• Global Stocks Slip Following Fed’s Cautious Tone (WSJ)
• Oil rallies towards $41, near 2016 high, on producer meeting (Reuters)
• Hamptons luxury home sales soften as Wall Street weakness takes a toll (Reuters)
• Obama picks centrist high court nominee; Republicans unmoved (Reuters)
• Allies See Challenges for Hillary Clinton in a General Election Campaign (WSJ)
• China’s Looming Currency Crisis (WSJ)
• China’s biggest metals trader under pressure to cut staff amid reforms (BBG)
• Oil Investors See $7.4 Billion Vanish as Dividends Are Targeted (BBG)
• Bond Vigilantes So Yesterday as Budget Brigade Seeks More Debt (BBG)
• Austria’s highest court proclaims asylum cap illegal (New Europe)
• Wall Street’s Awful Quarter Is Hitting Goldman Sachs, Too (BBG)
• SEC Signals It Could Curb Use of Adjusted Earnings Figures (WSJ)
• Boom Times for Fracking’s Toxic Wastewater Come to a Shaky End (BBG)
• Shell, Saudi Aramco Plan to Break Up Motiva Partnership (WSJ)
• China Mobile 2015 Profit Misses Estimates, Shares Decline (BBG)
• China’s Exporters Struggle as Yuan Swings Disrupt Business (BBG)

 

Overnight Media Digest

WSJ

– William Ackman’s Pershing Square Capital Management LP is selling down his biggest investment as a disastrous bet on Valeant Pharmaceuticals International Inc tears a hole in its portfolio. The activist investor said his hedge fund sold 20 million shares in Mondelez International Inc after the market closed, which would yield $834 million at current prices. (http://on.wsj.com/1S5mN84)

– Republicans on Wednesday didn’t budge in their refusal to consider Judge Merrick Garland, President Barack Obama’s choice for the Supreme Court, before this fall’s elections. Following this, the GOP’s strategy could shift dramatically. (http://on.wsj.com/1S5mQAC)

– It is just the start of the U.S. mosquito season, but companies that make bug repellent are already running factories near capacity as they anticipate surging demand in response to the spread of the Zika virus. (http://on.wsj.com/1S5nkGQ)

– Peabody Energy Corp warned Wednesday that it could go bankrupt, signaling the end of an era for listed U.S. corporate coal companies, even as their mines continue to fuel a big chunk of the country’s power stations. (http://on.wsj.com/1S5mV7q)

– A sales consultant who said he paid bribes on behalf of aircraft maker Embraer SA told Brazilian prosecutors that he believes the company’s top managers, including Chief Executive Frederico Curado, knew of the illicit payments, which were tied to the sale of military aircraft to the Dominican Republic. (http://on.wsj.com/1S5n2zY)

– Novartis AG has faced a problem in getting doctors to prescribe its heart-failure pill, Entresto, since winning regulatory approval for it in July. The drug had $21 million in sales in the six months following its launch, a fraction of the $126 million expected by industry analysts. (http://on.wsj.com/1S5na2r)

 

FT

* British Finance Minister George Osborne handed tax sweeteners to voters and small businesses but warned the economy would grow more slowly than previously forecast.

* The U.S. Federal Reserve held interest rates unchanged and cut back its interest rate forecasts to two quarter-point rises this year.

* The European Union and Turkey are set to collide over a refugee deal after Donald Tusk, the European Council president, backed Cyprus’ demands to weaken a promise to unfreeze parts of Turkey’s EU membership negotiations.

 

NYT

– House lawmakers tangled on Wednesday with Richard Cordray, director of the Consumer Financial Protection Bureau, accusing it of overstepping its bounds in overseeing areas as various as payday loans, mandatory arbitration clauses and discrimination in the auto market. (http://nyti.ms/1SUR2ke)

– Founders Fund, the venture capital firm co-founded by the billionaire Peter Thiel, has raised more than $1 billion for its latest investment fund, a person with knowledge of the matter said Wednesday. (http://nyti.ms/1SUR6k8)

– Pershing Square Capital Management, William Ackman’s $12 billion hedge fund, sold 20 million shares in food and beverage company Mondelez International Inc. (http://nyti.ms/1SURb7b)

– In a budget meant to appeal to voters before a looming referendum, Britain’s chancellor of the Exchequer, George Osborne, on Wednesday mainly offered tax breaks, while warning the public against the risks of opting to quit the European Union. (http://nyti.ms/1SURgba)

 

Canada

THE GLOBE AND MAIL

** The federal government has brought in advisers, including an American investment bank, to help analyze the feasibility of a $1 billion aid package to aerospace giant Bombardier Inc . (http://bit.ly/1ppah9J)

** After a lengthy regulatory process, a final decision on Pacific NorthWest LNG’s proposed liquefied natural gas export terminal on British Columbia’s coast looks set to be referred to the federal cabinet because of its impact on Canada’s greenhouse gas emissions. (http://bit.ly/1R0aBoU)

NATIONAL POST

** The former CEO of a Canadian firm that specialized in the treatment of contaminated soil was convicted on Wednesday of conspiring to pay kickbacks and committing major fraud against the United States, the U.S. Department of Justice said. (http://bit.ly/1UBXIDH)

