$UWTI monkey see and Monkeys do..
— Michael NG3 (@NatGasPro) Mar. 17 at 01:06 PM

Reuters
Ukraine's largest creditor, Franklin Templeton, has hired investment and advisory firm Blackstone to advise a creditor group during debt restructuring negotiations with Kiev, sources familiar with the situation told Reuters on Sunday. The sources confirmed an earlier report by the Financial Times, which quoted sources as saying Franklin Templeton had organised a group of creditors holding 50 percent of outstanding Ukrainian international bonds. Blackstone represented Greece's creditors in 2012. "A significant bondholder of Ukraine's foreign debt has appointed Blackstone as adviser and Weil (Gotshall) as legal adviser to assist in creditor discussions with Ukraine," one person familiar with the situation said. The bondholder is understood to be Franklin Templeton, the person added.

Full Update

Superfund Macro Report

Headlines

The Euro takes a deeper dive...but then slightly recovers. Currently at $1.0566.

An Interest Rate Hike Could Cause A Recession? LINK

Why is Apple making a gold watch? Think luxury markets - LINK 

How Billionaires in London Use Secret Luxury Homes to Hide Assets - LINK

U.S. crude fell below $43 a barrel on Monday for the first time since March 2009 - LINK

In Depth

From bust to boom: How the world became addicted to debt Mapped: Eight years on from the financial crisis, the global economy is still awash with record levels of debt. Click on the countries to find who's in the red and who's in the black - LINK

The Bloomberg Commodity Index fell 1.4 percent to 97.5777, the lowest level since August 2002, dragged down by crude oil and raw sugar. The Bloomberg Dollar Spot Index, tracking the greenback against 10 currencies, is set to climb the most since 2008 this quarter and reached the highest level in data going back to the end of 2004. A stronger dollar tends to deter investment in raw materials - LINK

Spine (really head) transplantation is here - LINK 

Onward profits!

Chad

Managing Partner, Hagan Capital
Founding Editor, Superfund Macro Report
Chad Hagan on StockTwits

EURUSD


A very light euro area data and event calendar this week is unlikely to stem recent EUR losses, says Barclays Capital.

"We and consensus forecast final February headline and core HICP inflation (Tuesday) to be confirmed at -0.3% y/y and 0.6% y/y, respectively, supporting the ECB’s recently expanded asset purchase programme," Barclays projects.

"The EU summit (Thursday) may also gain some attention as the situation in Greece is likely to be a topic for discussion, at least on the sidelines. However, we do not expect any major decision. First, the Greek government, in collaboration with the Troika, will have to prepare a comprehensive medium-term macroeconomic framework clearly identifying the reform agenda and any fiscal funding gaps. Current funding pressures should encourage Greece to accelerate its efforts in this regard," Barclays adds.

SOURCE: https://twitter.com/efxnews

Hearing dates: 20-22, 26-29 January, 2-4 and 10-12 February 2015
____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©
The Honourable Mr Justice Flaux:

Introduction and background

This case concerns a fraud committed many years ago by the defendant, formerly known as Marc Rich & Co AG (which became Glencore International AG in 1994 and to which I will refer as "Glencore" save where the context requires otherwise) upon the claimant (to which I will refer as " Petrom"). Petrom is a Romanian oil company which, following corporate reorganisations, is the successor in title of two other Romanian oil companies SC Rafirom SA ("Rafirom") and SC Compania Romana de Petrol SA ("CRP"). Rafirom and then CRP after merger in about 1996, was the state owned company with overall responsibility for the import and refining of crude oil and export of petrochemical products in Romania. In 2004, the merged company was privatised and became Petrom .


Prior to 1999, the actual importation of crude oil was organised by another state owned company Petrolexportimport SA ("Petex"). Petex entered all contracts with third parties for the supply of crude oil as principal, but at all material times it was acting as a commission agent for Rafirom/CRP pursuant to a series of Foreign Trade Agreements. Payment for crude oil under contracts with third parties was made by Rafirom/CRP pursuant to letters of credit opened with Banco Romana de Comert Exterior SA ("Bancorex") or another Romanian bank. Although it was sometimes Petex (as opposed to Rafirom/CRP) which instructed the bank to open the letter of credit, Petex did so as agent for Rafirom/CRP and Petex was not entitled to open a letter of credit in respect of any contract without the permission of Rafirom/CRP. Contracts with third parties for the supply of crude oil were usually made on CIF Constantza terms and when, under the terms of those contracts, title and risk passed to Petex, pursuant to the Foreign Trade Agreements (for example Article V(2) of the 1992 Agreement), title and risk passed simultaneously to Rafirom/CRP. Also pursuant to the Foreign Trade Agreements, Petex's remuneration for acting as commission agent was 0.2% of the CIF value of the relevant cargo.


