OPEC

• ‘Cov-lite’ loans soar in dash for yield (FT)
• Cambodian police clash with thousands of garment workers, 23 hurt (Reuters)
• Obama Accepting Sequestration as Deficit Shrinks (BBG)
• Having done nothing to restore confidence in a fragmented market, the SEC turns back to main street fraud (WSJ)
• Europe's austerity-to-growth shift largely semantic (Reuters)
• Germany thwarts EU in China solar fight (FT)
• In EU-China dispute, Beijing warns of trade  (FT)
• U.S. Oil Boom Divides OPEC (WSJ)
• Record Cash Sent to Balanced Funds (BBG)
• Hilsenrath: Fed Wrestles With Market Expectations About Pace of QE (WSJ)
• Worse-Than-Cyprus Debt Load Means Caribbean Defaults to Moody’s (BBG)
• States Raise College Budgets After Years of Deep Cuts (WSJ)
• U.K. Banks Cut 189,000 With Employment at Nine-Year Low (BBG)

The fundamentals of the platinum and palladium markets are beginning to receive market attention and not before time. The positive supply demand dynamics are leading to increased investment demand as seen in the ETF data and Chinese demand rising again due to both industrial and jewellery demand.

• Controversies give Obama new governing headaches (Reuters)
• About that Capex... BHP to Rein In Investment, Chief Says (WSJ), considers returning cash to shareholders (FT)
• Bloomberg users’ messages leaked online (FT)
• Japanese mayor sparks China outrage with sex-slave remarks (Reuters)
• Economists Cut China Forecasts (WSJ)
• U.S. oil boom leaves OPEC sidelined from demand growth (Reuters)
• U.S. banks push back on change in loan loss accounting (Reuters)
• Fed’s Plosser Says Slowing Inflation No Concern for Policy (BBG)
• Watchdog probes 1m US swap contracts (FT)
• Used Gold Supply Heads for ’08 Low as Sellers Balk (BBG)
• Ex-BlackRock Manager Said to Be Arrested in U.K. Probe (BBG)

Overnight risk continues to ignore all newsflow (today the economic reporting finally picks up with advance retail sales due at 8:30 am as expectations for a second modest decline in a row of -0.3%) and is focused entirely on what the consensus decides to make of the Hilsenrath piece, even as the difficulty level was raised a notch following another late Sunday Hilsenrath piece, which puts more variable into the "tapering" equation, and whose focus is whether Bernanke will be replaced by Janet Yellen, Geithner or Summers, or anyone. With all three classified as permadoves, one does scratch their head how the market can be confused: worst case Fed tapers by $10/20 billion per month, market tumbles, then Bernanke's replacement or Ben himself ploughs on even more aggressively with QE. QED.

• Microsoft prepares U-turn on Windows 8 (FT), Microsoft admits failure on Windows 8 (MW), After Bumpy Start, Microsoft Rethinks Windows 8 (NYT)
• China reports four more bird flu deaths, toll rises to 31 (Reuters)
• Republicans shift stance on US budget (FT)
• NYC Tallest Condo Corridor Gets New Entrant With Steinway (BBG)
• U.S. Says China's Government, Military Used Cyberespionage (WSJ)
• China rejects Pentagon charges of military espionage (Reuters)
• Bank of China Cuts Off North Korean Bank (WSJ)
• Libya defense minister quits over siege of ministries by gunmen (Reuters)
• London Recruiter Says City Job Vacancies Rose 19% (BBG)
• Colleges Cut Prices by Providing More Financial Aid (WSJ)  or, said otherwise, loans
• Jeweler agrees to plead guilty in KPMG insider-trading case (LA Times)

There is no hope whatsoever of so-called U.S. "energy indepedence" unless three things happen. First, environmental rules have to be wound back to 1970 standards -- in other words, disband the EPA and make civil plaintiffs show actual harm, not just hypothetical harm because someone goofed on a sheaf of mandated paperwork. Second, stop wasting taxpayer money on nonsense like $25 per gallon biofuel. Third and most urgently, stop subsidizing Wall Street. Let the market decide what interest rates make sense, rewarding companies who can find and produce oil, instead of gorging themselves sick on artificially cheap junk bonds that money-losing shale swindlers will never pay off.

