What do you do when two policy rate cuts, $19 billion in committed support from a hastily contrived broker consortium, and a promise of central bank funding for the expansion of margin lending all fail to quell extreme volatility in a collapsing equity market? You ban selling.
According to Colin Lancaster, senior managing director with Balyasny "we now have another 48 hours of calm before things really start happening", and the punchline: "situation could then break down as banks stay closed, ATMs will run out of cash Tuesday or Wednesday, uncertainty grows and rioting possible."
LEADERS OF GREEK RULING AND OPPOSITION PARTIES ISSUE JOINT STATEMENT BACKING EFFORTS TO REACH DEAL WITH CREDITORS
"The IMF has taken note of yesterday's referendum held in Greece. We are monitoring the situation closely and stand ready to assist Greece if requested to do so."
Futures opened 33 points lower a little over 12 hours ago because, well, nobody has any idea how the Greek fiasco would play out. And then, moments ago the entire gap lower was closed as ES stormed into the green...
"When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: what a huge joke! Germany is the country that has never repaid its debts. It has no standing to lecture other nations. ... Germany is really the single best example of a country that, throughout its history, has never repaid its external debt. Neither after the First nor the Second World War. However, it has frequently made other nations pay up... "
15 minutes ago we had a miss from the Markit Service PMI, and now it is the turn of the ISM's non-manufacturing survey to also miss, rising from 55.7 to 56.0, below the 56.4 consensus increase. The reason: trade (both - imports and exports - disappointed with Imports dropping into outright contraction down from 53.5 to 48.0, while employment dipped from 55.3 to 52.7. Finally, here are the respondents who after blaming winter, port strikes, drought and flooding have found a new scapegoat or rather scapebird: avian flu.
Following last week's disappointing manufacturing PMI, today it was Markit's turn to report the June Service PMI, which just came out at 54.8, just under the 54.9 expected, down from 56.0 in May and the lowest reading since January. Additionally, job creation eased to a three-month low while input cost inflation reaches its highest since October 2013. In other words, more bad news for future job prospects and margins.
On the heels of Sunday's landmark referendum in Greece, all eyes are now on global financial markets and how the European Central Bank intends to prevent contagion in the event Greece exits the currency bloc.
In this centrally-planned world, in which nobody even denies anymore that all markets have become central banker playthings, fundamentals are irrelevant and few have a clue what this latest crash in copper may signify (some do, and it isn't pretty) an even more disturbing clue for the fate of this erstwhile "market doctor" is revealed when looking at the long-term price chart. Here, as SocGen notes, copper is in danger of breaching a huge 15 year support line... after which it is free fall for a long, long time.
It’s time for the Troika to seek out some real men too. It cannot be that the winner leaves and all the losers get to stay. The attempts to suppress the IMF debt sustainability analysis were a shameful attempt to mislead the people of Greece, and of Europe as a whole. And don’t forget the US: Lagarde operates out of Washington. It cannot be that after this mockery of democracy, these same people can just remain where they are.
We are in a risk-off period, so we reiterate the need to have cash in portfolios. The US dollar and US Treasuries are the safest assets in our view...
"After the Greeks voted against accepting the latest demands from its creditors, Merkel is facing her worst nightmare: a possible Greek exit from the euro, a possible exit from the EU completely and loss of confidence in the currency itself. Half of her was Merkel — the pragmatic economist, the other was Merkel — the great European. She has now discovered, in her vacillation, she has not shown the leadership expected of the most powerful woman in the European Union."
- Greece Bailout Referendum: They Voted ‘No’. Now What? (BBG)
- Varoufakis Quits as Greece Enters New Showdown With Europe (BBG)
- Merkel to Meet Hollande as Greece Told to Make Next Move (BBG)
- German line hardens after Greek referendum 'No' (Reuters)
- BOJ keeps rosy view of regional Japan, watching markets after Greek upset (Reuters)
- Oil falls on Greece vote, China stock market turmoil (Reuters)
- China Urges U.S.-Iran Compromise 36 Hours to Nuclear Deadline (BBG)
- U.S. and Iran: the unbearable awkwardness of defending your enemy (Reuters)
With the only thing that matters in the hours ahead, at least until China reopens and the Pandamonium repeats, is the sheer chaos out of Greece which now literally changes the narrative by the minute, here is a convenient timeline of everything that has happened so far this morning starting with Varoufakis' unexpected resignation and going from there.