It has been a bad week for the Greek finance minister: first, under pressure from Europe, Tsipras was forced to sideline the "combatied" Varoufakis from future Troika negotiations, then his wife had to protect him from an attack by "young anarchists", and now - adding insult to injury - an anonymous EU source said that, without Varoufakis present, Greece and its creditors have made "significant progress" and that there were "encouraging" signs from meetings over the weekend. Meanwhile, the maverick economist's 90-year-old father jumped to his son's defence, claiming his European counterparts were jealous of him.
Facing a pensioner rebellion and a looming payment due to the IMF, Greece’s back is now truly against the wall. As Handelsblatt reports, even if a deal were reached with creditors this weekend, it may now be logistically impossible for Greece to make a €780 million payment scheduled for May 12. Oh well, there's always war reparations...
"Too Big To Fail Is A License For Recklessness" America's Banking System Is A "Fragile House Of Cards"Submitted by Tyler Durden on 05/01/2015 17:45 -0400
"Too Big to Fail is a license for recklessness. These institutions defy notions of fairness, accountability, and responsibility... They benefit from the upside and expose the rest of us to the downside of their decisions. These banks are too powerful politically as well... Effectively we're hostages because their failure would be so harmful. They're likely to be bailed out if their risks don't turn out well and the largest financial firms in America can hide an enormous amount of risk in derivatives which creates a house of cards — a very fragile system."
Earlier this week, Greek pensioners discovered that a "technical glitch" caused the delay of some €2 hundred million in pension payments. Apparently, Athens ran out of money. Exhausted, exasperated, and short on cash, restless retirees have now taken to storming pension fund meetings and forming lines at banks.
- Record month ends in pain as biotech, small-caps, Apple tumble (BBG)
- Japan inflation rises for first time in nearly a year (WSJ)
- US Navy starts to accompany ships in strait where Iran seized cargo carrier (WSJ)
- Russia may be readying for new Ukraine offensive: NATO commander (Reuters)
- Big banks use loophole to avoid ban (WSJ)
- China April official PMI shows factories struggling to grow (Reuters)
- CME suspends traders for alleged Sarao-like manipulation (BBG)
One of the biggest stories of the week has been the great German Bund route as everyone’s new favorite short has sold-off hard on what HSBC calls a “cascade of small events [which has] created a large splash in a structurally ever-thinner mkt, similar to UST flash crash of Oct. 15.” Amid the cacophony of explanations emanating from every credit and rates strategist on Wall Street, BNP is out with a simple suggestion: it’s all about the waxing and waning of supply.
- Marchers protest police violence in Baltimore, New York (Reuters)
- Majority of Financial Pros Now Say Greece Is Headed for Euro Exit (BBG)
- Greece signals concessions in crunch talks with lenders (Reuters)
- Greece, Euro-Area Partners Target Deal by Sunday (BBG)
- Iglesias Says EU Risking Right-Wing Backlash With Greek Pressure (BBG)
- Student-Loan Surge Undercuts Millennials’ Place in U.S. Economy (BBG)
- Majors’ Quandary: Why Drill for Oil When They Can Buy Somebody Else’s? (WSJ)
The biggest overnight story was neither out of China, where despite the ridiculous surge in new account openings and margin debt the SHCOMP dipped 08%, or out of Japan, where the Nikkei dropped 2.7%, the biggest drop in months, after the BOJ disappointed some by not monetizing more than 100% of net issuance and keeping QE unchanged, but Europe where for the second day in a row there was a furious selloff of Bunds at the open of trading, which briefly sent the yield on the 10Y to 0.38% (it was 0.6% two weeks ago), in turn sending the EURUSD soaring by almost 200 pips to a two month high of 1.1250, and weighing on US equity futures, before retracing some of the losses.
Greek deposits fall €2.5 billion in March to the lowest level since 2005 as the cash crunch intensifies ahead of looming payments to government employees and the IMF. Meanwhile, Deutsche Bank sees a referendum on a "reluctant" reform agreement as the most likely "solution" (although most Greeks reportedly oppose such a step) but says the chances of a less favorable outcome are still at least 30%.
- Police enforce curfew in Baltimore, disperse protesters (Reuters)
- Saudi king resets succession to cope with turbulent times (Reuters)
- Euro-Area Bank Lending Increases for First Time Since 2012 (BBG)
- Riksbank Increases Bond Purchases as Key Rate Left Unchanged (BBG)
- Greek Banks Get More Funds as ECB Weighs Collateral Discount (BBG)
- Greek bank deposits drop 1.36 pct in March for sixth month in a row (Reuters)
- Sarao Remains in Jail After Failing to Pay Bail at Hearing (BBG)
- Maryland Governor Calls in National Guard to Control Baltimore Riots (BBG)
- Fed Seen Delaying Liftoff to September to Push Down Unemployment (BBG)
- Nepal PM says toll could rise to 10,000 (Reuters)
- China Readies Fresh Easing to Tackle Specter of Debt (WSJ)
- ‘Damned Lies’ Threaten to Overshadow U.K. GDP in Election Fight (BBG)
- Uncertainty Over Impact of a Default by Greece (NYT)
- Why the Cost of Hedging European Banks Stocks Has Soared (BBG)
- Carinthia cash crunch gives Austria its own mini-Greece (Reuters)
Following yesterday's early MNI rumor that a Chinese QE is being "considered" and which sent the Shanghai Composite surging 3% and led to an initial boost in US stock futures, overnight the PBOC scrambled to once again deny such speculation. Of course, going full "cold Turkey" on Chinese stimulus would be too much for the market to handle, so in a piece by the WSJ also released overnight, the author said the PBOC would pivot from outright QE to mere LTRO, which is also not new and was reported over a week ago here in "China Floats QE Trial Balloon, PBoC May Launch LTROs." In any event, for now at least, Asian stocks are not happy despite Apple's latest blockbuster results, and neither is Europe, with the Stoxx 600 down 1%, and even the E-mini is hugging 2100 unable to levitate on any imminent central bank intervention.
According to Bloomberg, the Greek government is €400 million short of the amount needed for payment of pensions and salaries this month, citing a Kathimerini report. Surprisingly, this takes place even as Greece’s IKA, OGA pension funds have been informed by the government that amount needed for payment of pensions will be deposited today, while the Greece’s OAEE pension fund has said payment of pensions won’t be a problem. In other words, someone is not telling the truth: either there is enough money or there isn't. And if the latter case is valid, then either the government or the pensions are now openly lying to the population.
Earlier today, while the European markets were caught in the latest myopic buying frenzy resulting from the hope that an imminent termination of Yanis Varoufakis may mean a Greek debt deal is imminent, the Central Union of Municipalities and Communities of Greece ("KEDE") held a meeting in which it said that while it "declares it support for the national negotiating effort", it would not transfer any funds to the Bank of Greece.