** As the dust settled from Tuesday’s devastating 50 percent selloff in Valeant Pharmaceuticals International Inc’s shares, analysts scrambled to reassess the prospects for the company’s stock going forward. And if they were divided before, they are even more so now. (http://bit.ly/1Pdv0CD)

** Canada’s exporters appear to be finally delivering the goods. Not only are the country’s manufacturers revving up sales volume, but they are doing it in record numbers, according to the latest numbers for January – with food products, vehicles and auto parts driving much of the gain. (http://bit.ly/1pLhtxi)

 

Britain

The Times

The U.S. Federal Reserve surprised markets on Wednesday by scaling back expectations on the number of rate rises this year from four to two as it highlighted global risks to the U.S. economy. (http://thetim.es/22nvnE3)

Barclays is being sued by the former boss of Tullett Prebon, Terry Smith, over accusations that the bank failed to transfer hundreds of thousands pounds of the financier’s money into his investment fund so that he missed out on a more than doubling in its value.(http://thetim.es/1VdJb1E)

The Guardian

British finance minister George Osborne’s attempt to woo voters ahead of Britain’s EU referendum has come under intense scrutiny after he used a range of accounting devices to disguise a looming 56 billion pound ($79.78 billion) “black hole” in the government’s finances and deliver a promised surplus by the end of the decade.(http://bit.ly/1RloG3p)

Supermarket chain Asda has confirmed plans to cut up to 500 jobs in stores and 250 at its head office in Leeds. (http://bit.ly/1RlfIDq)

The Telegraph

U.S.-based Peabody Energy is on the verge of bankruptcy as the commodity crash claims its biggest victim, crippled by fierce competition from cheap gas and a radical policy shift by China. (http://bit.ly/1WrKSqX)

Drug maker Vectura is buying peer Skyepharma in a 441 million pound ($628.29 million) deal. (http://bit.ly/1QZ9sOk)

Sky News

British taxpayers could lose more than 20 billion pounds($28.49 billion) if George Osborne presses ahead with the sale of the government’s remaining stake in Royal Bank of Scotland, according to an official forecast published on Wednesday. (http://bit.ly/1pp1Wmz)

NS Intressenter is in advanced discussions about acquiring PriceRunner from the American internet tycoon Barry Diller, and Wall Street sources say a deal worth close to $100 million could be announced within days, according to Sky News.(http://bit.ly/1RnwtaN)

The Independent

London Stock Exchange has agreed its 21.6 billion pounds ($30.77 billion) merger with Deutsche Boerse, saying the combination would create the largest financial exchange business in the world, able to counter U.S. rivals which could still try to break up their party. (http://ind.pn/1UAMC1M)

via Zero Hedge http://ift.tt/1MaqOJ6 Tyler Durden

Moments ago Caterpillar, the company which as we promptly report every month, has never seen a “greater depression”…

 

… “surprised” markets with yet another reality check when it announced early this morning that it is slashing its Q1 revenue and EPS guidance, as follows:

• Caterpillar expects first quarter 2016 sales and revenues to be in a range of $9.3 to $9.4 billion. Wall Street’s estimate was for a $10.2 billion number
• The EPS estimate for the first quarter 2016 is expected to be $0.50 to $0.55 per share. Excluding restructuring costs, the profit estimate for first quarter 2016 is expected to be $0.65-$0.70 per share. On a non-GAAP basis, the consensus estimate was $0.95, implying a nearly 30% cut to expectations.

What is perplexing is that even as CAT slashed Q1 guidance, the Company also said that its “remained comfortable with full year guidance for 2016 sales and revenues and profit per share.” It is unclear just how the company plans to make up for the Q1 drop in future quarters, as it is unclear if anyone else “remains comfortable” with this guidance which puts CAT’s 2016 revenue outlook of $42 billion…

 

…. some $20 billion lower than the company’s 2012 revenue. At this rate the company will have to buy back more than all of its stock by 2020 to continue the illusion that all is well in a world that continues to grind through a global industrial depression.

The question now is what will shareholders, who have bid up the stock by 15% in the past three months on both a short squeeze and hopes of operational improvement, do when presented with this latest reality check that things continue to deteriorate rapidly.

For now shares are down about 3% in the premarket; we would not be surprised to see the stock end higher as CAT spends a few hundred million to buyback its stock later today.

Source

via Zero Hedge http://ift.tt/25624YV Tyler Durden

We’ve long said the Norges Bank would ease in March in the face of falling crude prices and the continuation of the negative rates regime at the ECB, the Riksbank, and the NationalBank.

Indeed by the time of today’s announcement, the market was pricing in a ~75% chance that Oystein Olsen would cut rates by 25 bps. And he didn’t disappoint, slashing the depo rate to 0.50%. Incidentally, we’d hate to be the 1 economist out of 20 surveyed by Bloomberg that managed to miss this one.

The picture in Norway is clouded by a number of factors.

