As Hope Lifts Athens Stocks, German Vice Chancelleor Warns Of "Gigantic Consequences" If Greek Talks Fail

Despite all the reassurances by various leaders that any Grexit or Greek bankruptcy would be 'contained', Sigmar Gabriel - vice-chancellor and economic minister of Germany's SPD party - unleashed some uncomfortable truthiness yesterday. With Greek stocks up almost 5% today as hope springs eternal, Gabriel warned of nothing less than “gigantic consequences” for Europe in case of a Greek bankruptcy.

Are Stocks Due For A Big Move?

With last month’s failed (so far) breakout in the U.S. equity market, stocks are relegated once again to range-bound status. Essentially the market has gone nowhere since the beginning of the year and, by some measures, 2015 has been the quietest start to a year in over a century. One characteristic of the stagnant action has been a lack of out-sized daily moves in the market, up or down. This is the index’s longest streak without a 2% day since the one that ended on June 1, 2012 at…111 days.

Trade Deficit Shrinks 19% In April Driven By Drop In Imports

After March's six-year high disastrous kitchen-sink trade deficit revised down to -$51.4 billion, April saw a bounce back to just $40.9 billion deficit (considerably lower deficit than the $44 billion expectation). The imporvment was driven by a big shift in imports - dropping 3.3% (after a 6.5% jump in March) as exports rose just 1% (which is still the most in 2015).

ADP Employment Bounces, Still Weaker Than All Of 2014, 3rd Monthly Decline In Manufacturing Jobs

Having fallen for 5 straight months (and missed expectations for the last 4), much to the 'recovery meme' chagrin of Mark Zandi and his fellow extrapolators, May's 201k print (against expectations of 200k) was a modest bounce that will be seen as heralding the post-weather recovery. At 201k, ADP job change remains below every month of 2014 aside from January. Led by small business - which gained 122k of the 201k jobs, we note that large firms 500-999 employees actually saw jobs being shed. Furthermore, Service-providing jobs dominated with 192 of 201k jobs coming from that segment of the economy and just 9k growth in goods producing with manufacturing dropping 5k. Zandi's helpful remarks provide the narrative, "I think the economy is doing much better than the data shows and when it is all revised will show strong growth." Brilliant.

Greece Admits It Will Not Make IMF Payment On Friday, No Deal Expected Wednesday

"Greece will not make a June 5 repayment to the International Monetary Fund if there is no prospect of an aid-for-reforms deal with its international creditors soon," Reuters reports. PM Alexis Tsipras will meet with European Commission President Jean-Claude Juncker Wednesday evening, but no deal is expected today.

ECB Keeps Rates Unchanged Ahead Of Draghi Press Conference

While there will be far more focus on Mario Draghi's press conference in 45 minutes, where there is no expectation of another glitter bomb this time due to much more stringent press screening measures, the ECB just announced that, as expected, it is keeping it three key rates unchanged.

Frontrunning: June 3

  • Obama signs bill reforming surveillance program (Reuters)
  • Tsipras to meet Juncker in Brussels for talks on agreement (AFP)
  • Spot the irony: OECD cuts global growth forecast, says recovery taking hold (Reuters)
  • The Secret Money Behind Vladimir Putin's War Machine (BBG)
  • Companies' Borrowing Spree Darkens Stock Market Future (BBG)
  • How OPEC Hurt Big Oil (WSJ)
  • What's OPEC Going to Do With Iran's Million Barrels a Day? (BBG)
  • Draghi’s Europe Looks Healthiest for Years Despite Greece (BBG)
  • Bund yields inch higher, euro holds ahead of ECB (Reuters)

Futures Rise, Bund Rout Pauses On "Cautious Optimism" Ahead Of Greek Endgame

With the Greek IMF payment just 48 hours away, and Europe having submitted its best and final offer to Greece in a battle of "deal proposals", today Greek PM Tsipras will meet with European Commission President Juncker to discuss the recently submitted reform proposals by the Greek premier. However, a Greek government spokesman says that Greek PM Tsipras will not meet Eurogroup's Dijsselbloem despite several reports suggesting that they would do so later today. Last night it was reported that the EU, ECB, IMF agreed on terms for a cash-for-reform plan to be presented to Greece. However, a senior EU official has said that they are concerned that the stringent measures of the proposal could be met with rejection by Greece.

