Thursday, March 13, 2014

March 13/GLD advances by 2.1 tonnes of gold/SLV inventory remains constant/Gold advances a bit/silver retreats by a tiny amount/Details on the Ukraine and Turkey today/

Gold closed up $1.90  at $1372.20 (comex to comex closing time ). Silver was down 16 cents to $21.17  

In the access market tonight at 5:15 pm
gold: $1371.25
silver:  $21.15

As promised to you, gold and silver were thrown lower by the bankers starting right after the London first fix.  However gold and silver slowly clawed back its early losses to finish in the positive.  However silver is still lagging behind which is probably the bankers feeble attempt to muster another attack.  Let us see what they offer us tomorrow.

GLD and SLV:  Today, the gold inventory at the GLD advanced by a rather large 2.1 tonnes and the SLV remained constant.  The GLD will be death knell of the bankers as China still requests its gold from the GLD and this gold heads to Shanghai through Switzerland. The game ends with the Bank of England declares they are out of gold.

We have trouble on 3 fronts this morning:

i.)  China and its disappearing collateral value of copper and iron ore and how this is playing havoc to their shadow banking sector.  Copper fell again today.
All bourses around the globe spilt massive red ink as the Japanese Yen carry trade has been unwound due to the cross (USA/Yen) fell below the magical 102. level. This coupled with the disappearing collateral at the shadow banking sector inside China is responsible for setting off massive neutron bombs!!

ii) The Ukraine where a vote this Sunday is set to allow Crimea to be annexed by Russia. The Crimea issued a declaration of Independence yesterday morning.
The USA after promising aid has so far stated no to money and no for weapons.

iii) Turkey where the Turkish lira is now back to pre crisis levels and its bonds due to June have an interest rate of 51%.  There is huge rioting on the streets today.

we will be discussing all of these in articles below.

Now let us head over and see the readings for the GOFO rates.

  Here are today's readings with yesterday's comparison:

  Rates now in  the positive in  all months/  increase in positivity in all months /gold becoming scarce again
i) One Month:  +.0125000%   vs  yesterday: +007500000% 
ii Two Months:  +.025000%.  vs  yesterday:  +.01750000%  
iii) Three Months:+.0300000% vs yesterday:  +.0250000% 
iv) Six months:  +.05750000%  vs   yesterday:   +.0550000%

London good delivery bars still in short supply

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

Here are today's comex results:


The total gold comex open interest rose today by a whopping 9,107 contracts from 415,340 all the way up to 424,447 as gold was up $23.80 on yesterday.The bankers were busy supplying the necessary non backed comex gold paper. For the March non active gold contract month  the OI fell by 5 contracts up to 141. We had 2 notices filed yesterday so we lost 3 contracts or 300 additional oz will not  stand for the March contract month.   The next big active contract month is April and here the OI fell by 354 contracts  to 185,092. We  have less than 3 weeks before first day notice, Monday, March 31.2014. The estimated volume today was fair at 166,813 contracts .    The confirmed volume yesterday was humongous at 270,599. 

The total silver Comex OI rose by 1391  contracts as silver was up  in price to the tune of 54 cents yesterday. The total OI now rests tonight at 138,016 contracts. The  big active delivery month for silver is March and here the OI  fell by 136 contracts  to 416. We had 114 notices filed yesterday so we lost  22 contracts or 110,000 additional ounces will not stand for metal in the March contract month.  It is inconceivable that so many would pitch their contracts or roll for no gain despite the huge geopolitical problems facing the globe.  It looks to me like the 110,000  oz was cash settled.   The estimated volume today was good at 39,623 contracts. The confirmed volume yesterday was huge  at 65,708 contracts.

Comex gold/ contract month

March 13.2014   the March delivery month.

Withdrawals from Dealers Inventory in oz
Withdrawals from Customer Inventory in oz
 1,318.15 (Scotia)
Deposits to the Dealer Inventory in oz
Deposits to the Customer Inventory, in oz
 60,044.745 (Scotia)
No of oz served (contracts) today
 0  (nil oz)
No of oz to be served (notices)
141  (14,100 oz)
Total monthly oz gold served (contracts) so far this month
10  (800 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month
 1399.97 oz  
Total accumulative withdrawal of gold from the Customer inventory this month

91,556.419 oz

Today we had some activity in the Comex gold vaults today and still no gold enters the dealer

We had 0 dealer deposits  and 0 dealer withdrawals

total dealer withdrawals:   nil oz

 we had 1  Customer deposit

i) Into Scotia  60,044.745 oz  (this arrived from a withdrawal from HSBC yesterday in the exact amount)

Total customer deposits:  60.044.745 oz

we had 1 customer withdrawals;

i) Out of HSBC:  1,318.15 oz

Total customer withdrawals: 1,318.15  oz

Today we had 0   adjustments

Thus tonight, we have the following JPMorgan inventory levels in gold;

JPM dealer inventory  remains  tonight at 214,097.318  oz or 6.659 tonnes

JPM customer inventory remains  tonight at: 602,530.808 oz  or 18.741 tonnes

Today, 0 notices was issued from  JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contracts  of which 0 notices were stopped (received) by JPMorgan dealer and 0  notices stopped by JPMorgan customer account. 
The total dealer comex gold  remains  tonight  at  637,591.610 oz or 19.830 tonnes of gold . The total of all comex gold (dealer and customer) rests at 7,139,540.141 oz or  222.069 tonnes.

Tonight, we have dealer gold inventory for our  3 major bullion banks(Scotia, HSBC and JPMorgan) with its gold inventory  resting  tonight  at only 16.319 tonnes.

i) Scotia:  157,966.367 oz or 4.913 tonnes
ii) HSBC: 152,612.868 oz or  4.747 tonnes
iii) JPMorgan: 2144,097.318 oz or 6.659 tonnes

total: 16.319 tonnes

Brinks dealer account which did have  the lions share of the dealer gold saw its inventory level remains constant tonight  at only 89,129.259 oz or 2.772 tonnes.  A few months ago they had over 13 tonnes of gold at its registered or dealer account.

Today we  had only 0 notices served upon our longs for nil  oz of gold.  In order to calculate what will be  standing for delivery in December, I take the number of contracts served so far this month at 10 x 100 oz  = 1000 oz      and add the difference between the number of OI for the front month (141 ) minus the number of notices filed today (0) 

In summary:

10 notices x 100 oz per contracts already served this March month or 1000 oz + (141) the OI for the front March month - the number of notices served today (0) x 100 oz =  15,100 oz,  the number of oz standing for the March contract month (.4695 tonnes).  We lost  300  additional oz of gold that will not stand for the March contract month.

As you will see below we have only 16.319 tonnes in the registered or for sale category for the big 3 (JPMorgan, HSBC,Scotia) and 19.091 tonnes if you include Brinks.(If you include the tiny Manfra, we end up with a total dealer gold of only 19.83 tonnes). We have witnessed little gold enter the dealer except from Brinks and adjustments

In Summary:

i) the total dealer inventory of gold settles tonight  at  a very dangerously low  level of only 19.83 tonnes.

i)  a) JPMorgan's customer inventory rests tonight at  602,530.808 (18.741 tonnes

ii  b)  JPMorgan's dealer account rests tonight at  214,097.318 oz (6.659 tonnes)

iii) the 3 major bullion banks have collectively only 16.319 tonnes of gold left in their dealer account.(JPMorgan, HSBC,Scotia)

and what is totally remarkable is the fact that little gold entered the dealer comex vaults despite December and February are  the busiest months for the gold calendar . Another oddity is that the only gold that does enter the customer account are kilobars and kilobars are generally of demand from Eastern persuasion.


now let us head over and see what is new with silver:


March 13/2014:

 March contract month final


Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventory 45,170.610 (Scotia, CNT)
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory nil
No of oz served (contracts)0 contracts  (nil oz)
No of oz to be served (notices)416 contracts ( 2,080,000 oz)
Total monthly oz silver served (contracts) 1726 contracts  (8,630,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month629,076.74 oz
Total accumulative withdrawal of silver from the Customer inventory this month2,952,478.8 oz

Today, we  had fair activity  inside the silver vaults.
 we had 0 dealer deposits and 0  dealer withdrawals.

total dealer deposit:  nil oz

Today we had zero dealer withdrawals:

We had 0 customer deposits:

Total customer deposit   nil    oz

We had 2  customer (eligible) withdrawals:

i) Out of Scotia:  30,170.610 oz
ii) Out of CNT;  15,000.000 oz (this is becoming a farce!! another perfectly round 15,000 oz)

total customer withdrawals:  45,170.610  oz
we had 1  adjustments

i) Out of brinks dealer:  1220.45 oz was adjusted out of the dealer and this
an accounting error.

Registered (dealer) silver   : 52.353 million oz  
total of all silver:                 183.270 million oz.

The CME reported that we had 0 notices filed for nil oz today. To calculate what will stand for this  active delivery month of December, I take the number of contracts served  for the entire  month at 1726  x 5,000 oz per contract or 8,630,000 oz to which we add the difference between the OI standing for March (416) minus the number of contracts served today (0) x 5,000 oz

Thus in summary, :  

1726 contracts  x 5000 oz per contract (served) or 8,630,000 oz  +  (416) OI standing for March - (0)  number of notices filed today  x 5000 oz  = 10,710,000 oz.  We lost another 110,000 oz standing for the March silver contract month.


The two ETF's that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.

***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold.  I can visualize demand coming to the buyers side:

i) demand from paper gold shareholders
ii) demand from the bankers who then redeem for gold to send this gold onto China

vs no sellers of GLD paper.

