Archive - Jul 15, 2015 - Story

The EU Commission has submitted a formal request to tap the mothballed EFSM for a bridge loan to Greece. The UK may look to block the proposal, but fortunately, Europe has a creative "soultion". 

• Tsipras Braves Parliament on Aid as Greek Outlook Worsens (BBG)
• European markets rise before Yellen speech, Greek vote (Reuters)
• China’s Growth Beats Economists’ Forecast as Stimulus Kicks In (BBG)
• China stocks drop again, positive data shrugged off (Reuters)
• Yellen intensifies Republican outreach amid Fed probe, Senate bill (Reuters)
• Iran deal holds both promise and peril for Hillary Clinton (Reuters)
• Iranians Party Into the Night as Khamenei Backs Accord (BBG)

If yesterday's JPM results were largely a story of contracting trading revenues offset by a decline in expenses, then in many ways today's Bank of America results mimicked what Jamie Dimon did in the second quarter. Moments ago BofA reported that in a quarter in which it repurchased $775 million in stock, it generated $5.3 billion in net income, or $0.45 per share, above the $0.36 declining consensus estimate as a result of a $1.9 billion drop in non-interest expenses, even as FICC trading revenue tumbled just as it did for JPM and Jefferies, sliding 9% Y/Y, offset by a rise in equity trading courtesy of China.

The high debt to GDP and the gross financing needs resulting from this analysis point to serious concerns regarding the sustainability of Greece's public debt. A very substantial re-profiling, such as a long extension of maturities of existing and new loans, interest deferral, and financing at AAA rates would allow to cater for these concerns from a gross financing requirements perspective, though they would still leave Greece with very high debt-to-GDP levels for an extended period.

Just when the Chinese plunge protection team (and "arrest shortie" task force) seemed to be finally getting "malicious selling" under control, first we saw a crack yesterday when the composite broke the surge of the past three days as a result of yet another spike in margin debt funded purchases, but it was last night's reminder that "good news is bad news" that really confused the stock trading farmers and grandmas, which goalseeked Chinese economic "data" beat across the board, with Q2 GDP coming solidly above expectations at 7.0%, and retail sales and industrial production both beating, but in the process raising doubts that the PBOC will continue supporting stocks.