In the period with which this case is concerned, 1993 to 1996, crude oil was being imported in accordance with the requirements of the refineries in Romania pursuant to programmes laid down by the Government, although it is fair to say that difficulties experienced by Romania in obtaining foreign currency from time to time in that period meant that the actual importation of crude oil was more haphazard than the programme might suggest. Again, on occasion, the needs of the refineries were such that Petex had to obtain cargoes of crude oil at short notice. Cargoes of crude oil were discharged at Constantza into the storage facilities of Oil Terminal Constantza, which had eight storage tanks of 50,000 cubic metres each. Imported crude oil was used by four of the ten Romanian refineries, Petromidia, Petrotel, Arpechim and Rafo. The Petrobrazi refinery also seems to have used some imported crude oil, but not any with which this case is concerned. It also had a processing plant for processing domestic crude oil. The other refineries were smaller and processed only domestic crude oil. The imported crude oil was sent to the four refineries through pipelines running from the oil terminal at Constantza to the refineries inland.


During the relevant period, 1993 to 1996, the crude oil imported by Petex for use in the four refineries was principally (but not exclusively) of three grades or types, Iranian (mainly Iranian Heavy although sometimes Iranian Light), Gulf of Suez Mix ("GOSM") a recognised blend of various Egyptian crudes and Urals (Russian crude oil from the Urals also known as Soviet Export Blend) because these were medium heavy/medium sweet crudes which suited the technological profile of the refineries. During this period, Petex entered into supply contracts with a number of oil trading companies (and occasionally direct with the Iranian and Egyptian state oil companies, NIOC and EGPC respectively). About 25% of the crude oil it contracted for was supplied by Glencore. Petex had a long standing trading relationship with Glencore dating back to the foundation of the company by Marc Rich himself in the 1970s.


In the years 1993 to 1996, Glencore made about 80 shipments to Petex of crude oil principally pursuant to contracts calling for the supply of Iranian Heavy, GOSM or Urals (sometimes the relevant contract was for supply of a specific grade, sometimes it gave Glencore the option as to which grade to supply). In addition, in 1995 and 1996, Glencore made over 60 shipments of some 3,500 tons each of Keimir crude oil from the Caspian Sea region which was brought in barges downriver to the Black Sea and then along the coast to Constantza. The court is not concerned with those cargoes, save to the extent that Petrom relies upon the price paid as demonstrating a discount payable for new grades of crude oil, a matter to which I return in more detail later. It will also be necessary to examine in more detail below, a contract for the supply of a cargo described as "Egyptian Blend" ex SEAWIND II, supplied to Petex in February 1993.


Of the 80 or so other shipments made by Glencore to Petex, there were 32 where, although the supply contracts provided for the supply of Iranian Heavy (in the case of cargoes 1 to 14) or GOSM (in the case of cargoes 15 to 31[1]), the crude oil supplied by Glencore was not in fact Iranian Heavy in the case of the first fourteen such cargoes (delivered at Constantza between August 1993 and September 1994) or GOSM in the case of cargoes 15 to 31 (delivered at Constantza between November 1994 and November 1996). Instead the crude oil supplied was in each case a blend of various crude oils blended on behalf of Glencore by the Eilat Ashkelon Pipeline Company ("EAPC") at its storage facility in Ashkelon, Israel. The crudes used in the blends were predominantly Egyptian but not always so and, in the case of the purported GOSM cargoes, contained substantial quantities of Marib, a Yemeni crude oil or Oso, a Nigerian crude oil. The blends were all bespoke and were never identical in terms of the constituent crude oils in the recipe or their quantities or proportions, but the object of the exercise was evidently to create crude oil which resembled Iranian Heavy or GOSM respectively. Although Glencore has not vouchsafed any evidence as to the actual costs of either the purchase of the various crude oil constituents or of the blending exercise, it is a fair inference that the cost overall was less in each case than the CIF Constantza price for Iranian Heavy and GOSM which Glencore charged Petex, so enabling Glencore to make a greater profit than it would otherwise have done.


It is common ground in these proceedings that the actual composition of each of the cargoes was as set out in so-called Table B, at Annex 1 to the Amended Particulars of Claim, reproduced as an Appendix to this judgment. Presumably the information in the Table, which I was told was available in the arbitration between Petex and Glencore ten years ago (to which I refer in more detail below) came at some stage from EAPC, but there is no evidence about how readily available the information about what the recipe had been for any particular cargo would have been at the time the cargo was loaded or delivered at Constantza save in relation to some of the later cargoes (for example cargo 29) where EAPC wrote to Glencore providing the composition of the blends. That information was never passed to Petex at the time. Continue Here - LINK
Thank you Kit Chellel
Thank you http://www.bailii.org/ew/cases/EWHC/Comm/2015/666.html
https://plus.google.com/u/0/+ChadHagan

VIX is everywhere - opportunity is in the markets ---

German Consumer Price Inflation sent the Pound to euro exchange rate down today, drfiting off recent multi-year best conversions. 

Can the GBP/EUR resume the strong uptrend, or do forecasters believe it has peaked? 