And now the Gold inventory at the GLD:

March 13:30  tonnage 813.30/ a gain of 2.1 tonnes of gold.  (great news)

March 12.2014: we lost exactly 1.5 tonnes of gold at the GLD.
Tonnage:  811.20 tonnes.

With demand for gold extremely high, there is no doubt that China is the likely destination of this gold as it heads to the vaults of the Shanghai Gold Exchange.

March 11.2014:  no change:  tonnage 812.70

March 10.2014: wow!!! we had another massive gain of  7.5 tonnes of gold into the GLD:  tonnage:  812.70

March 7.2014:  a gain of  1.5 tonnes of gold (and they whacked the yellow stuff today?)...again great news!!  tonnage:  805.20

March 6.2014:  no change again:  803.70 tonnes  (very good news)

March 5. 2014:  no change  803.70 tonnes  (very good news)

March 4.2014: no change  803.70 tonnes (very good news)

March 3.2014:  no change  803.70 tonnes (very good news)

Feb 28.2014: no change:  803.70 tonnes  (very good news)

For today, March 13.2014  we gained 2.1 tonnes of gold inventory at the GLD: tonnage:   813.30 tonnes


The registered  vaults at the GLD will eventually become a crime scene as real physical gold  departs for eastern shores leaving behind paper obligations to the remaining shareholders.   There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat  (same banks). 

As a reminder the total comex gold had inventories of around 11 million oz in 2011. Today the total comex gold remains at   7.139 million oz  (222.069 tonnes).

The total dealer comex gold remains at : 637,591.61 oz or 19.83 tonnes.

GLD gold:  813.30 tonnes.


And now for silver: as of 6 pm est

March 13.2014:  no change:

Inception Date4/21/2006
Ounces of Silver in Trust326,803,953.400
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

March 12/2014: no change

Inception Date4/21/2006
Ounces of Silver in Trust326,803,953.400
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

March 11.2014:  no change:

Inception Date4/21/2006
Ounces of Silver in Trust326,803,953.400
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

March 10.2014:  no change in inventory of silver at the SLV"

Inception Date4/21/2006
Ounces of Silver in Trust326,803,953.400
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

March 7.2014: no change in inventory:

Inception Date4/21/2006
Ounces of Silver in Trust326,803,953.400
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

March 6.2014:  no change in silver inventory

Inception Date4/21/2006
Ounces of Silver in Trust326,803,953.400
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

March 5.2014:  we lost 120,000 oz of silver from the SLV vaults.

Inception Date4/21/2006
Ounces of Silver in Trust326,803,953.400
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

March 4.2014:

Inception Date4/21/2006
Ounces of Silver in Trust326,923,758.700
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

March 3.2014:  no change

Inception Date4/21/2006
Ounces of Silver in Trust328,077,858.700
Tonnes of Silver in TrustTonnes of Silver in Trust
One metric tonne is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.

Feb 28.2014: no change:

Inception Date4/21/2006
Ounces of Silver in Trust328,077,858.700
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, March 12, no change in silver inventory  at the SLV

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

Note:  Sprott silver fund now deeply into the positive to NAV and the gold fund moved into positive terrotiry as well.

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 4.5% percent to NAV in usa funds and Negative  4.5%  to NAV for Cdn funds. March 12/2014)    

2. Sprott silver fund (PSLV): Premium to NAV rose to positive 3.29% NAV   (March 13/2014)
3. Sprott gold fund (PHYS): premium to NAV fell to positive +0.12% to NAV (March 12/.2014) 

Note: Sprott silver trust back hugely into positive territory at 3.29%. 
Sprott physical gold trust is back in positive territory at  +0.12%.

Central fund of Canada's is still in jail.


And now your overnight gold and silver trading and comments:

1. The following would be a killer move:  Putin demanding gold in payment for exports!!!!
2. USA Mint silver sales increase by 11%

(courtesy Goldcore/Mark O'Byrne)

Russia May Retaliate Sanctions By Demanding Payment For Exports In Gold

Published in Market Updates  Precious Metals Update  on 13 March 2014
By Mark O’Byrne

Today’s AM fix was USD 1371.00, EUR 982.30 and GBP 821.70 per ounce.
Yesterday’s AM fix was USD 1355.75, EUR 977.47 and GBP 817.01 per ounce.
Gold rose $20.10 or 1.5% yesterday to $1,367.10/oz. Silver surged 47 cents or 2.2% to $21.28/oz.
Putin and a Gold Bar
Gold extended gains to a third session today, reaching fresh six month highs as investors hedged geopolitical risks and Chinese economic slowdown fears. Gold hit $1,375.20, its highest since September 10 and has gained 14% so far this year on global geopolitical and macroeconomic risk.
A significant bond default in China and a weak exports report has sent equities and base metals lower in recent days. More data overnight showed China's economy slowed sharply in the first two months of the year, with growth in investment, retail sales and factory output all falling to multi-year lows.
The biggest factor driving gold prices at the moment is the increasing tension between the West and Russia over Ukraine. The EU agreed on a framework yesterday for its first sanctions on Russia since the Cold War.
Gold in US Dollars - 1 Year (Bloomberg)
This is a much stronger response to the Ukraine crisis than many expected and a mark of solidarity with Washington. Senior American military officials have been making hawkish sounds and warned that they are ready for a military response to Russia.
Russian government officials and businessmen are bracing for sanctions resembling those applied to Iran according to Bloomberg. Should Russian foreign exchange reserves and bank assets be frozen as is being suggested, then Russia would likely respond by wholesale dumping of their dollar reserves and bonds.
In retaliation, Russia could opt to only accept gold bullion for payment for their gas, oil and other commodity exports. This would likely lead to a sharp fall in the dollar and a surge in gold prices.
Currency wars could soon take the turn for the worst that many of us have warned of for some years.
Gold’s technical picture is increasingly positive after breaking resistance at $1,360/oz and the next levels of resistance are at $1,376/oz and $1,434/oz, the high from August 28th last year. In the short term, gold may be vulnerable to some profit taking and a period of correction and consolidation.
Silver Coin Sales Increase 11% as Price Declines 33% YoY
U.S. Mint sales of Platinum Eagle bullion coins rose by 200 Tuesday after advancing 8,500 on Monday, the first day of issue since 2008. Also higher on the day were sales of Silver Eagle coins. Sales rose 388,500 to above 1.1 million for the week, surpassing last week’s total.
U.S. Mint Silver Eagle Coins Sales and Silver in U.S. Dollars - Jan 2009 to March 2014 (Bloomberg)
February silver coin sales rose 11% yoy as prices fell 33% (see chart). Silver coin sales were down 22% from January. January produces sales spikes as collectors buy coins bearing the new year's date and bullion wholesalers secure their inventories of new year coins for the year ahead.
Silver prices have risen more than 9% ytd after falling 18% during the final five months of 2013. A record 42.6 million silver coins were sold in 2013, up 26% from 2012.
The American Eagle 1 ounce Silver bullion coin is the official U.S. national silver bullion coin, and is the world’s most widely sold 1 oz silver coin. In fact, over 335 million Silver Eagles have been sold since 1986. Download your Comprehensive Guide to the American Silver Eagle here.


Rob McEwen, founder of Goldcorp cites GATA and the first major CEO to acknowledge manipulation in the gold market:

(courtesy Rob McEwen/GATA)

McEwen acknowledges central bank intervention against gold, cites GATA

10:40p ET Wednesday, March 12, 2014
Dear Friend of GATA and Gold:
GATA got a compliment yesterday from Goldcorp founder Rob McEwen, now CEO of McEwen Mining --
-- who seems to have become the first major mining executive to speak candidly about and to acknowledge central bank intervention against the price of gold.
McEwen's comments came in response to a question during McEwen Mining's fourth-quarter and year-end financial results conference call. He was asked what he thought of the growing number of complaints about manipulation of the gold market and whether it would be good for him to complain about it to the Bank of Canada.
McEwen's reply begins at the 24:07 mark in the recording archived here:
A slightly edited transcription is appended.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


David Stockman talks about the dangerous game the USA is playing in the Ukraine

(courtesy David Stockman/Eric King)

West playing dangerous and provocative game in Ukraine, Stockman says

4:20p ET Wednesday, March 12, 2014
Dear Friend of GATA and Gold:
Former U.S. Budget Director David Stockman today tells King World News that the West is playing a dangerous and provocative game with Ukraine and Russia with implications for gold:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc


Charts on gold:


The case for gold right now

4:15p ET Wednesday, March 12, 2014
Dear Friend of GATA and Gold:
The Internet site of Centennial Precious Metals in Denver,, today publishes "The Case for Gold Right Now," complete with self-updating charts showing that the problems of the financial system since the crisis of 2008 have not been fixed and that gold remains almost insanely cheap:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


And now, Bill Holter describes a case for technical analysis in gold as long as we deal with long term charts.  In the short run, manipulation destroys technical analysis on gold.

(courtesy Bill Holter/Miles Franklin)

Mirror images?

Gold and the dollar are supposed to be mirror images of each other on the charts.  This only makes sense as gold is commonly referred to as the "anti-dollar."  Over the past 10 plus years Jim Sinclair has referred to this "mirror" relationship many many times.  I can remember so many times in the past where on individual days this did not hold true and the "bashers" would come out of the woodwork to attack Jim.  They would say things like, "Look, if they are mirror images then how do explain this?" I had not seen a "monthly" chart on the dollar for quite a while but I had my suspicions so I again asked my buddy Trader Dan Norcini if he could send it.  Send it he did, look at this.

