Greek Unpaid Electricity Bills Grow By €4 Million Per Day: Over 700,000 Pay In Installments

Judging by the collapsing Greek yields, which at this rate may drop below US bonds soon enough, the Greek economy has never been stronger. Sadly, manipulated bond levels driven by yet another bout of pre-QE euphoria (suddenly the conventional wisdom is that the ECB will conduct QE in a few months as first explained here in November) no longer reflect anything besides a massive liquidity glut and momentum chasing lemmings. Alas, as usual the reality on the European ground is much worse. The latest example comes from the Greek Public Power Corporation which has reported that Greek households and corporations are finding it increasingly difficult to pay their electricity bills. In total, debts to the power utility from unpaid bills currently amount to some €1.3 billion and growing at an average rate of €4 million per day. Also known as the Grecovery.

Short-Sellers Set-Up Shop As Sentiment Starts To Shift

"It's dangerous to be short still, but we might be building toward a moment where the market becomes quite vulnerable," warns Bill Fleckenstein who is finishing up the documentation on a new short fund he is about to start marketing. With the slowing growth of the Fed balance sheet, over 70% of the S&P's gains since 2011 from hope-driven multiple-expansion alone, bond and equity market sentiment at extremes, and (as Goldman warned) valuations anything cheap; it is hardly a surprise that, as Reuters reports, after years of hiding under their desks, short sellers are re-emerging - slowly. Whether outright short or long/short funds, the market-share of this corner of the business bottomed at approximately 25% in 2013, but in the last weeks, several S&P 500 companies have seen large increases in shares borrowed for short bets; and the "tide might be turning."

Pakistan Enforces 30-Day Ban On Gold Imports To Stall "Steep Increase" In Smuggling To India

As we have discussed numerous times, India's ban and tariffs on gold imports (supposedly to protect their current account balance) is having numerous unintended consequences. From flights full of gold-laden passengers entering the country,  to trying to roll-back centuries of tradition surrounding Indian weddings, the capital control efforts are back-firing as the smuggling epidemic spreads. The foolishness of this 'control' is also spreading as Pakistan has noticed the surge in smuggling, concerned at a steep increase in import duties on gold in a "neighboring country," and has imposed a 30-day ban on gold imports to curb the 'trade'.

The Retail Death Rattle

If ever a chart provided unequivocal proof the economic recovery storyline is a fraud, the one below is the smoking gun.

US Officials: Iran "Falls Well Short" Of Eligibility To Attend Syria Conference

While momentum has been with the hopes that Iran has gone full-peace-tard and following Iran's foreign ministry stating earlier that it would attend the conference on Syria, known as Geneva II; senior US officials have stepped in...

  • *IRAN NOT ELIGIBLE FOR SYRIA CONFERENCE, US OFFICALS SAY: AP
  • *U.S. SAID TO WANT UN TO RESCIND IRAN INVIATION TO SYRIA TALK
  • *IRAN FAILS TO MEET REQUIREMENTS FOR GENEVA II TALKS:US OFFICIAL

After practically inviting them, the US demands that the UN rescind the invitation to Iran to attend since it "falls well short" of what is required.

The Isoquants Of Gold

A scatterplot of the gold price (in USD) vs the USDX index highlights provides informative hyperbolae (or isoquants) that appear to be of some importance in constraining the evaolution of the gold price over time.

Market Trading Hours During The US Holiday

  • New York, Chicago trading floors: closed
  • CME Equity products closes at 11:30 AM Eastern, resume trading at 6:00 PM Eastern
  • CME and CBOT Interest Rate & FX Products close early at 1:00 PM; resume trading at 6:00 PM
  • NYMEX, COMEX early close 1:15 Eastern; resume trading at 6:00 PM Eastern
  • NYSE Liffe – Normal close
  • Eurex – Normal close