It all looked great as we held the overnight rampathon (driven by EURJPY fiddling) into the US open and yay verily, the media was celebrating (and kept their exuberance going til the close with the Dow at another all-time closing high). The S&P was amusingly (and oh so humanly) bid 7 points vertically into the close to ensure a VWAP close in the futures (and another new closing high for the S&P) as the Nasdaq bounced perfectly off unchanged from Cyprus levels. But away from that idiocy, things were not so great. Builders were battered out of the gate (-2.4% on the week); The Dow Transports never saw green all day dropping 1.3% (and now down 3% post-Cyprus) and while the broad Russell 2000 opened gap up (like the rest) it was slammed slower all day and ends -2% from pre-Cyprus (while the Dow, S&P, and Nasdaq hold 0.5-1% gains). Silver was monkey-hammered (on no news whatsoever - and record US Mint demand) down 4% on the week and gold slipped ending -1.3% (even with the USD retracing yesterday's weakness to close unchanged on the week). Treasuries drifted higher in yield with 7Y underperforming (but only unch on the week). VIX compressed but remains considerably dislocated from stocks' exuberance.

Was the Real Purpose of the Iraq War to Restrict Oil ... So As to Raise Oil Prices?

Russia and South Africa, which together control about 80% of the world’s reserves of platinum group metals, plan to create a trading bloc similar to OPEC to control the flow of exports according to Bloomberg. “Our goal is to coordinate our actions accordingly to expand the markets for realization of these metals,” Russian Natural Resources Minister Sergey Donskoy said yesterday in an interview at a summit of leaders from Brazil, Russia, India and South Africa in Durban. “The price depends on the structure of the market, and we will form the structure of the market.” South Africa mines about 70 percent of the world’s platinum, while Russia leads in palladium, a platinum group metal used in autocatalysts, with about 40% of output, according to a 2012 report by Johnson Matthey Plc. Palladium rose 0.8% yesterday to $763.50 after Donskoy’s comments, reversing declines to reach the highest level since March 18. Platinum, used to make jewelry and autocatalysts, has risen 2.3% this year because of increased demand from the auto industry and after supply disruptions at mines. The price jumped yesterday in the hour after Donskoy’s comments, narrowing yesterday’s decline. South African Mines Minister Susan Shabangu confirmed that the two countries aimed to counter oversupply of platinum, and said possible measures could include taxes and incentives. “We’re not really controlling the market,” she said in an interview in Durban. “We want to contribute without creating a cartel, but we want to influence the markets.”

The United States is expected to lead the pack among non-OPEC members in terms of oil supply growth for 2013. That's the assessment from this month's market report from the Vienna-based cartel. OPEC, in its forecast, said U.S. oil supply growth is projected at 600,000 bpd this year. That figure, however, is 40,000 bpd less than the previous year. The Vienna-based cartel said U.S. oil growth could go either way for 2013, but noted growth from tight oil developments in states like North Dakota is expected to slow down. While improved drilling technology may offset some of that decline, OPEC said that factors like price issues may dampen the oil boom in the United States.

So much for that December plunge in the US trade deficit, which plunged from $48.6 billion to three year low of $38.5 billion supposedly on a drop in energy imports, but in reality was due to a drop in broad imports as the US economy ground to a halt ahead of the Fiscal Cliff. In January, or after the stop gap measure to allow the economy to continue, things went back to normal, with the US returning to doing what it does best: importing, especially importing expensive energy, and sure enough the deficit spiked promptly back to $44.4 billion - it recent long-term average - as exports were $2.2 billion less than December exports of $186.6 billion while January imports were $4.1 billion more than December imports of $224.8 billion. Immediate result: look for banks to trim 0.2-0.3% GDP points from their Q1 GDP forecasts.

This is why before and during almost any major up move in markets traders go to the EUR/USD and USD/JPY funding crosses for the juice to propel the move. It all starts with the juice, that is what determines price in markets. 

Biggest loser? China.

“Repression” is what Dallas Fed President Richard Fisher called “the injustice of being held hostage to large financial institutions”

Israel hasn`t attacked Iran, huge builds in gasoline products, no jump in demand, yet oil price moved up regardless...