Obviously, the economy is heavily dependent on oil, and the sharp decline in prices has taken a significant bite out of revenue. At the same time, falling crude has also put pressure on the NOK, which has naturally adjusted downward with oil, providing somewhat of a cushion for the country’s economy.

Still, there are two factors that prevent the currency from adjusting as much as it otherwise might: 1) competitive easing from the ECB, the Riksbank, the NationalBank, and 2) the fact that when Norway taps into oil revenues to provide fiscal stimulus to the economy, the Norges Bank becomes a buyer of NOK. We explained the latter dynamic in detail here, but suffice to say that in February, the bank bought 900 million kroner per day, a marked increase from previous purchases. Here are two simple graphics which show that when the budget deficit began to catch up with oil revenues, the Norges Bank began buying NOK:

As Bloomberg put it last November, there’s a certain extent to which the krone “just can’t get weak enough.” And if it did, it’s not yet clear what effect that would have on the country’s housing bubble and on financial stability in general. 

By the time the March decision rolled around it was pretty clear that “financial system vulnerabilities” – as the central bank puts it – would have to take a backseat to concerns about the economy and worries about what effect Draghi’s new package of easing measures would have on EURNOK. Further, the Riksbank also cut rates again last month, putting still more pressure on the Norges Bank. Oil prices have rebounded thanks to incessant banter about an output freeze led by Saudi Arabia, Russia, and Qatar, but the outlook is hardly encouraging and as we’ve outlined on a number of occasions, Norway will this year be tapping the rainy day SWF (which, at $830 billion, is the largest on the planet) to help plug budget holes and provide stimulus to the economy. 

And so, cut they did and an effort was made to send a dovish signal to markets. “The current outlook for the Norwegian economy suggests that the key policy rate may be reduced further in the course of the year,” Oeystein Olsen said. The Norges Bank also said it “will not exclude the possibility of negative rates.”

Meanwhile, the bank revised lower its estimates for oil investment which is now seen declining by 12% in 2016, by 75 in 2017, and by 2% in 2018. The 2016 GDP growth forecast was cut to 0.8% from 1.1%.  

 “[The] rate path is more dovish than expected,” said Erica Blomgren, SEB’s Norway chief strategist. “[The] determination to support growth through weaker krone suggests that bank will be forced to cut rates again.”

Yes it does, and all things equal, all of the above would certainly suggest that the NOK should be getting some respite. But as explained above, all things in this case are not equal which is why in the aftermath of the cut, the NOK gained against all G-10 currencies except the NZD. How is that possible you ask? Well for the reasons outlined above. “There’s appreciation pressure from Norges Bank NOK purchases, stabilizing oil price and attractive valuation; should the government decide to increase fiscal stimulus it will increase further,” SEB’s chief FX strategist told Bloomberg. “[The] policy decision was dovish but the market obviously was very long EUR/NOK into the announcement.”

In other words, Norway has fallen behind in the currency wars and in a world where Draghi is buying corporate bonds, Kuroda pontificates daily about his “three forms,” and Janet Yellen is leaning dovish, a 25bps cut to positive 0.50% and a hint that more cuts are coming doesn’t even come close to being competitive. Especially when you are buying your own currency hand over fist to support fiscal stimulus. 

So good luck Norway because really, there’s no way out of this one.

And for the final punchline, note that Olsen says he’s “not considering QE right now.” Well that’s good, because there’s nothing to buy:

via Zero Hedge http://ift.tt/1Lsq6Ha Tyler Durden

Yesterday when summarizing the Fed’s action we said that in its latest dovish announcement which has sent the USD to a five month low, the Fed clearly sided with China which desperately want a stronger dollar to which it is pegged (reflected promptly in the Yuan’s stronger fixing overnight) at the expense of Europe and Japan, both of which want the USD weaker.

ECB, BOJ don’t want a weak dollar; China does not want a strong dollar
Fed sides with China for now

— zerohedge (@zerohedge) March 16, 2016

This morning the global markets got a rude reminder that at the end of the day it is all about currency debasement – even if it means appeasing China in the process – when the plunge in the dollar,, much to Goldman’s ongoing embarrassment, extended overnight as seen in the chart below.

 

This has led the USDJPY slide to just over 111 while the EURUSD was surging over 1.13 as of this moment, and in the process undoing all the recent easing by both the ECB and the ECB; furthermore an expected 25 bps rate cut by the Norway Central Bank, not only did not weaken the NOK but in fact sent it surging against the EUR, indicating that even when central bank decisions are fully priced in, few can actually trade the reaction and the implication of such moves.

Worse, after briefly spiking in the aftermath of the Fed’s decision overnight European sovereign and US Treasury yields have tumbled, commodities and especially gold have soared, and as of moments ago, European stocks hit their lows on the day now that the European currency is surging, leading to this:

• EUROPEAN STOCKS EXTEND DROP; STOXX 600 DOWN 1.4%

And since these are all the telltale signs of yet another Fed policy error, it was only a matter of time before the move also hit the Fed’s favorite asset class – equities, and sure enough, after posting modest gains overnight, US equity futures have seen a sharp reversal lower, and from up 0.3% were down -0.3% at last check, as suddenly the market appears to be getting very cold feet not only about the Fed’s decision to slam the Dollar at the expense of the Euro and the Yen, but also going back to that all important question which Yellen was unable to answer: has the Fed lost its credibility?