Just as I suspected, the dollar is again rolling over to the downside from the not so lofty level of the 80-82 range.  In fact, from a short term standpoint we have now had 4 closes under 80 ...AND closed the week under the all-important "80" level.  A break under 79 should at least lead to a test of 76.  It is important to understand that the dollar is now under all of the important moving averages which are quite bearish.  While the dollar is still in a defined triangle, the MACD's have crossed to the downside.  Whether we break the bottom of the triangle or not, it does look to me that at least a test of the support will occur.  Below is the chart of gold which I sent 2 weeks ago, the MACD's have not crossed yet (the HUI has for sure), this looks like a double bottom to me and resumption to the upside.
If you compare the 2 charts of gold and the dollar, they really do look like mirror images.  As the dollar strengthens or weakens, generally gold is doing the opposite.  The opposite as in making either highs or lows in the inverse.  So while they are not mirror images on a daily chart and not exact mirrors on a percentage basis, these longer term charts really show the inverse longer term relationship that we would expect.
I wanted to show you these 2 charts together not so much to show the "inverse" nature but to show you that they are both telling a "story"...the SAME STORY!  The "MACD's" are crossing up in gold and down in the dollar which auger well for a sustained move upward in gold while further weakness in the dollar. Some people will tell you that charts are worthless, especially because the markets (all markets) are manipulated.  They say that charts only show what has happened rather than offer you clues as to the much more important "what will happen."  I tend to agree with this the short term daily charts and maybe even the weeklies.  But, when it comes to the very long term monthly charts, painting these is next to impossible just as holding back the tides are.  The long term charts are very difficult "make lie."
Chartists are a different breed.  Some read only charts while others read the charts but will only act if the chart is pointing them in the direction that they also believe the fundamentals are pointing.  An example of this would be Jim Sinclair.  He reads charts but will not take a position contrary to what he believes the fundamentals to be.  For example, I don't believe Jim would ever "short" gold or silver in today's environment even if the charts looked like they were topping out.  I say this because he knows that fundamentally the U.S. is broke and issuing valueless "chits" (dollars), he knows that it could be any given day that the dollar collapses for any number of reasons.  He will (already has) "load the boat" however when the charts are in agreement with the fundamentals which they are right now.  
Other chartists like Bo Polny who have had great track records don't really care about the fundamentals.  In fact, they don't even care "what" the chart is.  It makes no difference whether the chart is one of soybeans, stocks, interest rates, currencies, oil or what have you.  "The chart is the chart" and it makes no difference what the underlying asset is.  I personally don't agree with this but I am not good enough or smart enough to read the short term I don't try to.  Bo was at the Austin Q+A seminar with Jim Sinclair.  I heard Bo with my own ears "call bottom" on that Saturday afternoon.  He said, "We may have a down day Monday or Tuesday but we have bottomed and are turning up into a bull market that will last several years and be very powerful in the gold market."  So far he just about called it to the day (which he first did last June and was correct) as we have rallied over $125 since then.  He has also recently as of last week called for the dollar to break down and he sees the 79-80 level as very significant.  We will see if he is correct, the long term charts tell me that he is...again.
Many times over my career the charts of various assets would be saying that "something" was going to happen...and then all of a sudden out of the blue it would.  The news could be anything from a drought or flood, a buyout or an unknown and unexpected "loss," a lawsuit, a war, a death or a law change.  It didn't matter "what" it was...but it was something that forced the market (particular stock or commodity) to move.  To a pure chartist it doesn't matter "why," what matters is whether the chart was "speaking to them" and whether they were on the right side or not.  
Here is my perspective on the "charts" and the mirror images they have shown and what they mean now.  I preface this with "the markets are all rigged and charts are painted" the short term and with ALL "their" might ...and that I am not a chartist but a fundamentalist by heart.  The long term charts as I've said are hard to "paint," particularly in the dollar market because of the sheer size of this market.  The dollar chart is telling me that something bad, and dollar negative is about to occur.  The "fundamentals" certainly support this whether you look strictly at the financial facts that the U.S. is bankrupt or you look at geopolitical events where the U.S.'s "power" is waning.  It makes no difference "what" it is that is out there, what does matter is that the dollar looks vulnerable and its "mirror" gold looks even more powerful.  It is also important that you understand that this is "happening" now, right now, the MACD's are telling you this!  Do I know "THE" day that this will be recognized?  No, of course not but at this point it looks like the "bottom" for gold has already occurred and the "top" in the dollar as well is in the rear view mirror.
If I had to guess, I would say that some sort of geopolitical event will take place that "isolates" or shines the spotlight on the U.S. and our finances.  This could be anything from the Saudi's accepting another currency other than the dollar for their oil, the Chinese announcing a 5,000+ metric ton hoard of gold or Russia invading the Ukraine unopposed.  It could be something as simple as us issuing sanctions that either backfire or are not adhered to by our allies.  It could be something as simple as the G-20 telling us that we are not invited to their next meeting.  It could be...literally anything.  
Not knowing "what" might be the "trigger" however it is not a problem.  As long as you understand what it means.  "Means" as in gold will move higher and the "standard of living" (the dollar) will move lower.  ALWAYS in the past, whenever something "bad" happened the dollar would always strengthen and rally.  It did this because the U.S. was seen as a safe haven with a strict rule of law and a military to back it all up.  The next time that you see that "something bad" has what the dollar does and also watch what gold does.  The monthly charts are screaming up in gold and whispering down in the dollar, if these moves begin to accelerate on some sort of bad news then you will know that the game has changed!  The "fundamental meaning" is that the Sun is setting on the West.   Regards,  Bill Holter


Now the Swiss financial newspapers are noting gold market manipulation:

(courtesy GATA)

Swiss financial newspaper notes gold market manipulation issue

4p ET Wednesday, March 12, 2014
Dear Friend of GATA and Gold:
The twice-weekly Swiss newspaper Finanz und Wirtschaft (Finance and Economics), based in Zurich, yesterday published a long article headlined (translated from German into English) "The Manipulated Gold Market." While in the fashion typical of mainstream financial journalism it attempts no original reporting, is entirely derivative, and even presumes to use the word "rumors" as if reams of documentation aren't available --
-- at least it calls attention to the issue and implicitly invites others to undertake actual financial journalism someday.
The article is posted at the Finanz und Wirtschaft Internet site here --
-- and if you open it in Google Chrome and accept the option of running it through Google Translator, you'll get an English translation that gives a pretty good idea of the content.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


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

First your overnight trading from Asia and Europe:

1. Stocks  in the positive in Shanghai and negative in Hang Sang   with the stronger yen values (climbing  to 102.62).
2 Nikkei closed down 14 points or 0.10%   as USA/Yen falls below 103 to close at 102.62. 
3. Europe stocks mixed despite USA/Yen fall//Euro up/USA dollar index way down. 
4. Deteriorating conditions in the Crimea/ Closer to sanctions by the EU and USA/Chinese exports fall. Big misses in Chinese industrial production fixed investments and retail sales /Fears of the great yuan/dollar carry trade/Total collapse in Japanese inflows/another current account deficit/Bank of Japan disappoints.
4b Shanghai composite sits below levels reached in 2009.  The S and P up 2.7 times in price terms 
5.  USA 10 yr treasury bond at 2.73% early this morning.
6. Details Ransquawk/Bloomberg/Jim Reid Deutsche bank

(courtesy zero hedge/Bloomberg/Jim Reid Deutsche bank)

Futures Rise On Big Misses In Chinese Industrial Production, Retail Sales And Fixed Investment

