Over the past year, the US State Department had repeatedly objected to the proposed Russian delivery of S-300 missile defense systems to Iran. One year ago, the issue first came up when as CNN reported then John Kerry raised objections with Moscow over a plan to sell advanced missile defense systems to Iran. The White House said Kerry made the US opposition clear in a phone call to Russian Foreign Minister Sergey Lavrov.

It wasn’t just Kerry: the Pentagon also expressed concern about the move, saying it was “unhelpful.” At the time, Pentagon spokesman Colonel Steve Warren told reporters that “our opposition to these sales is long and public. We believe it’s unhelpful. We are raising that through the appropriate diplomatic channels.”

Israel also chimed in and “expressed alarm” over Putin’s announcement that he was lifting the block on the transfer of the controversial weapons system to Tehran, against which both the US and Israel have lobbied hard. “There is concern that the S-300 would seriously complicate any attempt at military intervention against Iranian nuclear facilities” CNN reported. 

A senior Israeli official told Haaretz on Monday night that the Kremlin briefed Israel on its decision a short while before announcing the move. The official said Israel is also worried components of the air-defense system will be transferred to Syria and Hezbollah, seriously hamstringing the air force’s ability to dominate the skies over Lebanon or Syria.

And yet, none of these formal diplomatic complaints resulted in anything. As Iranian media reported overnight, Russia has delivered the first part of an advanced missile defense system to Iran, starting to equip Tehran with technology that was blocked before it signed a deal with world powers on its nuclear program.

The S-300 surface-to-air system was first deployed at the height of the Cold War in 1979. In its updated form it is one of the most advanced systems of its kind and, according to British security think tank RUSI, can engage multiple aircraft and ballistic missiles around 150 km (90 miles) away.

In a recorded transmission, state television showed Foreign Ministry spokesman Hossein Jaber Ansari telling a news conference on Monday: “I announce today that the first phase of this (delayed) contract has been implemented.”

Ansari was replying to reporters’ questions about videos on social media showing what appeared to be parts of an S-300 missile system on trucks in northern Iran.

More from Tasnim News:

Iranian Foreign Ministry Spokesman Hossein Jaberi Ansari announced on Monday that the first phase of a contract with Russia on the sale of S-300 air defense missile system to Iran has been completed.

 

The first phase of the contract has run its course, Jaberi Ansari said at his weekly press briefing in Tehran on Monday, expressing the hope that all the phases of the deal will be implemented according to schedule.

 

The head of Russia’s industrial conglomerate Rostec had said last month that Iran would take delivery of the first shipment of S-300 missile defense system in August or September this year.

 

“I think we will deliver the S-300 by the end of the year,” Sergei Chemezov said on March 11. “The first delivery will be in September or August.” Chemezov also said that Iran has stressed it is only interested in purchasing S-300 PMU-1.

 

“They (Iranians) gave the conditions, and said they need only an S-300 PMU-1. We suggested an Antey-2500, but they said no, give us the S-300,” he said

On February 17, Russian media reported that the first consignment of S-300 surface-to-air missile defense systems was to be delivered to Iran on February 18. However, one day later, Russia’s Defense Ministry dismissed the reports and said there were still some issues that needed to be resolved.

Under the previous contract signed in 2007, Russia was required to provide Iran with at least five S-300 defense system batteries. But the contract, worth more than $800 million, was revoked after then-President Dmitry Medvedev banned the supply of those systems to Tehran in 2010.

Later, Iran lodged a $4 billion lawsuit at an international court in Geneva against Russia’s arms export agency. However, Russian President Vladimir Putin decided in April 2015 to lift the self-imposed ban on the S-300 missile system delivery to Iran.

While the U.S. military has said it has accounted for the possible delivery of the S-300 to Iran in its contingency planning, Israel is sweating now that any attack on Iran’s nuclear centers, or elsewhere, can result in an immediate counterattack.

Finally, to confirm receipt of the first S-300 system, Iran released the following video clip.

via Zero Hedge http://ift.tt/1oQwnRU Tyler Durden

Submitted by Jeffrey Snider via Alhambra Investment Partners,

Not to continue beating a dead horse, but I have a stick and the carcass is right in front of me. The entire supply chain inside the US economy is full agreement both on where the economy is right now and, perhaps more importantly, how it came to be that way. Such harmony is not atypical, as synchronicity usually defines the hard edges of any cycle. This, however, is something else entirely, especially as it stretches back years and confirms we are witnessing nothing like the usual.

As it is, this latest part or phase or whatever has already taken up nearly two years. In terms of wholesale sales, as noted this morning, overall sales peaked in July 2014 – meaning nineteen months (thru Feb 2016) of deceleration into sustained contraction. Worse and what is probably the most concerning is that after those nineteen months inventory is only just now starting to correct, and it is doing so ever so gently. That suggests again slowdown without yet any visible end. In that sense, recession might actually be the best case since it would greatly speed up the affair in at least the convergence and reversion of inventory to sales (though that would still leave questions about the economic trend after it).

By comparison, the Great Recession featured just nine months of contraction; the whole of the dot-com recession twelve. Those were both top to bottom, peak to trough, over and done with. In 2016, we are very likely facing two years and still only the beginning of reconciliation or balance, and no idea what that might mean further down in wider economic feedbacks and negative multipliers.

The supply chain, top to bottom:

 

One other noteworthy interpretation: to find the “goods economy” including the whole of the supply chain in such joined, steady dislocation cannot be anything but a negative comment on the whole of the economy, services included. That starts with the fact that a significant portion (as much as half) of the “services economy” directly addresses the “goods economy” (retail, wholesale, transportation, etc.). Beyond that, if there is total breakdown in growth and advance in goods that can only mean a serious problem with US consumers. It has already forced economists and policymakers to completely abandon what was in late 2014 and early 2015 inarguable recovery and success. Just because it has not, so far, acted like recession does not propose a clean bill of health (just like it did not, last year, recommend this was all some temporary slump worthy of nothing but dismissal). Instead, that it has continued on for so long suggests quite the opposite, and, again, likely worse than just recession prospects in the long run.

via Zero Hedge http://ift.tt/1VMSg1n Tyler Durden

While the market is still enjoying the post-NFP weekly data lull, economic data starts to pick up again in the coming days, alongside the start of the reporting season. Below are this week’s key events:

Monday, April 11

09:25 AM New York Fed President Dudley (FOMC voter) speaks

Federal Reserve Bank of New York President William Dudley will give a keynote speech at the Association for Neighborhood and Housing Development (ANHD) Annual Community Development Conference. Text and Q&A are expected. Last week, President Dudley judged the balance of risks to his inflation and growth outlooks to be tilted slightly to the downside, although the downside risks have diminished since earlier in the year.

01:00 PM Dallas Fed President Kaplan (FOMC non-voter) speaks

Federal Reserve Bank of Dallas President Robert Kaplan will deliver a speech at a community forum hosted by the bank at Louisiana Tech University in Ruston, Louisiana. Last week, President Kaplan said that weakness in China and overseas could cause another wave of financial turmoil.

Tuesday, April 12

08:30 AM Import Price Index, March (consensus +1.0%, last -0.3%)

Consensus expects the import price index to rise 1.0% in March, which would follow 8 consecutive months of decline.

09:00 AM Philadelphia Fed President Patrick Harker (FOMC non-voter) speaks

Federal Reserve Bank of Philadelphia President Patrick Harker will give a speech on the economic outlook at an event titled “Region on the Rise: A Construction and Development Summit”. In late March, President Harker said he would prefer at least three hikes before year end.

03:00 PM San Francisco Fed President John Williams (FOMC non-voter) speaks

San Francisco Fed President John Williams will speak at the LendIt USA 2016 Conference in San Francisco. Last week, President Williams said that at least two interest-rate hikes this year are the “right course” so long as the economy continues to grow, businesses add jobs, and inflation picks up as he expects.

