Asian shares edge down from five-month high, dollar steadies

TOKYO (Reuters) - Asian shares prices edged away from five-month highs on Thursday, while the dollar steadied after slipping on Federal Reserve Chair Janet Yellen's indication that the U.S. central bank is in no hurry to hike interest rates.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) fell about 0.2 percent, as investors took profits after Yellen's testimony and a China factory survey's better-than-expected headline number lifted it to a five-month high on Wednesday.

Japan's Nikkei stock average (N225) outperformed, rising about 0.9 percent to a 15-year high, helped by news that the Federation of National Public Service Personnel Mutual Aid Associations, the body managing Japan's national civil service pensions, will raise its target allocation for domestic stocks to 25 percent from 8 percent.

"This officially-announced drastic investment strategy is giving renewed excitement to the market," said Shigemitsu Tsuruta, senior strategist at SMBC Friend Securities.

MSCI's 46-country world index (MIWD00000PUS) was up 0.1 percent, and stood just below its double-top of its September peak and a record high hit in July.

"On the whole, the world's markets seem likely to be in a risk-on mode. The valuation still looks not that expensive, except for U.S. markets," said Hirokazu Kabeya, senior strategist at Daiwa Securities.

The price-earnings ratio of U.S. shares stood at 19.6, but the world's markets on the whole were traded at 16.3 times earnings, according to Thomson Reuters StarMine.

Wall Street shares were narrowly mixed on Wednesday as a positive mood was offset by a 2.6 percent fall for Apple (O:AAPL), which saw some profit-taking after gaining 21 percent since the start of this year.

Data released overnight showed solid U.S. new homes sales in January despite snow storms in the country's Northeast. [USHNS=ECI].

The U.S. data followed Wednesday's survey showing activity in China's factory sector edged up to a four-month high in February.

Yellen's congressional testimony on Tuesday and Wednesday suggested the Fed is in no rush to raise rates, even though technically she did not rule a hike as early as in June.

"The only thing that is clear is that the FOMC (Federal Open Market Committee) has given itself more flexibility than before," said Ray Attrill, global co-head of FX strategy at National Australia Bank in Sydney.

"If U.S. data begins to positive surprise once more, the market will quickly jump back on to the 'Buy USD' bandwagon."

Following Yellen's comments, U.S. bond yields have fallen sharply this week, with the 10-year notes yielding 1.956 percent (U.S. 10-Year Bond Yield), compared to 2.133 percent at the end of last week and a six-week high of 2.164 percent on Feb. 18.

The lower yields weighed on the dollar, moved off its lows in Asian trade. The dollar index(DXY) was nearly flat on the day at 94.184, while the greenback edged up slightly against the yen <USD/JPY> to 118.93 yen, moving back toward this week's high of 119.84.

The euro stood at $1.1366 <EUR/USD>, slightly higher than Wednesday's levels.

Oil prices erased gains after surging on Wednesday following comments from Saudi Arabia's oil minister that oil demand was growing.

Brent crude shed about 0.6 percent to $61.25 a barrel, while U.S. crude was down 0.8 percent at $50.57.

Spot gold added about 0.3 percent on the day to $1,208.65 per ounce, rising for a second straight session and pulling away from a seven-week low hit on Tuesday

Weekly Price Action Setups & Key Levels

EURUSD – Range Continues to Profit (4hr chart)
For the last week or two we’ve been talking about ‘playing the range’ byselling at resistance around 1.1420/40 and buying off 1.1270. As you can see from the chart below, last week both sides of the range would have played out for some nice +2R or better trades within a day or so.

This just goes to show (once again) good trades do not take long to play out. Only when you have a bad entry, SL or TP do trades and solid profit take a lot of time to play out.