Tyler Durden's picture

It was another day of ugly overnight macro data, all of it out of China, with industrial production (8.6%, Exp. 9.5%, Last 9.7%), retail sales (11.8%, Exp. 13.5%, Last 13.1%) and fixed asset investment (17.9% YTD vs 19.4% expected) all missing badly and confirming that in a world of deleveraging, the Chinese economy will continue to sputter. Which is precisely what the "bad news is good news" algos needs and why futures levitated overnight: only this time instead of latching on to the USDJPY correlation pair, it was the AUDJPY which surged after Australia - that Chinese economic derivative - posted its third best monthly full-time jobs surge in history! One can be certain that won't last. But for now it has served its purpose and futures are once again green. How much longer will the disconnect between deteriorating global macro conditions and rising global markets continue, nobody knows, but sooner rather than later the central planner punch bowl will be pulled and the moment of price discovery truth will come. It will be a doozy.
In Europe, stocks traded mixed this morning, with the FTSE-100 index underperforming its peers following the release of less than impressive earnings by Morrisons, shares down around 10%. As a result, heading into the North American cross over, consumer services sector is among the worst performing, while the recovery by base metals also ensured that basic materials related stocks traded higher. Still, the move higher was led by financials, with Commerzbank trading with good gains following an upgrade by SocGen to buy rating.
Looking elsewhere, in spite of the bounce back by stocks this morning, USD/JPY traded lower, with Swiss rates also bid, as market participants remained vary of any future shocks stemming from China amid fears of more corporate defaults. On that note, Chinese Premier Li said that China is to take measures to regulate local financing vehicles and ensure no systemic financial risks arise from defaults. Of note, Ireland made a successful return to markets, selling its first 10y bond since entering the bailout in 2010.
Going forward, market participants will get to digest the release of the latest weekly jobs and retail sales reports from the US, while the US Treasury will auction off USD 13bln in 30y bonds.
Bulletin headline summary from Bloomberg and RanSquawk
  • FTSE-100 index underperformed its peers following the release of less than impressive earnings by Morrisons, down 10% at the open.
  • Chinese Premier Li said that China is to take measures to regulate local financing vehicles and ensure no systemic financial risks arise from defaults.
  • Bundesbank's Weidmann said that it is premature to declare euro zone debt crisis over, adding that ECB’s expansionary monetary policy stance is appropriate.
  • Treasuries steady before week’s auctions conclude with $13b 30Y bonds, WI yield 3.675% vs 3.69% at February sale; retail sales due at 8:30am ET, est. +0.2%
  • Yesterday’s $21b 10Y reopening was awarded at 2.729%, about 1.5bps below WI yield at 1pm according to Stone & McCarthy
  • Other metrics strong, including highest bid-to-cover and lowest primary dealer award lowest since March 2013, as increase in direct award offset drop in indirects
  • China’s industrial-output, investment and retail-sales growth cooled more than estimated in January and February, signaling an economic slowdown that makes the government’s 2014 expansion target harder to reach
  • Chinese Premier Li Keqiang said there’s some flexibility around the nation’s target of 7.5% growth this year without specifying how much of a slowdown leaders would tolerate
  • Russian government officials and businessmen are bracing for sanctions resembling those applied to Iran after what they see as the inevitable annexation of Ukraine’s Crimea region, according to four people with knowledge of the preparations
  • Australia boosted payrolls in February by the most in more than 22 years, with the number of people employed full time rising by 80,500; overall employment climbed 47,300 vs 15k  median estimate
  • New Zealand raised its key interest rate, the first developed nation to exit record-low borrowing costs this year, and said it plans to remove stimulus faster than previously forecast to contain inflation
  • The missing Malaysian airliner kept flying after it dropped off controllers’ radar screens, raising new questions about whether foul play was involved, according to people familiar with data gathered in the inquiry
  • Sovereign yields mostly lower. EU peripheral spreads little changed. Asian equities mixed; Nikkei and Topix lower, Shanghai +1%. European equity markets, U.S. stock-index futures gain. WTI crude and copper lower, gold gains
US Event Calendar
  • 8:30am: Retail Sales Advance, Feb., est. 0.2% (prior -0.4%); Retail Sales Ex Auto, Feb., est. 0.1% (prior 0.0%); Retail Sales Ex Auto and Gas, Feb., est. 0.2% (prior -0.2%)
  • Retail Sales Control Group, Feb., est. 0.2% (prior -0.3%)
  • 8:30am: Initial Jobless Claims, March 8, est. 330k (prior 323k)
  • Continuing Claims, March 1, est. 2.903m (prior 2.907m)
  • 8:30am: Import Price Index, Feb., est. 0.5% (prior 0.1%)
  • 9:45am: Bloomberg Consumer Comfort, March 9
  • 10:00am: Business Inventories, Jan., est. 0.4% (prior 0.5%)
  • 2:00pm: Monthly Budget Statement, Feb., est. -$195b (prior - $203.5b)
  • 11:00am: Fed to purchase $3.25b-$4b in 2018 sector
Asian Headlines
Chinese Premier Li said that China is to take measures to regulate local financing vehicles and ensure no systemic financial risks arise from defaults. (BBG)
- At the same time, Moody's said that non-financial companies in China will see little effect from the Chaori Solar default as their exposure to any follow-on tightening is limited.
- This follows the first corporate bond default in China's history last Friday, with markets keenly focused on what could be the next domino to fall.
Of note, JGBs closed sharply lower and had a brief moment of extreme volatility as it spiked to the downside by 1 point but then immediately pared the large majority of the move, which was attributed to a rogue algorithmic trade and a sharp reaction to the Bank of Japan's decision to buy JPY 170bln of long-term bonds vs. Exp. JPY 180bln. In terms of Chinese data released overnight:
- Chinese Industrial Production YTD (Feb) Y/Y 8.6% vs. Exp. 9.5% (Prev. 9.7%) - Retail Sales YTD (Feb) Y/Y 11.8% vs. Exp. 13.5% (Prev. 13.1%)
EU & UK Headlines
Bundesbank's Weidmann said that it is premature to declare euro zone debt crisis over, adding that ECB’s expansionary monetary policy stance is appropriate. Also, even though Bundesbank's Weidmann said that the risk of widespread deflation in the Eurozone is very limited, EU inflation indicators (ie swap rates) continued to point to growing fears of lower inflation for a prolonged period of time, with 2y inflation swap rate falling to its lowest since late 2008.
This morning, Italy sold EUR 7.75bln vs. Exp. EUR 7.75bln worth of BTPs, while the Irish debt agency successful returned to markets with its first 10yr auction since entering the bailout in 2010.
US Headlines
Congress will fail to approve an aid package to Ukraine before a Sunday referendum in Crimea, where voters will decide whether to break away from Kiev’s government to join Vladimir Putin’s Russia. (TheHill) While a Senate panel on Wednesday approved legislation in a bipartisan vote, aides said differences between the House and Senate will prevent Congress from completing its work before lawmakers leave Washington on Friday for a weeklong recess.
Consumer services sector underperformed since the open, following earnings by Morrison's, which consequently weighed on other retailers such as Tesco and Sainsbury's. At the same time, with stocks trading higher enabled credit spreads to reverse some of the recent widening, which when combined with a positive broker recommendation by SocGen meant that financials outperformed on the sector breakdown.
Resumption of the downward trend by USD/CNY following the conclusion of the annual congress meeting in China, together with the pick up in sentiment saw the USD index fall to its lowest level since late October 2011. In turn, EUR/ USD advanced to its highest level since September 2011, in spite of the fact that there remains a growing risk of deflation in the joint currency bloc.
AUD benefited from a rebound by gold prices and also the release of better than expected jobs report which also saw the pair move above its 100DMA line. Also of note, RBNZ hiked their Official Cash Rate by 25bps to 2.75% as expected, adding that NZD remains a headwind and that the current exchange rate is not sustainable in the long-run.
Credit Suisse says platinum selling at USD 1,550/oz is possible on continuation of strikes in South Africa. (BBG)
Peruvian silver mine Uchucchacua owned by Bueaventura has been hit by a miners strike. The Union leader said it was based on the dismissal of 10 employees and the need for better working conditions that has halted production.
Estimated output loss is 324,000 kilos of silver. (RTRS)
The decision to release 5mln bbls of crude from the US Special Petroleum Reserve is a 'warning shot' to Russia saying the decision has been engineered as a warning shot to Russia over the Ukrainian crisis, with the US excuse of 'testing operations' as too close to coincidence, according to analysts at SocGen. (BBG)
Arab countries will extend aid to Egypt in the form of petroleum products until at least September, according to Egyptian Finance Minister Dimian. (RTRS)
* * *
We conclude with the traditional overnight recap by DB's Jim Reid
As we went to print this morning China printed its retail sales, industrial production and fixed asset investment data for February. Overall the data is disappointing, which doesn’t help the general nervousness over the Chinese growth story at the moment, but again we need to be wary of seasonal factors. For the record China’s February industrial production (8.6% YTD YoY vs 9.5% expected), retail sales (11.8% YTD YOY vs 13.5% expected) and fixed asset investment (17.9% YTD YoY vs 19.4% expected) were all below consensus. In reaction, S&P500 futures are down about 1pt as we type and the AUD is down 20 ticks. Earlier this morning we saw better sentiment return to Asian markets but volumes were generally on the low side. In China, Premier Li spoke to reporters to mark the end of the National People’s Congress. Li said that he was aware of the downside risks to the Chinese economy but assured that the government will take measures to ensure growth was within a reasonable range, to secure jobs and to prevent inflation. Amid all the concern about corporate and trust defaults, Li indicated that though he did not want to see defaults of financial products, some defaults cannot be avoided. He also stated that the government must ensure that there is no systemic financial risk arising from debt market problems. The words have helped the closely-watched Shanghai Composite (+1.2%) lead the rest of the region’s bourses higher overnight but it’s safe to say that sentiment remains pretty fragile. Adding to the jumpiness in Asia is a potential “fat finger” incident in the JGB futures market overnight, which saw the 10yr contract collapse by more than 1pt in a matter of seconds before swiftly recovering most of those losses.
Nevertheless, confidence there has been weakened today and 10yr JGB yields are up 1.5bp. In Australia, the AUDUSD (+0.9%) spiked higher following a significantly stronger than expected employment report (+47k vs 15k expected).
A surprising turnaround in sentiment during the NY session helped the S&P 500 (+0.03%) record a small gain yesterday and in the process avoid its first 3- day-consecutive fall in nearly two months. The catalyst for the NY morning rally was unclear but it might have been a combination of a rally in copper futures (both in London and Shanghai) and news that US Secretary of State John Kerry will be meeting with Russian Foreign Minister Sergey Lavrov in London on Friday to discuss the Ukraine crisis. Some dovish prepared remarks from the Fed nominees Fischer, Brainard and Powell ahead of their Senate nomination hearings today perhaps also helped.
Aside from the headlines on the Kerry-Lavrov London meet up, yesterday’s EM news flow was hardly confidence-inspiring. The MSCI EM equity index closed down -1.2% and the CDX EM credit index (-0.25points) notched up its fourth straight loss but those losses could have been larger were it not for the abrupt risk turnaround during the NY session. Reports of anti-government unrest in Turkey intensified yesterday and the BBC said that there were violent protests in at least 32 towns and cities across the country that were partly triggered by the funeral of a youth who had tragically passed away earlier in the week (BBC). Turkish bond yields spiked another 10bp, but still fared better than Russian 10yr USD bonds which sold off more than 20bp in yield terms yesterday. US and European lawmakers appeared to be inching slowly towards imposing sanctions against Russia, and the G7 issued a statement to the effect of condemning Russia’s actions in Crimea. The G7 also announced that the group has cancelled preparations for the next G8 summit in Sochi. Russian president Putin was said to have told his finance minister and central bank governor that he was dissatisfied with Russia’s economic growth rate (Reuters), but there was very little other detail provided on the discussions.
There were a few bright spots in EM, such as in India where there was better dataflow in the form of industrial production (January +0.1% vs -0.9% expected) and CPI (8.1% vs 8.3% consensus) but even that failed to inspire the INR (-0.44% against the USD).
Though we saw the S&P500 recover back to unchanged on the day and US treasuries close 4bp lower, there was surprisingly little macro data from the US to drive markets. Perhaps the biggest news was the release of prepared statements from the trio of Fed Board of Governor nominees. Of those, the most closely watched were the comments from the Fed vice-chair nominee Stanley Fischer who was on balance fairly dovish. He said that the Fed needed to remain very accommodative as “normalcy has not been restored”. He was referring to the unemployment rate which he thought was still too high and inflation which was below target. Interestingly, there was fair amount of commentary from Fischer on the Fed’s financial regulation role, saying that the financial crisis had driven home the lesson that the Fed also has to contribute its part to financial system stability. Staying on the Fed, the WSJ’s Hilsenrath wrote in a blog that the Fed’s rate guidance is likely to change, possibly at the next policy meeting on March 18th-19th with a shift away from unemployment-oriented guidance. He writes that Yellen’s next challenge is to rewrite guidance without unanchoring market expectations. Yesterday saw the front end of the UST curve underperform, with 2yr yields largely unchanged despite the rally in 10yr and 30yr.
Returning to the topic of Ukraine, our EM strategists write that the crisis there is still at a dangerous stage and the economic element to the crisis has yet to be resolved. Ukrainian FX reserves are now more or less exhausted and exchange controls have therefore been tightened to prevent a freefall in the currency. This has bought a little time but is not a sustainable solution in their view. They estimate that about US$35bn of external financial assistance is needed. Public debt is moderate at 40% of GDP but will inevitably increase significantly. This is partly because about 60% of government debt is denominated in foreign currencies. Against this backdrop, they consider whether there is a case for bailing in the private sector and suggest an alternative approach to private sector involvement which could involve the voluntary exchange of short-dated for longer-dated bonds. The nature of the situation in Ukraine (a relatively low debt stock, but considerable short-term uncertainty) make for ideal conditions for a “PSI-lite” approach such as this, which could be beneficial for Ukraine and for investors.
Turning to the day ahead, the focus will be on US retail sales and the Senate nomination hearing for Stanley Fischer (mainly the Q&A given that the prepared remarks have already been published). The Senate committee will also consider the nomination of Lael Brainard and renomination of Jerome Powell to a new term at the Fed. US weekly initial jobless claims, French and Italian CPI are the other major data points today.


