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Market Wrap: Futures Decline; Treasurys Weak On Actavis Mega-Deal, Dollar At 12 Year High





With little newsflow out of Europe, and just as little on deck out of the US (just NY ISM and auto sales later today), the main overnight events were out of Asia where first the RBA decided to leave rates unchanged but not before the announcement was leaked up to a minute early. In China, the rate-cut euphoria lasted just one day, and after a feeble 0.8% bounce on Monday, the SHCOMP was down 2.2% this morning over fears the PBOC is doing too little, too late to halt what is now perceived by many as a massive "tightening" capital flight out of China. Finally, Japan made the newsflow, after it JGBs continued to slide following a weak auction, fears that the BOJ is done easing after Abe advisor Etsuro Honda warned against overheating, and after the biggest jump in base pay in over a decade led some to think the BOJ may soon have to halt easing altogether, especially if real wages proceed to rise

 
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Europe's "Them" & "Us" Fiscal Faux Pas





Oh well, some are more equal than others. One day after Eurogroup head Dijsselbloem says France won’t get any more lenience... "France must respect EU budge rules," ... the EU over-rules him "France gets more time to meet EU budget rules."

 
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Troika "Happy" With Revised List Of Greek Reform Promises: Full Varoufakis Letter





What happened over the past week to the Syriza "mandate" is that the new government's list of unfulfillable promises to the Greek people has been replaced with a new list of unfulfillable promises to the Troika.

Update: EU COMMISSION SAYS GREEK LIST `SUFFICIENTLY COMPREHENSIVE'

 
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The Ultimate "Easy Money Paradox": How The ECB's Previous Actions Are Assuring The Failure Of Its Current Actions





The problem, as several sources told Reuters last week, is that there simply aren’t a lot of willing sellers. Ironically, the ECB’s own policy maneuvers are ultimately responsible for creating this situation. That is, the fallout from previous forays into ultra accommodative monetary policy is now hampering the implementation of quantitative easing - call it the ultimate easy money paradox.

 
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What's Next For Greece, The Euro, And Markets?





A quick recap of the key implications of Friday’s Greek “deal”, and what it means for the future of the Eurozone, the common currency and capital markets.

 
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How Greece Folded To Germany: The Complete Breakdown





Having, as we previously explained, been given 'just enough rope' by the Germans, we thought it worth looking at just what Greece capitulated on (or perhaps a shorter version - what they did not capitulate on) and how Tsipras and Varoufakis will sell this to their fellow politicians... and most of all people.

 
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The Catastrophic Costs Of Extend-And-Pretend Are About To Crush Europe





Extending imprudently massive loans to marginal borrowers always plants the seeds of disaster, and extending and pretending turns a potentially containable disaster into an uncontainable financial calamity. Yet this is the game plan of policymakers everywhere, from Europe to the U.S. to China--extend enormous loans to marginal borrowers and then mask the inevitable defaults with extend-and-pretend policies that vastly increase the size of the debt. By the time extend-and-pretend finally reaches its maximum limits, the resulting implosion is so large that the shock waves topple regimes, banks, currencies and entire nations.
 
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Greece: What Happened Today, And What Happens Next





Ultimately, then, we are still left with the same three-step process to reach a conclusion to the Greek crisis.

  • Step 1 consists of a request for a new program or an application for a 3rd ESM program with Greece committing to some a prior conditionality.
  • Step 2 consists of negotiating the substance around this conditionality, in particular the prior actions that would need to be fulfilled to disburse funding to Greece.
  • Step 3 would consist of passing such prior actions through the Greek parliament and ultimately servicing Greece's loan obligations.

The more each of these steps is delayed, the shorter the timespans available and the greater the risks of failure.

 
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World Press Freedom Index Plunges – USA Now Ranked #49 Globally





The 2015 World Press Freedom Index highlights the worldwide drastic decline in freedom of information in 2014. The rise in overall violations of freedom of information was evident in all continents, but for America - the bastion of press freedom in the land of the free and "the most transparenet administration ever" - fell once again... to 49th!!

 
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German DAX Rises Above 11,000 For First Time After European GDP Surprises To Upside





Who would have thought all it takes for Eurozone Q4 GDP to print above expectations, even if by the smallest of possible margins - one which even the Chinese goalseek-o-tron bows its head down to in respect - which at 0.3% Q/Q was above the 0.2% expected and above Q3's 0.2%, was for Europe to admit it has finally succumbed to deflation. Oh, and for the ECB to admit the situation has never been more serious by launching Q€. Oh, and add the "estimated contribution" to GDP from hookers and drugs. Put all that together and on an annualized basis, the European economy grew by 1.4%. Whatever the reason, Q4 GDP was the best print since Q1, even as Germany blew not only consensus of 0.3%, but the highest GDP estimate of 0.6% out of the water when it reported that courtesy of a spike in spending, its economy grew by 0.7% in the fourth quarter, up from the near-recessionary 0.1% in Q3. That, together with QE and ZIRP now raging across the continent, was enough to push the DAX above 11,000 for the first time ever.

 
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Dijsselbloem Pours Cold Water On Greek Compromise: "Don't Get Your Hopes Up"





Just over an hour ago, what appears to have been a strawman now was issued by Bloomberg via leaked sources from Greek and German officials that proclaimed talk of a "compromise" deal that makes everyone happy in Europe. However, as the leaders exited today's summit, the tone of their responses did not exactly sound compromise-prone:

*DIJSSELBLOEM SAYS GREECE PROCESS GOING TO BE V. DIFFICULT, "DON'T GET YOUR HOPES UP YET" ON GREECE
*MERKEL URGES GREECE TO MAKE UP ITS MIND SOON ON FINANCING

Hardly the resoundingly positive spin we saw earlier. Poland's Tusk, Finland's Stubb, and good old Juncker also chimed in with the latter commenting on Greece's "anti-social" behavior. Tsipras made some neutral statements, then came out swinging, "The MoU as we knew it is over. The same goes for the troika. All these years, the burden fell on the poorest. Our aim is to restore the sense of justice."

 
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Europe's Greek Showdown: The Sum Of All Statist Errors





The politicians of Europe are plunging into a form of ideological fratricide as they battle over Greece. Accordingly, all the combatants - the German, Greek and other national politicians and the apparatchiks of Brussels and Frankfurt - are fundamentally on the wrong path, albeit for different reasons. Yet by collectively indulging in the sum of all statist errors they may ultimately do a service. Namely, discredit and destroy the whole bailout state and central bank driven financialization model that threatens political democracy and capitalist prosperity in Europe - and the rest of the world, too.

 
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If Greece Exits, Here Is What Happens (Redux)





Now that the possibility of a Greek exit from the euro is back to being topic #1 of discussion, just as it was back in the summer of 2012 and the fall of 2011, and investors are propagandized by groundless speculation posited by journalists who have never used excel in their lives and are merely paid mouthpieces of bigger bank interests, it is time to rewind to a step by step analysis of precisely what will happen in the moments before Greece announces the EMU exit, how the transition from pre- to post- occurs, and the aftermath of what said transition would entail, courtesy of one of the smarter minds out there at the time (before his transition to a more status quo supportive tone), Citi's Willem Buiter, who pontificated precisely on this topic previously. Three words: "not unequivocally good."

 
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