Equities Soar As Tsipras Said Ready To Accept Most Of Expired Bailout Offer, European Response MutedSubmitted by Tyler Durden on 07/01/2015 06:19 -0400
It's deja vu all over again.
Just hours after Greece became the first developed country to default to the IMF, as a result being expelled from its existing bailout program, a little before 5am CET news hit that Greek PM Tsipras was willing to concede to virtually all creditor demands, with a few exceptions. As the FT first reported, "Greek prime minister Alexis Tsipras will accept most of the bailout creditors’ conditions offered last weekend, but is still insisting on a handful of changes that could thwart a deal according to a letter he sent late on Tuesday night."
Chinese QE Calls Officially Begin: Bond Swap "Sucks Liquidity", "Contributes To Stock Slump", Broker ClaimsSubmitted by Tyler Durden on 06/30/2015 20:40 -0400
"Local debt issuance sucks liquidity, reduces banks’ capital to buy bonds, contributes to stock slump," Haitong Securities says. The only option, according to the firm, is outright debt monetization by the PBoC.
With massive strikes in France and now drivers shooting passengers, Uber is making headlines everywhere. While some might say any publicity is good publicity (and any disruption is good disruption), for the firm valued at $50 billion (with a stunning operating loss of $470 million and revenues of only $415 million) perhaps there is a limit to both press and disruption...
That an ETF can satisfy redemption with underlying bonds or shares, only raises the nightmare possibility of a disillusioned and uninformed public throwing in the towel once again after they receive thousands of individual odd lot pieces under such circumstances.
Anyone trading the Global X FTSE Greece 20 ETF should take a cue from Howard Marks and ask themselves the following question: can an ETF be more liquid than the assets it references?
Regulators across Europe are beginning to curtail trading in Greek assets as the country’s stock market remains closed and Greeks grapple with capital controls and prepare for a default to the IMF at midnight.
The Greek D-(efault) day has arrived, and with it so has quarter-end window dressing for many underwater hedge funds (recall the S&P is now red for the 2015) which means the rumor mill today will be off the charts. And sure enough, less than an hour ago, futures exploded higher as did the EURUSD, following another "report/rumor" of a last minute detente between Greece and the Troika when Greek Ekahtimerini said that "Tsipras is reconsidering the last-ditch offer made by European Commission President Jean-Claude Juncker, sources have told Kathimerini."
"Millions of people in ex-Communist Bulgaria, Macedonia, Albania, Serbia and Romania have deposits in banks owned by Greek lenders, putting this corner of south-eastern Europe in the frontline if there is contagion from the Greek crisis."
Late Friday night a solid blow was struck for sound money, free markets and limited government by a most unlikely force. Namely, the hard core statist and crypto-Marxist prime minister of Greece, Alexis Tsipras. He has now set in motion a cascade of disruption that will shake the corrupt status quo to its very foundations.
Having concluded last night that Puerto Rico debt is "unpayable," and that his government could not continue to borrow money to address budget deficits while asking its residents, already struggling with high rates of poverty and crime, to shoulder most of the burden through tax increases and pension cuts, Padilla confirmed tonight that: PUERTO RICO TO SEEK "NEGOTIATED MORATORIUM", 'YEARS' OF POSTPONEMENT IN DEBT PAYMENTS. Likening his state's situation to that of Detroit and New York City (though not Greece), Padilla concluded, the economic situation is "extremely difficult," which is odd because just a few years ago when they issued that bond - everything was awesome?
On Wall Street, a vital skill is the ability to sell something that you know is completely worthless. Goldman Sachs did it when it sold ABACUS 2007-AC1 to investors while hedge fund manager John Paulson was betting against it. Paulson paid Goldman $15 million to peddle this junk, which was a collateralized debt obligation that would make money when millions of people lost their homes. The SEC charged Goldman with fraud, and they eventually settled for $550 million. If you're an enterprising Wall Streeter who wants to make a name for himself without breaking the rules, you can operate a tantalizing scheme that investors can't resist. It's called Shubik's Dollar Auction.
It seems Goldman Sachs' conspiracy theory was right all along...
ECB'S COEURE SAYS ECB IS EVEN READY TO USE NEW INSTRUMENTS, WITHIN ITS MANDATE
GREECE COULD EXIT EURO, COEURE SAYS IN LES ECHOS INTERVIEW
This is exactly what The ECB wanted all along (and their leaders overlords) - all they needed was an 'excuse'. Or, in the parlance of Rahm Emanuel's times, "Let no Greek default crisis go to QE waste."
Because the central government is ultimately responsible for guaranteeing local government debt, and because yields on the new muni bonds are so close to those on treasurys, the newly issued local government bonds are really just treasury bonds, meaning that, in essence, the supply of Chinese government bonds is set to jump by CNY2 trillion in the coming months. If all of the local government debt ends up being refinanced, the end result will be the equivalent on CNY20 trillion in additional treasury supply.
Referendum is a CYA by Tsipras & Syriza, but a deal is by no means the end of anything...
Portuguese bond risk spiked a massive 49bps today. Early efforts to limit the contagion failed and Portuguese risk went out at its highs of the day and the biggest spike in risk since March 2008. Yes we know Draghi has a big bazooka but so does China... and how did that work out?