Another banker trader commits suicide:

(courtesy zero hedge)

Another Trader Commits Suicide, Brings Total Recent Banker Deaths To 10

Tyler Durden's picture

For a market that is flirting with all time highs on a daily basis, the recent banker and trader suicide epidemic seems oddly out of place. And yet, it continues to claim even more victims, with the latest casuality being Edmund Reilly, 47, a trader at Midtown's Vertical Group, who as the Post reported, jumped in front of an LIRR train station yesterday at 6 am near the Syosset train station and was pronounced dead at the scene.
A Manhattan trader was killed Tuesday morning by a speeding Long Island Rail Road commuter train, marking at least the seventh suicide of a financial professional this year.

Edmund (Eddie) Reilly, 47, a trader at Midtown’s Vertical Group, jumped in front of an LIRR train at 6 a.m. near the Syosset train station. He was declared dead at the scene.

Reilly’s identity was confirmed by Salvatore Arena, an LIRR spokesperson, who said an investigation into the incident was continuing.

Passengers on the west-bound express train told MTA investigators they saw a man standing by the tracks before he jumped in front of the train, Arena said.

“Eddie was a great guy,” Rob Schaffer, a managing director at Vertical, told The Post in an email. “We are very upset and he will be deeply missed.”

The divorced father of three had rented a house around the corner from his ex-wife, Michelle Reilly, in East Norwich, NY.

One family friend, who said he spoke to the trader on Sunday, told The Post that Reilly “didn’t look good.”
This latest death brings the recent banker death tally to 10:
1 - William Broeksmit, 58-year-old former senior executive at Deutsche Bank AG, was found dead in his home after an apparent suicide in South Kensington in central London, on January 26th.
2 - Karl Slym, 51 year old Tata Motors managing director Karl Slym, was found dead on the fourth floor of the Shangri-La hotel in Bangkok on January 27th.
3 - Gabriel Magee, a 39-year-old JP Morgan employee, died after falling from the roof of the JP Morgan European headquarters in London on January 27th.
4 - Mike Dueker, 50-year-old chief economist of a US investment bank was found dead close to the Tacoma Narrows Bridge in Washington State.
5 - Richard Talley, the 57 year old founder of American Title Services in Centennial, Colorado, was found dead earlier this month after apparently shooting himself with a nail gun.
6 - Tim Dickenson, a U.K.-based communications director at Swiss Re AG, also died last month, however the circumstances surrounding his death are still unknown.
7 - Ryan Henry Crane, a 37 year old executive at JP Morgan died in an alleged suicide just a few weeks ago.  No details have been released about his death aside from this small obituary announcement at the Stamford Daily Voice.
8 - Li Junjie, 33-year-old banker in Hong Kong jumped from the JP Morgan HQ in Hong Kong this week.
9 - James Stuart Jr, Former National Bank of Commerce CEO, found dead in Scottsdale, Ariz., the morning of Feb. 19. A family spokesman did not say whatcaused the death
10 - Edmund (Eddie) Reilly, 47, a trader at Midtown’s Vertical Group, commited suicide by jumping in front of LIRR train


Then this:

(courtesy zero hedge)

31 Year Old Son Of Jon Corzine Reported Dead

Tyler Durden's picture

He may not have been a banker or trader, but the just reported passing of one Jeffrey Corzine, 31, son of the infamous Jon Corzine will likely raise more eyebrows than all previous recently reported banker deaths combined.
According to the NY Post, Jeffrey Corzine, who friends said worked as a drug counselor in California, was just 31, when he passed.  Details of his death were not immediately known.
"Mr. Corzine is obviously devastated by this tragic loss,” said his spokesman, Steven Goldberg. “We ask that all respect his family’s privacy during this very difficult time."
He was a constant by his father’s side in the days after the former governor’s near-fatal car crash in 2007.
The youngest of the former politician’s three children with ex-wife Joanne Corzine, Jeff also had launched a fledgling photography website. The photography site, which features photos of walls, nature, and various semi-nude women, can be found here.

And now let the conspiracy theories surrounding the death of the young Corzine begin.


Stratfor which a detailed look at the Ukraine's oligarchs and how they will play a decisive role in what happens to the Ukraine:

(courtesy Stratfor)

the Ukrainian oligarchs:

Ukraine's independence from the Soviet Union was followed by the privatization of state-owned assets, giving birth to a powerful class of business leaders known as oligarchs. Since the country's founding, they have played a crucial role in the political system -- there are close ties between Ukraine's oligarchs and the evolution of the country's political crisis. This was most recently illustrated in Donetsk on March 9, when Ukrainian presidential hopeful Vitali Klitschko met with Rinat Akhmetov, the country's richest man, to discuss the ongoing situation.

The oligarchs function as a bridge between the Western-leaning interim government and Russia's interests in the country, especially in the Ukrainian east. They will play a key role in negotiations over Ukraine's political future and will prove pivotal in shaping any Ukrainian administration's relationship with Russia.

Similar to Russia, the rapid transition to capitalism in Ukraine allowed politically connected individuals to amass tremendous wealth as they acquired and monopolized assets spanning the country's metals, chemicals and energy distribution industries, among others. But Russia has a long tradition of centralized power, and as the Kremlin regained its strength, Moscow subsumed or eliminated these wealthy individuals. Kiev wields no such political might. Ukraine's oligarchs were never fully subordinated by the government; their power only grew.

The result is a political system in Ukraine that continues to depend highly on the patronage and support of oligarchs. All major political parties and candidates for powerful posts in parliament and the executive office have their respective oligarch backers. For instance, figures such as Akhmetov, who holds a dominant position in the country's steel and coal production, and Dmytro Firtash, a major player in the power and chemicals industry, have been leading financiers of former Ukrainian President Viktor Yanukovich's Party of Regions. Other oligarchs, such as Igor Kolomoisky, a banking and industrial magnate, have kept out of direct politics, forging short-term situational alliances with various politicians.


OK, now let us see the chronological big stories surrounding the Ukraine today.

Late in our evening/early this morning in Ukraine. Looks like a run on the Ukrainian based banks

( courtesy zero hedge)

Crimea Bank Runs Begin As "Bail-In" Risks Arise

Tyler Durden's picture

While the sight of Russian flags, pro-Russian troops, and Russian navy ships in Crimea is now a day-to-day thing; this morning brings a new normal for the eastern Ukraine region - long lines at bank ATMs as the bank runs have begun. We noted last night the dreaded inversion of Ukraine's yield curve, the greater-than-50% yields on 3-month Ukraine government debt, and the pressures on local bank debt maturities as the ability to garner dollars cost-effectively was becoming a problem but on the heels of concerns by the head of the central bank that moving cash in Crimea was difficult, ATM withdrawal limits have been cut. People in long ATM lines are reported to be concerned because "banks are closing" but it is Deutsche Bank's comments this morning that raised many an eyebrow as they suggest that Ukraine's debt is pricing in a "burden-sharing" haircut for bondholders (which as we have seen in the past - in Cyprus - can quickly ripple up the capital structure and become a depositor haircut).
Quiet calm bank runs are beginning in Ukraine...
h/t @MarquardtA

As Deutsche Bank raises the prospect of bail-ins and Private-Sector-Involvement (PSI) in bailing-in the banks and government...
...given the recent experience of IMF programs it is natural to ask whether some form of 'private sector involvement' (PSI) will be proposed as part of any package of support.

