Archive - Jul 7, 2015 - Story

A day of diplomatic blow-ups in Europe just had a more literal, if perhaps more tragic echo, in the US when minutes ago in a scene straight out of Breaking Bad took place in real life when an F-16 fighter jet is said to have crashed into a civillian Cessna airplane, above Highway 52, near Cooper River in Berkely County, 30 miles north of Charleston, South Carolina.

Among all the mindless blather served up by the talking heads of bubblevision is the recurrent claim that “its all priced-in”. That is, there is no danger of a serious market correction because anything which might imply trouble ahead—-such as weak domestic growth, stalling world trade or Grexit——is already embodied in stock market prices. Yep, those soaring averages are already fully risk-adjusted! Nothing to see here, it will be argued. Today’s plunge is just another opportunity for those who get it to “buy-the-dip”. And they might well be right in the very short-run. But this time the outbreak of volatility is different. This time the dip buyers will be carried out on their shields.

Greek Prime Minister Alexis Tsipras spoke to U.S. President Barack Obama by telephone on Tuesday shortly before an emergency euro zone summit and briefed him on Greece's request for a rescue loan, a Greek government official said. The official said Obama had voiced strong U.S. hopes for a successful outcome to the negotiations. The United States has said it wants an early solution to Greece's debt crisis that keeps Athens in the European currency area.

Does this look contained to you?

With near record shorts in Treasuries once again, yields are collapsing as both a flight to safety and short squeeze send 30Y back below 3.00% for the first time in a month...

"Bottom line: our early flow has been entirely one way: risk-off. Starting to get more much quiet now but have seen zero attempts to buy the dip or fade this move"

In one of the shorter Eurogroup meetings in recent history, the Greeks came bearing nothing and today's "final, final, final" "last chance for a deal" conference ended just after 2 hours in. The Greeks may come back tomorrow bearing a new proposal but at this point it is rather clear what the endgame is. In a few moments expect Diesel-BOOM to explain why nothing got done again, and why it's on the Greeks if the Eurozone dominoes start falling next.

The last time the S&P 500 dropped below its 200-day moving average, The Fed's Jim Bullard rapidly stepped in to save the world... who will save the world this time?

After hiking the haircuts on Greek banks' ELA collateral, the ECB decided it was time to apprise the market of its "risk management" procedures. The result: an epic display of central banker hypocrisy.

It appears that 'hope' for a deal (again) was entirely misplaced (again). Yesterday's 'containement' was all EURJPY-driven as BoJ and ECB held hands to maintain markets... it appears they have stopped for now...

One of these definitely does not belong with the others...

Who's next?

For every loser there is a winner, and in the case of Greece and its tragedy, just as millions are about to lose everything, a few not only made billions but quietly, under the guise of "sovereign bailouts" transferred their entire risk onto the taxpaying public.

At this point it is unclear who wants Grexit more: the ECB or Greece.

It appears the China-related margin calls are spreading... just as we warned.