04:00 PM Richmond Fed President Jeffrey Lacker (FOMC non-voter) speaks

Federal Reserve Bank of Richmond President Lacker will speak about “Economic Leadership in an Uncertain World” at an event sponsored by the University of North Carolina Wilmington’s Cameron School of Business. Last month, President Lacker said that the evidence indicates that inflation expectations remain well-anchored.

Wednesday, April 13

08:30 AM Retail sales, March (GS flat, consensus +0.1%, last -0.1%)

Retail sales ex-auto, March (GS +0.3%, consensus +0.4%, last -0.1%)

Retail sales ex-auto & gas, March (GS +0.2%, consensus +0.3%, last +0.3%)

Core retail sales, March (GS +0.4%, consensus +0.4%, last flat)

Following a soft February print, we expect core retail sales to grow at a 0.4% month-over-month pace in March, aided by higher gasoline prices that likely bleed into the core. We expect headline retail sales to be flat, primarily due to softer vehicle sales in March.

08:30 AM PPI final demand, March (GS +0.3%, consensus +0.3%, last -0.2%)

PPI ex-food and energy, March (GS +0.1%, consensus +0.1%, last flat)

PPI ex-food, energy, and trade, March (GS +0.1%, consensus +0.2%, last +0.1%)

We expect core PPI (ex-food, energy, and trade) to increase by 0.1pp in March. Headline PPI likely increased due to the pick-up in energy prices.

10:00 AM Business Inventories, February (consensus -0.1%, last +0.1%)

Business inventories include manufacturing, wholesale, and retail inventories, but retail inventories will be the only new information contained in this report. Consensus expects a slight decline in inventory levels in February.

02:00 PM Beige Book, April FOMC meeting period

The Fed’s Beige Book is a summary of regional economic anecdotes from the 12 Federal Reserve districts. The March Beige Book reported modest growth in activity across most of the country, mixed manufacturing activity, muted price inflation and increasing wages. In the April Beige Book, we will look for additional anecdotes related to price inflation, wage growth, consumer spending, and the state of the domestic energy and manufacturing sectors.

Thursday, April 14

08:30 AM Initial jobless claims, week ended April 9 (consensus 270k, last 267k)

Continuing jobless claims, week ended April 2 (consensus 2,183k, last 2,191k)

Consensus expects initial jobless claims to edge up slightly from the previous week. Last week, initial claims reversed some of the gains from the prior week, likely due to seasonal effects related to the Good Friday Holiday.

08:30 AM CPI (mom), March (GS +0.18%, consensus +0.2%, last -0.2%)

Core CPI (mom), March (GS +0.16%, consensus +0.2%, last +0.3%)

CPI (yoy), March (GS +1.0%, consensus +1.1%, last +1.0%)

Core CPI (yoy), March (GS +2.3%, consensus +2.3%, last +2.3%)

We expect that core CPI rose by 0.16% in March, following a larger than expected 0.28% increase in February that featured outsized gains in apparel prices. On a year-on-year basis, core CPI likely rose by a solid 2.3%. We estimate headline consumer prices rose by 0.18% last month as retail gasoline prices recovered. On a year-on-year basis the headline index likely increased by 1.0%.

10:00 AM Atlanta Fed President Dennis Lockhart (FOMC non-voter) speaks

Atlanta Fed President Lockhart speaks to the Engage International Investment Education Symposium. Two weeks ago, President Lockhart said that there was still scope for three hikes.

10:00 AM Fed Board Governor Jerome Powell (FOMC voter) speaks

Fed Board Governor Powell will appear before the Senate Banking Committee in a hearing on current trends and changes in the fixed-income markets.

Friday, April 15

08:30 AM Empire Manufacturing, April (consensus +2.00, last 0.62)

Consensus expects a slight improvement in the Empire Manufacturing survey. The Empire survey rebounded last month from depressed levels. The improvement in March of the ISM manufacturing index and the five major Fed surveys suggest that US manufacturing has turned a corner.

9:15 AM Industrial production, March (GS flat, consensus -0.1%, last -0.5%)

Manufacturing production, March (GS +0.2%, consensus +0.1%, last +0.2%)

Capacity utilization, March (GS 75.4%, consensus 75.3%, last 75.4%)

We expect industrial production to remain flat, which has been restrained of late, mostly due to low utilities demand given warmer than usual weather. We expect that the manufacturing recovery continues.

10:00 AM University of Michigan consumer sentiment (preliminary), April (GS 90.3 forecast, consensus 92.0, last 91.0)

We expect the University of Michigan consumer sentiment index to decline modestly in the April preliminary estimate.

12:30 PM Chicago Fed President Charles Evans (FOMC non-voter) speaks

Federal Reserve Bank of Chicago President Charles Evans will speak on the economy and monetary policy in Washington, DC.

 

* * *

And summarized in table format, courtesy of BofA:

via Zero Hedge http://ift.tt/1Q2WwTF Tyler Durden

Over the weekend there was a flurry of commentary around the increasing use of NIRP by central banks, and the program’s declining effectiveness. Predictably the IMF – whose Christine Lagarde recently said “When The World Goes Downhill, We Thrive“, came out in support, while investors Larry Fink and Bill Gross came out hammering the program.

On one side of the argument, and to the surprise of no one, the IMF was quick to defend negative rates. In a blog post on Sunday, the organization listed the reasons they favor NIRP. Despite the fact that they admit individuals may just increase their cash position, they base their argument on the fact that lending will increase and portfolios will rebalance from fixed income into riskier assets such as equities, corporate bonds, or property.

The portfolio balance channel appears to have operated normally at negative rates. Wholesale interest rates have fallen with central bank deposit rates. Money market trading activities appeared to have declined, but it is not clear whether these effects reflect negative rates per se, or the substantial surplus liquidity associated with quantitative easing that reduces the demand for trading. Lower risk-free wholesale rates have tended to encourage investors to switch from low yield government securities to riskier assets such as equities, corporate bonds, or property. In addition, lower wholesale interest rates have reduced the cost of funds for those borrowers such as large corporates who can directly finance in commercial paper and corporate bond markets.

On the other side are Blackrock’s Larry Fink and Bill Gross, both of whom  came out hammering NIRP, pointing out that it would decrease spending, lead to disastrous consequences for insurance companies and pension funds, and generally crush the middle class.

Larry Fink’s take, as the Financial Times reports, is that savers aren’t going to be able to get the returns they need to prepare for retirement, so as fixed income rates go negative they would divert those funds into savings instead.

This reality has profound implications for economic growth: consumers saving for retirement need to reduce spending…A monetary policy intended to spark growth, then, in fact, risks reducing consumer spending.

Bill Gross agrees with that sentiment. In an interview with Barrons, Gross touches on the fact that savers would be going to cash, but also brings up the fact that insurance and pension models would blow up, and along with it, the ability of states to fund their liabilities, or insurance companies to honor their commitments.

So where does that leave our economy?

 

In the developed financial economies, as a bloc, lowering interest rates to near zero has produced negative consequences. The best examples of this include the business models of insurance companies and pension funds. Insurers have long-term liabilities and base their death benefits, and even health benefits, on earning a certain rate of interest on their premium dollars. When that rate is zero or close to it, their model is destroyed.

 
To use another example, California bases its current and future pension payments to civil workers on an estimated future return of 8% or so from bonds and stocks. But when bonds return 1% or 2%, or nothing in Germany’s case, what happens? We’ve seen the difficulties that Puerto Rico, Detroit, and Illinois have faced paying their debts.

 
Now consider mom and pop and other people who read Barron’s. They are saving for retirement and to put their kids through college. They might have depended on a historic 8%-like return from stocks and bonds. Well, sorry. When interest rates get to zero—and that isn’t the endpoint; they could go negative—savers are destroyed. And savers are the bedrock of capitalism. Savers allow investment, and investment produces growth.