A brief foreign exchange market summary before we bring you the rest of the report: 

The Pound to Euro exchange rate: GBP/EUR converts at 1.405.
The Euro to Pound exchange rate: EUR/GBP conversion is 0.712.
The Euro to US Dollar exchange rate: EUR/USD conversion is 1.05.
The Euro to Swiss Franc exchange rate today is converting at 1.056 EUR/CHF.

NB: the forex rates mentioned above, revised as of 14th Mar 2015, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks. Speak to a recommended FX provider to lock in the best exchange rates. - See more at: http://www.exchangerates.org.uk/news/12073/sterling-vs-euro-drops-following-latest-german-cpi-figure-.html#.dpuf

(Bloomberg) -- Glencore Plc was ordered to pay just over $40 million to OMV Petrom SA by a U.K. court for fraudulently shipping oil of a lower-than-purported quality to Romania in the 1990s. Marc Rich & Co., later to become Glencore International AG, sold about 32 shipments to Romanian state firms from 1993 to 1996 made up of cheaper crude blends than agreed, and falsified documents, Julian Flaux, the judge in the London court, said in his ruling on Friday. It profited by about $40.1 million from the “deceit,” he said. Glencore will appeal the ruling.


From Bloomberg

The case is: SC Petrom SA v. Glencore U.K. Ltd. & 3 Ors, High Court of Justice, Queen’s Bench Division, 08-417

HANOI, March 13 (Reuters) - Heres a snapshot of Vietnamese dong exchange 
rates in the official and unofficial markets, indicative SJC gold prices in 
Hanoi and interbank offered rates at 0402 GMT. 
March 13 March 12 
USD/VND mid-point VND=SBVN 21,458 21,458 
USD/VND interbank VND=VN 21,330/21,400 21,345/21,390 
USD/VND unofficial VNDUNOFF=VN 21,665/21,680 21,670/21,700 
SJC gold (mln dong/tael) 35.24/35.36 35.17/35.29 

Interbank offered rates Overnight 3.9-4.4 3.8-4.5 
1 week 4.0-4.6 3.9-4.5 
1 month 4.3-4.5 4.2-4.6 
3 months 4.3-5.0 4.3-5.0 

NOTES: State Bank of Vietnam rules allow dollar/dong transactions to move in 
a band of +/- 1 percent around the mid point set daily. 
The dongs exchange rate against other currencies is not restricted by a 
band. Interbank offered rates are the latest indicative bid/ask prices, quoted 
from market sources. 
One tael is equivalent to 37.5 grams or 1.21 troy ounces. SJC gold prices 
are quoted by state-owned Saigon Jewelry Co. 
For more interbank rate fixings released at 0400 GMT, click on VNIBOR . 
For Vietnam market overview click on: VNDVIEW 
Vietnams bonds market auctions: HNGBAUCSCH01 
Bonds auction results: HNGBAUCRES01 

(Compiled by Hanoi Newsroom) 
((hanoi.newsroom@thomsonreuters.com; +844 3825 9623)) 

Keywords: MARKETS VIETNAM/RATES 

On common theme we’ve been building on lately as central banks work to monetize all net (and sometimes gross) government bond issuance in their respective jurisdictions, is that QE is destabilizing markets by sapping liquidity which in turn inhibits price discovery and creates volatility. This is on display in Japan, where 2 out of 3 dealers think the JGB market is impaired thanks to BoJ asset purchases and where many officials are beginning to get more vocal about the possibility that a lack of liquidity could have “dire consequences.” Similarly, market financing via shadow banking conduits has declined by nearly half since 2008 in the US, and with dealers unwilling to hold inventory of corporate paper thanks to tougher capital requirements, the stage is set for what the Center for Financial Stability recently called “an accident.” As a reminder, here’s what  the SEC's Daniel Gallagher had to say recently about liquidity in the US corporate bond market (via Bloomberg): 

http://www.zerohedge.com/news/2015-03-12/fed-will-open-pandoras-box-rate-hike-ubs-warns

Thanks @zerohedge: http://t.co/kmC6q4g66s

Different Degrees Of Interest Surround Apple's Smartwatch
Mar. 11, 2015 15:48 PM ET

Summary
Is Apple positioning itself as a lower end luxury product company?
20+ available models.
Priced up to $10,000.00.
Luxury product mentality is great for $APPL bottom line.

Apple ($APPL) will make its smartwatches available pre-order on April 10th and available April 24th.

The watch is unique to itself but an apparent and analyzed market move. Critics need to look at the original critique of the iPad, which many considered an item that was not necessarily needed. The same is being said about the smartwatch. But then again a watch is an accessory and accessories are not needed by everyone and Apple is a consumer electronics company.

Apple's smartwatch collection will range in price from $349 to $17,000 (£299 to £13,500 in the UK).