The US Is Closed, But Markets Elsewhere Are Open - Full Overnight Summary

Markets have started the week on the back foot, despite a brief rally following a better-than-expected Q4 GDP print in China. Indeed, Asian equities recorded a small pop following the GDP report, but the gains were shortlived as the general negativity on China’s growth trajectory continues to weigh on Asian markets. In terms of the data itself, China’s Q4 GDP (7.7% YoY) was slightly ahead of expectations of 7.6% but it was slower than Q3’s 7.8%. DB’s China economist Jun Ma maintains his view that economic growth will likely accelerate in 2014 on stronger external demand and the benefits from deregulation. The slight slowdown was also evident in China’s December industrial production (9.7% YoY vs 10% previous), fixed asset investment (19.6% YoY vs 19.9% previous) and retail sales (13.6% vs 13.7% previous) data which were all released overnight. Gains in Chinese growth assets were quickly pared and as we type the Shanghai Composite (-0.8%), HSCEI (-1.1%) and AUDUSD (-0.1%) are all trading weaker on the day. On a more positive note, the stocks of mining companies BHP (+0.29%) and Rio Tinto (+0.26%) are trading flat to slightly firmer and LME copper is up 0.1%. Across the region, equities are generally trading lower paced by the Nikkei (-0.5%) and the Hang Seng (-0.7%). Staying in China, the 7 day repo rate is another 50bp higher to a three month high of 9.0% with many investors continuing to focus on the Chinese shadow banking system following the looming restructuring of a $500m trust product that was sold to ICBC’s customers.

Germany Has Recovered A Paltry 5 Tons Of Gold From The NY Fed After One Year

On December 24, we posted an update on Germany's gold repatriation process: a year after the Bundesbank announced its stunning decision, driven by Zero Hedge revelations, to repatriate 674 tons of gold from the New York Fed and the French Central Bank, it had managed to transfer a paltry 37 tons. This amount represents just 5% of the stated target, and was well below the 84 tons that the Bundesbank would need to transport each year to collect the 674 tons ratably over the 8 year interval between 2013 and 2020. The release of these numbers promptly angered Germans, and led to the rise of numerous allegations that the reason why the transfer is taking so long is that the gold simply is not in the possession of the offshore custodians, having been leased, or worse, sold without any formal or informal announcement. However, what will certainly not help mute "conspiracy theorists" is today's update from today's edition of Die Welt, in which we learn that only a tiny 5 tons of gold were sent from the NY Fed. The rest came from Paris.

Philippine Navy Adds To Regional Arms Build-Up As China Words (And Deeds) Escalate

Following China's pledge to seize another South China Sea island, The Philippine navy hopes to add two more warships to its fleet as Southeast Asian countries continue to expand their militaries in response to the Chinese government’s increasingly assertive territorial ambitions. “An army that fails to achieve victory is nothing,” China's Liu was quoted as saying by a defense magazine “Those borders where our army has won victories are more peaceful and stable, but those where we were too timid have more disputes.” That type of language again irritated its neighbors.

Chinese Money Markets Spooked Despite Slight Beat (And Miss!) In GDP

UPDATE: China overnight repo rates just spiked to 6% - the worst since June...

Chinese overnight repo rates were already on the rise (several trades at 5.5%: 200bps above Friday's close) as contagion concerns over wealth management product default spreads and the Chinese Business Climate Index tumbled to its lowest since June 09. Equity futures were sliding also with JPY strength and the Shanghai Composite was testing down towards the 1-handle once again. Then, amid the glorious nashing of spreadsheets and in the face of missed manufacturing and services PMIs, Chinese GDP (according to the Chinese government) came in at a better-than-expected 7.7% YoY (7.6% exp.) and handily above the all-too-crucial-to-hit 7.5% target GDP growth - but in keeping with the Schrodinger plan missed QoQ expectations (+1.8% vs +2.0% exp.). Industrial production also miraculously met expectations of 9.7% perfectly; and (shocker) Retail Sales perfectly matched expectations of 13.6% YoY. The results of all this 'meeting expectations' - JPY weakness (back down to 104 instantaneously) and implicitly US equity futures regain some momentum and scramble back close to unchanged.

Firing Squads Set To Return With A Bang, As Lethal Injection Shortage Persists

Chalk this one up to US (f)austerity, and a $1.1 trillion omnibus spending bull that forgot to add Pentobarbital among the billions in pork spending. Two months ago we reported that due to a shortage of Pentobarbital, Ohio would be unable to execute death row convicts. It appears that the shortage has persisted into the new year, and now some states are taking matters into their own hands. Or rather the hands of the firing squad. As NBC reports, due to the lethal drug shortage, lawmakers in at least two states to call for the return of firing squads. "Missouri state Rep. Rick Brattin, a Republican representing Harrisonville, introduced legislation Friday (.pdf) that would add five-person firing squads as an alternative to the state's current method of capital punishment, lethal injection."