Of course central banks will do what they please, as they know best of course. Many countries have already enacted NIRP, and some speculate that the US will follow in short order, although that remains to be seen.

via Zero Hedge http://ift.tt/1S0HWym Tyler Durden

Over the past year, the credit cycle finally turned, and has unleashed the latest default cycle. In fact, as BofA’s Michael Contopoulos warned last week, it may be the worst default cycle in history with “cumulative losses over the length of the entire cycle could be worse than we’ve ever seen before.”

Over the weekend, the FT got the memo with a report that “global company bond defaults at highest level since 2009” in which it said that “the global bond default rate by companies is running at its highest since 2009 with the US accounting for the vast majority, according to rating agency Standard & Poor’s. A further four defaults this week, with three coming from the troubled oil and gas sector, pushed the overall tally to 40 with a little over a quarter of 2016 done.”

To be sure, the US default cycle is bad and getting worse. But how much worse?

The latest to attempt that answer is DB’s Jim Reid who in his just released 18th annual default study explains why his “late cycle fears continue to build.” These are some of the highlights:

There are clear signs the cycle is turning, especially in the US. Our US strategists have previously suggested that we need the combination of three conditions for us to be confident the next default cycle is imminent. We need the accumulation of excessive debt and preferably of deteriorating quality, some kind of external shock/trigger and tighter monetary policy/a flattening of the yield curve. The pieces of the jigsaw are building. US corporate debt accumulation now compares with that seen prior to previous default cycles. Equity volatility has seen two spikes in the last 12 months (August and early 2016), bank equity is falling (a lead indicator of lending?) and global yield curves continue to flatten.

* * *

The buildup of excess is often a pre-requisite for bubbles to burst or for economic cycles to be vulnerable to shocks. One argument for why this US economic cycle might still be able to run for a few years is that many economists feel that excess hasn’t been as prevalent as in prior cycles. However one can argue there has been a sizeable increase in US corporate debt since the GFC comparable to increases prior to previous default cycles. As Figure 15 shows, in the modern era of leveraged finance the debt cycle waves have been well correlated to defaults. We’ve used single-Bs to keep credit quality constant throughout and used Fed data to determine non-financial corporate debt/GDP.

 

 

Our US credit strategists measure the total growth of debt stock as well as its aggressiveness to determine whether there has been sufficient “material” created to feed the next wave of defaults. Figure 16 looks at the growth of the stock of US HY debt as well as the aggressiveness of new issuance. The former is measured by the combined size of the HY bond market (USD developed markets) and loans on U.S. bank balance sheets. The graph shows distinct periods of debt growth in the past, going back to the late 1980s, with each of the past three complete credit cycles preceded by waves of new debt creation, lasting from four to five and a half years, and resulting in cumulative debt stock growth of 53-68% (shaded areas). The current episode, measured since early 2011, has lasted 5.2 years and resulted in 64% growth in the combined value of the high yield bond market and loans on bank balance sheets, putting it comfortably inside the range of previous cycles. It shows a similar result to our own US corporate debt/GDP chart.

 

 

For a measure of aggressiveness in recent issuance trends, our US strategists look at CCC-rated issuance in HY and leveraged loans, as a percentage of total  market size, as shown in the right-hand graph of Figure 16. Volume is presented as a percentage of total market size (HY + loans), on a trailing-12- month basis. Shaded areas again highlight previous debt growth cycles, as well as the most recent one, with figures printed inside representing cumulative CCC issuance volume for the full duration of each episode, divided by the market size at its start. The previous two credit cycles, in the late 1990s and mid- to late 2000s, saw this indicator expand by 20% and 18%, respectively, compared to its present value of 17%. Unfortunately, there is a lack of detailed issuance data to extend this to the first cycle in the late 1980s.

 

The analysis is somewhat conservative in estimating the starting point of the current credit cycle to be January 2011. Arguably, the market was healing and perhaps even expanding in 2010, which would make these measurements of pre-requisite debt growth and aggressiveness look even more stretched here. We will nonetheless use the numbers shown above, as we aim to build our case for the timing of the next default cycle based on the more conservative assumptions.

 

We can therefore conclude that pre-requisites for the next default cycle are now in place.

From the conclusion:

The artificial ingredients keeping defaults below their 1983-2003 levels are still broadly in place so although we expect the next default cycle to be round the corner it could still be mild relative to the early 90s and early 00s cycle and even the already subdued 2009 cycle which was very short, especially given the economic wreckage seen.

 

As we’ve suggested in previous editions of this report, this is likely due to the increasing artificial demand for fixed income seen over the last 15-20 years which effectively allows more financing opportunities for levered companies at lower yields than they might be asked to pay if global fixed income markets were a perfectly free market where the only consideration was relative value. Over the last two decades, SWFs, pension funds, insurance companies, banks and more recently central banks in great size have distorted the demand for and yield of global fixed income. This is unlikely to change and although the Oil and Gas sector demonstrates that bad fundamentals can still win out, for more marginal companies, the artificial conditions in fixed income could still help prevent a more savage cycle.

 

Obviously the Oil and Gas sector will play a big part in determining the overall level of defaults and in a separate section our US strategists detail their expectations for defaults in this sector and how that will filter through into the wider US HY market.

 

It’s also true that credit spreads are relatively elevated and price in a default rate markedly higher than current levels. Indeed as we’ll see throughout the body of this report, at an aggregate level a buy-and-hold investor would need to see defaults worse than virtually all observed periods through history for them not to get a positive excess return relative to Government bonds from this starting point. However if we do see a recession even if defaults are relatively subdued the illiquidity of financial markets could easily see big mark-to- market losses. Recession tend to bring big overshoots in credit spreads relative to default risk anyway. So lower structural defaults may not provide comfort in the heat of the next recession but current spreads should give longer-term investors some comfort across the vast majority of sectors.

All of which perhaps explains why the ECB is well on its path to monetizing junk bonds once it is done with investment grade corporates.

via Zero Hedge http://ift.tt/1VMLXee Tyler Durden

Bank Bail Ins Begin as EU Bank “Bailed In” In Austria

Bank bail ins in the EU are here after Austria’s financial markets regulator FMA imposed a hefty haircut on creditors in an Austrian bank. Creditors in the bank Heta Asset Resolution will receive less than half of their money back according to the country’s financial regulator, the FMA.

Senior bondholders in the so called “bad bank” could expect to receive around €0.46 for each euro which would be paid from the realisation of assets by 2020, according to the FMA statement. It said that this had been calculated using “very conservative” assumptions.

“This package of measures also ensures the equal treatment of creditors. Orderly resolution is more advantageous than insolvency proceedings,” the FMA said.

Bond maturities, however, will be extended to 31 December 2023 as “all currently outstanding legal disputes will realistically only be concluded by the end of 2023”. “Only at that point will it be possible to finally distribute the assets and to liquidate the company,” the regulator said.

In November 2015, the largest collection of creditors, which included Pacific Investment Management Co (PIMCO), Commerzbank , FMS Wertmanagement AoeR and a collection of distressed debt investors, proposed to extend bond maturities for 30 years in return for repayment in full.

Representatives of Austrian province Carinthia and creditors of the failed regional lender are to meet in London tomorrow to try to break the impasse over a bond buyback scheme, an Austrian newspaper reported. Carinthia, a southern Austrian province, guaranteed the debt of local lender Hypo Alpe Adria before the bank collapsed and now faces the threat of insolvency if it had to honour the 10.8 billion euro ($12.3 billion) debt in full.

Heta Asset Resolution was formed to wind down the bank but regulators froze Heta’s debt repayments after discovering a gaping capital hole at the bad bank.

Heta’s bail-ins pertain to bond holders but it is important to note that recently introduced EU and international bail-in regulation mean that depositors in banks are now exposed to having their deposits bailed in.

