Archive - Jun 29, 2015 - Story

We are watching the total collapse of Democracy and the birth of a new era – Economic Totalitarianism from Arrogant people who are totally clueless beyond their own greed for power and money.

The Syrian "chemical weapons" narrative is back and with it is the confirmaton that Russia will not leave the US dictate middle eastern borders unilaterally. Syria's foreign minister said on a visit to Moscow on Monday that top ally Russia had promised to send political, economic and military aid to his country. "I got a promise of aid to Syria - politically, economically and militarily," Walid al-Moualem said at a televised news conference in Moscow after meeting Russian President Vladimir Putin.

Eurocrats have spent untold billions of other people’s money to save face, just so they wouldn’t have to admit that Project “Make Everyone Germany” has failed. But what they never acknowledged was that no matter how much they extend and pretend, the disease will always reach its crisis. And this financial disease is going to slay the patient. History is very clear on this point: debt kills.

In the natural course of things, structural reform can occur, but that natural course entails some degree of disorder and loss.

Europe's Senior Financial credit index traded a stunning 20bps wider at the open to 97bps before giving a little back and holding at around 90bps. This is the biggest spike in European bank risk since May 2010... and is the highest level of risk since December 2013. Is faith in central bank omnipotence faltering?

Trannies touched unchanged and instantly reversed but Dow Industrials only managed a modest bounce of opening lows. However, the momo did not last and there's no Nike to save the day today - The Dow is now down over 200 points and has tumbled back into the red for 2015.

Greek stocks may be closed and the bond market super-illiquid but traders are willing to dump GGBs at almost any price for now. 10Y Greek government bonds are spiking over 400bps and have topped 15% for the first time since December 2012.

Because nothing of import happened this weekend. And if it did, the central banks "got it covered."

After breaking to 6 year lows in May, expectations were for a bounce in Dallas Fed's Manufacturing Outlook from -20.8 to -16. After missing expectations for six straight months, June's bounce to a -7.0 print is the biggest best since January 2012. This surge was all due to the current conditions shift as future hope for new orders and production tumbled. While most subindices rose, we note that CapEx fall once again to 3-month lows. This is the 6th consecutive negative (contractionary) print in a row for Dallas Fed - something not seen outside of a recession.

According to Germany's FAZ, "the Greek Court also estimates that the referendum will cost around 110 million euros, according to a well-informed policy analyst. Money that in view of the strapped Greek Checkout simply will not be there, even if the country saves a EUR 1.6 billion full-scale default to the International Monetary Fund this Tuesday."

While May Pending Home Sales are the highest in 9 years, the pace of growth is slowing as April's rise was revised lower to +2.7% (from 3.4%) and May prints +0.9% (slightly less than the 1.0% jump expected). The 0.9% rise is the slowest MoM rise since Dec 2014.

While the Greek Stock Market remains closed, ADRs trade around the world and National Bank of Greece - theoretically the strongest and least ELA-exposed (although still a disaster) - is trading down 24% in US markets on extremely heavy volume...

See! Greece doesn't matter... nor does China... nor does Puerto Rico...

European investors are increasing purchases of gold as Bloomberg reports, Greece’s turmoil boosts the appeal for an alternative to the euro. Demand from Greek customers for Sovereign gold coins was double the five-month average in June, the U.K. Royal Mint said in an e-mailed statement.As one Frankfurt-based bullion dealer noted, "most of our common gold coins are sold out, when people learned that the Greek banks will be closed, they started to think that it may not be such a bad idea to have some money in gold."