From CNET:
For the case of its entry-level Sport edition (starting price: $349), Apple said that its engineers custom-designed an alloy based on aluminum that is 60 percent stronger but just as light. The company started with pure, raw aluminum that was heated to a molten state and then added magnesium and zinc to form a more protective and stronger compound. For its midrange Apple Watch (starting price: $549), the company started with a steel alloy known for strength and resistance to corrosion. Apple then put the metal through a cold-forging process to make it as much as 80 percent harder and less vulnerable to nicks and scratches. For the black stainless steel edition, Apple added a carbon layer to create a more durable and brighter appearance. And for the top-of-the-line Apple Watch Edition (starting price: $10,000), Apple started with 18-karat solid gold for the body and then used a custom alloy designed to be twice as hard as standard gold. After the body went through its manufacturing process, ultrasonic scanners were employed to detect flaws in the metal. In the end, each case was hand-polished by "jewelry artisans." See Article Here


Not to be left out, competition has followed up to some degree.
Huawei is among the first firms to unveil smartwatch models that operate on Androids Wear platform. The latter by the way is full of smartphone watches, in fact it is like a smartphone competitor showcase explosion. See Link

Wired brought up a good question - especially pertaining to markets and bottom lines - what is the point of this product? It can't beat a smartphone or a watch.

A few okay-but-not-needed functions of the smartwatch:

- using the Watch as your hotel keycard

- opening the garage (assuming it is connected to the internet)

Stocktwits @InsiderMonkey blasted: Surveys Showed 10% Of iPhoneUsers Interested In $AAPL's Smartwatch

From the BBC: The big question is will Apple be able to reinvent the wrist watch industry in the way it has redefined others like computing and music?


Chad Hagan, managing partner of Hagan Capital Group

Chad on StockTwits

Puerto Rico's House clears way for $2.95 bln bond deal

March 10 (Reuters) - Puerto Ricos House of Representatives 
approved legislation Tuesday to allow for automatic adjustments 
to a tax on oil that would help ensure sufficient revenue to pay 
back a bond deal of as much as $2.95 billion expected by early 
April. 
The measure was approved by the Senate last week and is 
expected to be enacted quickly by Gov. Alejandro Garcia Padilla. 
Puerto Rico needs to sell the bonds to improve its liquidity 
position outside of financial markets for up to two years while 
it pushes fiscal and economic reforms. 
Lawmakers agreed to ensure that investors in the deal would 
have sufficient coverage by including a clause to hike the oil 
tax if it failed to raise $325 million annually to make the bond 
payments. If oil tax revenue surpasses expectations, the tax 
rate could be adjusted downward. 
The legislation calls for the Treasury secretary to certify 
the amount of money raised by the tax by March 31 of each year. 
The adjustment would then be made effective on the following 
fiscal year starting July 1. The first adjustment will take 
effect July 1, 2017, according to the bill. 
Lawmakers inserted stronger anti clawback language 
protecting the oil tax revenue from being redirected for other 
uses. The legislation extends a general obligation 
constitutional guarantee for the bonds and allows investors to 
sue in New York state courts for any claim arising from the bond 
deal. 
The 68 percent oil tax hike backing the deal raises the tax 
on a barrel of oil to $15.50 from $9.25 and takes effect on 
March 15. 
It is unpopular and comes during an austerity drive this 
year that cut government spending by $1.4 billion. Most of the 
proceeds from the deal will be used to repay a $2.2 billion GDB 
loan to the Puerto Rico Highways Transportation Authority 
(HTA). 
The legislation aims to transfer the GDBs $2.2 billion loan 
to the HTA to the Puerto Rico Infrastructure Financing 
Authority, along with the means to pay for it via revenue 
produced by hikes in the petroleum tax. The oil tax hike would 
also be used to support HTA operations. 
The legislation has been an uphill battle for the 
administration, with the governor calling a special session last 
December after lawmakers refused to approve the tax during the 
ordinary legislative session by a single vote in both chambers. 


(Editing by Edward Krudy and Ken Wills) 
((edward.krudy@thomsonreuters.com)) 

Keywords: USA PUERTORICO/BONDS 

A bill that would give Puerto Rico’s government agencies access to the same bankruptcy protections provided to cities such as Detroit would provide a road map for investors if one or more runs out of money, a senior government official told a U.S. House committee Thursday. Melba Acosta, president of the island’s Government Development Bank, told the panel of the House Judiciary Committee that a bill permitting the island to let its so-called public corporations seek protection under Chapter 9 of the U.S. Bankruptcy Code would help protect public services and plans for long-term growth. Puerto Rico is currently barred from allowing its government entities to use Chapter 9.

http://www.wsj.com/articles/puerto-rico-bankruptcy-bill-could-offer-roadmap-for-creditors-1424977816

Superfund Equities Report

Headlines:

A good look at a great move in the startup world. Especially when companies start out seemingly pigeonholed. 
LINK

Warning! US slowdown ahead. LINK

In Depth:
The NASDAQ hit 5000 today. Bill Gross is saying we are in a tech bubble. Remember AOL Time Warner?  We could be in a sub-prime auto finance bubble (see here), or perhaps it is just good old-fashioned growth.  Bio-Tech is half truth half promise, so that could be a bubble?  