Bail-ins are one of the greatest financial risks to investors, savers and indeed companies today. Yet they remain the most poorly covered financial risk and are largely ignored by financial advisers, brokers and not surprisingly banks.

There is a belief that bail-ins only relate to “the rich” and very wealthy depositors as they will be imposed on those with deposits greater than national deposit guarantees. These deposit “guarantees” are generally the ‘big round’, arbitrary number of say €100,000, $250,000 and £75,000. These are not particularly large amounts and could amount to the entire life savings of a family or pensioners or indeed it could be the entire capital of a small to medium size business enterprise.

There is a belief that bail-ins only relate to “the rich” and very wealthy depositors as they will be imposed on those with deposits greater than national deposit guarantees. These deposit “guarantees” are generally the ‘big round’, arbitrary number of €100,000, $100,000 and £75,000. This is not a particularly large amount and could amount to the entire life savings of a family or pensioners or indeed it could be the entire capital of a small to medium size business enterprise.

Bail-Ins – Key Considerations (GoldCore Research)

Media internationally has not analysed this growing financial risk and the risk that it poses to the deposits of savers, investors and companies and indeed to our respective economies. In a world already beset with huge deflationary pressures, bail-ins and confiscating deposits  would be extremely deflationary and would likely contribute to severe recessions.

This is something we warned of when we first conducted our extensive research on the developing bail-in regimes. Diversification of deposits remains vital and one important way to protect against bail-ins is owning bullion. Taking delivery of gold and silver coins and bars or owning bullion in allocated and segregated storage in the safest vaults in the world is a prudent way to protect against bail-ins.

Access Protecting your Savings In The Coming Bail-In Era (11 pages)

Access From Bail-Outs to Bail-Ins: Risks and Ramifications – (51 pages)

Gold Prices (LBMA)
11 April: USD 1,247.25, EUR 1,095.84 and GBP 878.96 per ounce
8 April: USD 1,235.00, EUR 1,085.18 and GBP 877.33 per ounce
7 April: USD 1,237.50, EUR 1,086.07 and GBP 879.70 per ounce
6 April: USD 1,225.75, EUR 1,079.76 and GBP 868.38 per ounce
5 April: USD 1,231.50, EUR 1,083.59 and GBP 866.32 per ounce

Silver Prices (LBMA)
11 April: USD 15.16, EUR 13.34 and GBP 10.78 per ounce  (Not updated yet)
8 April: USD 15.16, EUR 13.34 and GBP 10.78 per ounce
7 April: USD 15.22, EUR 13.38 and GBP 10.81 per ounce
6 April: USD 15.07, EUR 13.28 and GBP 10.71 per ounce
5 April: USD 15.19, EUR 13.37 and GBP 10.69 per ounce

Silver Britannias – VAT Free

Gold News and Commentary

Gold climbs to near 3-week high on safe-haven demand (Reuters)
Gold Nears Three-Week High as Fed Outlook on Rates Erodes Dollar (Bloomberg)
Obama, Yellen in unexpected meeting Monday to talk economy (Marketwatch)
Now, India’s very own gold coins (Hindu Business)
China goes prospecting for world’s gold mines (WSJ)

Gold’s “run is far from over” (CNBC)
Gold Defies Stock Bear Rally (Gold Seek)
Myths About Gold That Just Won’t Die (Zero Hedge)
Standby for terrible news from Wall Street … (Yahoo Finance)
Dead Canaries And Disobedient Falcons: Bad Month Coming, Especially For Banks (Dollar Collapse)

Read More Here

www.GoldCore.com

via Zero Hedge http://ift.tt/1S4X4Nl GoldCore

• Italian Bank Stocks are Surging on the Back of Rescue Reports (WSJ)
• European Stocks Rise Led by Italian Banks; Emerging Markets Gain (BBG)
• Oil price dips on prospects for producers’ meeting (Reuters)
• U.S. shale oil firms feel credit squeeze as banks grow cautious (Reuters)
• U.S. banks’ dismal first quarter may spell trouble for 2016 (Reuters)
• Miserable Year for Banks: Stocks Suffer as Rates Stay Low (WSJ)
• Whipsawed Wall Street Traders Find Bullish Signal in Bad Profits (BBG)
• Sales of Short-Term Health Policies Surge (WSJ)
• Panama Furor Rumbles Into Week Two as Global Pressure Mounts (BBG)
• Daily Mail parent in talks with private equity for Yahoo bid (Reuters)
• As Puerto Rico Nears Record Default, Insured Investors Rest Easy (BBG)
• Wall Street Wages Double in 25 Years as Everyone Else’s Languish (BBG)
• U.S. Navy officer charged with spying, possibly for China, Taiwan (reuters)
• The Invisible Money Makers Who Thrived During 2015’s Oil Slump (BBG)
• Audio recording reveals Brussels Attacks were coordinated from Syria (RTBE)
• Tale of Two Chinas Is Emerging as Economy Slows, Fidelity Says (BBG)
• China internet regulator says web censorship not a trade barrier (Reuters)
• Kerry says Hiroshima ‘gut-wrenching’ reminder world should abandon nuclear weapons (Reuters)… just not the US

 

Overnight Media Digest

WSJ

– The UK’s Daily Mail has emerged as a suitor for Yahoo Inc’s assets, joining a wide group of interested companies that includes telecom giant Verizon Communications Inc as an April 18 deadline for preliminary offers nears, according to people familiar with the matter. (http://on.wsj.com/1XpCSXL)

– Ukrainian Prime Minister Arseniy Yatsenyuk said on Sunday he would resign from his post, opening the way for the formation of a new government and the potential for urgently needed reforms to be passed in parliament. (http://on.wsj.com/25SUmBC)

– The Brussels suicide attacks that killed 32 people were the result of a last-minute scramble by terrorists after the capture of a comrade days earlier persuaded them to ditch plans for a fresh strike in France, Belgian prosecutors said. (http://on.wsj.com/1VJsKKp)

– UK Prime Minister David Cameron faced further questions about his financial affairs on Sunday, including a cash gift from his mother, despite taking the unprecedented step of publishing information about his income tax for the past six years following a week of scrutiny sparked by the Panama leaks. (http://on.wsj.com/1N2C0rx)

– TransCanada Corp said its Keystone oil pipeline resumed pumping Sunday after a nearly week-long shutdown due to a leak discovered in South Dakota. The Canadian company said it has completed repairs to the leak, which caused a spill of about 400 barrels, or 16,800 gallons near the company’s Freeman pump station in Hutchinson County. (http://on.wsj.com/20tHPkl)

 

FT

Prime Minister David Cameron will promise to create a new criminal offence for companies that fail to stop their staff assisting in tax evasion. (http://on.ft.com/25TznyJ)

Ukraine’s prime minister Arseniy Yatseniuk stepped down late on Sunday afternoon, accusing the president’s party of plunging the country into an “artificially created” crisis. (http://on.ft.com/25Tzz0V)

Opposition is growing in Germany to Deutsche Boerse AG’s merger with London Stock Exchange, as concern mounts about the consequences for the combined company if Britain votes to leave the European Union. (http://on.ft.com/25TzQ3R)

 

NYT

– After two years of heavy legal and financial consequences, General Motors has finally turned the tide and started winning lawsuits related to the gravest safety crisis in its history. So far this year, General Motors has prevailed in three injury lawsuits, including a case dismissed on Friday, in ongoing litigation to resolve hundreds of remaining claims linked to its recall of 2.6 million small cars with faulty ignition switches. (http://nyti.ms/1qCKrA7)

– Panama leak signaled something that was a big deal but went unheralded: The official WikiLeaks-ization of mainstream journalism; the next step in the tentative merger between the Fourth Estate, with its relatively restrained conventional journalists, and the Fifth Estate, with the push-the-limits ethos of its blogger, hacker and journo-activist cohort. (http://nyti.ms/23nKJwf).

