When it comes to Greece, and Europe in general, "hope" continues to remain the driving strategy. As Bloomberg's Richard Breslow summarizes this morning, "if you were looking for a word to describe the general feeling of equity markets today, you might well pick hopeful. U.S. equity futures opened higher and have been up all day. European bourses opened cautiously higher as they await word, any word, from the European finance ministers or more importantly, Chancellor Merkel. Equity markets will continue to be very reactive to European headlines, but so far, no news has been taken as a reason for hope." Which incidentally, has been the general investment case for the past 6 years: "hope" that central banks know what they are doing.
Despite all the hopes and prayers of illiterate farmers everywhere, Chinese stocks refuse to hold a bid and down 3-4% at the open amid suspension of around 160 individual securities. In the pre-open to open, Shanghai Composite is down 3.2%, Shenzhen is off 3.5%, and China's Nasdaq - ChiNext is down 3.8%. This leaves ChiNext down over 40% from its highs as the cost of insuring downside in Chinese stocks explodes to record highs. As China goes through the 1929 playbook to save its 'market', it appears "momentum" has shifted.
"Strange how paranoia can link up with reality now and then."
As Americans stared heavenwards at the sound and fury of incendiary devices lighting the dark to celebrate their independence from an over-taxing monarchy, there were other fireworks going off in the skies above Alaska and California. As Fox News reports, two pairs of Russian bombers flew off the coast of California and Alaska - forcing the Air Force to scramble fighter jets to intercept both flights, according to two senior defense officials who did not confirm if the bombers were armed. As Free Beacon adds, it was the second time Moscow dispatched nuclear-capable bombers into the 200-mile zone surrounding U.S. territory in the past two weeks.
Earlier this month, news emerged that the US government had suffered its worst cyberattack ever. There’s a good chance the attack is even worse than what we've read about. So what does the Obama administration want to do to solve the problem? For starters, it’s proposed “economic sanctions” against China, which it holds responsible for the attack. And only a few days after the OPM hack, Senate leaders tacked on the Cybersecurity Information Sharing Act (CISA) - which creates a back-door channel for government agencies to retrieve, analyze, and store enormous volumes of personal data - to a defense bill to avoid debate on the measure. It didn’t work – the Senate failed to advance the legislation for now... but it is a good time to begin securing your electronic life. The US government certainly isn’t going to do it for you.
Earlier today we reported that as Bloomberg correctly leaked, the ECB would keep its ELA frozen for Greek banks at its ceiling level disclosed two weeks ago. However we did not know what the ECB would do with Greek ELA haircuts, assuming that the ECB would not dare risk contagion and the collapse of the Greek banking system by triggering a collapse in Greek banks if and when it boosts ELA haircuts. Turns out we were wrong, and as the ECB just announced "the Governing Council decided today to adjust the haircuts on collateral accepted by the Bank of Greece for ELA."
As the strong dollar prices out the South American buyers who have been largely responsible for Miami's booming condo market, developers look East for a savior.
With Greece’s debt situation spiraling downwards, the European project is showing some cracks. The July 5 referendum could end up amounting to a mandate on whether or not Greece stays in the euro. In the meantime, the turmoil offers an opportunity for Russia to advance its interests... and with The Krlemlin reporting that Putin held discussions with Hollande today, it appears something is going on behind the scenes.
“I don’t really follow news on stocks that closely. My hairdresser said it was still a bull market and I needed to get in”...
Brussels has been dead wrong. The stupid idea that the euro will bring stability and peace, as it was sold from the outset, has migrated to European domination as if this were “Game of Thrones”. Those in power have misread history, almost at every possible level.
China's PBoC-assisted plunge protection program got off to a rather inauspicious start on Monday after an early bid to ramp the SHCOMP fizzled fast.
France has managed to use the Greek bailout to offload €8 billion in junk debt onto its neighbors and burden them with tens of billions more in debt they could have avoided had Greece simply been allowed to default in 2010. The upshot is that Italy and Spain are much closer to financial crisis today than they should be.
Health insurance companies around the country are seeking rate increases of 20 percent to 40 percent or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected.
Perhaps the more important catalyst for asset price changes of late is Chinese economic slowing rather than fears of Grexit?