"China Expected To Announce It Has More Than Doubled Its Gold Reserves", Shanghai Daily

Shanghai Daily: "China may soon announce an increase in its official gold reserve from 1,054 tons to 2,710 tons, Jeffrey Nichols, managing director of American Precious Metals Advisors, said. The People’s Bank of China has not reported any increase in official gold holdings since 2009, when the central bank said the official reserve was at 1,054 tons, which accounted for only about 1 percent of its multi-trillion foreign exchange reserves. The PBOC has been “surreptitiously” adding to its official gold reserves. It has bought a total of 654 tons in 2009 through 2011, another 388 tons in 2012, and more than 622 tons last year, mostly from domestic mine production and secondary supplies, Nichols said in a commentary posted on NicholsOnGold.com yesterday. Central bank purchases comprise the smallest fraction of global gold demand — less than 10 percent. “If China announces an increase in gold reserves, there would be an immediate drag-up force in the gold market,” Albert Cheng, managing director of the industrial association World Gold Council for the Far East, told Shanghai Daily. China is the biggest gold consumer and producer in the world."

The Biggest Pain-Trade? - Bearish Bond Belief At 20-Year Extremes

Jeff Gundlach recently warned that the trade that could inflict the most pain to the most people is a significant move down in yields (and potential bull flattening to the yield curve). Citi's FX Technicals group laid out numerous reasons why this is entirely possible (technically and fundamentally) but despite this, investors remain entirely enamored with stocks and, as the following chart shows, Treasury Bond sentiment now stands at 20-year extremes of bearishness.

Bank of America Is Actively Preparing For The Chinese January 31 Trust Default

Last week we were the first to raise the very real and imminent threat of a default for a Chinese wealth management product (WMP) default - specifically China Credit Trust's Credit Equals Gold #1 (CEQ1) - and its potential contagion concerns. It seems BofAML is now beginning to get concerned, noting that over 60% of market participants expects repo rates to rise if a trust product defaults and based on the analysis below, they think there is a high probability for CEQ1 to default on 31 January, i.e. no full redemption of principal and back-coupon on the day. Crucially, with the stratospheric leverage ratios now engaged in such products, BofAML warns trust companies must answer some serious questions: will they stand back behind every trust investment or will they have to default on some or potentially many of them? BofAML believes the question needs an answer because investors and Trusts can’t have their cake and eat it too. The potential first default, even if it’s not CEQ1 on 1/31, would be important based on the experience of what happened to the US and Europe; the market has tended to underestimate the initial event.

What 1,592 Days Of Central Planning Looks Like

Altogether, of the 1881 days starting on November 25, 2008 and continuing through January 19, 2014, the Fed has directly and unambiguously intervened in the markets for a total of 1592 days. It was not been directly involved in the market for a tiny 289 days. In sum: the New Normal is best characterized by a Federal Reserve which has been actively manipulating the equity "market" 85% of the time.

Can We Be Sure The War On Drugs Is Worth Fighting?

Did you know the war on drugs is founded on racist principles? Prof. Stephen Davies shows the historical thought process behind banning drugs. One of the main reasons drugs were banned initially is because people were concerned drug use would lead to interracial relationships. Can you imagine someone making that argument today? Yet it was a principle reason for some of the laws banning drugs that we still have. Other reasons for banning drugs included fear of conspiracies and the misguided notion that the government somehow has a right to the productivity of its citizens. All three of these reasons are truly absurd, but all three were historically used as arguments that contributed to the war on drugs. If these are the arguments on which the drug war is founded, can we be sure it's a war worth fighting for?

34 Years Ago Today, Gold Trading Reached "Delirious Proportions"

On this day in 1980, after more than doubling in the prior month, gold prices peaked amid "trading that reached delirious proportions" at a record $820. Between The Hunt Brothers precious metals miasma and rumors that the Soviet Union had invaded Iran, one trader at the time described gold's bull run as "like going to a strip show knowing the place is about to be raided." The exuberance described in the WSJ's headlines below echo so strongly forward into the current "buying opportunity" that any dip represents in the US equity market... and just as it is never different this time, the WSJ reported, "no one wants to leave until they're sure the party is over."