Chinese Stocks Stumble As Hanergy Debt Debacle Looms Over All The 500%-Club

If one sentence sums up the farce that the hyper-speculative ponzifest that is the 500% club in China it is "Hanergy Group was basically using the listed company as a means to produce collateral in the form of shares that it could then pledge to secure financing." While the stock has been cut in half, lenders remain mired in opacity as they try to figure out, as Bloomberg reports, which of Chinese billionaire Li Hejun's many creditors risk losing every yuan they put into his company? Shenzhen and CHINEXT indices are lower out of the gate today after a 14% and 18% surge in the last 2 days as a group of 11 lenders (ranging from large banks to small asset managers) ask for a meeting to discuss various loans with various Hanergy entities... and whatever they find in Hanergy is bound to have been repeated manifold across China's manic markets.

Fed Mouthpiece Jon Hilsenrath Furious "Stingy" US Consumers Refuse To Buy The "Recovery" Propaganda

Dear American Consumer,

This is The Wall Street Journal. We’re writing to ask if something is bothering you. The sun shined in April and you didn’t spend much money. You have been saving more too. You socked away 5.6% of your income in April after taxes, even more than in March. This saving is not like you. What’s up?...  The Federal Reserve is counting on you too. Fed officials want to start raising the cost of your borrowing because they worry they’ve been giving you a free ride for too long with zero interest rates. We listen to Fed officials all of the time here at The Wall Street Journal, and they just can’t figure you out.

Sounding The Alarm On The Country's Vulnerability To An EMP

Last year, Elliott Management's Paul Singer highlighted "one risk that stands way above the rest in terms of the scope of potential damage adjusted for the likelihood of occurrence" - an electromagnetic pulse (EMP). As Michael Snyder previously details, our entire way of life can be ended in a single day.  And it wouldn’t even take a nuclear war to do it.  All it would take for a rogue nation or terror organization to bring us to our knees is the explosion of a couple well-placed nuclear devices high up in our atmosphere.  The resulting electromagnetic pulses would fry electronics from coast to coast, and, as PeakProsperity.com's Chris Martenson explains, the country is extremely vulnerable to an EMP...

Ron Paul Fears The CIA Is The Biggest Threat To Americans' Liberty

As the Senate scrambled to pass the USA Freedom Act this evening, reinstating the agency’s ability to spy on Americans, Ron Paul points out that US intelligence organizations have always – and will continue – to operate outside the law; with Daniel McAdams noting the CIA "is sort of the President’s own Praetorian Guard." As Sputnik News reports, before Americans applaud a minor step toward transparency, Paul warns that they should recognize the corrosive nature of the CIA, "They are a secret government," operating way above the law, and are "way out of control."

The Defaults Continue In China As Duck Producer Sinks

Over the past several months we’ve seen at least three examples of Chinese defaults including Baoding Tianwei Group, a subsidiary of state-owned parent China South Industries. This suggests Beijing will begin to take a more hands-off approach when it comes to propping up borrowers. The latest example is a profitable duck processing company, which FT says has defaulted on its debts after banks refused to roll over its loans.

"If It Looks Like A Duck" - The Man In The Moon: Part 2

During “normal times” – an economic growth phase accompanied or generated by rising systemic leverage – central banks have incentive to promote nominal growth and inflation, which make banking systems profitable and their free-spending political overseers happy. In such times, commercial banks have fiduciary responsibilities to shareholders to constantly increase their market values, which they do by expanding their balance sheets.  Now that economies are highly leveraged, extinguishing debt would require banks to reduce the sizes of their loan books, which would shrink their market values. Thus, it seems economic policy makers never have incentive to promote debt extinguishment in the banking system, regardless of economic conditions or prospects.

The Future Of India's Monetary Policy Is Now "Monsoon Dependent"

As it turns out it is not just a US "thing" to blame the weather. Enter the Bank of India, which overnight cut its benchmark rate from 7.5% to 7.25%, as had been largely expected, taking India's interest rate to the lowest since September 2013. The punchline, however, was when RBI's governor Raghuram Rajan gave his outlook for the possibility of future rate cuts, saying he would have to wait to assess monsoon rains before acting again