Archive - Jun 17, 2015 - Story

With 75% of invested capital trapped in private Unicorns, that’s pretty dry. So for now at least — it’s a roach motel. All this money is going in at higher, all time higher, valuations — but very little is coming back out. The optimists believe it’s just a matter of time... Bill Gurley thinks there is a dry bubble.

The Greece saga continues. This is a story that does not deserve to be derided by whines of “I’m sick of reading about Greece” and “If it weren’t for Greece”, blah, blah, blah. The next B level economic number that HFT traders can jump on is not more interesting nor important. This is a Western democracy, member of NATO and the euro zone in the throes of social and economic revolution. Their problems go to the very heart of EU problem... Today is the Fed’s day, but don’t dismiss this story for small mindedness.

Stocks have gievn up early gains with trannies ugly, Crude has plunged back into the red post DOE, EURUSD is dumping and pumping on every headline; and bond yields are spiking...

El Al Israel Airlines Flight #7 bound for New York City (from Tel Aviv) has, as AirLive.net reports, U-turn'd abruptly as it entered The Atlantic and appears to be heading back to Israel. Some details are being reported that there is a problem with one engine...

The algo reaction to "Greece is willing to make concessions," was a immediate vertical ramp higher... which was quickly obliterated when the humans read further that Greece "will not cut its existing pensions," thus meaning no deal is close as the EU demands just that. EURUSD has been weaker all morning...

Following last week's major inventory draw (and last night's less than expected API-reported inventory draw), DOE reports a 2.68 million barrel draw (slightly less of a draw than expectations of 2.79 million barrels). End products saw inventories rise considerably more than expected (Gasoline +460k vs -800k exp) and Cushing saw a build (+112k vs -850k exp.). Oil prices dropped on the news despite a very modest drop in production (-0.2%) which was all Alaska (as the Lower 48 saw production rise).

"...excluding Energy and rate sensitive sectors such as Telecom and Utilities, which have been bringing down the average, most sectors continue to show very strong breadth. In particular, Healthcare, Consumer Discretionary and Financial stocks continue to show very strong uptrends."

The world is on the brink of the longest-lasting oil glut in at least three decades and OPEC’s quest for market share makes it almost unavoidable. Oil supply has exceeded demand globally for the past five quarters, already the most enduring glut since the 1997 Asian economic crisis, International Energy Agency data show. But as WolfStreet.com's Wolf Richter warns, if Iran and world powers reach an accord on the Islamic Republic’s nuclear program by their June 30 deadline, we’ll be watching the most magnificent oil glut ever building up into next year.

The most sensitive financial instrument to the reality of the situation in Greece is flashing redder than it has ever flashed before. After trading at par just 9 months ago when everyone was proclaiming the Greek crisis over, Greek bank bonds are now trading at a stunning 55 cents on the dollar... For anyone "hoping" that a deal is nigh, real money investors are saying "nein nein nein."

As the calls for a cashless society grow louder, Bundesbank chief Jens Weidmann still believes "every citizen should continue to pay as he wants, so, cash or cashless."

As Americans continue to gain weight, heart attacks and emergency room visits should increase, doughnut consumption will rise, gyms will close, and healthy food stores will be stuck with inventory they cannot sell. But on Wall Street, greed is good. So if someone is going to have a heart attack, there's nothing wrong with making a few bucks from it right?

According to the CBO if the US wants to return back to its long-term debt/GDP average of 38% of GDP, it needs to boost revenues by 14% or slash spending by 13%. Alternatively, if it wants to keep debt/GDP at its current level of 74% of GDP, the US will need to boost revenues by 6% of cut spending by 5.5%.

As the war of words between Athens and Brussels reaches a fever pitch ahead of Thursday's Eurogroup meeting, the Bank of Greece has made a plea to both sides as capital controls and a "Lehman Weekend" loom. "A manageable debt crisis, as the one that we are currently addressing with the help of our partners, would snowball into an uncontrollable crisis, with great risks for the banking system and financial stability. An exit from the euro would only compound the already adverse environment, as the ensuing acute exchange rate crisis would send inflation soaring.

• Greek central bank issues 'Grexit' warning if aid talks fail (Reuters)
• Kerry says 'patience wearing thin' on Syria's Assad (Reuters)
• Juncker accuses Athens of misleading Greek people (FT)
• Al Qaeda kills two Saudis accused of spying for America (Reuters)
• Hedge-Fund Bet Hits Pensions (WSJ)
• ‘Flash Crash’ Trader Navinder Sarao Worked With Fund Network Now Under Investigation (WSJ)
• 'Me? Rich?' U.S. presidential hopefuls play middle-class card (Reuters)
• You’ve Been Warned: Central Bankers Turning Less Market-Friendly (BBG)

With the Fed's June FOMC statement in just over 7 hours and a Yellen press conference to follow shortly, one in which nobody expects the Fed will announces its first rate-hiking cycle in nine years despite repeated clues by Yellen that not only is there froth in the market but that the Fed has no dry powder to contain the next crisis when it emerges (even though a rate hike will catalyze the next crisis), traders have chosen to ignore the chatter from Greece which is getting worse by the hour, and unlike recent days, have bought risk overnight based on one simple technical: of the five press conferences in ten Fed meetings held by Yellen as Chairman, the S&P finished higher 80% of the time.