– In the year since Pakistani investigators raided Axact, a Karachi-based software company accused of raking in hundreds of millions of dollars with a vast Internet degree scam, Pakistani and American investigators have uncovered a tangled web of corporate entities – dozens of shell companies and associates, from Caribbean tax havens to others in Delaware, Dubai and Singapore – used to funnel illicit earnings back to Pakistan.(http://nyti.ms/1WmFirO)

– Intuit, a Silicon Valley company, is now focusing on its TurboTax software, which tens of millions of Americans use to file their tax returns, and on QuickBooks Online, an Internet-based version of the company’s flagship book-keeping software for small businesses and their accounting firms. (http://nyti.ms/1Vh9JRp)

 

Britain

The Times

* The owner of the Three mobile phone network has complained to the European Commission that Vodafone Group PLC, its rival, is seeking to bully it into coughing up 1 billion pounds to drop objections to its takeover of O2. (http://bit.ly/1qI5aCF)

* Thousands of patients are dying because the NHS cuts corners on operations for the critically ill, the Royal College of Surgeons has warned. (http://bit.ly/1RNq9xS)

The Guardian

* The boss of Revenue & Customs (HMRC), the UK’s government department overseeing a 10 million pound inquiry into the Panama Papers, was a partner at a top city law firm that acted for Blairmore Holdings and other offshore companies named in the leak. (http://bit.ly/1Xpy5Wt)

* Companies will be held criminally liable if they fail to stop their employees from facilitating tax evasion, UK Prime Minister David Cameron will tell MPs, as he uses a parliamentary statement to defend himself after one of the most difficult weeks of his premiership. (http://bit.ly/23m9OaH)

The Telegraph

* Tesco PLC will unveil a return to full-year profits and the first quarter of UK sales growth in three years on Wednesday as chief executive Dave Lewis tries to prove to investors his turn-around plan is working. (http://bit.ly/1Yo9cue)

* David Cameron will launch a robust defence of the right of parents to give money to their children after Labour said it will review inheritance tax rules. In an unprecedented Commons appearance, the prime minister will reject suggestions that he has avoided tax after he disclosed that he had personally profited from his stake in an offshore investment fund. (http://bit.ly/1oOFnXQ)

Sky News

* Chancellor George Osborne has “never had any offshore shareholdings or other interests”, a Treasury source has told Sky News. The comments come after members of David Cameron’s Cabinet were urged to follow the prime minister’s lead and publish any links they have with tax havens. (http://bit.ly/1SInrGc)

* The bosses of some of Britain’s biggest companies are warning that they may refrain from further interventions in the debate about Europe amid concerns that they risk falling foul of strict campaign rules. Sky News understands that the Electoral Commission will publish new guidance on Monday setting out the scope of activities permissible for businesses once the referendum period formally begins on Friday. (http://bit.ly/1UT5VFn)

The Independent

* Dozens of London Underground stations are at “high risk” of flooding, with London “fortunate to have escaped” the worst consequences so far. An unpublished report seen by The Independent reveals Transport for London has identified 85 sites across its network which are at high risk of flooding. (http://ind.pn/1RMW816)

* Lobbying companies working at the heart of Whitehall are exploiting loopholes in transparency legislation that allow them to avoid declaring clients who pay them thousands of pounds to help influence Government policy, The Independent can reveal. (http://ind.pn/1VLccBU)

 

via Zero Hedge http://ift.tt/1N3RBHj Tyler Durden

Two months after speculation and recurring headlines of an “imminent” OPEC meeting to first cut, then merely freeze (at record output levels) oil production, a meeting in which Iran is certain to not comply with any production curbs and the all important Saudis following suit, not even Goldman believes there is any upside from the meeting scheduled for this upcoming Sunday.

This is what Goldman commodity strategist Damien Courvalin said in a note released overnight.

OPEC and non-OPEC producers will meet next Sunday (April 17) in Doha to discuss a potential production freeze. We do not expect the meeting to deliver a bullish surprise as we believe production cuts make little sense given it has taken 18 months for the rebalancing to finally start. In addition, any resolute agreement that would support prices from current levels would prove self-defeating, in our view, as we believe that sustained low prices are required for the nascent non-OPEC supply adjustments to deliver a deficit in 2H16. Finally, a production freeze at recent production levels would not accelerate the rebalancing of the oil market as OPEC (ex. Iran) and Russia production levels have this year remained close to our 2016 average annual forecast of 40.5 mb/d. Importantly, the stable level of production achieved during the first three months of the year is due to transient disruptions whose reversal could add 500 kb/d to OPEC production, with Iran, the Neutral Zone and Libya potentially providing additional production growth in coming months. As a result, we see risks that even a production agreement could be followed by sequentially rising OPEC production given the multitude of potential sources of production growth.

 

Ultimately, while the market seems to have taken comfort in some form of OPEC help, press reports over the past weeks suggest that a production agreement is far from guaranteed. Net, we see greater odds that the Doha meeting delivers a bearish catalyst for oil prices. Interestingly, the oil options market is associating no risk premia to this meeting with Jun-16 Brent ATM implied volatility below Jul-16 ATM implied vol, the first time this has occurred heading into an OPEC meeting since June 2014. While it is difficult to assess consensus expectations ahead of the meeting, we believe that this upward sloping volatility curve is mispricing the potential moves on Monday, April 18, with our bias for lower prices. Finally, while we forecast that the balancing of the oil market will bring crude oil prices sustainably back into backwardation later this year, we believe that the recent flattening of the Brent forward curve is only transitory, reflecting the combination of production maintenance, especially in the North Sea, in the face of seasonally rising Atlantic basin refinery runs. As a result, we continue to believe that the balancing of the oil market requires sustained low prices with our 2Q16 forecast of $35/bbl.

Furthermore, this comes on the heels of news that Iraq just hit a fresh record monthly output, while Bloomberg reported that instead of freezing, Gulf nations are actually about to unleash even more production:

Kuwait plans to raise production capacity by 5 percent from 3 million barrels a day by the third quarter, and to reach 4 million barrels by 2020. Abu Dhabi means to lift production capacity to 3.5 million barrels a day by 2017 from about 3 million.

For now the algos refuse to listen and instead are pushing onward with last week’s oil momentum higher.

via Zero Hedge http://ift.tt/25UtS2R Tyler Durden

it has been a rather quiet session, which saw Japan modestly lower dragged again by a lower USDJPY which hit fresh 17 month lows around 170.6 before staging another modest rebound and halting a six-day run of gains; China bounced after a slightly disappointing CPI print gave hope there is more space for the PBOC to ease; European equities rose, led by Italian banks which surged ahead of a meeting to discuss the rescue of various insolvent Italian banks, while mining stocks jumped buoyed by rising metal prices with signs of a pick-up in Chinese industrial demand.

The Italian bank rescue euphoria spilled over to the US where equity futures spent most of the session around the flatline before a sudden buying jolt after the Europen open sent them almost instantly to session highs. WTI started off stong, immediately printing above $40 on the break but has since faded the jump and was down 0.5% at last check even as the USD has dipped, with the DXY sliding once again.

European shares erased earlier losses of as much as 0.8 percent as measures of banking stocks and commodity producers posted the biggest gains of the index’s 19 industry groups. Spain’s Banco  Santander SA and Italy’s Intesa Sanpaolo SpA led the advance, while Anglo American Plc and ArcelorMittal rose at least 3 percent. As a result, the Stoxx Europe 600 Index extended Friday’s gains, putting it on course for the biggest back-to-back advance since March.

The U.S. earnings season unofficially kicks off later Monday, when Alcoa Inc. reports quarterly results after markets close. European peers including Tesco Plc and Sodexo SA are scheduled to release financial reports this week. Analysts are forecasting profit at companies in Europe’s Stoxx 600 index will shrink in 2016, reversing earlier calls for earnings to improve.