While risk assets are suddenly airpocketing, dollar-denominated oil, copper and zinc all jumped by more than 2 percent, with Brent trading above $40 a barrel, which means we can expect a rewriting of the narrative that higher gas prices are actually good for consumers, even if it also means that marginal shale production is likely to start coming back on line any moment.

And the cherry on top may have come when moments ago industrial bellwether Caterpillar slashed guidance, and now expects non-GAAP Q1 EPS of $0.65-$0.70 per share, about 25% below consensus estimates of 95 cents.

All of the above, this had led to sudden repricing of risk, which has seen equity futures stumble, and the ES is now down 10 points to 2,007, roughly where it was when the Fed unveiled its dovish surprise. Was that it for the Fed’s intervention halflife? We don’t know, but we expect much confusion today over whether even the Fed has now run out of dovish ammunition.

This is where we stand currently

• S&P 500 futures down 0.5% to 2006
• Stoxx 600 down 1.4% to 336
• FTSE 100 down 0.7% to 613
• DAX down 1.7% to 9816
• German 10Yr yield down 7bps to 0.24%
• MSCI Asia Pacific up 2.1% to 129
• US 10-yr yield down 5bps to 1.86%
• Dollar Index down 0.82% to 95.1
• WTI Crude futures up 1.6% to $39.08
• Brent Futures up 1.4% to $40.09
• Gold spot up 0.6% to $1,270
• Silver spot up 0.2% to $15.65

Top Global News

• Witty to Step Down After Tumultuous Tenure as Glaxo Chief: CEO Andrew Witty plans to step down in 2017 after almost a decade, board to begin search for a successor
• Rio Tinto Appoints Copper Chief Jacques CEO to Succeed Walsh: Copper boss Jacques replaces iron man Sam Walsh in July
• FedEx Raises Floor of Full-Year Forecast After Cutting Costs: Now sees FY16 adj. EPS $10.70-$10.90, saw $10.40- $10.90, est. $10.56; 3Q adj. EPS $2.51, est. $2.34
• Pershing Square Falls 26% Year Through March 15 on Valeant: Cut its stake in Mondelez to 5.6%
• Toshiba Said to Face U.S. Probe Over Westinghouse Accounting: Justice Department, SEC reviewing conduct in Toshiba report
• VW Said in Talks With U.S. Over Two Funds to Pay for Pollution: In talks to establish national remediation fund and a separate one for California as punishment for pollution from its cars after co. cheated on diesel- emissions tests, said people familiar with the matter
• Fed Softens Rate-Rise Urgency as Risks Abroad Cloud Outlook: FOMC cites global concerns twice as Yellen highlights in Q&A
• American Pilots Concerned by CEO Meeting on ‘Toxic’ Culture: COO Robert Isom named to deal with pilot contract concerns
• Goldman Seen Succumbing Too as Wall Street Suffers Awful Quarter: Its trading revenue may slide 17%, Credit Suisse analysts say
• New York’s Plaza Hotel Said for Sale in Foreclosure Auction: Billionaire Reuben brothers said to foreclose on mortgage
• Oil Investors See $7.4b Vanish as Dividends Are Targeted: Conoco, Kinder resort to cuts “deplored” by shareholders
• March Madness Puts Time Warner’s Big Bet on Sports to the Test: NCAA men’s championship game to air on TBS for first time
• Valeant Lenders Said to Mull New Terms in Default Talks, Reuters Says: Lender’s demands include higher interest payments, pledge to pay a larger amount of bank loans from any Valeant asset sales proceeds
• Amazon Said to Eye Office Depot’s Corporate Business Unit, NYP Report: May use some of Office Depot’s corporate accounts to jump-start its new office supply business
• Canada to Announce Bombardier Aid Decision Within Weeks, Reuters Says: Govt has finished studying co.’s request for $1b in aid

Looking at global equity markets, Asia stocks traded mostly higher in the wake of the FOMC. ASX 200 (+1.0%) was led by energy and basic materials after commodity prices benefited from USD weakness post-FOMC, while oil prices were also underpinned following yesterday’s lower than expected DoE inventory build. Nikkei 225 (-0.2%) initially surged on the prospects of lower US rates for longer, but then shrugged off majority of gains as JPY strengthened, while the Shanghai Comp (+1.2%) conformed to the picture with the PBoC also said to be gauging banks for Medium-term Lending requirements. 10yr JGBs initially tracked T-notes higher following the Fed dovishness, however JGBs pared advances after a weaker 20yr bond auction result in which b/c, tail in price and lowest accepted price all disappointed.

