Archive - Feb 2015

The aim of the Greek bailout was not to restore prosperity to the country's people, but to save the eurozone. Given this, the new Greek government is entirely justified in questioning the terms that the country was given. As negotiations continue (Tsipras "war" vs the initial lost "battle), the single worst outcome of the current negotiations would be Greece's submission to its creditors' demands, with few concessions in return. Default and exit from the eurozone would allow Greece to begin correcting past mistakes and putting its economy on the path to recovery and sustainable growth. At that point, the EU would be wise to follow suit, by unraveling the currency union and providing debt reduction for its most distressed economies. Only then can the EU's founding ideals be realized.

With production and inventories at record levels despite the total collapse in rig counts, all eyes remain on Bake rHughes data for any signal the algos can use to mount a run. The total rig count fell for the 12th week, down 43 to 1267. This 3.3% decline is the slowest drop in 6 weeks and oil prices are sliding on this news. The key level to watch for WTI is $48.24 which moves it into the red for the 8th month in a row. WTI Contango and Brent-WTI spreads continue to surge.

Two words can describe yesterday's first impromptu anti-government protest "organized" by the far-left Antarsya party now that the Greek honeymoon with the new Syriza government is over: disorganized and violent, especially since calling it a "protest" is a stretch - if anything was just young, unemployed, angry people tossing Molotov cocktails. Which is why today's first truly official protest organized by the Greek communist party in front of the Greek parliament on the well-known Syntagma square, will get far more attention, especially since it was Syriza's own anti-bailout protests that filled the same venue as recently as a few weeks ago.

Another day, another currency hits a record low against the US Dollar. The Turkish Lira has collapsed in recent weeks since Erdogan rampaged against the 'independence' of the Central Bank and extended losses today after the economy minister said the government should discuss changing central bank regulations. Nihat Zeybekci said the Central Bank of Turkey’s independence should be conditional on the body taking “national interest” into account. Turkey continues to dump gold at record rates (money laundering to Iran via Switzerland?) and social unrest is on the rise (despite new laws to clamp down on protests) as the US consulate faces bomb threats.

As the finances of Venezuela continue to deteriorate under the collapse of crude oil prices, the government of President Nicolas Maduro is becoming more paranoid and vindictive. However, the utter bust in oil markets pulled the rug out from beneath the Venezuelan economy. Maduro is cracking down on political opponents as the country deals with the economic crisis, and his pronouncements have become more paranoid as the economy has worsened. The economic situation may only grow worse. The government’s budget breaks even with oil prices at an estimated $117.50 per barrel. With no imminent rebound in sight for oil prices, Maduro is resorting to state-sponsored repression to quell growing opposition.

Guess ...

As the rest of the world appears happy to assume everything is fixed in Europe (and if it's not, Draghi will buy it back to being awesome), Greece is looking unwell once again. Initial exuberance has faded dramatically in the last 3 days as IMF default warnings and a 22.5% plunge in tax revenues has sparked concerns about Greece's sustainability once again. Default (or restructuring) risk is soaring, Greek bond yields are surging, stocks sliding, and Greek banks (bonds and stocks) are getting hammered. As The Guardian's Helena Smith notes, "the country is in a strategic vacuum," and next week's T-Bill auction could be a major catalyst.

- Greece warns may default on IMF loan next week - Greek bank runs continue and deposits flee  - The truth can be a scary thing sometimes … especially for those who put their head in the sand and ignore it ...

For six years, we’ve been told that the US economy is in recovery. This is a totally bogus narrative that was dreamt up by the Central Planners running the Fed. The US economy is a disaster and has been since 2009.

Over the past year, there had been a perplexing spike in suicide events involving bankers, especially those of Deutsche Bank and JPMorgan. Overnight, the first prominent public sector suicide shook the state of Missouri when its state auditor Tom Schweich died in St. Louis in what is said to be an apparent suicide, at the age of 54, around 9:48 am on Thursday, when Clayton Police Chief Kevin Murphy said paramedics responded to an emergency call from his home. Schweich was then taken to a hospital, where he was pronounced dead from a single gunshot wound. The Police chief was quoted by Kansascity.com, who said that “What we know at this point suggests an apparent suicide.”

Forget what you think you know about credit and debit cards, PayPal, bitcoin, Apple Pay and any other modern conveniences meant to displace physical currency. The truth is that transactional currency ($1 through $20 bills) in circulation per capita today in America is essentially where it was, inflation adjusted, in 1994: $661 then and $649 today. Simply put, despite the mainstream media buzz, the “Cashless economy” is myth.

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Ugly data this morning had stock markets leaking lower into and beyond the open, and then Chicago PMI's total and utter collapse hit the tape... and this happened...