Utopia in the NEW ECONOMY is here? LINK

Sadly, a report from Bloomberg Markets: The Delusions of Venezuela and Argentina. LINK

Onward Profits!

Chad

Chad Hagan
Managing Partner, Hagan Capital Group
Founding Editor, Superfund Equities

Visit Northside Technology Investors
Visit Chad's Blog, Chaganomics.com
https://angel.co/chad-hagan

Sign up at tinyletter.com/superfund

Bringing Life Extension to Main Street

https://www.linkedin.com/pulse/bringing-life-extension-main-street-chad-hagan

Article from LinkedIn 

The Greek Bailout Explained:
How to Protect Yourself February 18, 2015 Greece's bailout expires at the end of this month. Athens needs to either secure a fresh bailout from its Eurozone lenders or find an alternative source of financing; otherwise, it is at risk of bankruptcy. Ahead of the bailout deadline on 28th February, Greece and the Eurozone finance ministers (known as the Eurogroup) have held talks, but a compromise has not been achieved. How this may impact markets: A failure to reach a deal for Greece could cause a spike in volatility for financial markets and large swings in prices. To help you plan your trading strategy around this important event, we've outlined some potential scenarios Greece may face in the coming days: Scenario 1: Greece doesn't secure a deal: The next meeting between Athens and the Eurogroup takes place on Friday 20th February. If no deal is reached, then we could see volatility jump and the EUR sell off alongside European stocks. Scenario 2: Greece secures an extension to its bailout: This would be the most risk-positive outcome in the short term as it would ensure that Greece has funds for the coming months. We may see a rally in the euro and European stock markets on the back of an announcement. Political risk events can be both an opportunity and a cause for concern for investors. We've summarized some protective measures you should consider over the coming days:

FROM:

http://online.barrons.com/news/articles/SB51367578116875004693704580451792955408052

It’s the central banks’ world, and we’re just living in it. Never in history have their monetary machinations so dominated financial markets and economies. And as in Star Trek, they have gone boldly where no central banks have gone before—pushing interest rates below zero, once thought to be a practical impossibility.

At the same time, central bankers have resumed their use of a tactic from an earlier, more primitive time that was supposed to be eschewed in this more enlightened age—currency wars.

The signal accomplishment of these policies can be encapsulated in this one result: The U.S. stock market reached a record high last week. That would be unremarkable if central bankers had created true prosperity.

But, according to the estimate of one major bank, the world’s economy will shrink in 2015, in the biggest contraction since 2009, during the aftermath of the financial crisis. That is, if it’s measured in current dollars, not after adjusting for inflation, which the central bankers have been trying desperately to create, and have failed to accomplish thus far.

Not since the 1930s have central banks of countries around the globe so actively, and desperately, tried to stimulate their domestic economies. Confronted by a lack of domestic demand, which has been constrained by a massive debt load taken on during the boom times, they instead have sought to grab a bigger slice of the global economic pie.

Unfortunately, not everybody can gain a larger share of a whole that isn’t growing—or may even be shrinking. That was the lesson of the “beggar thy neighbor” policies of the Great Depression, which mainly served to export deflation and contraction across borders. For that reason, such policies were forsworn in the post–World War II order, which aimed for stable exchange rates to prevent competitive devaluations.

Almost three generations after the Great Depression, that lesson has been unlearned. In the years leading up to the Depression, and even after the contraction began, the Victorian and Edwardian propriety of the gold standard was maintained until the painful steps needed to deflate wages and prices to maintain exchange rates became politically untenable, as the eminent economic historian Barry Eichengreen of the University of California, Berkeley, has written. The countries that were the earliest to throw off what he dubbed “golden fetters” recovered the fastest, starting with Britain, which terminated sterling’s link to gold in 1931.

This, however, is the lesson being relearned. The last vestiges of fixed exchange rates died when the Nixon administration ended the dollar’s convertibility into gold at $35 an ounce in August 1971. Since then, the world has essentially had floating exchange rates. That means they have risen and fallen like a floating dock with the tides. But unlike tides that are determined by nature, the rise and fall of currencies has been driven largely by human policy makers.

Central banks have used flexible exchange rates, rather than more politically problematic structural, supply-side reforms, as the expedient means to stimulate their debt-burdened economies. In an insightful report last week, Morgan Stanley global strategists Manoj Pradhan, Chetan Ahya, and Patryk Drozdzik counted 12 central banks around the globe that recently eased policy, including the European Central Bank and its counterparts in Switzerland, Denmark, Canada, Australia, Russia, India, and Singapore. These were joined by Sweden after the note went to press.

In total, there have been some 514 monetary easing moves by central banks over the past three years, by Evercore ISI’s count. And that easy money has been supporting global stock markets (more of which later).