For now the mantra is the same until it breaks. If the upper side breaks, look to sell again at the key resistance around 1.1530/45. Bulls wouldn’t want to consider buying till just about 1.11.

eurusd

AUDUSD – Bear Trend, But Approaching Key Resistance (4hr chart)
For the month of February, the AUDUSD has been consolidating in a range at the bottom of the bear trend between 7859 and 7650. This is kind of a make or break moment for the counter-trend players as they’ll need to close above this key resistance level on a daily basis to garner more to their cause. Hence bears wanting to get short have their line in the sand.

Any impulsive price action selling here means a likely pullback towards 7750 and perhaps down to the yearly lows at 7650. A daily close above here targets 8030 while bears will want to minimally get towards 7650 to feel stable in their short positions.

audusd

Technical Analysis February 20, 2015

Looking at the upcoming Friday session, the market has almost nothing to pay attention to as far as economic announcements are concerned. With this, it should be a very technically driven day, and therefore we are essentially just paying attention to the technical analysis.

The EUR/USD pair continues to struggle every time it gets above the 1.14 level, so we are buyers of puts every time we rally on a short-term chart. We believe that ultimately this pair will finally break down and head towards the 1.11 handle, so we remain bearish overall.

EUR/USD

Looking at the WTI Crude Oil markets, we fell slightly during the session on Thursday. With that, the market looks as if it is ready to continue consolidating between the $54 level on the top, and the $48 level on the bottom. With that, we actually prefer buying puts every time this market rallies on short-term chart, as we expect choppy but negative action.

The S&P 500 try to rally during the session on Thursday, but struggled again at the 2100 level. That is an area that continues offer massive resistance, so if we can get above there we think that buying calls for the longer term will be the way to go. We think that the 2060 level below is massively supportive, so quite frankly pullbacks to that area should offer call buying opportunities as well. We have no interest in buying puts.

Dollar holds gains vs. rivals, Fed meeting minutes on tap

The dollar remained broadly higher against the other major currencies on Wednesday, despite the release of weak U.S. economic reports as markets turned their attention to the minutes of the Federal Reserve's latest policy meeting due later in the day.

The Federal Reserve said that U.S. industrial production increased by 0.2% last month, below expectations for a gain of 0.3%.

The report also showed that the capacity utilization rate, a measure of how fully firms are using their resources, held steady at 79.4% in January, compared to expectations for a reading of 79.9%.

Earlier Wednesday, the Commerce Department reported that U.S. producer prices fell by 0.8% last month, compared to forecasts for a 0.4% decline, while core producer prices eased down by 0.1% last month, compared to forecasts for a gain of 0.1%.

In a separate report, the Commerce Department said that the number of building permits issued last month decreased by 0.7% to1.053 million units from December’s total of 1.060 million. Analysts expected building permits to rise by 0.8% to 1.069 million units in January.

The report also showed that U.S. housing starts declined by 2.0% last month to hit 1.065 million units from December’s total of 1.087 million units, worse than expectations for a decline of 1.7% to 1.070 million.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.32% to 94.44.

The euro pushed lower against the dollar, with EUR/USD down 0.41% to 1.1363.

However, market participants remained optimistic that a new deal on Greece’s international bailout could be reached, despite a standoff between Athens and European officials after talks broke down on Monday.

The pound remained near more than one-month highs against the dollar, with GBP/USDup 0.58% to 1.5442.

In a report, the U.K. Office for National Statistics said that the unemployment rate fell to a six-year low 5.7% in the three months to December from 5.8% in the preceding three month-period and better than expectations for a reading of 5.8%.

The report also showed that the claimant count fell by 38,600 last month, compared to expectations for a decline of 25,000.

Separately, the minutes of the Bank of England's February policy meeting showed that members voted unanimously to keep the asset puschase facility program on hold. Members also voted unanimously to keep interest rates unchanged at a record-low 0.5%.

Elsewhere, USD/JPY held steady at 119.20, while USD/CHF gained 0.61% to 0.9426.

The yen showed a muted reaction after the Bank of Japan kept monetary policy unchanged earlier Wednesday, in a widely anticipated decision.