The IMF itself recently published a consultation paper arguing that private sector debt restructurings had “often been too little, too late” and that the fund should look at ways to avoid its “resources eing used simply to bail out private creditors”. The ongoing consultation process which this paper nitiated is one reason why concerns over IMF-sponsored restructuring are more prevalent for Ukraine now than they have been in similar situations in the past. However, we think it unlikely that there will be  ignificant change in the Fund’s approach towards Ukraine, given that the consultation is still ngoing, views are divided and its outcome remains uncertain. Nevertheless, that does not mean that some form of PSI will not be considered, condoned, encouraged or even mandated and so it is useful to onsider the pros and cons from the perspective of the Ukraine (and its potential official sector inanciers) and the implications for private sector creditors.
[Of course PSI can take on many forms from debt-extensions to bondholder haircuts to further up the capital structure depositor haircuts]
...current market prices are relativelyconsistent with such a scenario of PSI-lite. Indeed, the current relative pricing of Ukrainian bonds are very unusual: the pricing of short-dated bonds are distressed, implying arelatively high probability that they won’t redeem at par, but on the other hand the narrow range of prices across the curve suggests that the market assumes a high recovery in the event of a default/restructuring.
Such pricing would be fair, considering a baseline scenario involving an IMF program and an orderly adjustment. However, it leaves little compensation for a more disorderly scenario. Tensions with Russia show no sign of abating and could escalate further. Also there is no guarantee that the new government has a strong enough popular mandate to carry through the necessary reforms. PM Yatseniuk has emphasized that the road ahead for Ukraine will not be easy, but only time will tell how united the country will be in following the path he intends to take.
We suspect a brand new populist PM is unlikely to remain in power long if depositor haircts were engaged - and would certainly not imbibe the eastern Ukraine region with the country's new leader.

It is also notable that these bank runs are focused on local Ukraine/Russian banks...


And now this morning our time:

First off, we had this bombshell:  Merkel warns Putin.  Germany has so much to lose and yet they warn Putin of  "massive damage" on both sides:

(courtesy zero hedge)

Merkel Warns Putin Of "Massive Damage", Russia Continues Piling Troops, Pro-Russia Oligarch Arrested, Gazprom Speaks

Tyler Durden's picture

It's crunch time for Ukraine.
With just over two days to go until the Crimea referendum, all the actors are stepping up the diplomacy to a fever pitch in a desperate attempt to talk Putin out of formally annexing the peninsula following results which are well-known in advance will show the population's allegiance to mother Russia. But while the generic rhetoric is well-known, one surprising place of escalation over the past 24 hours has been Germany's Angela Merkel, who for the most part had been willing to stay on the sidelines in the war of words, has suddenly stepped up her own phrasing, and warned Moscow on Thursday that it risked "massive" political and economic damage if it refused to change course on Ukraine, saying Western leaders were united in their readiness to impose sanctions on Russia if necessary.
Reuters reports that the chancellor, using her strongest language since the start of the crisis and removing any suspicion that Germany might seek to avoid a confrontation with President Vladimir Putin, said his actions would lead to "catastrophe" for Ukraine and much more.
"We would not only see it, also as neighbours of Russia, as a threat. And it would not only change the European Union's relationship with Russia," she said in a speech in parliament. "No, this would also cause massive damage to Russia, economically and politically."
Merkel has acknowledged that her efforts to persuade Putin to negotiate via a "contact group" with the transition government in Kiev - which he accuses of ousting Russian-backed president Viktor Yanukovich unlawfully - have failed and time is running out.
"To be absoultely clear, none of us want it to come to such measures but we are all ready and determined to if they are unavoidable," said Merkel.
Germany receives over a third of its gas and oil from Russia and over 6,000 German firms are active there. A poll last week showed that a majority of Germans oppose sanctions against Russia. So is Merkel doing the Western thing, and bluffing in a last-ditch effort to convince Putin she isn't, or does Putin still believe he has all the trump cards, and can bring the German economy to a crawl if Merkel acts out on her threat? We will known as soon as Sunday night.
Elsewhere, John Kerry headed out to London for some last ditch Russia talks on Ukraine. Expect this "effort" too to lead exactly nowhere.
In the meantime, Russia's response is well known, which is more of the same - and the Russian Ministry of Defensemade it quite clear what the next steps are when it announced that the large-scale maneuvers near the Ukraine border now involve some 8,500 troops, 270 tanks and 180 APCs.
An indication of how "seriously" Russia takes the diplomatic threats was the news that it is ready to impose counter-sanctions. WSJ reported that Russia’s economy ministry is looking at what the consequences of possible sanctions from the West would be and stands ready to impose similar penalties, deputy economy minister Alexei Likhachev said Thursday.
We are ready for any developments, all options are being considered. But we hope that it will impose specific political sanctions but not a wider range of some trade and economic decisions,” Mr. Likhachev said.

Mr. Likhachev said Europe is unlikely to impose harsh sanctions against Russia as both sides have strong business and trade ties.

Unlike Europe, which is Russia’s major trading partner, the U.S. has more room to impose sanctions, he added.

“Our sanctions will be symmetric,” Mr. Likhachev said.
But it wouldn't be a Russian response if Gazprom didn't make an announcement or two. Which it did:
  • Gazprom CEO: Ukraine’s Failure to Repay Gas Deliveries Debt Puts Company Dividend Policy At Risk
  • Gazprom CEO: Ukraine Debt for Gas Deliveries Now at $1.8 Billion, Keeps Growing
  • Gazprom CEO: Ukraine Political Crisis Detrimental For Company’s Investment Program
  • Gazprom CEO Seeking Clarity On Gas Payments From Ukraine
  • Gazprom CEO Doesn’t “Want A Gas Crisis”
  • Gazprom CEO Doesn’t Address Cutting Off Gas Supplies In Statement
And while diplomacy is failing all around, and a trade and all too real war are potentially on the horizon, the real issue was and continues to the money. Which is why it was surprising to learn that earlier today the a Ukrainian oligarch, Dmytro Firtash, was arrested in Vienna this week at the request of U.S. authorities, the Austrian government sources said on Thursday.  Reuters reports that Firtash, 48, is one of Ukraine's richest men, an oligarch whose close links to Russia and involvement in the gas, chemicals, media and banking sectors gave him substantial influence, notably during the administration of recently ousted, Moscow-backed President Viktor Yanukovich.
The Federal Criminal Office, had identified the man taken into custody only as Dmitry F. and said he had been under investigation by the U.S. Federal Bureau of Investigation since 2006.
As a reminder, Stratfor's take on the richest Ukrainians was that they would play a "decisive role" in the conflict:
With presidential elections set for May 25 and parliamentary elections likely to be held later in the year, Ukraine's current administration will need the continued support of the oligarchs. More immediately, with Crimea on the verge of leaving Ukraine, the new government's urgent challenge is to keep mainland Ukraine together. Eastern Ukraine is crucial to this -- the region is a stronghold for pro-Russia sentiment and the main site of opposition, after Crimea, to the Western-backed and Western-leaning government.

The oligarchs are key to keeping control over eastern Ukraine, not only because Ukraine's industrial production is concentrated in the east -- thus anchoring a shaky economy -- but also because many of the oligarchs have a stronger and more manageable relationship with Russia than the current government, which Moscow sees as illegitimate. Many of these business leaders hail from the industrial east. They have business ties to Russia and decades of experience dealing with Russian authorities -- experience that figures such as Klitschko and Yatsenyuk lack.

So far, the new government has been able to maintain the support of the country's most important oligarchs. In general, the oligarchs want Ukraine to stay united. They do not support partition or federalization, because this would compromise their business interests across the country. But this support is not guaranteed over the long term. There have been recent complaints about the new government, for example over the arrest of former Kharkiv Gov. Mikhail Dobkin. Akhmetov came out in Dobkin's defense, saying the government should not be going after internal rivals right now, but rather focusing on concerns over Russia. This can be seen as a warning to the new administration: The oligarchs' loyalty to the current regime is conditional and should not be taken for granted.

Ultimately, the biggest threat to the oligarchs is not the current government, over which they have substantial leverage, but Russia. The oligarchs stand to lose a great deal if Russia intervenes in eastern Ukraine. If Russia takes over eastern territories, it could threaten the oligarchs' very control over their assets. Therefore they have an interest in bridging the gap between Russia and Kiev, but it is Moscow they fear more. The oligarchs have substantial power to shape the Ukrainian government's decision-making as it moves forward. Their business interests and the territorial integrity of the country are at stake.
As always, follow the money, especially when some of the richest money ends up directly in prison in a country far away, under the orders of that global moralizer, the United States.


Second, it is China's term to warn the west not to enforce sanctions against Russia.
As we have been telling you, China and Russia are joined at the hip, with Russia the muscle and China the money.