Some strategists were concenred about what this quarter’s earnings season will reveal: “Investors won’t find it easy to believe in the rally until they get more evidence of a business-cycle recovery,” Allan von Mehren, chief analyst at Danske Bank A/S in Copenhagen, told Bloomberg. “The good news is that we already know that the beginning of the year was pretty tough for most companies, so the bar has been set pretty low for this earnings season.”

Others were more worried about the ongoing strength of the Japanese currency: “Yen strength is really hurting at the moment,” Steve Brice, chief investment strategist at Standard Chartered Bank, told Bloomberg TV in Singapore. “It’s shaken a lot of people’s confidence in Abenomics and the underlying thesis behind holding Japanese equities. The extent of the strength we’ve seen has surprised pretty much everybody.”

All that really matters, however, is what Janet Yellen and company will say or do, and what the closing price pegged for the S&P500 at the New York Fed is today. And speaking of that, recall that today at 11:30AM the Fed will hold a closed, emergency session behind closed doors where rates will be discussed, followed by an impromtpu meeting between Obama, Biden and Yellen in the afternoon.

Market Wrap

• S&P 500 futures up 0.3% at 20470
• Stoxx 600 up 0.3% to 333
• FTSE 100 +0%
• DAX +0.7%
• Euro down 0.11% to $1.1387
• German 10Yr yield down 1bps to 0.09%
• Italian 10Yr yield down 1bps to 1.3%
• Spanish 10Yr yield down 1bps to 1.51%
• MSCI Asia Pacific down 0% to 126.3
• Nikkei 225 down 0.4% to 15751.1
• Hang Seng up 0.3% to 20440.8
• Kospi down 0.1% to 1970.4
• Shanghai Composite up 1.6% to 3034
• US 10Yr yield up 0bps to 1.72%
• Dollar Index down 0% to 94.23
• Brent Futures down 0.8% to $41.6/bbl
• WTI Futures down 0.8% to $39.4/bbl
• Gold spot up 0.7% to $1248.2/oz

Top Global News

• Greece Points Finger at IMF as Schaeuble Sees Deal Within Weeks: Greek Minister of State Nikos Pappas speaks in interview
• Italy Officials, Banks Said to Plan Monday Meeting on Fund Setup: UniCredit would be among investors in possible fund, CEO says
• Panama Furor Rumbles Into Second Week as Global Pressure Mounts: David Cameron to face parliament over offshore tax havens
• Daily Mail Says It’s In Early Talks With Potential Yahoo Bidders: Verizon, Google said to be among bidders for Yahoo’s Assets

Looking at regional markets, Asian stocks traded relatively mixed after inflation figures suggested deflationary pressures eased, while Nikkei 225 underperforms on JPY strength. JPY weighed on the Nikkei 225 (-0.4%) with a contraction in Machine Orders adding to the dampened sentiment, while ASX 200 (-0.1%) is also negative, although losses have been stemmed amid advances in energy. Shanghai Comp (+1.6%) was underpinned by commodity strength and a mixed bag of Chinese data in which CPI missed estimates but matched its 22-month high, while PPI was better than expected despite declining for a 49th consecutive month. 10yr JGBs saw muted trade with prices flat despite a cautious tone in Japan, while the BoJ refrained from entering the market under its bond-buying program.

Top Asian News;

• Standard Chartered Said Selling $4.4 Billion of Asian Assets: Stressed Indian loan portfolio draws interest from SSG Capital
• Abenomics Rebuked as BlackRock Joins $46 Billion Japan Pullout: BlackRock among cos. ending bullish calls on Japan equities
• Chinese Authorities Said to Probe Nanjing Peer-to-Peer Lender: Easy Richness raised at least 10b yuan from investors
• Mystery $9 billion in Extra Cash Perplexes India: Cash spikes during election time, notes RBI’s Rajan
• HNA Agrees to Buy Airline Caterer Gategroup for $1.5 Billion: HNA makes all-cash offer for Swiss caterer at 20% premium

In Europe, this morning the Eurostoxx (+0.60%) pare opening losses led by gains in financial and material names. The FTSE MIB (+1.2%) outperforms in the region amid reports that Italy is finalising plans for a new multibillion-EUR rescue fund to shore up ailing banks. While upside in the precious metals complex underpinned strength in miners with Anglo American and Arcelormittal notching up gains of over 4%.

Bunds remain elevated as the 10 yield dropped to a fresh 12-month low of 0.077, just shy of the all-time low at 0.074 , however saw a modest pullback amid the turnaround in stocks. Interestingly, this week sees supply as largely net negative with around EUR 36b1n of redemptions (all due to be repaid on Friday) due to offset the circa EUR 10bIn of supply. Furthermore, the latest CFTC report has revealed that markets have placed their largest bet against treasuries in five months, while this week is also set to see USD 56b1n of US paper hit the market. Finally, analysts at RBS expect that the main driver for Bunds will be an acceleration of ECB QE rather than risk sentiment with expectations of outperformance in the periphery.

Top European News

• Vivendi Agrees to Buy Berlusconi’s Pay-TV Unit in Swap Deal: Vivendi and Mediaset will acquire stakes of ~3.5% in each other
• Aegon to Sell $8.5b of U.K. Annuity Portfolio to Rothesay: is disposal aimed at freeing up capital
• SAP Sales Miss Estimates as Some Deals Slip to Next Quarter: co. reiterates operating profit forecast for 2016
• HNA Agrees to Buy Airline Caterer Gategroup for $1.5b: Shareholders would get CHF53/shr as well as previously declared CHF0.30/shr dividend
• Standard Chartered Said Selling $4.4b of Asian Assets: Stressed Indian loan portfolio draws interest from SSG Capital
• CaixaBank, dos Santos Agree on Plan for BPI Angola Exposure: Deal allows Portuguese lender BPI to comply with ECB request
• Three-O2 Deal Should Be Banned If No Network Sale, U.K. Says: U.K.’s antitrust regulator tells EU concessions fall short
• Nordea Plans to Sell Baltic Units ‘In Near Future:’ Aripaev: says sale has been prepared for 1.5 yrs
• Total CEO Interested in Gas Downstream Sales in China: Caixin: Total aims to increase its lubricant market share in China from current 3%

In FX, a few interesting moves in FX this morning, with USD/JPY making a fresh cycle low at 107.61 but this was only a marginal extension of the lows seen last week. Price action suggests some demand ahead of 107.50, but back above 108.00, there seems little momentum for a full blown recovery to 109.00+ levels seen at the end of last week. Some of this support may have come from a reported buy order in GBP/JPY, which saw the recovery from sub 152.00 touching levels just shy of 154.00. Cable ripped through 1.4150-70 stops in the process, taking out 1.4200-10 before the latest dip back under the figure. We saw EUR/GBP back to .8000, but this level has held so far. Relatively tight ranges seen in the commodity currencies, with the CAD weakening temporarily through 1.3000 on a slip in Oil prices. Norwegian inflation pretty much in line with expectations. NOK makes new 4+ week highs vs the EUR.

In commodities, WTI initially opened above $40 but later erased gains as Iraq boosted its March oil production to a record before a meeting in Qatar of OPEC members and other producers on April 17 to discuss capping output. West Texas Intermediate dropped 0.4 percent to $39.57 a barrel and Brent lost 0.3 percent to trade at $41.82.U.S. natural gas futures slid 2.8 percent to $1.935 per million British thermal units, the biggest drop in more than two weeks.