The Australian, New Zealand and Canadian dollars were broadly weaker, with AUD/USDsliding 0.36% to 0.7790 and NZD/USD shedding 0.25% to 0.7520, while USD/CADclimbed 0.46% to 1.2446.

In Canada, official data showed that wholesale sales rose 2.5% in December, exceeding expectations for a 0.4% gain, after a 0.3% fall the previous month.

U.S. And German 10 Year Yields: Still Safe Haven Bids?

This Great Graphic, created on Bloomberg, shows the U.S. (white line) and German (yellow line) 10-year generic yields.

The US benchmark yield is at its highest level today since the first trading day of the year. It briefly traded at 2.15%. It is penetrating a downtrend. It is found by drawing that draw off the September high near 2.65%, and approached in early and late December. It came in yesterday near 2.11%. Recall that at the end of last month the 10-year yield was at 1.64%. The next chart-based resistance is seen near 2.20% then 2.30%.

The 10-year German bund yield set a record low at the start of this month just below 30 bp. It has not been above 40 bp this month. There have been two factors lending the bund support: Greek uncertainty and the anticipation of ECB purchases. We expect some kind of compromise that will keep Greece within the EMU, which would take away some of the safe haven bid for bunds. The ECB purchases appear to have been discounted. German growth has surprised on the upside. Growth in Q4 was a strong 0.7% (quarter-over-quarter) and sentiment surveys are recovering. The near-term risk is on the upside for bund yields.

The foreign exchange market has shown a clear bias toward bidding the euro higher on prospects of a settlement on Greece.The details seem somewhat less important than an agreement per se. Some observers have argued that the EMU would be stronger if Greece left. We do not see it that way. We think that it would negate the claim that the monetary union is reversible. We are concerned that the costs of a Greek exit would be greater than keeping it in, which costs tax payers guarantees (and gives them lower interest rates and debt service savings).

In addition, we recognize that Syriza members of the European parliament have been supportive of Russia. Many observers seem to forget that Greece is a NATO member and holds an important geo-strategic location. A loss of this "asset", or even the neutralization of it, could be costly even though it does not fit neatly into econometric and balance sheet analysis.

Stocks reverse losses as investors keep faith in Greek deal

By Lionel Laurent

LONDON (Reuters) - European stocks reversed early losses on Tuesday and yields on lower-rated euro zone bonds fell as investors reassessed the collapse of Greek debt talks and focused on the prospects of a deal.

The euro also recovered from early losses to rise against the dollar after Monday's breakdown of talks between Greece and euro zone finance ministers. Initial declines on equity markets were modest.

"For now, we assume that logic will prevail and this movie won't end in disaster," said Paul O'Connor, co-head of the multi-asset desk at Henderson Global Investors.

Both sides raised the possibility of another attempt to find common ground before the end of this week. The European Central Bank is set to decide on Wednesday whether to maintain emergency lending to Greek banks, and the Greek state faces some heavy loan repayments in March.

Dutch Finance Minister Jeroen Dijsselbloem, who chairs the group of euro zone ministers, gave Athens until Friday to request an extension of its current bailout, which would otherwise expire at the end of the month.

The pan-European FTSEurofirst 300 (FTEU3) equity index opened lower but was last up just under 0.1 percent.

Greek stocks underperformed. The volatile ATG main Athens share index (ATG) was down 2.8 percent, after earlier dropping more than 4 percent and then briefly turning positive.

Yields on three-year Greek government bonds rose 130 basis points to 19.04 percent and 10-year yields rose 66 bps to 10.58 percent.

"The risk of a collapse is more elevated now because time is running out," said Patrick Jacq, rate strategist at BNP Paribas (PARIS:BNPP). "This is putting Greek government bonds under pressure, but contagion effects will remain relatively limited ... Eventually a deal is likely to be reached."

Yields on lower-rated euro zone debt edged lower, suggesting no fear of an imminent break-up of the bloc. Italian 10-year bonds <Italy 10-Year Bond Yield> yielded 1.62 percent, down 1.8 basis points.