Top Asian News

• Li & Fung 2015 Earnings Top Estimates as New Clients Boost Sales: FY net $421m, est. $405.3m, sales down 2.4% to $18.8b
• Billionaire Li’s CK Hutchison Profit Edges Above Estimates: FY adj. net HK$31.2b; est. HK$30.9b, profit helped by earnings from Europe telecom operations
• China Mobile 2015 Profit Misses Estimates, Shares Reverse Gain: Govt request to lower mobile phone rates erodes profit
• Mr. Yen Called the Rally, Now Sees Gain Toward Intervention Zone: Ex-MOF Sakakibara correctly predicted advance
• Toshiba Gets $5.9 Billion Deal to Sell Medical Unit to Canon: Deal will be funded by existing cash and borrowings, Canon said, day after unsuccessful bidder Fujifilm questioned Toshiba about the sale
• Escape From Negative Japan Rates Wrecked by Record Hedging Costs: Swap premium for yen holders reaches record 102.5 bps
• Yuan Falls to 15-Month Low Versus Basket as Fixing Lags Dollar: Reference rate shows China doesn’t want excessive gains, DBS says
• TPG Sees Opportunity in $131 Billion India Distressed Assets: Co. would like to triple India investments in 3 yrs

In Europe, this morning has seen focus fall on the fallout from the Fed rate decision and press conference yesterday and as such, has seen much of the price action continue on from US and Asian hours. Bunds have seen significant upside during European trade, with the June future residing above 162.00 and the German curve showing many of the characteristics as its US counterparts with the curve flattening amid expectations for a shallower rate path going forward.

In tandem with this, European equities saw initial upside at the open in the wake of the dovishly interpreted Fed announcement. However stocks came off their best levels by mid-morning to see Euro Stoxx reside relatively flat as some analysts begin to focus on recent central bank commentary which appears to be relatively downbeat for global growth prospects as highlighted by the Fed statement and UK budget yesterday and the SNB and Norges Bank today.

Top European News

• Lufthansa Says Eurowings Price Cuts to Curb Profit Gains in 2016: Oper. profit will advance only “slightly” in 2016 amid deterioration in yields as Eurowings adds flights in long-haul market, where Lufthansa traditionally makes most of its money, and competition from low-cost rivals intensifies in Europe
• LafargeHolcim Sees Demand Growing After 2015 Profit Falls: Says overall demand to rise 2% to 4% in 2016, co. says it has made progress towards asset sales target; 2015 adj. operating Ebitda fell 10.7% to CHF5.75b vs est. CHF5.73b
• Swiss Keep Franc Intervention Threat Alive as Rates Left on Hold: SNB holds deposit rate at minus 0.75% as forecast by economist, repeats pledge to intervene in FX markets
• Norway Cuts Rates and Signals More Easing Ahead Amid Oil Plunge: Overnight deposit rate was lowered by 25bps to 0.50%
• HeidelbergCement Boosts Dividend Amid Expected 2016 Growth: Raises div. 73% to EU1.30/share, sees “moderate” improvement in 2016 profit
• Gulf Keystone Tumbles to Seven-Year Low as Future in Doubt: Kurdistan-focused oil company faces “material uncertainties”
• Bank of England Has Nowhere to Go With ‘Brexit’ in Limelight: Key rate will be kept at record low 0.5%, economists predict

In FX, early European flow has seen a continuation of the USD fallout from the Fed adjustment in rate hike projections for 2016. Commodities and their related currencies have benefited the most , notably USD/CAD, which is has torn through a series of support levels including 1.3000 to hit 1.2941. WTI is now looking to a move through $40.0, and the CAD seems to have pre-empted this to a degree, but near term stagnation in the Oil price sees some consolidation back around 1.3000 for now. AUD/USD took out .7600 in Asia, having previously contained the upside, but since then we have gone on to hit .7650. EUR/USD has had an easy ride on the upside and has traded to just shy of 1.1300, while EUR/GBP gains stalling at .7900 to allow for a Cable extension through 1.4300 , but lacking momentum here. USD/JPY is the one we are all watching from current levels, having taken out 112.00 to put 111.00 (double bottom) under threat. 111.45 is the low here so far, but now major pullback to note in the current climate.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, sank 0.9 percent at 10:18 a.m. in London, after losing 1.1 percent in the last session.

“Currency reaction suggests market expectations for the Fed’s rate outlook were slightly more bullish,” Hiroshi Kurihara, chief U.S. economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “The dollar’s been sluggish despite some positive signs over growth, hinting that it’s sensitive to negative news and that its advance may not be strong even as a rate hike approaches.”

The yen strengthened 0.8 percent versus the dollar, while the British pound rose 0.3 percent and Switzerland’s franc gained 0.4 percent. The Bank of England is forecast to leave interest rates unchanged on Thursday and maintain current stimulus levels, while the Swiss National Bank stuck with its ultra-loose monetary policy. The Norwegian krone appreciated 1.1 percent after a cut in borrowing costs.

In commodities, WTI and Brent continue to rally after yesterday’s FOMC comments with WTI close to testing the USD 40/bbl level. Gold also benefited from the FOMC reaching highs of USD 1267.60/oz while platinum and palladium are also appreciating respectively . In base metals Zinc advanced for the first time this week amid global production fell for a second month, while copper and iron ore prices were bolstered with the latter gaining over 4% amid the heightened risk sentiment. However, analysts at Jinrui futures did highlight that the market is waiting to see signs of Chinese demand given the increase in inventories and slowing physical trade.