As for the real economy, the Morgan Stanley analysts write that while currency devaluation is a zero-sum game in a world that isn’t growing, the early movers are the biggest beneficiaries at the expense of the late movers.

The U.S. was the first mover with the Federal Reserve’s quantitative-easing program. Indeed, it was the initiation of QE2 in 2010 that provoked Brazil’s finance minister to make the first accusation that the U.S. was starting a currency war by driving down the value of the dollar—and by necessary extension, driving up exchange rates of other currencies, such as the real, thus hurting the competitiveness of export-dependent economies, such as Brazil.

Since then, the Morgan Stanley team continues, there has been a torrent of easings (as tallied by Evercore ISI) to pass the proverbial hot potato by exporting deflation. That has left just two importers of deflation—the U.S. and China.

The Fed ended QE last year and, according to conventional wisdom, is set to raise its federal-funds target from nearly nil (0% to 0.25%) some time this year. That has sent the dollar sharply higher, resulting in imported deflation. U.S. import prices plunged 2.8% in January, albeit largely because of petroleum. But over the past 12 months, overall import prices slid 8%, with nonpetroleum imports down 1.2%.

China is the other importer of deflation, they continue, owing to the renminbi’s relatively tight peg to the dollar. The RMB’s appreciation has been among the highest since 2005 and since the second quarter of last year. As a result, China has lagged the Bank of Japan, the ECB, and much of the developed and emerging-market economies in using currency depreciation to ease domestic deflation.

The bad news, according to the Morgan Stanley trio, is that not everyone can depreciate their currency at once. “Of particular concern is China, which has done less than others and hence stands to import deflation exactly when it doesn’t need to add to domestic deflationary pressures,” they write.

But they see central bankers around the globe being “fully engaged” in the battle against “lowflation,” generating monetary expansion at home and ultralow or even negative interest rates to generate growth.

The question is: When? Bank of America Merrill Lynch global economists Ethan Harris and Gustavo Reis estimate that global gross domestic product will shrink this year by some $2.3 trillion, which is a result of the dollar’s rise. To put that into perspective, they write, that’s equivalent to an economy somewhere between the size of Brazil’s and the United Kingdom’s having disappeared.

Real growth will actually increase to 3.5% in 2015 from 3.3% in 2014, the BofA ML economists project; but the nominal total will decline in terms of higher-valued dollars. The rub is that we live in a nominal world, with debts and expenses fixed in nominal terms. So, the world needs nominal dollars to meet these nominal obligations.

A drop in global nominal GDP is quite unusual by historical standards, they continue. Only the U.S. and emerging Asia are forecast to see growth in nominal-dollar terms.

The BofA ML economists also don’t expect China to devalue meaningfully, although that poses a major “tail” risk (that is, at the thin ends of the normal, bell-shaped distribution of possible outcomes). But, with China importing deflation, as the Morgan Stanley team notes, the chance remains that the country could join in the currency wars that it has thus far avoided.

WHILE ALL OF THE central bank efforts at lowering currencies and exchange rates won’t likely increase the world economy in dollar terms this year, they have been successful in boosting asset prices. The Standard & Poor’s 500 headed into the three-day Presidents’ Day holiday weekend at a record 2096.99, finally topping the high set just before the turn of the year.

The Wilshire 5000, the broadest measure of the U.S. stock market, surpassed its previous mark on Thursday and also ended at a record on Friday. By Wilshire Associates’ reckoning, the Wilshire 5000 has added some $8 trillion in value since the Fed announced plans for QE3 on Sept. 12, 2012. And since Aug. 26, 2010, when plans for QE2 were revealed, the index has doubled, an increase of $12.8 trillion in the value of U.S. stocks.

Earnings haven’t been giving stocks much lift of late, however. As Jim Bianco of the eponymously named Bianco Research writes, the tepid 4.1% year-over-year earnings growth for the S&P 500 in the fourth quarter projected by Bloomberg is overblown. According to FactSet data, half of that gain came just from Apple (ticker: AAPL.) “The ‘S&P 499’ (S&P 500 less Apple) has a growth rate of less than 2%.”

Stocks’ recent climb has been led by a recovery in oil prices—the U.S. benchmark is back above $50 a barrel—which bounced on the notion that the surfeit of supply will end sooner than bears expect. Whether this is true or not, energy stocks have come off their lows, touched around the turn of the year. But on a technical basis, the sector now is overbought, according to Jeff deGraaf of Renaissance Macro. “When it rolls back under, we’d be sellers,” he writes in a research note.

In addition, markets remain uneasy with the planned cease-fire worked out last week in Ukraine and the continuing talks on Greece’s debts.






Anxiously awaited is Fed Chair Janet Yellen’s trip to Capitol Hill on Feb. 24 and 25, which will be watched for clues about the first rate hike. The real question is whether domestic factors will outweigh global deflation. If the Fed tightens later in the year, it will be on the other side of the currency wars. That is, if the stronger dollar’s drag doesn’t stay the hand of Yellen & Co.