Without support from creditors, the Greek government and banks face a funding crunch. That might lead to Greece's becoming the first country to ditch the euro and re-introduce its own currency.

The MSCI all-country world stocks index (MIWD00000PUS) was down 0.1 percent, after touching its highest since September on Monday.

Japan's Nikkei share average (N225) and MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) both dipped 0.1 percent.

The euro <EUR/USD> traded weaker against the dollar in early European trade but later picked up to $1.1388, up 0.3 percent on the day but well shy of Monday's high of $1.1429.

"The market has witnessed this before -- it remembers the brinkmanship during the Greek debt negotiations of 2011," said Kyosuke Suzuki, director of forex at Societe Generale(PARIS:SOGN) in Tokyo. "There are only nine trading days left until the Feb. 28 deadline, but some see that as enough time. Thus we are not seeing the euro sold in panic."

In commodities markets, Brent crude extended its recent rally and last traded at $61.97 a barrel as the International Energy Agency warned of supply risks in the Middle East, although some analysts said that prices had risen too far from the six-year lows hit in January.

The crude rally helped support the Russian rouble , which also benefited from political efforts to make a ceasefire hold in eastern Ukraine, although gains were capped by doubts about whether the ceasefire would hold.

Dollar index remains moderately lower in thin trade

The dollar remained moderately lower against the other major currencies on Friday, as recent downbeat U.S. data continued to weigh and as trading volumes were expected to remain light with U.S. markets closed for the Presidents' Day Holiday.

Sentiment on the dollar remained vulnerable after data on Friday showed that the preliminary reading of the University of Michigan’s consumer sentiment index fell to 93.6, down from January’s final reading of 98.1. Economists had forecast an unchanged figure

The report came a day after data showing that U.S. retail sales unexpectedly fell 0.8% last month after dropping 0.9% in December, indicating that consumer spending remained sluggish at the start of the year.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.08% to 94.16.

EUR/USD edged up 0.14% to 1.1408.

Investors remained cautious as officials from Greece and the European Union were due to hold fresh talks on Monday after a meeting on a new debt deal last week ended without an agreement.

Greece’s current €240 billion bailout is due to expire on February 28 and the new Greek government does not want it extended, fuelling fears over a conflict with its creditors which could trigger the country’s exit from the euro zone.

Earlier Friday, official data showed that the euro zone's trade surplus widened to €24.3 billion in December from €21.2 billion in November, whose figure was revised from a previously estimated surplus of €20.0 billion.

Analysts had expected the trade surplus to hit €20.5 billion in December.

The pound edged lower against the dollar, with GBP/USD slipping 0.13% to 1.5375.

Elsewhere, USD/JPY fell 0.21% to trade at 118.48, while USD/CHF held steady at 0.9313.

In Japan, data earlier showed that the economy returned to growth in the final quarter of 2014, but growth was still weaker than expected, indicating that the recovery remains fragile.

Japan’s gross domestic product expanded at an annual rate of 2.2% in the three months to December official data showed, falling short of forecasts for 3.7%.

The Australian and New Zealand dollars remained higher, with AUD/USD rising 0.22% to 0.7775 and NZD/USD gaining 0.75% to 0.7511.

The kiwi was boosted after official data showed that retail sales rose rose 1.7% in the fourth quarter of 2014, beating expectations for an increase of 1.3%, after a 1.6% gain in the previous quarter.

Core retail sales, which exclude automobiles and gas stations, rose 1.5% in the last quarter, exceeding expectations for a 1.1% gain and after a 1.5% increase in the three months to September.

Meanwhile, the Canadian dollar slipped lower, with USD/CAD up 0.21% at 1.2474.

Weekend Update February: Euro Ready To Resume Downside

VIX Weekly Chart

-- VIX completed a Minor degree Triangle formation today, implying a continuation of the direction of Minor Wave A.The Cycles inverted, suggesting the next peak may occur the first week of March. A rally above the Head and Shoulders neckline may get very exciting.

SPX closes at new all-time high.