Bulletin Headline Summary from RanSquawk and Bloomberg

• European equities fail to sustain opening gains as weakness in financials and the downbeat outlook for global growth prospects grips investor sentiment
• Early European FX flow has seen a continuation of the USD fallout from the Fed adjustment in rate hike projections for 2016
• Looking ahead, highlights include the BoE rate decision, US weekly jobs, Philadelphia Fed Business Outlook, JOLTS, and EIA Nat. Gas Storage Change

Treasuries rally overnight, global equity markets mostly lower and commodities rally after more a dovish FOMC statement and SEP than foreseen; today’s economic data includes jobless claims, JOLTS Job Openings.

Bank of England will announce their latest decision today together with minutes of their discussions. Investors are pricing in 20% chance they will cut benchmark interest rate this year

The Bank of Japan’s negative interest rate policy is making it more expensive for domestic banks to hedge dollar investments, threatening to slow their escape from negative rates into U.S. currency debt

Even with a 25% drop in the yen’s value, Japanese export volumes are basically unchanged from where they were when Prime Minister Shinzo Abe took office

Norway’s central bank cut its benchmark interest rate 25 basis points to a record low 0.50% and signaled it’s prepared to ease policy further to ward off a recession in western Europe’s biggest crude oil producer

Switzerland’s central bank held interest rates at a record low and repeated its pledge to intervene in currency markets, a threat President Thomas Jordan has used to keep the franc from strengthening

As Wall Street leaders warn publicly about this quarter’s plunging revenue from trading and deals, Goldman Sachs has provided no guidance. The mystery isn’t whether it is getting hit too — it’s how hard

$2.5b IG corporates priced yesterday; WTD $19.61b, MTD $106.03b, YTD $400.28b; $665m HY priced yesterday, MTD 13 deals for $7.315b, YTD 38 deals for $22.165b

Sovereign 10Y bond yields lower; European, Asian equity markets mostly lower; U.S. equity- index futures steady. WTI crude oil, copper, gold rise

US Event Calendar

• 8:30am: Current Account Balance, 4Q, est. -$118b (prior -$124.1b)
• 8:30am: Philadelphia Fed Business Outlook, March, est. -1.5 (prior -2.8)
• 8:30am: Initial Jobless Claims, March 12, est. 268k (prior 259k); Continuing Claims, March 5, est. 2.235m (est. 2.225m)
• 9:45am: Bloomberg Economic Expectations, March (prior 42.5); Bloomberg Consumer Comfort, March 13 (prior 43.8)
• 10:00am: JOLTS Job Openings, Jan., est. 5.5m (prior 5.607m)
• 10:00am: Leading Index, Feb., est. 0.2% (prior -0.2%)

Central Banks

• 8:00am: Bank of England bank rate, est. 0.5% (prior 0.5%)

DB’s Jim Reid concludes the overnight wrap

Although we saw the Fed closer align its rates expectations with those of the market, the market pushed Fed Funds expectations back even further with the probability of a June hike taken down to 38% (from 54%). Yellen made mention in her press conference of the April meeting being ‘live’ – which is unlikely to be surprising given her preference for optionality – although the market clearly sees that as an even longer shot now with the probability down to 8% this morning, after being at 25% just 24 hours ago.

Away from the Fed, it’s worth adding that Oil (+5.83%) rebounded hard yesterday (and is up further this morning) and in turn wiped out the heavy losses from Monday and Tuesday. That more than played its part in the price action for risk assets with the surge coming on reports that Saudi Arabia and other oil exporters will limit output levels even if Iran refuses to cooperate. According to the WSJ, Qatar have been reported as saying that they will host a meeting on April 17th for both OPEC and non-OPEC members to discuss such measures, although we highlight that this date has appeared to be pushed back on a number of occasions now.

Looking at the latest in Asia, aside from a drop in the Nikkei (-0.73%) with the stronger Yen weighing on markets there, bourses elsewhere are trading with broad based gains with the Hang Seng (+1.02%), Shanghai Comp (+0.88%), Kospi (+0.70%) and ASX (+0.96%) all up strongly. Credit indices are performing strongly too with the iTraxx Aus and Asia indices 5bps and 4bps tighter respectively. Asia FX is also posting some solid gains, while the Aussie Dollar is up over half a percent following an unexpected fall in the unemployment rate data this morning.

Back to yesterday and a quick recap of the economic data. As noted earlier, core inflation for the US in February was up a slightly better than expected +0.3% mom last month (vs. +0.2% expected) which has helped to nudge the YoY rate up one-tenth to +2.3% and the highest now in five years. Headline inflation was as expected at -0.2% mom last month, with the YoY rate down four-tenths to +1.0%. Elsewhere we saw industrial production disappoint with a -0.5% mom decline in February and more than expected (-0.3% expected) with utilities and mining output both contributing to the slump. Capacity utilization was down four-tenths to 76.7% (vs. 76.9% expected) although there was some better news in the latest manufacturing production data which showed a better than expected +0.2% mom gain last month (vs. +0.1% expected). Elsewhere, last month’s housing starts data showed a robust +5.2% mom increase (vs. +4.6% expected) although permits slipped -3.1% mom (vs. -0.2% expected).