He we go...

GOLD

Gold started positively into the new year and has recorded a price increase by approx. 7.5% since the start of the year. The metal benefitted from the falling oil prices firstly as well as from the fears of a weaker global economy. Gold became more attractive again as a safe haven asset in this environment. The unexpected announcement of the Swiss National Bank to cancel the minimum Euro exchange rate led to a price increase by 2.5 % on Thursday and a weekly gain of 4.5%. Worried investors escaped from volatile investment classes into Gold: Thus, the SPDR Gold Trust which is the biggest Gold ETF had an inflow of 1.4 % on Thursday and of 1.9 % on Friday - this was the biggest daily percentage increase in almost 5 years. There is increased physical demand from Switzerland which is not surprising after the revaluation of the Swiss Franc: Gold dropped in local currency from 1,250 CHF/oz to approx. 1,050 CHF/oz temporarily. In Asia in turn buyers are hesitant due to the increased prices. Further information with regard to the Quantitative Easing program by the ECB to support the economy are awaited eagerly. While Gold should benefit by it monetary measures by the ECB will further burden the Euro. Currently Gold is not affected by the strong USD. This morning Gold trades at 1,275 $/oz and we also see good support for the metal in the coming days.



SILVER

In the wake of Gold Silver’s character as a substitute currency and safe haven asset was also in the foreground past week. Thus, Silver could achieve a 7.5% gain throughout the week and resisted the overall devaluation seen in industrial commodities such as Palladium, Oil and Copper. The solid physical demand in the US thanks to an economic upswing surely also supported the price. This week, all signs point to a continued rise in price. Of particular interest is especially the ECB meeting on Thursday with a respective press conference afterwards at 2:30 pm and their information on the broadly based government bond purchase program. A respective flood of liquidity as well as ongoing low to negative interest rates could further drive investors into investment metals. Current support lies at 17.00 $/oz. After the resistance at 17.20 $/oz was broken on Friday, the next resistance level is at 18.00 $/oz.



PLATINUM

Since end of December Platinum has been in an upward trend. After the metal opened at 1,227 $/oz, it closed with a weekly increase by 3 % at 1,264 $/oz. This morning Platinum is trading at 1,266 $/oz. Thus, Platinum got into the waves of gold which reacted to the Swiss National Bank’s decision on the annulment of the minimum rate of the Swiss Franc with a price increase. In Platinum we could not observe a particular increase in demand. Furthermore, there is news from the South African mines again. Thus, operations have been suspended at Northam Platinum since Friday due to extensive safety measures which should support the price increase. Platinum has thus broken through its daily cloud resistance and targets a new resistance level at 1,286 $/oz. On the charts we see support at 1,245 $/oz and at 1,238 $/oz. Due to the developments of last week and the price decline in Palladium the Platinum : Palladium ratio shot up as well. An ounce of Platinum currently equals 1.68 oz of Palladium. Looking forward we see Platinum well supported particularly through the European automobile industry which recorded a sales growth by almost 6% in 2014.



PALLADIUM

In the middle of the last week Palladium went through a hefty price decline. Thus, on Wednesday there was an intraday price decline of almost 40 $/oz. This equals a decline by almost 6% and thus is the biggest daily loss since June 2013. After opening the reporting period at 797 $/oz Palladium closed the week only at 751 $/oz. Palladium Futures also suffered the biggest decline since almost 7 months. The main reason for this is the price decline in industrial metals - particularly copper. This in turn has been triggered by the projections by the World Bank on the global economy lowering the growth rates for 2015 as well as 2016. Commodity markets reacted to this adjustment the most. Thereby Europe, Japan, Russia as well as parts of Latin America are in the main focus. Thus, sinking oil prices also play a significant role in this adjustment as oil exporters like Russia are strongly affected by the oil price plunge. Analysts believe that the declining Palladium price in this year is solely attributed to the repositioning of a few market players who would like to balance out their Pd Long positions/Pt Short positions. The oil price decline gives hope as the sinking oil prices provide further momentum to the growing automobile industry. As mentioned in our H1 2015 precious metals forecast there is a strong correlation between the Palladium price and the developments in the automobile market. Thus, we stay bullish in our expectations for Palladium. On the charts resistance for Palladium is at 778 $/oz and at 792 $/oz, support at 755 $/oz.



RHODIUM, RUTHENIUM, IRIDIUM

Rhodium has unfortunately not developed very positively in the reporting period and has undergone a development opposite to platinum. At the beginning of the week the price difference was “only” at 35 $/oz which has now shot up to 85 $/oz. Demand for Rhodium is currently very limited which is on the one hand due to the year just beginning and thus buyers being still a bit hesitant. On the other hand buyers who currently do not have to urgently cover a need are in a very comfortable situation as the available supply is relatively big and currently there is no risk of fast and strong counter movements. Regardless of the price trading significantly under the 1,200 $/oz mark again there have not been any large purchases yet. However it shall be noted that this is a price level which we have not seen for 6 months and thus is to be treated with caution.

