Archive - Feb 17, 2015

Now where have we seen this before? Surprise contradictory headlines that occur shortly after vehement statements by leaders: *GREECE AIMS TO REQUEST LOAN ACCORD EXTENSION TOMORROW: OFFICIAL

This comes after Varoufakis and Tspiras specifically saying that they will not extend the current loan accord: "Salvation will not come by extending the mistake," adding that compromise on the current program "is not an agreement but a surrender that would complete the euthanasia of our country."

With earnings expectations collapsing, macro data disappointing across the board, Ukraine's truce failing, and Grexit looking ever more likely, is it any surprise that the S&P 500 (courtesy of yet another AAPL reacharound) is rapidly approaching the 2,100 level.

He is the gentleman with the white hair.

Having questioned the need for an independent central bank a week ago, saying that if they can’t cope with their duties, they will be held accountable, Turkey's President Recep Tayyip Erdogan has filed a lawsuit against the head of Turkey’s central bank, Erdem Basci. As Trend reports, the prosecutor accuses Basci of serious material damage inflicted to Turkey’s citizens as a result of an erroneous interest rate policy of the central bank. One wonders if that gives any ambitious American prosecutors any ideas?

From a Citi global credit survey: "...over 65% of respondents said they believed action from central banks in Europe and the US would be the principal force driving credit index spreads [and] surprisingly, in a year with major political catalysts in Europe, and ongoing regional tensions in the Middle East and Russia, only 4% of respondents felt that geopolitical risk would be the major factor driving spreads.”

"Walls of worry"... seem to be crumbling...

Here comes the strawman we've all been waiting for: "Greek deposit withdrawals picked up after talks between Greece and its euro-area creditors on extending its bailout ended in acrimony in Brussels Monday night, said the people, who asked not to be identified because the information is private. The ECB will likely provide ELA to Greek banks as long as there is a chance of an agreement between Greece and its creditors to extend the current bailout, economists at Barclays Plc including Antonio Garcia Pascual and Thomas Harjes wrote in a client note after the meeting ended Monday. If Greek authorities don’t take up euro area finance ministers’ offer this week, ELA funds to Greek banks would likely be shut down, they wrote."

Two months ago we showed, and explained in great detail, how in the new normal the role of gold is nothing more than a funding "currency" to allow the BOJ to sell Yen against it (on a borrowed basis, which is also why the LBMA halted reporting its GOFO data as of the end of February, as it would not be pleasant for the central bank cartel to demonstrate just how much institutional gold shortfall there developed following major BOJ interventions). So for all those who are curious what it looks like when the BOJ "enters the house", here it is...

Homebuilder Sentiment slipped from 57 to 55 in February - missing extyrapolated expectations of a 58 print by the most in over 6 months. Present sales slipped very modestly, future expectations remained flat (and hope-strewn) as Prospective Buyers Traffic tumbled from 44 to 39. Of course, the blame for this weakness and dramatic drop in prospective buyer traffic - The Weather!! Except we note that the Northeast region (one of the hardest hit by the storms) rose from 43 to 48.

At the start of Q4 2014, Appaloosa's David Tepper made a series of statements - dismissing Bill Gross as irrelevant (nope - turmoil caused by PIMCO unwinds roiled credit markets), calling the end of the bond bull market (nope - yields went on make lower and lower lows), and finally proclaiming that stocks were inexpensive and multiples not high. So, one wonders, if stocks were inexpensive and multiples not high, why did Appaloosa dump 40% of its US equity exposure in that quarter (only to end the quarter with even more exuberance proclaiming that stocks could rise another 10% in 2015)? It appears that when David Tepper says "buy", he means "buy... from me."

The rhetoric from both sides in Europe is hotting up but we suggest Tsipras' comments seem far more personal and existential than the Eurogroup's beligerence for now: GREEK DEMOCRACY CAN'T BE THREATENED

*TSIPRAS: GREEK GOVT NOT IN A HURRY, WON'T COMPROMISE, WON'T TAKE A STEP BACK FROM PROMISES TO PEOPLE

With a "strong mandate" to save the country, Tsipras adds that he wants "a solution, not rupture."

It appears the overenight exuberance at the possibility of a Grexit is fading fast... Silver - already weak overnight - was suddenly monkey-hammered lower on massive volume... WTI is down almost $2 from intrday highs, testing towards $51.50 on heavy volume.

The chances of Greece being forced out of the euro zone have risen but a compromise agreement between Athens and its European partners is still possible, Greek media and investment banks said on Tuesday.

SCHAEUBLE SAYS GREECE MUST DECIDE WHETHER IT WANTS A PROGRAM
SCHAEUBLE SAYS GREEK SITUATION ISN'T GETTING BETTER
SCHAEUBLE: GREEK PROGRAM EXTENSION BACKING NEEDED BY FEB. 27
SCHAUEBLE: UP TO GREEK GOVT TO DECIDE IF IT WANTS TO KEEP EURO

Following January's bounce back from December's collapse to 2-year lows, Empire Fed fell back modestly in Feb. Against expectations of a small drop to 8.00 (from 9.95), it printed 7.78 - basically flat now for 2 years. Under the hood things are a lot more concerning as New Orders tumbled from 6.09 to 1.22 and number of employees slipped from 13.68 to 10.11. What is perhaps the most concerning for the ever-hopeful multiple expanding dreams of equity market wealth, future business expectations collapsed from 48.35 to 25.58 - the biggest drop since Jan 09 (along with a plunge in expected workweek from 11.58 to 1.22).