In Europe yesterday price action was pretty benign which was of little surprise ahead of the Fed. The Stoxx 600 (+0.04%) closed barely unchanged while credit indices were flat to slightly wider (iTraxx sub fins being the notable underperformer, closing 10bps wider). Notable during the European session however was the €24bn of primary bonds issuance which priced in Europe which was the biggest volume day in two years and the week-to-date volume so far the second busiest YTD.

Looking at the day ahead now, this morning in Europe the notable data to be released will be the final revision to the February CPI report for the Euro area (no change to -0.2% yoy headline expected) along with the January trade balance. While the dataflow is light, there’s no shortage of central bank meetings however with the BoE, SNB and Norges Bank all due to announce their latest policy decisions – the latter the only one where the market is expecting a change with a 25bps cut to the deposit rate expected (to 0.5%). This afternoon in the US it’s another reasonably busy afternoon of data. The Philly Fed business outlook for March will be closely watched, while we’ll also receive employment data in the form of initial jobless claims and JOLTS job openings for January. The Conference Board’s February leading indicator will also be released.

via Zero Hedge http://ift.tt/1S5Rbz0 Tyler Durden

 

 

 

Hold your real assets outside of the banking system in one of many private international facilities  –>  http://ift.tt/1M1FiG5 

 

 

 

The Two Worlds of Precious Metals: East and West

Written by Jeff Nielson (CLICK FOR ORIGINAL)

 

 

For five thousand years, gold and silver have been humanity’s premier form of money; real money, not thefaux-money manufactured by our central banks. During that same period of time, these metals have been our premier instruments of wealth preservation and therefore our “safe havens.”

There is nothing accidental about this phenomenon. Gold and silver have obvious aesthetic appeal. Indeed, silver is actually the more brilliant of the two metals. It is their aesthetic appeal that makes these metals “precious.” But more than simply their aesthetic appeal, they are also (relatively) rare.

If diamonds were as common as pebbles, it would be impossible to impress one’s potential bride-to-be with such stones, even in a setting of gold. Diamonds have their value, both real and sentimental, not only because of their aesthetic qualities but also because of their perceived scarcity.

The situation is the same for gold and silver. If gold and silver were as common as iron, zinc, or even copper, they would not be coveted as greatly, regardless of their aesthetic appeal, because of their abundance. It is the qualities of being “rare” and “precious” which are essential in order for any commodity to be considered a suitable currency. It is these properties that make a commodity a source of value. There will always be demand for these metals; therefore, they will always have value. For these reasons, gold and silver preserve and protect wealth.

Gold and silver are both precious and rare, but they are more than that. As metals, they also exhibit uniformity. Once refined, any gold or silver coin is indistinguishable from any other. Conversely, diamonds lack uniformity, therefore they are not a good candidate to be used as “money.” Venders would complain that a particular buyer was using “low-grade” diamonds for payment. On the opposite side of the ledger, purchasers with stones of superior size or quality would seek to negotiate premiums on their “money.” It would wreak havoc for commerce.

Gold and silver are perfect money, but they are also more than that. They are forms of money that are available at what must be termed near-optimal quantities and fulfill two separate but equally important functions. Silver is rare enough to be valued for its scarcity yet plentiful enough to be the ideal Peoples’ Money. It can be the wages of the workers; the payment used in basic commerce.

Gold is more scarce than silver. Because of its greater degree of scarcity it derives greater value, yet it is still plentiful enough to be a tool of commerce. However, gold is not the Peoples’ Money. Rather, it is the money of nations or, alternatively, the wealthy. It is the money of investment and industry. This additional level of prestige makes gold ideal as a “standard” for a national or global monetary system.

A White Paper previously released on this topic explained how and why “a gold standard” was the optimal basis for a monetary system in our modern economy. That same paper then provided extensive empirical evidence documenting the horrific economic carnage that resulted from the loss of our gold standard in the early 1970s.

When our nations had gold as the money of governments and silver as the money of the people, we enjoyed a level of prosperity and economic stability that we have not seen either before or since that era. In the four and a half decades since these metals have lost their official monetary status, our economies have been destroyed, our governments have been bankrupted, and the currency in our wallets is fundamentally worthless.

Decades of relentless brainwashing in the West have convinced the vast majority of our populations that there is no longer a place or role in our modern economy for Perfect Money. Consequently, the masses in the West generally shun gold and silver by storing and protecting only a tiny percentage of their wealth with these metals, in comparison with any other era in our society’s history.

This is how gold and silver stand today from a Western perspective. What is continually forgotten beneath the veneer of our cultural arrogance is that the rest of the world, and the vast majority of humanity’s population, have a fundamentally opposite perspective regarding the world’s only Perfect Money.

Unexposed to the decades of monetary brainwashing directed at Western populations, Eastern populations have never forgotten the important role of precious metals in our societies and economies. Even the most humble peasant understands why we store our wealth in gold and silver money – not the diluted and debauched paper currencies of bankers.

