Archive - Jul 16, 2015

As with all data, none of these data points suggests that the economy, or the markets, will immediately plunge into a recessionary contraction. However, what is important to consider is that many of these data points are now converging and suggesting that risk is more elevated now than at any point since the financial crisis. It is at least worth thinking about.

When we noted that Greek banks would re-open Monday - thanks to gracious handout from The ECB, we questioned how much faith depositors would have? It appears, given the 4% tumble in National Bank of Greece ADRs that, judging by investors, that 'faith' won't last very long...

Post-Greek "Deal", stocks have soared in an incessant volumeless ramp. At the same time, and with heavy volume, the long-bond has been aggressively bid...

They're coming...

Views on volatility are often only within recent context, causing sometimes influential advisers and investment banks to misguidedly extrapolate correction or premature rebound calls with far greater frequency then they actually occur (excessive false positives).  In this article we see everything through a pertinent wider lens.  We focus on how and when volatility moves from one level, to another. 

It was less than three weeks ago that, in the aftermath of the surprising announcement of the Greek referendum and the even more surprising cap on the ECB's now clearly conditional ELA, the world was greeted to massive lines of Greeks waiting at ATMs where they were allowed to withdraw only €60 per day. Following the Greek capitulation, whose sole directive was recovering access to locked up bank funds, hopes were that Greek banks would promptly reopen, and now, according to a Greek senior banker cited by Reuters we know just when that will happen: Monday.

Having surged on Tuesday when the Iran "deal" was confirmed and tumbled yesterday despite inventory draws and production decreases, WTI crude is re-slumping back to a $50 handle this morning as traders cite more Iran concerns (flattening the curve) and a Genscape report that indicates inventory builds at Cushing once again...

‘Plan B’ Needed As Euro One Recession Away From Implosion - David McWilliams

There is nothing to fear but freed itself... With VXX - the VIX ETF - at record lows, the VIX term structure has swung from backwardated last week to extremely steep with VIX hitting an 11 handle this morning. This is the biggest weekly drop in fear since January 2013...

After June's hope-strewn dead-cat-bounce, Philly Fed has plunged back to the lows of the year. Printing 5.7, missing expectations of 12.0, this is the biggest miss since January. It appears the weakness in Q1 (and Q2) and now Q3 was more than just weather... or port closures... as the employment index plunged to its lowest since January.

THIS IS THE REAL CRISIS THAT GREECE WILL TRIGGER SHORTLY .

When it comes to the entire Greek financial system, the ECB is now in full control with its "support" of banks at least €10 billion more than total Greek deposits.

Greece is "fixed" - so no need for safe havens, alternative currencies, or any hedges...

"We will now see in the negotiations whether there is even a way to get to a new programme taking into account (Greece's) financing needs, which have risen incredibly. [Grexit] would perhaps be the better way for Greece."