Gold rose to the highest level in almost three weeks. Bullion for immediate delivery advanced 0.6 percent to $1,247.66 an ounce, extending a gain of 1.5 percent last week, as a subdued USD overnight underpinned the commodities complex and supported copper and iron ore prices, with the latter higher by over 3% alongside firm gains in steel prices on lower stockpiles and after a Chinese government official called for more capacity reductions. However, the FT are running a story suggesting that restructuring of the sector will lead to much more capacity than is required and thus the glut of supply will remain. Silver added 0.9 percent.

There is nothing on today’s economic calendar, although the relentless speeches from Fed presidents continue, with Dudley and Kaplan on deck. Of course the actually relevant Fed meetings, those in the close session at 11:30 where the Fed will be discussing rates, and the subsequent in which Yellen will meet Obama, will be entirely behind closed doors.

 

Bulletin Headline Summary from Bloomberg and RanSquawk

• European equities enter the US session in positive territory amid outperformance in Italian banks and materials names
• Despite printing a cycle low of 107.61, USD/JPY ran in to support above 107.50 to reclaim 108.00 while GBP/USD ripped through stops to take out 1.4200 to the upside
• Looking ahead, the calendar is relatively light with the only notable highlight being potential comments from Fed’s Kaplan
• Treasuries lower in overnight trading as European equity markets rally on news of Italian bank clean up, Asian markets rise; this week will feature Treasury auctions of $56b 3Y,10Y and 30Y.
• Italian Treasury and central bank officials will meet with executives of major banks on Monday to discuss the creation of a fund that would buy bank shares and help the institutions tackle non-performing loans
• Italian industrial production fell 0.6% in February, reflecting concerns about the pace of recovery that prompted the government to cut this year’s growth outlook
• After correctly predicting the yen’s advance beyond 115 and then 110 per dollar, the former Finance Ministry official in charge of currency intervention in Japan Eisuke Sakakibara now says Japan’s currency may strengthen to 100 by year-end
• Foreign traders have been pulling out of Tokyo’s stock market for 13 straight weeks, the longest stretch since 1998, dumping $46 billion of shares as economic reports deteriorated, stimulus from the Bank of Japan backfired and the yen’s surge pressured exporters
• Standard Chartered Plc is seeking to sell at least $4.4 billion of assets in Asia, people with knowledge of the matter said, as the lender pares its balance sheet after booking record impairments
• Five years after Occupy Wall Street protesters spawned a national discussion about the divide between America’s highest and lowest earners, the pay gap has only gotten wider; Wall Street bankers earned five times the national average in 2014
• The fallout from the Panama leaks showed no sign of abating as U.K. PM David Cameron was forced to provide more transparency over his wealth and European officials pledged measures to require companies to report their offshore bank accounts
• Brazilian security forces are deploying thousands of troops and erecting barricades in the capital city of Brasilia this week to prevent violent clashes as Congress holds key votes on the impeachment of President Dilma Rousseff
• Sovereign 10Y bond yields mostly steady; European, Asian equity markets mixed; U.S. equity-index futures rise. WTI crude oil and copper fall, gold rallies

US Event Calendar

• No major reports scheduled

Central Banks

• 9:25am: Fed’s Dudley speaks in New York
• 1:00pm: Fed’s Kaplan speaks in Ruston, Louisiana

DB’s Jim Reid concludes the overnight wrap

In Asia this morning there is some important inflation numbers out of China data to digest. CPI for the month of March has printed at +2.3% yoy which was a smidgen below expectations (of +2.4%) but flat on the prior month which was then the highest since July 2014 and will likely provide for some comfort that the data is stabilising. Meanwhile the latest PPI numbers continue to show improvement after printing at -4.3% yoy (vs. -4.6% expected), and up six-tenths from the prior month. While factory gate prices remain yet again in negative territory, the +0.5% mom reading is the first positive monthly rise in prices since 2013.

Looking at the market reaction, sentiment appears to be buoyed in China post the data where the Shanghai Comp and CSI 300 have bounced +1.82% and +1.74% respectively. Elsewhere, it’s a bit more mixed. Following a 3.24% rally last week for the Yen, further modest gains this morning appear to be weighing on Japanese equity markets where the Nikkei is currently -1.30%. Meanwhile the Kospi and ASX are flat and the Hang Sang (+0.51%) is posting a modest gain. Credit markets are little moved, as are US equity index futures this morning.

Away from the data the newsflow over the weekend has been fairly quiet on the whole. We highlighted on a few occasions in the EMR last week the notable underperformance of European Banks since the ECB bazooka over a month ago now. The notable drag for that asset class has come from Italian banks in particular where concerns for the sector have remained elevated. That said sentiment was greatly improved on Friday (FTSE MIB +4.08%) over hopes that the nation is looking to piece together a bank rescue fund. According to the FT, Italy’s finance minister, Padoan, has called a meeting in Rome today to run over and agree upon the final details of a ‘last resort’ bailout plan. The article suggests that the plan could become official as soon as tonight but there are still concerns about whether or not the proposal will be sufficient enough to ring fence Monte dei Paschi from contagion. One to keep an eye on.

Staying in Europe, our European Economists – in their Focus Europe piece from Friday – also gave their latest thoughts on the current political situations in Greece and Spain which had weighed on fixed income markets (particularly in rates) to some degree last week. With regards to the latter, our colleagues believe their central scenario of a new election in June in Spain has become more likely. Last Thursday negotiation teams from centre-left PSOE, liberal Citizens and left-wing Podemos met to see whether they could find an agreement to form a government. Their pessimism appears to have been justified and the Citizens’ and Podemos’ economic and political agendas continue to appear irreconcilable. Should their prediction prove correct and no PM nominee wins a confidence vote by the 2nd of May then the King will dissolve parliament and call a new election, likely due three days after the Brexit referendum.

Meanwhile, in terms of Greece, our Economists judge that a return of Grexit fears as being unlikely over the coming weeks. While they note that the ongoing disagreements between Greece, the IMF and European creditors suggest that there remains some way to go until agreement is reached, they highlight two important factors as dampening risks. First, both the refugee crisis and the Brexit referendum significantly increases the costs to Europe of a crisis in Greece. Second, the Syriza government has a greater commitment to the program with PM Tsipras having obtained voters’ support for continued cooperation with Europe last September and espousing the benefits of co-operation with European partners over the last six months. The perhaps greatest risk for now is that debt relief negotiations are not completed in time for Greece’s July ECB redemptions, once again deferring full IMF participation in the program and leaving some of Greece’s medium term issues – including the full lifting of capital controls on the banking system – unresolved.

Over to markets and a quick recap of how we closed out last week on Friday. Sentiment was broadly improved with a large part of that owing to the big rally across the Oil complex on Friday. WTI and Brent both closed up more than 6% on the day meaning they finished just shy of $40/bbl and $42/bbl respectively (although they have broken through those respective levels this morning). There didn’t appear to be any fresh news to drive those big moves but the rally did help to conclude the first five-day gain for both (WTI +7.96%, Brent +8.46%) in three weeks. Those gains boosted energy stocks which led the Stoxx 600 firstly to a +1.15% gain, and then helped the S&P 500 get off to a decent start before momentum faded as the session came to close, with the index eventually stumbling to a much more modest +0.28% gain. EM currencies were the big outperformer (Brazilian Real +2.83%, South African Real +1.91%, Russian Ruble +1.39%) while the better tone was reflected in a boost for peripheral rates markets where we saw yields drop 7-8bps, while core markets were little changed.

In terms of the macro, the economic data out of the US on Friday was fairly soft and representative of a further drag on growth this quarter from diminishing inventories. Both wholesale inventories (-0.5% mom vs. -0.2% expected) and trade sales (-0.2% mom vs. +0.2% expected) came in lower than expected and so much so that we saw the Atlanta Fed downgrade their Q1 GDPNow forecast by three-tenths to a lowly 0.1% and the lowest forecast they have predicted so far. After getting back into positive territory not too long ago, US economic surprise indices have now slipped back into negative territory again.

