Archive - Jul 17, 2015 - Story

Just today, the value of Google has increased by more than the market cap of 415 S&P 500 companies!

China’s central bank is officially in the business of financing leveraged stock buying and as Bloomberg reports, the country's state-run margin lender now has the capacity to pump the equivalent of five Greek bailouts into leveraged stock trades. 

Since January's exuberant peak, UMich consumer sentiment has drifted lower. Expectations for July's preliminary data was 96.0 but the 93.3 print is the biggest miss since 2006. Both current and future "hope" conditions dropped markedlywith details showing American sless certain about retirement, less confident about income growth outpacing inflation, and businesses considerably less confident.

The timing could not be worse from a visual perspective but within minutes of the Eurogroup confirming that they approved the €7.16 billion bridge loan (which will merely be recycled back to The ECB to ensure the appearance of normalcy continues), local reports that the Greek finance ministry says banks will not re-open on Monday (as promised). Welcome to the new normal Europe... where the elites get their mony and the people... not so much.

In her euro-hegemonic role Germany failed to properly handle the Greek Crisis. What economics have been whispering among themselves after the scandalous Brussels Agreement of July 13th is now on the public discussion. One of IMF’s former European bailouts official, Ashoka Mody made it very clear in his article on Bloomberg on Friday morning: It’s Germany not Greece that has to leave the eurozone.

A conventional housing recovery in the US is now dead: the builders have spoken and what the next generation wants is to rent, not to buiy.

Following "good" Housing data, "bad" CPI data, and "ugly" wage growth data, someone decided to dump $1.4 billion notional in gold futures markets (sending the price to 2010 levels), sending silver plunging also...

Following a small dip in May CPI ex Food & Energy YoY, June saw a rise of 1.8% (as expected), hovering near the highest since October. Headline CPI continues to trot along the flatline (printing +0.1% YoY as expected) enabling monetary policy to run amock hyperinflating financial assets whicl standards of living continue to drop. However, all of this pales when compared to the continuing slide in real wage growth which has slowed almost every month since its peak in January and now stands at 7 month lows. Not what the 'narrative' wants to see...

The coming few months will prove challenging for the sector, and some small and medium U.S. producers may start missing their debt repayments or even file for bankruptcy. Quicksilver Resources and American Eagle Energy are two of the six U.S. based companies that have filed for bankruptcy in 2015 so far. Sabine Oil and Gas Corp. is the latest, and the biggest, U.S. producer to file for bankruptcy so far. Even mergers and acquisitions have slowed down considerably for the U.S. oil and gas industry in 2015. If the present trend persists, companies will have no choice but to cut their workforces even further to remain competitive and reduce their rising overheads. If oil prices remain in the range of $50 per barrel for longer than expected, even big operators such as Exxon Mobil, Chevron and ConocoPhillips (who have so far not made any major layoffs) could start downsizing their workforce.

Following Wednesday's Greek vote approving the draconian terms of the Third Greek bailout, the next biggest hurdle for the implementation of another round of Greek aid was Germany's parliamentary vote whether to endorse the terms cobbled together over last weekend. Moments ago it did just that in a vote which had been widely expected to pass without complications, when 439 members of the lower house of parliament voted in favor Berlin to starting negotiations on a third bailout program for Greece, 119 voted against and 40 abstained. A total of 598 votes were cast.

As lawmakers across Europe debate bridge financing and a third Greek bailout, IMF chief Christine Lagarde is out reiterating her stance on Greece's debt sustainability. Although Lagarde insists the IMF will not participate without some manner of debt relief for the Greeks, it now appears she is resigned to the fact that Germany will never agree to an upfront haircut.

• Back Greek talks or face chaos, Merkel tells German lawmakers (Reuters)
• Fear of the Unknown Binds a Greek Deal With Few Believers (WSJ)
• Grexit Still on the Table Even With EU’s Latest Band-Aid (BBG)
• Donald Tusk warns of extremist political contagion (FT)
• Germany, Not Greece, Should Exit the Euro (BBG)
• Sabine Files Bankruptcy in New York as Oil Prices Fall (BBG)
• Markets Bow to Central Bankers as Bonds Rise, Pound Strengthens (BBG)

After weeks of overnight turbulence following every twist and turn in the Greek drama, this morning has seen a scarcity of mostly gap up (or NYSE-breakding "down") moves, and S&P500 futures are unchanged as of this moment however the Nasdaq is looking set for another record high at the open after last night's better than expected GOOG results which sent the stop higher by 11% of over $40 billion in market cap. We expect this not to last very long as the traditional no volume, USDJPY-levitation driven buying of ES will surely resume once US algos wake up and launch the self-trading spoof programs. More importantly: a red close on Friday is not exactly permitted by the central planners.