We suggested the Greek pivot from Europe to Russia was building previously, and now, we get confirmation from Russia's finance minister Anton Siluanov that the pivot could be mutual, who told CNBC in the interview below:
*RUSSIA WOULD WEIGH FINANCE FOR GREECE IF ASKED, SILUANOV: CNBC
With fire and brimstone spewing from Germany over the potential for Greece to veto any and everything, it seems Russia may just have stymied Europe's leverage over the newly democratic nation.
It would appear Gazprom has once again come knocking for payment - or else. As Bloomberg reports, Ukraine is pressing the Obama administration to provide political support, as much as $3b in financial aid and “non-lethal weapons,” with the goal of some progress by the end of February, Ukrainian Deputy Foreign Minister Vadym Prystaiko says. Of course, given Europe's agreement to further sanction Russia (asEU agrees more "punitive" steps are now possible) President Obama will be happy to lend Ukraine more American taxpayer money (despite the market's perception that Ukraine's default probability is over 80% - six year highs).
After the delayed 5 Year auction took place 90 minutes ago, and priced strongly well through the When Issued, it was the turn of the last for this week auction of $29 billion in 7 Year paper, which just concluded and, somewhat surprisingly, was the worst of all auctions this week: not only did it tail modestly, pricing at 1.59%, a 0.4 bps tail wider than the 1.586% WI, but the Bid To Cover also was just modestly anove last month's 2.388, at 2.499, below the TTM average of 2.56. To be sure, a key factor for this superficial weakness was that the high yield of 1.59% was the lowest since May of 2013, as a result all those who have booked major profits in last month's auction pricing at 2.13 likely had far less of an incentive to get involved here.
It appears markets are on the verge of learning just how damaging the unintended consequences will be from multiple years of extreme central bank promises now that the Fed has run out of the ammunition to keep the utopian market façade alive. The structure of the ECB QE and the Greek situation make the backdrop considerably more troubling and difficult.
Because nothing says dump gold and silver like an aggressively escalating currency war...
Earlier, we laid out a very reasonable explanation by none other than Europe's largest insurer AXA why the ECB's QE will fail. The ECB did not like ththis, so it decided to reply. This is how the ECB just "crushed" AXA's logic.
COEURE SAYS QE WILL WORK BECAUSE IT IS BIG
As we previously noted, yesterday's 2 Year auction was an absolute blockbuster and accurately guessed the general direction of the bond market following yesterday's FOMC announcement. Moments ago, the US Treasury sold $35 billion in 5 Year paper, the first of two Note auctions, with the 7 Year due at 1pm today, and like yesterday it too was a very strong auction, with the High Yield tumbling from 1.739% last month, when most were assuming a rate hike is imminent to just 1.288%, stopping through the 1.295% When Issued, and suggesting that the relentless collateral shortage of the past 2 years simply refuses to go away. This was also the lowest closing yield of a 5 Year auction since May 2013.
Yahoo! shares are down meaningfully during the last two trading days due to the decline in BABA shares, even though Yahoo! announced this week the best-case scenario for its shareholders in the form of a tax-free spin-off of its entire equity position in BABA (see our note here). The trading has created an unusual dislocation, in our opinion. Assuming 1) that the BABA stake trades at a 10% discount to BABA as a SpinCo (and, therefore, is worth $33/YHOO share at current BABA levels), and 2) that its 35% equity stake in Yahoo! Japan is valued using a 44% discount to the current market value (i.e., a 38% tax rate plus a 10% liquidity value), then the core Yahoo! business is currently valued at nearly a negative enterprise value of $1bn.
"People say, 'Sell government bonds and lend money to widget manufacturers.’ It doesn’t really work like that." Hayes says, adding that "Low yields don’t necessarily mean more lending to the real economy; time and confidence are key elements and last 6 years have shown QE can’t control those." In short: it hasn't even started and QE is already a complete failure. Good job central-planners.
Yet again this morning's "bounce" to $45 was heralded as maybe possibly could be the stability that markets are looking for. And once again it was not as WTI makes fresh cycle lows to a $43 handle.. and once again, energy stocks plunged back to energy credit's reality...
It Will Now Cost You 0.5% To Save Money In Denmark: Danish Central Bank Cuts Rates For Third Time In Two WeeksSubmitted by Tyler Durden on 01/29/2015 - 10:13
When the Danish Central Bank cut rates precisely a week ago, going from NIRP to NIRPer, and pushing the deposit rate from -0.2% to -0.35%, the sense of desperation was already in the air: after all this was already the second rate cut by the Denmark's monetary authority in one week, all in the hope of preserving the peg to the DEK to the EUR. That sense of desperation just hit a fever pitch moments ago, when the Dutch central bank just went NIRPest, and cut rates across the board yet again, and made it even more costly to save money in the north European country, where the Deposit rate has just been cut from -0.35% to -0.5%!
The 3.7% plunge MoM in December's pending home sales is the 2nd largest since May 2010, drastically missing expectations of a 0.5% rise in sales (buoyed by exuberance from homebuilders). All regions saw weakness but the Northeast was worst with a 7.5% MoM plunge (so weather will be blamed we are sure - though it appears analysts never thought of that). Inventories fell for the first time in 16 months but NAR's chief economist proclaims it is time for "current homeowners to realize their equity gains and trade-up." Yep - more leverage...
Two days ago, Zero Hedge first, and shortly thereafter everyone else, pointed out something stunning: the biggest surprise to emerge so far out of the new anti-Troika/austerity Greek government was not so much its intention to proceed with the first test of "Odious Debt" - this was largely known in advance - but its dramatic pivot away from Germany and Europe, and toward Russia: The most important message that Tsipras is sending to Europe is that (after meeting the Russian ambassador first upon his election) Greece is now effectively a veto power when it comes to future Russian sanctions!
It appears the Central Bank control is failing...
Alibaba is down over 10% this morning following a disappointing earnings release. This comes on the heels of selling pressure after the Chinese government released its report claiming significant "issues" at China's richest man's company. A combination of weak revenues, a 28% plunge in net income, slower than expected growth on its Tmall platform (and disappointment at the progress into mobile advertising) have sent the stock tumbling back near Facebook's market cap.