Away from this the latest comments out of the Fed were from NY Fed President Dudley, who certainly came across as more cautious and dovish than some of his colleagues. Dudley noted that risks to the US outlook are ‘slightly’ tilted to the downside and that caution is warranted ‘because of our limited ability to reduce the policy rate to respond to adverse developments, recognizing that we could also use forward guidance and balance sheet policies to provide additional accommodation if that proved warranted’.

Wrapping up the rest of the Friday dataflow, in Europe the highlight was a couple of softer IP reports covering the month of February. Both the UK (-0.3% mom vs. +0.1% expected) and France (-1.0% mom vs. -0.4% expected) missed to the downside which poses some downside risk for the Euro area reading this Wednesday. Finally on Friday, Germany reported a slightly higher than expected trade surplus as of February owing to a notable beat in exports (+1.3% mom vs. +0.5% expected) during the month.

There’s more important Fedspeak to keep an eye on including Dudley and Kaplan today, Harker, Williams and Lacker all tomorrow Lockhart and Powell on Thursday and finally Evans on Friday. Over at the ECB we’ll hear from Knot on Wednesday. Finally this week will also see the unofficial commencement of earnings season in the US with Alcoa due to report today. Also scheduled to report are the banks with JP Morgan (Wednesday), Bank of America (Thursday), Wells Fargo (Thursday) and Citigroup (Friday) all due up. Tuesday will also see the release of the IMF’s World Outlook ahead of its spring meetings.

via Zero Hedge http://ift.tt/1qiGOih Tyler Durden

 

 

 

 

Failure of the War on Cash

Written by Jeff Thomas (CLICK FOR ORIGINAL)

 

 

 

Some years ago, when I suspected there would be a War on Cash at some point, everything in the behaviour of the central banks pointed to the idea – it fit exactly into their own informed, yet unrealistic pattern of logic. I therefore decided that it would be a likely development and would take place at a time when they had tried everything else and had run out of other ideas. As to a date when this might happen … I had no idea.

When several countries had begun to limit the amount of money that a depositor could take out of a bank, I decided that the first shots in the War on Cash had been fired and began to publish my prognostications as to what shape it would take. First, there were the benefits to the bank (the elimination of cash transactions, which would assure that virtually all monetary transactions, large and small, would have to be passed through banks, allowing them to effectively “own” all deposits, charge for every transaction and even refuse transactions.) The governments would also benefit. In approving the banks’ monopoly on monetary transactions, they’d benefit primarily through the new ability to tax people by direct debit, ending any remnant of voluntary payment of taxation.

What I didn’t anticipate at that time was that, within a few months, the War on Cash would be escalated quickly – more quickly than was safe for them to do, as it could alarm depositors. (As in the old analogy of boiling a frog, it’s always best to turn up the heat slowly, to lull the victim into complacency, as he’s being done in.)

This indicated to me that the central banks had decided that they’d already waited too late and had better hurry up the programme to assure that it was in place before a currency crisis could heat up.

Since then, someone came up with an excellent name for the phenomenon, “the War on Cash,” one that succinctly describes the plan in a nefarious way, as it deserves to be described. Today, anyone who is paying attention is aware of the War on Cash and what it might do to him. As each new salvo by the banks and governments is uncovered, attentive observers are publishing such developments on the internet.

However, there’s a further facet to the War on Cash that no one (to my knowledge) has yet addressed. The war is still new, and those who will be attacked are understandably still scrambling for their muskets and hurrying to the ramparts. (Musing on how a war will play out usually comes later, as it’s winding down and a victor seems apparent. However, in my belief, it’s wise to examine what the landscape will look like after the war is over, as it can serve to inform us as to what battle tactics should be employed.)

So, let’s have a look. First off, we know that whenever there’s a coming monetary collapse, major banks look forward to employing their political influence to assure that legislation and emergency government measures protect them in such a way as to assure that the upcoming competitors are put out of business. We can expect the same this time around. These smaller banks arise during boom times by creating many small branches – the type seen in strip-malls and shopping villages. Typically, they may have only 1000 or more depositors per bank – just barely enough to create profit, but, as “convenience banks,” they can count on a steady business from those who live nearby.

Larger banks also tend to create numerous branches during good times, in order to hold down the rising competition; however, they resent the need to create endless less-profitable entities that tie up funds that could otherwise go out as directors’ bonuses. Consequently, when a monetary crisis occurs and the government steps in to help out the major banks, many of the competitors are driven under, as they don’t receive the same governmental support. At such a time, we see the edifices in the city remain, whilst the little banks in the strip mall disappear. The majors can now be rid of them. During a banking crisis, a country returns to 19 th century banking in terms of available institutions. Want to make a deposit? Make a trip into the city.

In keeping with the War on Cash, ATM’s will also be eliminated. All transactions will be by plastic card or smart phone.

Certainly, as a result of the dangerous position the banks will already be in, we shall witness a steady increase in the charges by banks for the privilege of having the bank control depositors’ economic worth. Worse, we shall witness the outright confiscation of deposits (as in Cyprus in 2013) and the control of how much a depositor may debit his account in any given week (as in Greece today). It’s at this point that a universal trend will unquestionably take place to get around the banks’ control. This, I believe, will manifest itself in two ways: Top Down and Bottom Up.

Top Down:

As we speak, in “lesser” countries like Romania, branches are already closing – all of them in small towns. This will both grow and spread, eventually to the more prominent countries. Banking will be increasingly difficult for depositors, as the ability to actually talk to individuals at the bank will dry up. The bank will become more like a faceless authority that holds power over their money and will grow to be hated in a relatively short time. (Most of the people of the world have already learned to be deeply distrusting of banks and bankers; outright hatred would not be a major next step.)

Bottom Up:

In the Eastern provinces of Mexico, the Campesinos already eschew banks, choosing instead to store their money privately. (Chiapas Province is in a virtual economic war with Western Mexico. They value the Libertad as East Indians value gold.) Those Mexicans who live further to the West regard their Eastern brothers as somewhat lawless and uncivilised at present. However, when the Campesinos prove to be surviving the crisis better than their Western neighbours, the Western provinces will, of necessity, follow their lead. Mexico will be amongst the first countries to return to precious metals as the primary (if not sole) currency, setting the stage for other countries.

Countries such as Romania and Mexico will serve as an early-warning system. The solutions they and other “fringe” countries employ will spread quickly to the larger world. In order to keep from being controlled by banks, the average person in the EU, US and other “civilised” jurisdictions will learn quickly that, if other forms of trade (alternate currencies, precious metals, barter, etc.) allow him to feed his children when the banks restrict him, he’ll resort to any and all forms of black market dealing that he can find.

The Treaty of Versailles

Following World War I, the victors decided to economically cripple the losers – Germany. The Treaty of Versailles was ruthless in its purpose – to strip Germany of all possibility of future prosperity so that it could never rise again.

Of course, what happened was the opposite. Following an economic collapse just five years after the war, the German people, now desperate, chose to follow a new leader who promised that he would “make Germany great again.” The more arrogant he became, the more support he received. The oppression of the Treaty failed, as Germans, pushed to the wall, came out fighting.

I believe that the War on Cash will end without such an extreme, but, just as the Treaty of Versailles, will be stopped by the people of the world as a result of a monetary stricture that is simply too oppressive to be tolerated. This will by no means be a pleasant historical period to travel through. Many people will have their savings wiped out. Many will literally starve. But the anger that’s created in them will reveal the banks as the clear “enemy” in this drama and, those citizens who are presently respectful of the laws of their country, will increasingly defy the enemy. They will resort to an alternate system. This is historically what has always occurred when people have been squeezed to this degree and it will repeat itself this time around..

 

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Failure of the War on Cash

Written by Jeff Thomas (CLICK FOR ORIGINAL)

 

via Zero Hedge http://ift.tt/1ROg9Ey Sprott Money