Creditors

Allied Nevada Gold Files For Bankruptcy Protection

Just as in the case of oil currently, the problem with gold (and countless other commodities) trading where it does, is that as we have shown repeatedly on previous occasions, it is at or below the marginal production cost of various gold producers.  And with miners losing money on every incremental ounce (or barrell) they pull out of the ground, there is only so much capital they can burn before they have not choice but to file for bankruptcy. Which is precisely what happened to Allied Nevada Gold, the operator of the gaming state’s Hycroft mine, which earlier today filed for bankruptcy in Delaware. The company blamed its deteriorating financial condition on the drop in gold and silver prices in recent years, an overleveraged capital structure, delays in a key expansion project, and currency swap exposure.

US May Run Out Of Oil Storage Space As Soon As June

Oil storage capacity in the US is now at 60% and is set to be completely exhausted in just three months. With storage at a premium, the contango breakeven trade will become increasingly more unprofitable and come June, each incremental barrel will have to be dumped on the market forcing prices lower.

Frontrunning: March 10

  • Dollar at 12-year peak versus euro, emerging markets spooked (Reuters)
  • CIA sought to hack Apple iPhones from earliest days (Reuters)
  • Draghi Urged Greece to Allow Troika Back Before It’s Late (BBG)
  • Brent crude dips below $58 on strong dollar and supply (Reuters)
  • Credit Suisse replaces CEO Dougan with Prudential's Thiam (Reuters)
  • More "distressed" energy M&A: Verisk buys Wood Mackenzie for £1.85bn (FT)
  • Prepare for a surge in defaults: Investors Are Buying Stocks and Bonds From Energy Producers Amid Oil Price Drop (WSJ)
  • Private equity executive ordered to pay £72m to ex-wife (FT)
  • Democratic donors unfazed by Hillary Clinton's use of private email (Reuters)
  • Expensive Hepatitis C Medications Drive Prescription-Drug Spending (WSJ)
  • 'ISIS Hackers' Almost Certainly Not ISIS Hackers (NBC)

Futures Sell Off As Soaring Dollar Weighs On Risk, European Yields Slide To Fresh Record Lows

As noted earlier, starting early with the overnight session there was already some serious fireworks in Asia, when first the USDJPY soared then tumbled, pushing the Nikkei lower some 0.7% with it, driven entirely by the surge in Dollar which rose to a fresh 12 year high overnight after gaining as much as 0.59%, in an extension of Friday’s post-NFP gains. Additionally, the EUR/USD slipped below 1.0800 to touch its lowest level since Sept’03 while USD/JPY rose above 122.00 for the first time since Jul’07, after breaching long-term resistance at 121.85. However, in recent trade the pair has seen a straight line sell-off which in turn has sent US equity futures sliding, and the ES down about 14 points as of this moment. Meanwhile, the frontrunning of the ECB continues, with German 10 Year yields sliding -3bps to 0.281%, the lowest in series history. Also touching fresh record lows were Austrian, Belgian, Dutch, Finnish, Irish, Italian, Spanish 10 Year rates.

Frontrunning: March 9

  • ECB Starts Buying German, Italian Government Bonds Under QE Plan (BBG)
  • Creditors Reject Greece's Reform Proposals (BBG)
  • Is Apple Watch the Timex digital watch of the Internet era? (Reuters)
  • Tesla shedding jobs in China as sales target missed (Reuters)
  • Malaysia Airlines says expired battery on MH370 did not hinder search (Reuters)
  • Gunmen kill more than 12 Islamic State militants in eastern Syria (Reuters)
  • GM Plans Share Buyback, Averting Proxy Fight (WSJ)
  • Wisconsin capital marked by third day of protests after police shooting (Reuters)

A Black Swan Lands In Southern Austria: The Ripple Effects Of "Mini-Greece Going Off In The Heartland Of Europe"

Austria’s decision to wind down Heta Asset Resolution AG sent ripples through the financial system, causing credit rating downgrades in Austria and bank losses in Germany: "It’s a mini-Greece going off in the heartlands of Europe." Here are some of the consequences, and delightful ironies, of a completely unexpected black swan landing in the south of Austria.