Ruthenium is trading slightly weaker than in the past weeks as there have also been a couple of sellers at the beginning of the year in an already weak market. Sales were relatively high despite of the difficult circumstances and if purchases should remain on this current level then the 50 $/oz mark is surely a very good support line.

In Iridium there was immediately good demand right at the beginning of this year which slightly pulled up the price. In the reporting period the price increased by 15 $/oz and compared to our last report from 2014 even by 35 $/oz which is significant in percentage terms. We continue to see good demand coming from all Iridium applicants and see upside potential for the price in near future.


Sonia Hellwig
Senior Manager Sales und Marketing

Heraeus Metals Germany GmbH & Co. KG
Edelmetallhandel/Trading Division
Heraeusstrasse 12-14
63450 Hanau

Phone/Sales +49 (0) 6181/35-2760
Fax +49 (0) 6181/35-9444
E-mail sonia.hellwig@heraeus.com
Internet www.heraeus-edelmetallhandel.de Thanks!! Chad - 

10:19, 15 Jan 2015 (Thu)
By John Revill

ZURICH--Swiss businesses are bracing themselves for negative effects from the scrapping of the Swiss central bank's cap for the franc-euro, a move that could sharply reduce the value of sales to their key European markets. The blue chip Swiss Market Index plunged 9.6% in lunchtime trading, and billions of Swiss francs were wiped from the value of companies such as cement maker Holcim AG and pharma giant Novartis AG, after the Swiss National Bank said it would eliminate a long-observed cap of 1.20 francs per euro. Representatives from Novartis declined to comment, while Holcim said the drop reflected the general development of the Swiss market. The SNB's decision, which caused the franc to surge in value to about 1.03 per euro from around 1.20, was particularly critical for companies which rely on sales to the 19 countries in the eurozone--Switzerland's biggest export market and buyer of more than half of the Alpine country's products. A rise in the value of the Swiss franc reduces the value of sales made in euros, and pressures profitability. It also makes Swiss products less attractive if Swiss companies raise their euro-denominated prices to compensate. Swiss watchmakers are vulnerable as they have to produce most of their products within Switzerland, to qualify for a so-called Swiss-made label. Jean-Daniel Pasche, president of the Swiss watchmakers' federation said he was "anxious" about the decision, and feared a negative impact on exports. Among the companies worst affected in Thursday's selloff were the watchmakers Swatch Group AG and Cie. Financiere Richemont SA, both of which saw their stock plunge 15%. Swatch Chief Executive Officer Nick Hayek has previously been among the strongest supporters of the 1.20 Swiss franc per euro minimum exchange rate, which was introduced by the SNB in September 2011 to prevent deflation and help Swiss companies remain competitive. Mr. Hayek said Thursday's decision by SNB President Thomas Jordan to scrap the minimum exchange rate will have disastrous consequences for Switzerland. "Words fail me," Mr. Hayek said in a prepared statement. "Jordan isn't only the name of the SNB president, but also of a river and today's SNB action is a tsunami; for the export industry and for tourism, and finally for the entire country." Also likely to be badly hit by the SNB's decision are machine tool makers, one of Switzerland's largest export sectors. The rise of the franc made Swiss companies less competitive and "profit margins will melt," said Ivo Zimmermann, spokesman for their association Swissmem. "Companies are thinking about what to do next," Mr. Zimmermann said. "They are very worried." Plumbing and building supplies company Geberit AG said Thursday that for every 10% rise in the value of the franc, the value of the company's sales would fall by 7% to 9%, while its profit margin would be reduced by 0.5%. Industry associations said exporters wouldn't be the only part of the Swiss economy to be hit. "Suppliers to the exporters in Switzerland will come under pressure to reduce prices again," said Rudolf Minsch, chief economist at Economiesuisse, the country's main business association which represents around 100,000 companies. There was also likely to be a surge in consumers shopping outside Switzerland, crossing over the borders into neighboring France, Italy and Germany, depressing consumer spending within Switzerland. Another worry was the lack of certainty which the minimum exchange rate gave and many companies based their decision making around, Mr. Minsch said. Many now expect the Swiss economy, which has consistently outperformed its neighbors in recent years, to slow. Switzerland's annualized growth hit 1.9% in the third quarter, compared with just 0.6% in the eurozone. Investment was likely to be reduced as a result of the uncertainty, while jobs and wages could also come under pressure. The Swiss Federation of Trade Unions estimates around 80,000 jobs could be lost if the Swiss franc settles in the long term around parity with the euro. The resulting rise in the value of the Swiss franc would put pressure on wage levels and employment, while it could also lead to more outsourcing, its chief economist Daniel Lampart said. Write to John Revill at john.revill@wsj.com

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(END) Dow Jones Newswires January 15, 2015 10:19 ET (15:19 GMT)