening over the next two years as the two parties pull back and lick their wounds.

end




Nouriel Roubini is now warning the US, that the financial markets are underestimating the impact of the 2.3% in austerity cuts:

(courtesy Nouriel Roubini/ Arabian Money)

Roubini warns US financial markets under estimating impact of 2.3% austerity cuts on growth

Posted on 22 February 2013 with no comments from readers
Professor Nouriel Roubini who correctly warned on the US subprime crisis in 2006 is warning that the 2.3 per cent US austerity cuts of the sequestration at the end of next week will have worse than expected effects because this is a part of a coordinated global austerity slowdown in spending.
‘The core of the eurozone has to do it, the US has to do it…and when you have synchronized fiscal contraction the negative effects on economic growth are worse,’ he told Yahoo Finance TV.
No deal
‘It doesn’t look like there will be a last minute deal on the sequester ….the question will be how long the sequester will last… The fiscal drag will be another 0.7 or 0.8 per cent of the economy.’ And that would mean another shock in the financial markets and another rating agency downgrade.
US financial markets currently either assume a resolution of the $85 billion automatic spending cuts of sequestration or think it will have little impact on the US economy. That sounds like dangerous complacency, like the people who ignored subprime until it smacked them in the face.
ArabianMoney wonders if some of the weakness in global stocks this week is not down to the smart guys beginning to sneak out the back door.


end  
A novel approach on how to solve the USA social security problem:
(courtesy Bruce Krasting)



The Best Thing to Happen to America in a Long Time

Bruce Krasting's picture





It’s hard to describe how happy I am to see Walmart facing a slump. I’m delighted to see that the cause of Walmart’s problem is the 2% increase in Social Security withholding taxes.

It’s not just Walmart that is feeling the pinch from higher payroll taxes. According to today’s WSJ (link) damn near every company that has a retail sales base is getting nicked.

wsj
BI

We are witnessing what happens when tax rates go up. There is (new) definitive evidence that raising taxes decreases consumption. That notion is an old one, but I think the reality that is now being proven out in real time has to make a difference in how people think about taxes, government spending and the real economy.

Who is responsible for the increase in payroll taxes that is causing all the damage? Don’t blame the evil Republicans for this one. The liberal wing of the Democratic Party INSISTED that payroll taxes had to go up on January 1. Want to blame someone for the slump in retail? Blame Harry Reid (D-NV).

Why would liberal Democrats want to whack their base with higher taxes? Easy answer. Because they love Social Security more than anything else. They would sacrifice anything, including the economy and their political base, to protect SS from the criticism that it was no longer “Off budget and self financed”.

What an idiotic position. And now those who fought to get the full 12.4% tax reinstated are going to have to pay the price. The evidence is overwhelming; higher payroll taxes hurt the economy.

I've felt alone the past 4 years while writing articles on a weekly basis trying desperately to make the point that SS is at the heart of America’s economic problems. I have been vindicated.The ranks of those who will point fingers at SS is going to swell. Those opposed are now going to include all of the big retailers (and their shareholders). That will be a tremendous boost for those who are crying for substantial changes in America’s biggest entitlement program. I can’t wait for ‘them” to publicly come on-board to the opposition.

We are living with a program that was designed 75 years ago. Everything has changed – but not SS. The assumptions that were used in the 1930’s are no longer valid today. The ratio of workers to beneficiaries has fallen by 70%. The ratio of worker’s income to GDP has fallen steadily (the rise of the robots). We have substantial changes in expected life. The most significant challenge to SS is the Baby Boomers. Not one of the Boomers was a twinkle in the eye when SS was created.

1935 Plymouth - the year SS was created
4513257586_80f5a825db_z


America is driving a 77-year-old car. The car is dangerous. It has none of the modern safety devices; it burns leaded gas and has asbestos brake pads. It weighs twice as much as a new car, and only gets 8 miles to the gallon. Yet a small portion of the Deciders in D.C. have blocked any chance of bringing SS up to date, and making it safe to drive for the next 20 years.

The Social Security Trust Fund has said that to “fix” SS would require an immediate and permanent increase in PR taxes of 2.2% (above the 12.4% today). Based on the evidence of the past few months it’s easy to conclude that a tax increase of that magnitude would push the economy into a recession – Once in a slump, the economy would be hard pressed to recover.
Not only would higher PR taxes kill the economy, it would hurt lower paid workers the hardest. The evidence from Walmart reconfirms the fact that SS taxes are very regressive. They hurt the base of people that the liberals claim they are trying to protect. How can Senator Reid defend that outcome? He can’t.

NYT

There is an alternative. It would mean that we would have to junk the old clunker and get new, safe, energy efficient car. The new car would be expensive, but the payoff would be worth it.

SS taxes can’t be eliminated. The program is too big and very hard to unwind and IT IS needed. But SS taxes could be reduced by 3% if changes were made (Employer taxes would remain the same, worker’s payroll tax would fall from 6 to 3%).

The changes required to achieve the reduction in taxes have been discussed for years. There has to be changes in age eligibility over a longer period of time. Changes to inflation adjustments have to be made. There has to be an immediate means tax on benefits to fill the Baby Boomer bucket. The means test HAS to be based on both income AND assets. You can’t be a multimillionaire and get SS checks. That has to stop.Now. SS is, and always has been insurance. If you don’t need the insurance, you don’t get paid.

IMHO if individual payroll taxes were cut 50% from the current level, the economy would prosper. Unemployment would fall, incomes would rise. Federal tax revenues would increase, in the process, the deficits would fall. A permanent reduction in payroll taxes is the only chance I see for a sustained expansion of the economy.

So to the Execs at Walmart, and all of those other retailers that are feeling the SS pinch, I say "Welcome to the club". You can be the wind behind the sails for the changes that are needed. Just this once I will say that what is good for Walmart, is also good for America.


Note: Stan Druckenmiller (ex Duquesne Capital) was on TV last night with Maria Bartiromo . Stan is a very sharp guy. He said the same as I have. It’s idiotic that he gets a check from SS. The $200k he might get back in his life is not going to change his spending one bit. But it would make a world of difference to those who are making $40k a year. The Zero Hedge link to the Druckenmiller interview: Link

Hope

&

Change
end


Well that wraps up the week.

I will be away for 2 weeks where I probably will not have time to write commentary every day  as is my custom.

I will bring my computer and hope to write one or two commentaries..especially on Feb 28..the first day notice on silver.

I will try my best to keep you informed.

I will be back of March 10.

bye for now

Harvey

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