Greek Minister Threatens Europe With Flood Of Jihadists And Immigrants If Greece Fails

It wasn't even a full 24 hours after Greece raided at least some of the funds of its pension and other public entities in order to make a €310 payment to the IMF, the first of four this month (the balance is 350 million on March 13, 580 million on March 16 and another 350 million on March 20), that the insolvent country resumed doing what it does best: dispensing hollow threats. This time it was its foreign minister and leader of the Independent Greeks party - Syriza's junion coalition partner - Nikos Kotzias, who showed how to bluff like the best of them, when he threatened that "there will be tens of millions of immigrants and thousands of jihadists, if you take out Greece" the minister said on before EU foreign ministers meeting in Riga.

Greece Proposes To Become A Tax-Collecting Police State: Will "Wire" Tourists And Unleash Them As "Tax Inspectors"

"We propose the following: that large numbers of non-professional inspectors are hired on a strictly short-term, casual basis (no longer than two months, and without any prospect of being rehired) to pose, after some basic The very 'news' that thousands of casual "onlookers" are everywhere, bearing audio and video recording equipment on behalf of the tax authorities, has the capacity to shift attitudes very quickly, spreading a sense of justice across society and engendering a new tax compliance culture - especially if combined with the appropriate communication of the simple message that the time has come for everyone to share the burden of public services and goods."

- Yanis Varoufakis

Despite Tsipras Complaining That "ECB Has Rope Around Our Neck" Greece Finds Enough Cash To Make IMF Payment

While the biggest economic event of the week was the US February jobs report, one of the lingering concerns following last week's report that Greece is in financial dire straits, is whether the Eurozone member nation would default on its IMF loan as soon as today when it had a scheduled €310 million payment due to the IMF. Earlier today, in the build up to the NFP report, it was reported that indeed Greece had managed to dig deep under the cushion and find just enough cash to make the required partial loan repayment thus avoiding a technical default.  As Reuters reports, "struggling to scrape together cash and avoid possible default, Athens made a 310 million euro (223.37 million pounds) partial loan repayment to the International Monetary Fund, while Tsipras pleaded to be allowed to issue more short-term debt to plug a funding gap."

IMF Director Admits: Greek Bailout Was "To Save German & French Banks"

For the first time in public, though practically the entire world assumed it, an official from The IMF has admitted that the various Greek bailouts were not for The Greeks at all... "They gave money to save German and French banks, not Greece,” Paolo Batista, one of the Executive Directors of International Monetary Fund told Greek private Alpha TV on Tuesday. As KeepTalkingGreece reports, Batista then went on to strongly criticized not only the euro zone and the European Central Bank but also the IMF and the Fund’s managing Director Christine Lagarde for defending Europe much too much...

"Patient" - What's In A Word?

Is Janet Yellen "patient" or not? And is "patient" a nudge-nudge, wink-wink code for a period stretching beyond the next few FOMC meetings or is it just a tacit admission that the Fed will start checking its parachute harness only after the plane’s engines have at last caught fire?  The last time they did this - with the benefit of hindsight - the supposed golden era was the one in which were actively sowing the seeds of our own ruin, it might give pause for thought about quite how much harm our masters' stubbornly accommodative stance is causing us again today.

Greece Said To Tap Social Security Capital To Fund T-Bill Rollover

Today's Greek T-Bill rollover auction came, and it was successful, even if it means the yield on the paper rose from 2.75% previously to 2.97% - the highest yield in 11 months, since the 3.01% in April of 2014. The problem is when looking at where the funds came from: as Bloomberg reported, also citing Kathimerini, today it was the turn of Greek Social Security funds to prop up the auction, with part of the reserves of other public entities held at Bank of Greece also used to cover the Treasury-bill auction. Bloomberg adds that the "investment of common capital reserves was necessary as no foreign investors participated in auction, Greek banks couldn’t buy additional securities as they weren’t allowed to increase their exposure to Greek Treasury bills." The biggest problem is that  about €750m of the T-bills maturing Friday were held by foreign investors who didn’t participate in today’s auction.