Archive - Jun 16, 2015 - Story

If it wasn't clear to everyone that the "old normal" American Dream of buying and owning a house is now dead and buried, then today's just announced housing starts and permits data put the last nail in that particular coffin, because as we noted earlier while single-family housing starts dropped once again, this time to a level last seen in October, the real story was in housing permits. But not single-family permits: multi-family ones, aka rental buildings, just had the biggest monthly surge since June 2008, jumping 26% in one month, and a whopping 54% from a year ago!

Following April's hope-filled spike in Housing Starts and Building Permits SAAR (and the exuberant jerk to 10 year highs in NAHB Sentiment), May data is more mixed. Housing Starts plunged 11.1% MoM (against expectations of a 4% drop) missing for the 3rd of last 4 months. Permits, on the other hand, spiked 11.8% (againmst expectations of a 3.5% drop) smashing the hope to its highest since August 2007. So - in summary - hope is soaring, reality is falling and all the hope is based on America as 'rental nation' with a record number of multi-family unit permits.

In the wake of reports that Greece could be headed for a "Lehman Weekend" complete with capital controls and an "emergency" Sunday meeting, the headlines are coming fast and furious on Tuesday morning, with Tsipras calling the IMF's stance "criminal" and Merkel digging in for the worst.

As expected, earlier today the pro-ECB top European Union court found that Draghi's impromptu announcement of an OMT, which was basically the wrapping of his "whatever it takes" policy from 2012 to prevent the collapse of the Eurozone when peripheral bond yields were hitting daily records, was perfectly legal.

The last time the Fed tried to exit a period of massive balance sheet expansion coupled with ZIRP - back in 1937 - its strategy completely failed. The Fed tightening in H1’37 was followed in H2’37 by a severe recession and a 49% collapse in the Dow Jones. This is the ghost of 1937 and it is about to make a repeat appearance.

• Greek PM sticks to hard line as contagion hits euro zone bonds (Reuters)
• Greek Deadlock Has Leader Hoping for Miracle to Avoid Default (BBG)
• Greek Showdown Puts Merkel's Teflon Legacy at Risk (BBG)
• Greek standoff saps Europe, dollar swings ahead of Fed (Reuters)
• Allianz Increased Holdings of Greek Debt as Its Largest Investor (BBG)
• French Bonds Infected as Greek Crisis Swells Euro-Region Spreads (BBG)
• Statoil to cut 1,500 more jobs as savings drive intensifies (FT)
• UnitedHealth, Anthem Seek to Buy Smaller Rivals (WSJ)
• Five Million Reasons Why China Could Go to War (BBG)

It’s not only Greece this morning. Things just don’t seem to be functioning smoothly anywhere. More arrests in Hong Kong, delays to the Shenzhen-Hong Kong Exchange link, Kuroda having to say he didn’t mean what he said, weaker start to the new month’s numbers in the U.S., an Indian export number that put paid to any hopes of a reversal of what has been an inexorable six-month collapse, disappointing European car sales (slowest in 6 months) with noted weakness in Latin America being cited, peripheral bond spreads widening out, Spanish 10-yr hitting highest yield in 10 months.

Another day of constant Grexit chatter, and this time the futures are really starting to react as what was seen as mostly impossible for the past 4 months is now almost inevitable. The first tremors emerged when Greece announced it would not present a new proposal to the Eurogroup to unlock aid, relying instead on what has already been submitted and which the Troika said was inadequate. Then, confusing matters, a new GPO poll posted on Greece's Mega TV showed that increasingly more, or over 56% at last count, of Greece would prefer a "bad" deal with creditors than being kicked out of the Eurozone putting the future of Tsipras' cabine tin jeopardy. And then, hinting that the endgame is officially here, the FT reported that "Eurozone officials discuss holding emergency summit on Greece", suggesting a second Lehman weekend may be just around the corner.