41

SPX Weekly Chart

SPX’s test of Long-term support at 1984.63 gave it the impetus to make a new intra-day high at 2097.03. A closer examination of the final rally suggests that it may be complete at today’s close. The inversion of this Cycle from an anticipated low to a high now suggests a new low may occur as early as mid-March.

(USAToday) The Wall Street bull shrugged off fears of Friday the 13th and raced higher, with the S&P 500 stock index setting a new record high and the Dow topping 18,000 for the first time this year.

The Standard & Poor's 500 gained 8.51 points, or 0.4%, to close at an all-time high of 2096.99 beating its previous Dec. 29, 2014 record close of 2090.57.

NDX approaches the upper trendline.

NDX Weekly Chart

NDX closed higher this week as it approached the upper trendline of its trading channel.The new high nullified the bearish cup with handle formation.The next critical support is the weekly Long-term support at 4010.50 and beneath that is the 3-year trading channel trendline. There is a probable 4 weekdecline in this cycle and a lot may happen in that time span.

(ZeroHedge) After six month so soaring confidence, UMich consumer confidence tumbled from 11 year highs by the most since October 2013 in January (despite the low gas price stimulus), printing at 93.6, missing expectations of 98.1 by the most on record. It appears survey-based 'hope' is catching down to hard-date-based reality of spending habits as the sheer idiocy of the low-gas-price meme is destroyed once again. The drop was led by a plunge in Current Conditions from 109.3 to 103.1 and towards the future, fewer now expect higher incomes and those who have favorable business expectations plunged from 70 to 58 with a surge in people expecting "bad times" over the next 12 months.

High Yield bearish patterns change.

MUT Weekly Chart

The High Yield Index appears to have shrugged off its Diamond Formation but retained its Broadening Wedge and Cup with Handle formations. What originally appeared as a potential Cycle low became inverted to a cycle high this week. The upside pattern appears complete, so a reversal may be imminent. The mainstream press has no idea what might be coming…

(Reuters) Investor appetite for US junk bonds has rebounded strongly in the past few weeks, as stronger oil prices and better liquidity have helped draw billions of dollars back into the asset class.

That in turn has narrowed the gap between cash prices of high-yield bonds and the cost of protection on those bonds to just 30bp, according to Barclays.

That's in sharply from an 80bp level in mid-December, only a few weeks ago, as the buy-side sees less to fret about in lower-rated debt offerings.

The euro appears ready to resume the downside.

Euro Weekly Chart

The euro bounce appears to be over. It anticipate sits next Master Cycle low (Wave 3) in mid-March, which may produce quite a fall. The discussion now is, how far below parity will the euro go?

(ContraCorner) Now and again history reaches an inflection point. Statesman and mere politicians, as the case may be, find themselves confronted with fraught circumstances and stark choices. February 2015 is one such moment.

For its part, Greece stands at a fork in the road. Syriza can move aggressively to recover Greece’s democratic sovereignty or it can desperately cling to the faltering currency and financial machinery of the euro zone. But it can’t do both.

So by the time the current onerous bailout agreement expires at month end, Greece must have repudiated its “bailout debt” and be on the off-ramp from the euro. Otherwise, it will have no hope of economic recovery or restoration of self-governance, and Syriza will have betrayed its mandate.

EuroStoxx makes its final run to its Broadening Top.

Dow Jones Weekly Chart

The EuroStoxx 50 Index appears to have completed the final upward probe of an Orthodox Broadening Top. The Cycles Model now suggests the next low may come late February to early March..

(ZeroHedge) Because "bad is good" in the new normal central-planner-created fiction in which we live...

Despite today's surprise in GDP, 2015 growth expectations remain dismal... but when did that ever stop anyone?

The yen is still lingering at the bottom.

Yen Weekly Chart

The yen continues to linger near its Cycle Bottom at 84.05. It has yet to overcome its December 16 high at 86.34. Once the breakout occurs, the yen may gain momentum in its rally, since most traders have not recognized a change of trend…yet.

