Archive - Jul 16, 2015 - Story

When we noted that Greek banks would re-open Monday - thanks to gracious handout from The ECB, we questioned how much faith depositors would have? It appears, given the 4% tumble in National Bank of Greece ADRs that, judging by investors, that 'faith' won't last very long...

Post-Greek "Deal", stocks have soared in an incessant volumeless ramp. At the same time, and with heavy volume, the long-bond has been aggressively bid...

Views on volatility are often only within recent context, causing sometimes influential advisers and investment banks to misguidedly extrapolate correction or premature rebound calls with far greater frequency then they actually occur (excessive false positives).  In this article we see everything through a pertinent wider lens.  We focus on how and when volatility moves from one level, to another. 

It was less than three weeks ago that, in the aftermath of the surprising announcement of the Greek referendum and the even more surprising cap on the ECB's now clearly conditional ELA, the world was greeted to massive lines of Greeks waiting at ATMs where they were allowed to withdraw only €60 per day. Following the Greek capitulation, whose sole directive was recovering access to locked up bank funds, hopes were that Greek banks would promptly reopen, and now, according to a Greek senior banker cited by Reuters we know just when that will happen: Monday.

Having surged on Tuesday when the Iran "deal" was confirmed and tumbled yesterday despite inventory draws and production decreases, WTI crude is re-slumping back to a $50 handle this morning as traders cite more Iran concerns (flattening the curve) and a Genscape report that indicates inventory builds at Cushing once again...

There is nothing to fear but freed itself... With VXX - the VIX ETF - at record lows, the VIX term structure has swung from backwardated last week to extremely steep with VIX hitting an 11 handle this morning. This is the biggest weekly drop in fear since January 2013...

After June's hope-strewn dead-cat-bounce, Philly Fed has plunged back to the lows of the year. Printing 5.7, missing expectations of 12.0, this is the biggest miss since January. It appears the weakness in Q1 (and Q2) and now Q3 was more than just weather... or port closures... as the employment index plunged to its lowest since January.

When it comes to the entire Greek financial system, the ECB is now in full control with its "support" of banks at least €10 billion more than total Greek deposits.

Greece is "fixed" - so no need for safe havens, alternative currencies, or any hedges...

"We will now see in the negotiations whether there is even a way to get to a new programme taking into account (Greece's) financing needs, which have risen incredibly. [Grexit] would perhaps be the better way for Greece."

Despite earlier commenting that Greek debt sustainability is hard without a write off, German FinMin Schaeuble just told German lawmakers bluntly that there will be no Greek debt cut. What is problematic for Merkel and her minions is that Mario Draghi just confirmed what The IMF has been 'secretly' leaking - that it is "uncontroversial that Greek debt relief is necessary." As this confusion reigns, The Eurogroup has issued a statement "welcoming the adoption by the Greek parliament" of the measures imposed upon the Greek people to drive them further into depression.

For the FOMC to reach its mandate of full employment they boost stock prices which then creates employment in bubble jobs. When people feel rich, they spend more money on the low quality bubble jobs, and hence employment reacts accordingly. This is obviously entirely unsustainable as spending paid for by feelings manipulated by the FOMC accounts to nothing more than pure capital consumption, and the money flow will disappear as soon as the FOMC tighten the screw and the good feeling disappears along with the stock market gains.

The biggest unknown in today's ECB Q&A was whether Mario Draghi would agree to raise the Greek ELA, and moments ago we go the answer:

• DRAGHI SAYS ECB RAISED GREEK EMERGENCY BANK AID THURSDAY
• DRAGHI SAYS CONDITIONS TO INCREASE ELA HAVE BEEN RESTORED
• DRAGHI SAYS ECB ACTS ON ASSUMPTION THAT GREECE IS EURO MEMBER

Specifically, Draghi said that "The decision to raise ELA again today is symmetrical to the decision we took a few days ago to freeze ELA."

Following last week's spike in initial jobless claims, this week saw a modest pull back to 281k (slightly better than the 285k expectations) but hovering at the average for the year, notably confirming that post-QE3 we have seen the improving trend in claims cease. The smoother 4-week average rose to 282k - the highest in almost 3 months.