Real money is a store of wealth. Mere paper currency is only a tool of commerce. As a store of value, these currencies are the equivalent of a “leaky bucket.” Over a period of thousands of years, gold has perfectly preserved the wealth of its holders. In the mere century in which the Federal Reserve was entrusted with “protecting” the dollar, it has lost 99% of its value and the wealth contained.

Now that is a big leak. And it’s getting worse. Thanks to the ever-increasing rate of Fed money printing, and thus U.S. dollar dilution, 75% of that loss in value has occurred over just the last quarter-century of Federal Reserve fraud and mismanagement.

We needed gold and silver for our financial protection a century ago. We really needed gold and silver 45 years ago when Paul Volcker assassinated the last vestige of our gold standard. And we really really need gold and silver to protect our wealth today – as the monetary crime of “quantitative easing” has rendered these faux currencies fundamentally worthless.

In the East, China and Russia are relentlessly accumulating gold, observing a “rule” which is now forgotten by the arrogant oligarchs of the Corrupt West: the Golden Rule. He who has the gold makes the rules.

Conversely, the Corrupt West has squandered its own once-vast reserves, both officially and surreptitiously. For the better part of two decades, Western governments were dumping hundreds of tonnes of gold per year into the market to suppress the price. Meanwhile, the central banks of these regimes were secretly dumping at least that much gold onto the market.

This process was done via what these crooked bankers call “bullion leasing”: (supposedly) ‘lending’ their gold. Regular readers are already somewhat familiar with such frauds. “Gold generates no income.” The bankers tell us this all the time. Thus there can be no legitimate commercial purpose to so-called bullion-leasing.

Instead, this “borrowed” gold is also dumped onto the market (i.e. sold), with much or most of that gold gone forever. Yet our corrupt central banks continue to register every ounce of gold on their books –pretending to continue to have legal title and possession of this gold.

No one has seen any of this gold in decades. In the case of the United States’ mythical “gold reserves,” there has been no public accounting of this gold in over 50 years. The farce has grown to such an extreme that any time any significant quantities of this Western “gold” is transported, it is done secretly so that no one outside of these corrupt regimes ever gets even a glimpse of this myth-gold, let alone a touch or an official audit.

The West’s gold is gone. Yet out of one side of their mouths, these rancid governments boast of supposedly gigantic reserves, while out of the other side of their mouths they continually denigrate its importance as a monetary asset. “Gold is a barbarous relic.” One would never hear such ignorance and idiocy emanating out of the East – or anywhere outside of the Corrupt West.

Western governments and their deluded populations are about to get a history lesson and economics lesson all rolled into one. It could and should also be a lesson in humility, though that is likely too much for us to hope.

Clearly China and Russia are not accumulating vast reserves simply to engage in idle boasting, as does the West. Both of these nations are deliberately understating their total reserves – significantly – though not declaring the gold they acquire domestically. With any gold acquired from domestic sources (i.e. gold mining) such declarations are entirely voluntary.

The purpose of such massive stockpiling can only be with the intent of resurrecting “the gold standard.” The difference would be that these Eastern nations could and will occupy the drivers’ seat of the new system, which will replace the fraudulent Western system of un-backed and totally debauched paper currencies.

He who has the gold makes the rules. The “world” in the East has never ceased to recognize the Golden Rule. The “world” in the West now contemptuously scorns this eternal wisdom. Another expression long forgotten in the arrogant West: pride cometh before a fall.

 

 

 

Please email with any questions about this article or precious metals HERE

 

 

 

The Two Worlds of Precious Metals: East and West

Written by Jeff Nielson (CLICK FOR ORIGINAL)

 

 

 

 

 

 

 

via Zero Hedge http://ift.tt/21wBOlU Sprott Money

By EconMatters

Dollar weakness pushed all commodities higher on Wednesday afternoon causing shorts to be squeezed in the oil market. I am sure Bears are surprised where Oil is now given the negative sentiment on Tuesday, we are trading in a range between $35.96 and $39.64 the last nine days. If there is any weakness if the oil complex the rest of the week, look for gasoline to lead the way, as it had a lesser inventory drawdown than expected by traders.

Equities and oil are basically the same trade right now, pullbacks are bought up pushing both assets to new cycle highs in this bull run starting from mid February in both asset classes. The “God Father Algo” is orchestrating quite the profitable move for these positional traders. These type of long term highly correlated positional runs are not coincidental, always keep in mind the big picture of who is playing the Game, and how it is being played – these positional players dictate the rules for financial markets.

Always know who your “Overlord” is and what they are doing if you want to make money in this game. The Overlord in financial markets are the big positional traders who were building sizable positions in multiple asset classes when oil was getting hammered everyday under $30 a barrel.

The same patterns happen year after year for a reason, market tells give you insight into the thinking and methodology of the big game players. Look to currency markets for many of the clues as often carry trades in part accompany these long term structural trades as the funding source for providing extra juice in the trade.

via Zero Hedge http://ift.tt/255SoNZ EconMatters