Archive - Feb 12, 2015 - Story

The bond market may have gotten so fragmented in recent months that even Bloomberg was amazed at how little trading volume it necessary to make a price impact, the amount of bond traders (and certainly salesmen), and certainly their bonuses, appeared to only go up. "Appeared" being the key word, however, because as Bloomberg reports, "the average number of dealers providing prices for European corporate bonds dropped to a low of 3.2 per trade last month, down from 8.8 in 2009, according to data compiled by Morgan Stanley."

Just over an hour ago, what appears to have been a strawman now was issued by Bloomberg via leaked sources from Greek and German officials that proclaimed talk of a "compromise" deal that makes everyone happy in Europe. However, as the leaders exited today's summit, the tone of their responses did not exactly sound compromise-prone:

*DIJSSELBLOEM SAYS GREECE PROCESS GOING TO BE V. DIFFICULT, "DON'T GET YOUR HOPES UP YET" ON GREECE
*MERKEL URGES GREECE TO MAKE UP ITS MIND SOON ON FINANCING

Hardly the resoundingly positive spin we saw earlier. Poland's Tusk, Finland's Stubb, and good old Juncker also chimed in with the latter commenting on Greece's "anti-social" behavior. Tsipras made some neutral statements, then came out swinging, "The MoU as we knew it is over. The same goes for the troika. All these years, the burden fell on the poorest. Our aim is to restore the sense of justice."

As America continues to drift toward totalitarianism, it is only a matter of time before political speech on the Internet is regulated.  It is already happening in other countries all around the globe, and control freak politicians in the US have begun a renewed push to regulate independent news websites. People are hungry for the truth, and an increasing number of Americans are waking up to the fact that they are not getting the truth from the corporate-controlled media.  But as the alternative media has grown, it was only going to be a matter of time before the establishment started cracking down on it.

The front page of The Wall Street Journal on Tuesday, February 10 proclaimed “Oil-Price Rebound Predicted” according to the IEA (International Energy Agency).

Not true.

Presented with no comment...

With tax receipts tumbling and ELA funding hitting its limit, the Greeks are up against it. On the other side, the Greek strength in the face of EU's demands (and Eurogroup's realization of the uncertainty this could lead to) has apparently led to the start of compromise. As Bloomberg reports,

*GERMAN, GREEK OFFICIALS SIGNAL COMMON GROUND ON AID DEAL
*GERMANY SAID NOT TO INSIST ALL PARTS OF CURRENT BAILOUT STAY, GREECE SAID TO BE OPEN TO SURPLUS, PRIVATIZATION DEBATE

As Merkel noted earlier, "Europe is always about finding a compromise," and it appears they are getting closer  - as long as a 'program' continues. Bundesbank's Weidmann has noted that Grexit would not solve either side's longer-term problems.

The new cease-fire agreement is based largely on the original one that went into effect Sept. 5. It focuses on the withdrawal of heavy artillery systems, which have been prominent throughout the conflict, within 14 days of the cease-fire's implementation. The new cease-fire requires these artillery systems to be withdrawn far beyond their maximum effective ranges, a move that will create a buffer to prevent escalation and heavy artillery fire on the demarcation line.

The usual bag of tricks no longer works. And the subject Varoufakis brings to the table, that the EU and ECB economical policies have been an abject failure is no longer an extreme notion. The contagion from Syriza success can be considerable, and though it pretends otherwise, the EU has no idea what it would mean down the line. Every single option they look at that is NOT Varoufakis surrendering, must scare them out of their socks. Anything they give up will be seen as a sign of weakness, and it will encourage parties for which Syriza ‘carries the torch’, and likely raise their support and votes.

Hot on the heels of the previously discussed surge in Indirect, aka mostly foreign central bank and other official, demand for 3 and 10 Year Treasurys discussed in the past 2 days, the week's issuance was set to end with today's $13 billion in 30 Years bonds. And, as expected, Indirects could barely contain their excitement, taking down just shy of half, or 49.4%, in line with the recent prints of 48.9% and 49.8% in Janury and December, if a little shy of the record high of 53.2% hit in July, after the auction priced 0.4 bps just wide of the When Issued, at 2.56%, a fraction wider than January's 2.43% even if today's session had seen some aggressive buying into the 1pm hour.

If you want to know where the next bear market is, look around at the people who are enjoying unimaginable wealth. Mr. Market has a habit of correcting things over time. My guess is that you won’t be paid $200K/year to drive trucks in North Dakota for much longer. The best thing about capitalism is that everything is temporary. The last time around, people had the stock, could have sold it, and didn’t. Nothing lasts forever.

Did Did The US just blink? Perhaps under pressure from Merkel having enough of Obama's "costs", Secretary of State John Kerry just released the following statement... " the United States is prepared to consider rolling back sanctions on Russia when the Minsk agreements of September 2014, and now this agreement, are fully implemented."

Despite media claims that the German-Greek relationship did not "look tense" at today's EU leaders' meeting; and in spite of the European market's seeming exuberance at no deal but a possible deal but no deal, ECB's Noyer has come out swinging:

*NOYER SAYS GREECE NEEDS TO NEGOTIATE SERIOUSLY, SAYS GREEK EXIT FROM EURO WOULD BE `VERY PAINFUL'

This is odd in that markets have been managed to prove Grexit is 'contained'.. Noyer added that the Emergency lending agreement (ELA) is adapted to the needs of the economy, and ironically explained Greece needed to focus on growth (ironic because Greece is expected to grow notably faster that eurozone this year) and debt reduction won't help.

US equity markets are quietly doing what they do - go up and stay up. But in the biggest markets in the world - US Treasury, Japanese bonds, and foreign exchange - something turmoily is happening. Yields are cratering today.. The USDollar is getting hammered on the back of JPY gapping dramatically stronger and EUR surging.