Creditors

Futures Flat With Greece In Spotlight; UBS Reveals Rigging Settlement; Inventory Surge Grows Japan GDP

The only remarkable macroeconomic news overnight was out of Japan where we got the Q1 GDP print of 2.4% coming in well above consensus of 1.6%, and higher than the 1.1% in Q4. Did it not snow in Japan this winter? Does Japan already used double, and maybe triple, "seasonally-adjusted" data? We don't know, but we do know that both Japan and Europe have grown far faster than the US in the first quarter.

Are They About To Confiscate Money From Bank Accounts In Greece Just Like They Did In Cyprus?

Do you remember what happened when Cyprus decided to defy the EU?  In the end, the entire banking system of the nation collapsed and money was confiscated from private bank accounts.  Well, the nation of Greece is now approaching a similar endgame.  At this point, the Greek government has not received any money from the EU or the IMF since August 2014As you can imagine, that means that Greek government accounts are just about bone dry.

Each Day Without Debt Deal Costs Greek Economy €22 Million And 613 Full-Time Jobs

It’s no secret that the protracted negotiations between Athens and its creditors are taking a toll on the Greek economy in general, on the Greek banking sector more specifically, and on Greek citizens most tragically. Now, thanks to a new report from the Hellenic Confederation of Commerce and Enterprises, we can quantify the daily economic toll of failed negotiations.

US Taxpayer On The Hook As Ukraine Prepares Moratorium On Debt Repayments, Increases Military Spending

It appears, thanks to the generous backing of US taxpayers, Ukraine is about to get its cake and eat it too. On the same day as Ukraine's government unleashes a bill enabling a moratorium on foreign debt repayments - implicitly meaning default "in case of an attack from dishonest lenders" - the defense ministry unveils a plan to increase military spending by 17 billion hryvnia this year statuing that will “make efforts to find possibilities to finance needs” to secure country’s defense. Ukraine bonds are tumbling.

Merkel Faces German Parliament "Revolt" On Greece

Angela Merkel is attempting to head off staunch opposition from lawmakers concerning further coddling of what they perceive to be a belligerent Greek government. As we reported earlier this month, the German Chancellor has been under pressure from members of her Christian Democratic bloc to essentially cut Greece loose. Now that pressure is building, leaving Merkel with the unenviable task of selling yet another Greek bailout to an increasingly hostile audience.

Frontrunning: May 19

  • China’s Record Capital Outflows Spark Financial Stability Fears (FT)
  • U.K. Inflation Falls Below Zero for First Time Since 1960 (BBG)
  • Islamic State Solidifies Foothold in Libya to Expand Reach (WSJ)
  • Judge sentences 11 Afghan police over lynching of woman in Kabul (Reuters)
  • The $18 Trillion Global Economic Boost If Everything Went Right (BBG)
  • Eurozone Prices Confirmed Flat Year-on-Year in April, Core Inflation Inches Higher (Reuters)
  • Greek Finances to Stagger On Longer Than You Think (BBG)
  • Athens sees EU deal soon, Greeks' approval of government stance dwindles (Reuters)

Stocks, Bonds Spike After ECB Pledge To Accelerate QE Ahead Of "Slow Season"

Less than a week ago, fresh from the aftermath of the recent dramatic six-sigma move in German Bunds, one of Europe's largest banks openly lamented that so far the ECB's QE had done absolutely nothing: "two months of QE for nothing." And lo and behold, as if on demand, overnight the ECB confirmed it had heard SocGen's lament when just before the European market open, ECB executive board member Benoit Coeure delivered a speech at the Brevan Howard Centre for Financial Analysis (appropriately named after a hedge fund) at Imperial College Business School (not to be confused with the July 26, 2012 Mario Draghi "whatever it takes" speech which also took place in London) in which he said that the ECB intends to "frontload" i.e., increase, its purchases of euro-area assets in May and June ahead of an expected low-liquidity period in the summer.

Why Did The IMF Leak The Greek Default Details?

Whenever secret or confidential information or documents are leaked to the press, the first question should always be who leaked it and why. That’s often more important than the contents of what has been leaked. And since there’s been a lot of hullabaloo about a leaked document the past two days, here’s a closer look.

Shape Of Greek Endgame Emerges: IMF Discussed "Cyprus-Like" Plan After Tsipras Warned Of Looming Default

The IMF discussed a "Cyrpus-like" take it or leave it solution for Greece last week, FT reports. With the countdown to outright insolvency down to two weeks, PM Tsipras will meet EU leaders in Latvia on Thursday to make one last push for a last minute deal. Meanwhile, the fate of the Greek banking sector hangs in the balance as the ECB has come under fire for the monetary financing of the Greek government. 

EURUSD & Peripheral Bonds Tumble As Greek Fears Re-Emerge

The exuberant bounce of last week's IMF default/IMF payment workaround is fading fast as peripheral European bonds and the euro are being sold aggressively this morning, after headlines continue to suggest Greek bank collateral is dropping faster than the pressure in Patriot's footballs. Most notably, bunds are eeerily stable - almost as if some central planner figured out German bonds were the world's flashing red indicator and decided to suppress volatility some more.

Frontrunning: May 18

  • Tsipras Endgame Nears as Greek Bank Collateral Evaporates (BBG)
  • Shi'ite forces ordered to deploy after fall of Iraqi city (Reuters)
  • Ratings agency Fitch to downgrade many European banks (Reuters)
  • Bubble Blowing to Continue So Long as Yellen Isn’t Raising Rates (BBG)
  • Greece's Debt Battle Exposes Deeper Eurozone Flaws (WSJ)
  • Obama to set new limits on police use of military equipment (Reuters)
  • China April home prices fuel hopes of bottoming out, but long road to recovery (Reuters)
  • Hedge Funds Close Doors, Facing Low Returns and Investor Scrutiny (NYT)
  • ASIC's Greg Medcraft 'quite worried' about Sydney, Melbourne house prices (Fin Review)

Gold Jumps Despite Stronger Dollar As Grexit Gets Ever Nearer, Futures Flat

With equities having long ago stopped reflecting fundamentals, and certainly the Eurozone's ever more dire newsflow where any day could be Greece's last in the doomed monetary union, it was up to gold to reflect that headlines out of Athens are going from bad to worse, with Bloomberg reporting that not only are Greek banks running low on collateral, both for ELA and any other purposes, that Greece would have no choice but to leave the Euro upon a default and that, as reported previously, Greece would not have made its May 12 payment had it not been for using the IMF's own reserves as a source of funding and that the IMF now sees June 5 as Greece's ever more fluid D-day. As a result gold jumped above $1230 overnight, a level last seen in February even as the Dollar index was higher by 0.5% at last check thanks to a drop in the EUR and the JPY.

Guest Post: Why Syriza Will Blink

Once again, Greece seems to have slipped the financial noose. This brinkmanship is no accident. Since coming to power in January, the Greek government, led by Prime Minister Alexis Tsipras’s Syriza party, has believed that the threat of default – and thus of a financial crisis that might break up the euro – provides negotiating leverage to offset Greece’s lack of economic and political power. But their calculation is based on a false premise.

Greece Will Default On June 5 Without Deal, IMF Leaks

The ECB warns Athens that Greece is rapidly approaching the "end game", as Tsipras sticks to 'red line' rhetoric. Meanwhile, FinMin Varoufakis claims the country will pay wages and pensions this month, but a leaked IMF memo indicates Greece will default on June 5 if it does not strike a deal with creditors by the end of the month.