(courtesy zero hedge)

China Warns West Not To Enforce Sanctions Against Russia

Tyler Durden's picture

"Sanctions could lead to retaliatory action, and that would trigger a spiral with unforeseeable consequences," warns China's envoy to Germany adding that "we don't see any point in sanctions." On the heels of Merkel's warning that Russia risked "massive" political and economic damage if it did not change course, Reuters reports ambassador Shi Mingde urged patience saying "the door is still open" for diplomacy (though we suspect it is not) ahead of this weekend's referendum. Russia's Deputy Economy Minister Alexei Likhachev responded by promising "symmetrical" sanctions by Moscow. So now we have China joining the fray more aggressively.
China's top envoy to Germany has warned the West against punishing Russia with sanctions for its intervention in Ukraine, saying such measures could lead to a dangerous chain reaction that would be difficult to control. In an interview with Reuters days before the European Union is threatening to impose its first sanctions on Russia since the Cold War, ambassador Shi Mingde issued the strongest warning against such measures by any top Chinese official to date.

"We don't see any point in sanctions," Shi said."Sanctions could lead to retaliatory action, and that would trigger a spiral with unforeseeable consequences. We don't want this."


Using her [Merkel's] toughest rhetoric since the crisis began, she warned in a speech in parliament on Thursday that Russia risked "massive" political and economic damage if it did not change course in the coming days.

Russia's Deputy Economy Minister Alexei Likhachev responded by promising "symmetrical" sanctions by Moscow. But Shi urged patience, saying the door for talks should remain open even after a referendum on Sunday in which Ukraine's southern region of Crimea could vote to secede and join Russia. Merkel and other western leaders have denounced the referendum as illegal and demanded that it be canceled.

"We still see a chance to avoid an escalation. The door to talks is still open. We should use this possibility, also after the referendum," Shi said.
After the Referendum, so when Russia is already in control. More importantly, China joins the fray with threats over West's sanctions. Perhaps BTFWWIIID will make a re-appearance any minute now


Third, the head of the Ukrainian National Defense council states that his country is facing a threat of a full scale invasion from all directions

(courtesy zero hedge)

Head Of Ukraine National Defense Council: "Ukraine Is Facing The Threat Of A Full-Scale Invasion From Various Directions"

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A few moments ago we showed a map of the various Russian military units amassing near the Ukraine border (whose movements we had been tracking for the past several days), so the ongoing less than stealthy escalation by Russian forces in preparation for what by all accounts looks like a preparation to take on east Ukraine should come as no surprise to anyone. And yet, it appears to have surprised Othe head of Ukraine’s National Security and Defense Council, Andriy Parubiy, who earlier today claimed that Russian forces near the border totaled more than 80,000 solders, 270 tanks, 370 artillery systems and 140 combat aircraft: precisely what Zero Hedge readers know already. His assessment: "Ukraine today is facing the threat of a full-scale invasion from various directions."
Aleksandr Golts, an author and military analyst, noted that the operations were not training exercises like the huge one Mr. Putin ordered at the end of February that require notification of neighboring states under a series of conventional arms agreements.

He added that the operations were clearly intended as a warning of Russia’s readiness to intervene, if necessary, noting that the parachute drop was on a scale not seen since the collapse of the Soviet Union. They also served to tie down Ukraine’s beleaguered military and prevent any effort to challenge the secession of Crimea.

“The goal is very clear: not to permit Ukrainian troops from moving toward Crimea,” he said. He later met with his national security council in Sochi.
As long that's the only goal. Interpreter adds:
While the Russian government claims that these are training exercises, it’s also worth noting that those have to be pre-announced to neighbors under conventional arms agreements. They were not. In fact, the existence of this mobilization was denied by the Kremlin until today.
It adds that the last time Russia conducted "drills", Crimea was quickly and quietly annexed. In the meantime, we hope Europe has a significant "Strategic Gas Reserve." It will likely need to use it quite soon.


OH! you can surely count on the Americans: Ukrainian aid delayed by congressional bickering

(courtesy zero hedge)

Ukraine Aid Delayed Due To, What Else, Congressional Bickering

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With Russia warning of "boomerangs" and China threatening "unforeseeable consequences" it appears gridlock in Washington is (coincidentally) enabling the US to sit out the first round of shenanigans responses over this weekend's Crimea referendum.
But as AP reports, Congress won't be able to authorize aid to Ukraine until after March 24 amid disagreements among several Republican. Simply put, No Aid For You...

Via AP,
Congress won't be able to authorize aid to Ukraine until after March 24 amid disagreements among several Republican.

The Senate is unlikely to vote before leaving for recess Thursday evening on a bill approving $1 billion in loan guarantees to Ukraine, sanctions on Russia and International Monetary Fund reforms. Four Republicans backed it as the Foreign Relations Committee voted 14-3 in favor Wednesday.

Meanwhile, House Speaker John Boehner urged the Senate anew Thursday to adopt House-approved legislation for the loans, without sanctions or IMF provisions.

Many in his caucus reject expanding the IMF's lending capacity, which every other major country has approved.

They say it increases U.S. taxpayer exposure; the counterargument is it immediately releases money for Ukraine.

Other Republicans oppose paying for the loans with unused military money.
Of course, the timing is perfect for the administration to look like they are moving forward and yet not... actually avoiding the sanctions that will likely come back to bite.
It seems, however, Ukraine's Yatsenyuk thinks it's a done-deal...
Ukrainian Prime Minister Arseny Yatsenyuk has met with the top three figures in the U.S. House of Representatives - Speaker John Boehner, majority leader Republican Eric Cantor and minority leader Nancy Pelosi - during a working visit to the United States.

"The American lawmakers made assurances of their intention to consolidate bipartisan efforts for giving urgent and long-term assistance to Ukraine and its government for urgent reforms. They pointed out that safeguarding the territorial integrity and sovereignty of Ukraine is a matter of principle for the House of Representatives," the Ukrainian government said in a statement.

Yatsenyuk expressed hope that the United States would soon legalize a quota redistribution that would enable Ukraine to obtain an extra $600 million.
American "promises" and political "principles"?


And now requests for weapons from the USA is rejected  (for now)
what a joke!!

(courtesy zero hedge)

Ukraine Requests Weapons From US, Is Rejected (For Now)

Tyler Durden's picture

Shortly after Ukraine found out that financial aid from the US will not be forthcoming (thanks to politicial gridlock); it appears they will be disappointed by the US once again:
It would appear that what is good for US-assisted Syrian Al-Qaeda rebels is not good enough for the vastly outmatched and outnumbered Ukrainians.
The UN Security Council does not sound hopeful:
As clashes breakout in Dontesk (with a tleast 10 injured):
With tear gas and stun grenades being used.


Teen's funeral sparks riots in Turkey

Police used water cannon and tear gas on protesters. ULAS YUNUS TOSUN/EPA

Tens of thousands of people turned out in Istanbul for the funeral of a teenager whose death from injuries suffered during last year's anti-government protests sparked violent demonstrations across Turkey

Police fired tear gas and water cannon at stone-hurling protesters in several cities following the death of 15-year-old Berkin Elvan on Tuesday, after 269 days in a coma.
The teenager was hit on the head by a tear gas canister while he was going to buy bread during the demonstrations against Prime Minister Recep Tayyip Erdogan that gripped Turkey in June.
"Berkin's murderers are the AKP police," protesters shouted yesterday, referring to the ruling Justice and Development Party (AKP).
More demonstrations have been called ahead of local elections on March 30.
Irish Independent


Today, the Euro was trading well north of 1.39 when Draghi stated that it was enough as he sold euros to bring the Euro to below the 1.39 level:

(courtesy zero hedge)

Meanwhile, The Euro...

Tyler Durden's picture

It would appear that 1.39 EURUSD is the line in the sand for Mario Draghi. As pressures build on European competitiveness, Draghi appears to have finally got sick of China buying EURs to diversify its FX reserves away from USDs. This time "whatever it takes" is to drag the EUR lower - on the back of suggestions that OMT 2.0 (new measures - double the effectiveness and just as non-existent) and guarding against deflation (not worried about inflation). The jawbone is working for now as EUR breaks down through 1.39.
China has been diversifying aggressively away from the US Dollar:
Via Bloomberg

Add China pushing the yuan lower and diversifying reserves away from dollar assets to the drivers behind the euro defying forecasts and rallying to a two-year high versus the U.S. currency, according to BNP Paribas SA.

The upper panel shows the 18-nation euro reaching the strongest level since October 2011 and the six-month average of changes in China’s foreign reserves touching the highest since June 2011, according to data compiled by Bloomberg. The lower panel shows the yuan, after strengthening the past four years to an all-time high, slumped by the most on record last month amid speculation the People’s Bank of China will allow greater volatility.

"China’s central bank is widely believed to have intervened heavily in February and this means markets will anticipate a period of the dollar selling versus the euro and other reserve currencies as these reserves are diversified,"
And so Draghi finally reached "Whatever it takes 2.0"...

It would seem, given previous levels and actions, that Draghi has given the market a bogey of around 1.45 for the next round of QE

This comes as the "Deflation Club" in Europe doubles to 4 members:
Signs of deflation strengthened on the Eurozone periphery Wednesday, with four countries now registering annual declines in consumer prices.

Data around the edges of the single currency area showed that consumer prices fell by 0.1% in February in both Portugal and Slovakiacompared with a year ago. The two countries join Greece and Cyprus, where price declines are already running at an annual pace of more than 1.0%.
Charts: Bloomberg


Your opening 10 year Portuguese bond yield Thursday : par  in  basis points from Wednesday night

Portuguese 10 year bond yield:  4.51%

Your closing Portuguese 10 year bond yield Thursday night:  a  rise of 1 basis points  on the day) Mrs Watanabe of Japan is still buying European debt like crazy. Looks like they are front running for direct QE from the ECB and Portugal does not get its gas from Russia.

