On Thursday, Ukraine struck a restructuring agreement on some $18 billion in Eurobonds with a group of creditors headed by Franklin Templeton. That's the good news. The bad news is that Ukraine also owes $3 billion to Vladimir Putin, and Vladimir Putin wants it back. All of it.
Overnight's start attraction was as usual China's stock market, where trading was generally less dramatic than Thursday's furious last hour engineered ramp, as stocks rose modestly off the open only to see a bout of buying throughout the entire afternoon session, closing 4.8% higher, and bringing the gain over the last two days to over 10%. This happens as China dumped a boatload of US paper to push the CNY higher the most since March, strengthening from 6.4053 to 6.3986, even as Chinese industrial profits tumbled 2.9% from last year: this in a country that still represents its GDP is rising by 7%. Expect much more Yuan devaluation in the coming weeks.
News That Matters
War-torn Ukraine has reportedly reached a restructuring deal with a group of creditors headed by Franklin Templeton, according to the country’s finance minister Natalie Jaresko. The terms of the agreement call for a 20% writedown and a reprofiling that includes a maturity extension of four years and an across-the-board 7.75% coupon. Vladimir Putin isn't interested.
Aggressive Chinese Intervention Prevents Another Rout, Sends Stocks Soaring 5% In Last Trading Hour; US Futures JumpSubmitted by Tyler Durden on 08/27/2015 06:48 -0400
After a 5 day tumbling streak, which saw Chinese stock plunge well over 20% and 17% in just the first three days of this week, overnight the Shanghai Composite was hanging by a thread (and threat) until the last hour of trading. In fact, this is what the SHCOMP looked like until the very end: Up 2.6%, up 1.2%, up 2.8%, up 0.6%, up 2%... down 0.2%. And then the cavalry came in: "Heavyweight stocks like banks and insurance companies helped pull up the index, and it’s possibly China Securities Finance entering the market again to shore up stocks," Central China Sec. strategist Zhang Gang told Bloomberg by phone. Net result: the Composite, having been red just shortly before the close, soared higher by 156 points or 5.4%, showing the US stock market just how it's down.
"Greece’s state insurance funds are resorting to external loans to cover their needs as fears grow that the measures of the third bailout will not be enough to cover the rest of 2015’s liquidity needs."
China 2015 = U.S. 2008
"We conclude that, under current circumstances, it is only a matter of time until Brazil loses its investment grade status."
"I have learnt from history that it is very hard working out what the trigger is. In 2008, it was the collapse of Lehman Brothers that triggered a credit crunch. Now it could be a major event in Turkey or a default of the Brazilian oil company Petrobras or some event in Malaysia. But if I have to pick one I would say it is Turkey introducing capital controls. Such controls will mean that Turkey will not pay back principals amounting to 400 Bio. $ and the interests on it." - Russell Napier
Members of Syriza's Left Coalition, led by Panagiotis Lafazanis who once plotted to storm the Greek mint, seize the country’s reserves, and arrest central bank governor Yannis Stournaras, have broken away and formed their own political party which they say will support Grexit and stand firm in the face of German "blackmail."
- No End in Sight for Oil Glut (WSJ)
- Dozens of Clinton emails were classified from the start, U.S. rules suggest (Reuters)
- China August Manufacturing Activity Hits Lowest Level Since 2009 (WSJ)
- German Manufacturing Strengthens as Economy Shifts Up a Gear (BBG)
- Israel responds to rocket attack with protest and air strikes (FT)
- ASX carnage: 2015 fast becoming a year to forget (Canberra Times)
- Hong Kong Stocks Enter Bear Market After Falling From April Peak (BBG)
Update: GREEK PM TO HAND IN RESIGNATION TO PRESIDENT LATER ON THURSDAY -GOVT OFFICIALS
"Greek state broadcaster ERT is reporting that the embattled prime minister will announce the vote later today. The PM has been meeting with government officials this afternoon and could resign from office having called the vote. September 13 and 20 have been touted as possible dates."
FOMC Minutes Leaked Early After Embargo Broken, Fed Warns Risk To GDP Forecast "Tilted To The Downside"Submitted by Tyler Durden on 08/19/2015 13:41 -0400
Seconds ago, someone accidentally (we hope) pulled a Janet Yellen as the following just came across the wires
FOMC MINUTES: MEMB 'GENERALLY AGREED' MORE INFO NEEDED TO HIKE
FOMC MINUTES: NO TIP TOWARDS SEPT LIFTOFF, DOESN'T RULE IT OUT
But the bottom line is that the Fed just admitted things are going from bad to worse: "The risks to the forecast for real GDP and inflation were seen as tilted to the downside." The question now is what comes first: QE4 or the first rate hike in nearly a decade.
This is precisely what has happened in Spain during the 2012 banking crisis. Since then it’s also happened in Cyprus, Greece…and it is now perfectly legal in the US courtesy of a clause in the Dodd-Frank bill.
Earlier today an EU official was reported as saying that Greek banks will exclude all depositors from losses until the EU’s Bank Recovery and Resolution Directive rules go into effect on Jan. 1, 2016. Needless to say this was vastly different to Dijsselbloem's blanket guarantee statement from Friday, and suggests that depositors will indeed be bailed-in, but not right now: only after BRRD rules come in place on the first day of 2016.