(WSJ) Betting against the yen isn’t the layup it once was.

One of Wall Street’s most popular and lucrative trades in recent years has gone flat in 2015, the victim of its own success and renewed concerns that Japanese officials may not see through a radical overhaul of monetary and economic policy.

The sentiment shift has wrong-footed many traders, prompted others to close out their wagers and sown seeds of doubt among those still betting that Japan’s efforts to jump-start a stagnant economy will send the yen lower still.

The Nikkei was positive, still no new highs.

Nikkei Weekly Chart

The Nikkei again failed to make a new high this week andthus retained its bearish formations. The attempted rally has produced a new chart pattern that suggests a possible waterfall event in the making. The Orthodox Broadening Top agrees with that outcome, since it represents a market that is out of control and has a highly emotional public participation. This may be the start of a dramatic decline that is imminently due.

(Bloomberg) -- Predictions the Nikkei 225 Stock Average will reach 20,000 by December spells another bumper year of share sales for Bank of America Corp.

The nation’s second-biggest underwriter among wholly-owned overseas banks of equity offerings in 2014 says some Japanese company owners may look to cash in, having ridden a market whose returns have more than doubled since the end of 2011.

“We may see more corporate sponsors who bought shares at a cheaper level selling to take profits,” Reiko Hayashi, the Charlotte, North Carolina-based bank’s head of Japan global capital markets, said in a Feb. 2 interview. “I wouldn’t be surprised to see some people push ahead with share sales if the market moves up to between 18,000 and 20,000.”

U.S. dollar may be extending its retracement.

USD Weekly Chart

The US dollar may be extending its retracement through early March. The Cycles Model may be calling for a deeper Wave (4). Typically a retracement will fall back on some support level. It may test Intermediate term support at 90.33, for example.

(Reuters) - The dollar dropped across the board on Thursday after weaker-than-expected U.S. economic data, although its outlook remained upbeat as many investors continued to price in an interest rate hike by the Federal Reserve sometime this year.

The dollar index, a gauge of its value against six major currencies, fell after two straight days of gains. For the month of February, the dollar index was down 0.5 percent, on track for its first monthly loss in eight months.

U.S. retail sales fell 0.8 percent last month, while jobless claims rose above 300,000 in the latest week.

"We're seeing a bit of a bump in the road for the dollar with retail sales being a miss compared with expectations and jobless claims being higher," said Lennon Sweeting, corporate dealer at U.S. Forex in Toronto.

USB nearing the end of its retracement.

USB Weekly Chart

The Long Bond appears to be completing its Wave (4) retracement at its Cycle Top support at 153.37. For the last two weeks liquidity has been rotating out of bonds and into stocks and commodities as the Cycle inverted. However, the flow may reverse back into bonds as stocks and commodities complete their topping process.

(WSJ) U.S. government bonds fell Friday, capping their biggest two-week selloff in more than 1½ years as worries over the global economic outlook abated.

Investors’ appetite for risky assets, such as stocks, revved up, while demand for the relative safety of Treasurys fizzled. Money managers took comfort from data released Friday that showed accelerating growth in the eurozone, led by Germany, in the fourth quarter. Sentiment also was boosted by hopes that Greece and its international creditors would find a solution to avert a default by the country.

Gold is caught between support and resistance.

Gold Weekly Chart

Gold bounced off Intermediate-term support at 1216.26, but closed beneath Short-term support at 1235.90.It may bounce further early next week, but should resume its decline by mid-week. Shortly thereafter, it may decline through the Lip of its Cup with handle formation.

(CNBC) Gold rose one percent on Friday, erasing a week of losses, as the dollar dropped on weaker than expected U.S. economic data.

Spot gold rose to a session high of $1,234.60 an ounce and was up 0.5 percent at $1,228 an ounce.

U.S. gold for April delivery edged up $9 at $1,229 an ounce. The United States is on a national holiday on Monday.

Crude may spend another week or two in consolidation.

