Dow Futures 'Rally' 150 Points Off Opening Lows Into Positive Territory On Greek Makeshift "Deal" ChatterSubmitted by Tyler Durden on 07/12/2015 23:14 -0400
We have detailed just what a total farce of a day this has been in Brussels, but even more farcical is the reaction in equity markets in the last few minutes...
Equity markets roared higher Thursday and Friday as they 'knew' a deal was imminent in Greece because Tsipras appeared to backpedal. However, after someone told Merkel the truth, and "everyone knows you can't believe" the Greeks, The Eurorgoup Meeting ends with zero agreement after 9 hours of rumor-mongering and escalating tensions. Local reporters noted the leaders could not even agree on what to disagree about as an increasing number of EU member states pushed for either a Grexit or considerably tougher sanctions austerity on the Greeks. There is no press conference and the meeting will resume tomorrow at 11am... shortly before FX markets open.
Non-bombastic look at the price action and speculative positioning, with the hope of anticipating next week's developments.
"The explosion in margin financing behind the recent astonishing run-up in Chinese A shares is a new twist on China credit concerns, a long-standing grey swan for Chinese and global growth. As of the beginning of June, the balance of margin financing outstanding was RMB2.2tn, an estimated 12% of the free float market cap of marginable stocks and 3.5% of GDP—easily the highest in the history of global equity markets."
Despite the exuberance in US and European equity markets, it appears Bitcoin is sending a different (avoid the looming capital controls) message... Does someone know something?
"With the drastic fall in share prices recently, social stability is clearly at stake," Credit Suisse says. With the bubble now finished it is only a matter of time before all the 'nouveau riche' farmers and grandparents see all their paper profits wiped out and hopefully go silently into that good night without starting mass riots or a revolution.
Markets are beginning to signal that policy makers are losing control. Many second-order-effects of the unprecedented and experimental global actions taken since the 2008 crisis are beginning to manifest. There are always causes and effects that develop; but they do so at different speeds. Many actions in recent years have prioritized 'benefits today' over 'consequences tomorrow'. 'Tomorrow' is approaching ever more quickly. There is no 'free lunch'.
It's officially Groundhog day... and month... and year... and so on.
With just six days to go until the government begins Jade Helm 15, expect the rumor mill to come alive because as The Washington Post reports, the media will not be given access to the drills.
In the wake of China's unprecedented attempt to rescue its collapsing equity markets, Deutsche Bank is out with a history lesson for Beijing where officials can learn some "sweet and sour" lessons from the crash of '87.
What began as a glitch in pre-market trading turned into the NYSE's longest trading halt since Hurrican Sandy battered the East Coast. The ever-increasing complexity of US equity markets combined with an ever-decreasing pool of greater fools leaves windows open on down days (for it appears these 'glitches' only ever occur on down days) for markets to break. While NYSE traders defended the very market structure they have abhorred in the past as evidence that today was "not a failure," we can't help but find CNBC's Scott Wapner's ignorant remarks that "if retail investors want low cost liquid trading they are going to have learn to live with it," the perfect post-mortem for a rigged system brimming with confident insiders ever excited to take mom-and-pop's money.
With equity markets jumping vertically on every possible 'hope' of a deal - no matter what the consequence - we look to the asset class that is a) not driven by headline-reading algos and HFT, and b) is by far the most sensitive to reality - Greek Bank Bonds... and they are carnaging!!
At around 645ET, EURCHF suddenly took off out of nowhere. This instantly lifted European stocks off new post-Greferendum lows, slammeds EU credit risk lower, lifted US equity markets, and drove Treasury yields higher. The SNB has declined to comment on whether it intervenened but we ask in all frankness, have we become so divorced from 'free markets' that China can blatantly enter markets to save them (and fail) and European markets can mysteriously go bid and no one bats an eyelid that this is all rigged.
Today's market battle will be between those (central banks) "hoping" that a Greek deal over the weekend is finally imminent (which on one hand looks possible after a major backpeddling by Tsipras - who may never have wanted to win the Greferendum in the first place - yesterday in Brussels and today during his speech in the Euro Parliament, but on the other will be a nearly impossible sell to Greece as any deal terms will be far harsher than the deal offered by the Troika 2 weeks ago and will have no debt reduction), and those who finally noticed that the Chinese central planners have effectively lost control.