Portuguese 10 year bond yield:  4.52%


Your closing Japanese yield Thursday morning: up  1 in  basis points: yield  .64%

Japanese 10 year bond yield:  .64% 

And now for your closing Japanese 10 year bond yield from NY/par in  basis points from the morning  (THE ECONOMY IN JAPAN IS NOT PERFORMING TOO WELL AS RATES ARE PLUMMETING)

Japanese 10 year bond yield:  .64%  


Your opening currency crosses for Thursday morning:

EUR/USA:  1.3955  up   .0053
USA/JAPAN YEN  102.62   down  .190
GBP/USA  1.6695  up .0079
USA/CAN  1.1074 down .0043   

This morning the Euro is a lot stronger trading well above the 1.39 level at 1.3955.  The yen is a little stronger this morning, trading well above the all important  102 cross. It closed in Japan up 19 basis points at 102.62 yen to the dollar  (dollar down). The pound  is now showing major strength as it now trades just below the 1.67 level  to 1.6695.  The Canadian dollar is up again this morning with its cross at 1.1074 to the USA dollar.  This morning everything moved positive against the USA dollar.

 Early Thursday morning USA 10 year bond yield:  2.73%   up 1 in  basis points  from Wednesday night/ 

USA dollar Index early Thursday morning: 79.33  down 27 cents (not good)


The NIKKEI Thursday morning: closed down 14 points or 0.10%

Trading from Europe and Asia : 1) Europe mixed  ; 2) Asia bourses mixed, Japan  in the red/Shanghai in the green.

Gold early morning trading:  $1369.00

silver:$ 21.26 



Your closing Spanish 10 year government bond: Thursday up 1  in basis point in yield  from Wednesday night.  (Mrs Watanabe is buying European bonds and shunning Japanese bonds and front running for a possible QE from the ECB and Spain does not get its gas from Russia.

Spanish 10 year bond yield:  3.36% 


Thursday closing Italian 10 year bond yield: down 1 in basis points and trading 5 basis points above Spain.

Italian 10 year bond yield;  3.41%


Closing currency crosses for Thursday night/USA dollar index/USA 10 yr bond: 

Euro/USA:  1.3871 down.0031
USA/Japan:  101.85 down   .960
Great Britain/USA:  1.6620  up .0007
USA/Canada:  1.1067 down .0007

The euro fell  in value during this afternoon's  session, and it was down  on the day , closing well below the 1.39 level to 1.3871.  The yen rose quite  a bit during  the afternoon session, as it gained 96  basis points on the day closing well below the magical support 102 level to 101.85 (dollar down). A breach below the 102 usually sends the Dow and many bourses southbound as many key on this cross and as well if breached many of the yen carry traders must unwind their trades.  The market is now quite convinced that Japan will engage in another round of QE to help the moribund economies. The British pound lost a little  ground  during the afternoon session and was up on the day as it closed at  1.6620. The Canadian dollar rose a bit  during  the afternoon session, and was up on the day closing at 1.1067.  Currency wars at their fullest.  

Your closing USA dollar index:

79.59 down 2 cents on the day 

Your closing 10 year USA bond yield down 9  basis points on the day

USA 10 yr Bond Yield:  2.64%. 


Closing bourses figures for Thursday: 

i) England/FTSE  down 67.12 or 1.01%

ii) Paris/CAC down 55.75 or  1.29%

 iii) German DAX: down 170.60 or 1.86%
iv) Spanish ibex down  120.10 points or 1.19%

v) Italian bourse (MIB) down 189.64 or .91%

and the Dow down 231.19 or 1.41%


And now the big USA stories:

Trading today around the globe: mammoth red ink as the yen carry trade collapses:

(courtesy zero hedge)

Stocks Slammed Most In 6 Weeks On Yen-Carry Collapse

Tyler Durden's picture

Copper's China-credit-contraction-driven crash continues as the metal drops to fresh 5-year lows today (on par with Lehman and the US downgrade collapses). Japanese stocks are down over 1000 points from their post-Putin highs. Russian stocks are plunging, Germany's (and Swiss) bonds are surging (as is gold) and European equity and credit markets are in free-fall. But apart from that... Finally we saw the world's angst spill into Yen-carry trades(USDJPY was spanked today - almost biggest drop in 6 months). US equities plunged tick-for-tick with USDJPY (S&P's biggest drop in 6 weeks and red for 2014); Treasury yields were crushed 9-10bps from intraday highs (biggest drop in 2 months); credit spreads banged wider; gold jumped to six-month highs; and EUR weakness (post-Draghi) ramped the USD back near unchanged on the week.VIX was a one-way street higher all day (biggest low-to-high run in 6 weeks) to 6-week highs.
CNBC clarifies "you can't find any single reason for this selloff" - nope, none at all...
But perhaps this is more realistic (h/t @stalingrad_Poor):
JPY-carry collapse sent stocks reeling:

Only Trannies remain green from Putin's press conference (despite a late-day ramp effort) - this is the 4th down-day in a row for the Dow

Year-to-date, the S&P joins the Dow in the red once again...

Financials (trumpeted as the leader of the next leg higher in stocks) are back to unchanged  YTD with Utes leading the way...

VIX was a one-way street higher with 2 efforts to ramp (including the ubiquitous late-day ramp)

And bonds recovered most of their post-Putin (and issuance rate-lock biased) losses...

Credit markets continue to be ugly here but stocks playing catch down quickly...

Demand for safe havens is dominating growth hope this week...

FX markets were a mess - AUD spiked on Aussie jobs data (but recovered the move in the US session), JPY rallied dramatically, and EUR dumped on Draghi jawboning...

Copper's drop is starting to look a lot like Lehman... (copper intrday clung to yesterday's intrday lows but closed at lowest levels since mid-2009)

And Japan is getting spanked... (as JPY drops most in 6 months)


Goldman Sachs cuts in half its forecast for first Quarter GDP:

(courtesy zero hedge/Goldman Sachs)

Goldman Cuts Q1 GDP Forecast To 1.5% On Weaker Retail Sales; Half Of Goldman's Original Q1 GDP Forecast

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As we predicted when we highlighted the cumulative decline in the control retail sales group, it was only a matter of time before the banks started cutting their Q1 GDP forecasts. Sure enough, first it was Barclays trimming its Q1 GDP tracking forecast from 2.3% to 2.2%, and now it is Goldman's turn which just cut its latest Q1 GDP forecast from 1.7% to 1.5%.
From Goldman:
BOTTOM LINE: Although February retail sales rose a bit more than expected, negative back revisions more than offset the front-month surprise. Separately, initial and continuing jobless claims both fell more than expected. Import prices rose more than expected in February, but declined on a year-on-year basis. We reduced our Q1 GDP tracking estimate by two-tenths to 1.5%.

February retail sales rose 0.3% (vs. consensus +0.2%). Core retail sales?used by the Commerce Department to estimate the personal consumption expenditures (PCE) component of the GDP report?also rose 0.3% (vs. consensus +0.2%). By category, the strongest gains occurred in sporting goods (+2.5%) and non-store retailers (+1.2%), both bouncing back from weakness in January. (Non-store retailers mainly represent online shopping.) However, back-revisions to core retail sales in January (-0.3pp to -0.6%) and December (-0.2pp to +0.1%) were significant and widespread across categories, suggesting a trajectory of consumer spending in Q1 that was weaker than we anticipated.

We reduced our Q1 GDP tracking estimate by two-tenths to 1.5%.
As a reminder, Goldman's original Q1 GDP forecast, as recently as a month ago, was for a growth of 3%. How things change when weathermen, pardon economists, are shocked to find it gets cold in the winter...


Retail sales beat but only after revisions from the month before.  The data is becoming farcical:

(courtesy zero hedge)

Retail Sales Beat Following Sharp January Downward Revision: Control Group Decline Continues

Tyler Durden's picture

When retail sales last month came in far weaker than expected, it was the weather's fault. A month later, we find that the January retail sales were even weaker than expected, with the headline number revised from a -0.4% drop to -0.6%, the ex autos number revised from unchanged to -0.3%, and the ex autos and gas whose drop more than doubled from -0.2% to -0.5%. Oh well: one can't go back in time and force the algos to soar even more (since everyone knows bad news is great news). So how about February? Well, apparently it warmed up because despite expectations of a 0.2% increase in headline and ex auto and gas retail sales, the actual prints were 0.3% for both, beating by the tiniest of margins, yet net lower when adding the January revision. Of course, what happens in April, when the March data too is revised lower, is irrelevant - all that will matter is the current month numbers all of which recently seem to get an odd "optimism" boost that promptly fades away in no time.
Finally, let's ignore that the unadjusted February number was actually a decline from $390billion to $385 billion. Then again seasonal adjustments only matter these days when they are used to scapegoat.
For those curious just how much real "growth" there is in retail spending, here is the annual change in the control group, which excludes food, auto dealers, building materials and gas stations, and feeds directly into GDP: it rose 0.3% from January, even as January was sharply revised from -0.2% to -0.6%, meaning net impact on GDP for Q1 isnegative!
As for the breakdown of sales by category, it would appear that in February Americans weren on a sporting goods, hobby book and music store buying spree, with the sales print up 2.5%, and the other notable increase was in non-store retailers, i.e. Internet Sales, up 1.2% which would make sense if one is trying to scapegoat the weather. There were sales declines in Electronics and Appliance stores, Food and beverage stores and General Merchandise stores: hardly the stuff of robust spending recoveries.

Finally, a bonus chart via @Not_Jim_Cramer - retail sales vs consumer confidence.

1 comment:

Mike Mouse said...

Harvey, can we have a shorter report and less boilerplate? Maybe put items like the starting interest rate in Portugal into an appendex.

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