Light Crude Oil Weekly Chart

Crude appears to be in a Triangle formation that may require another week or two to finish the consolidation. It may either rally a bit more to its weekly Cycle Bottom resistance currently at 61.90 or wait for resistance to decline toward it, or some combination of the two. This may allow the weaker (short) hands to be shaken out some more.

(MarketWatch)—U.S. crude-oil futures on Friday scored a third straight weekly gain, with prices for the Brent contract marking their highest settlement of the year on the back of spending cuts by oil companies and further declines in the number of active U.S. oil rigs.

On the New York Mercantile Exchange, crude for delivery in March CLH5, +2.81% rose $1.57, or 3.1%, to settle at $52.78 a barrel—up about 2.1% for the week.

Shanghai Index closes beneath Short-term support.

Shanghai Weekly Chart

The Shanghai Index fell beneath Short-term support at 3222.74 last week and could not close above it this week. The Shanghai Index appears to be on a sell signal and may be in a panic decline for the next three weeks. The decline may go to weekly Long-term support at 2459.98 or possibly mid-Cycle support at 2274.73 by early March. Volatility is on the rise in China, despite massive liquidity injections.

(ZeroHedge) Following the previously reported collapse of Chinese trade, the Politburo had to find a way to keep the economy humming internally, since it couldn't rely on outside growth stimuli. As a result it did precisely what it has done every time in the past decade when it finds itself in a growth crunch: flood the economy with new loans, which just happens to be the main threat facing the Chinese economy, which as we have describe time and again, is now toiling under trillions in under-reported and underestimated non-performing loans.

As the PBOC reported overnight, in January, Chinese new loan creation soared to RMB 1,470 billion, more than double the RMB 697 billion in December, and blowing estimated out of the water. This was also a 14% surge from a year ago, and most disturbing, the highest new loan creation month since the emergency interventions during the Lehman collapse!

The Banking Index rallies, but still bearish.

BKX Weekly Chart

--BKX extended its retracement rally this week, but couldn’t change its bearish outlook. This is the index that will lead equities and commodities in their next decline. The Cycles Model now implies that there may be a 3 week decline ahead. Could this be a waterfall event?

(ZeroHedge) It would appear the un-sourced rumors of Greek banks having used up their Emergency line of credit with the ECB are true. Following a hastily put together conference calls this morning:

*ECB RAISES GREECE ELA ALLOWANCE TO EU65BN: FAZ

Up from the previous EUR 59.5 Billion. It appears the stealth bank run in Greece is showing no signs of slowing.

(ZeroHedge) You know it's bad when... you start blaming speculators. Very reminiscent of the "it's not us, we have a solid balance sheet, it's the short selling speculators" bullshit in the days before and after the stock crashes of American Insurance Group, Bear Stearns, Lehman Brothers and Merrill Lynch; mere days after his bank's bonds crashed, the CEO of RaiffeissenBank (Austria's 3rd largest) has stated (unequivocally) that "panic was created artificially," blaming short-sellers for his bank's demise.

(TheHill) Sen. Elizabeth Warren (D-Mass.) maintained Thursday that the 2010 Dodd-Frank Wall Street reform law has helped community banks do better than big banks.

Warren made the claim at a Senate Banking Committee hearing on community banking regulations, during which she also chided Daniel Blanton, chairman-elect of the American Bankers Association (ABA), who testified.

Blanton and community banking officials have pushed for exemptions from certain parts of Dodd-Frank, such as mortgage-lending requirements, that they argue should only be applied to big banks.

(ZeroHedge) Over the past two years we explained how in a time of ubiquitous central bank debt monetization, the amount of global sovereign bonds available for purchase - when taking into account CB purchases - has been declining at an ever faster pace, leading to a collapse in liquidity (something the TBAC warned about in the summer of 2013, leading to the Fed's taper and subsequent temporary halt of QE3), and - naturally - to soaring bond prices (and plunging yields). The latter has reached epic proportions recently, and resulted in $3.6 trillion in global government debt, 16% of total, that is now trading at negative yields.