It’s really just a matter of time; the working man’s deal with his overseers is half dead already. But there’s still inertia in the system, and even the losers are keeping the faith. Hope dies slowly, after all. Nonetheless, the deal is collapsing and a new wave of robots will kill it altogether. Unless the overseers can pull back on technology – very fast and very hard – the deal that held through all our lifetimes will unwind.
Just when the Greek debt deal appeared certain even if as we reported last night, virtually all the funds from the approved first tranche would go to repaying creditors, the IMF, which has been pushing for more debt relief since last summer, appears read to pull the plug again, following a report that the IMF isn’t officially endorsing the latest Greek debt deal until the board approves new loan program, and according to AFP, the IMF is not ready to add funds to the Greek bailout as it stands now.
If the state/central bank attempts to create capital by printing or borrowing money into existence, private capital will flee because the writing is on the wall: the currency and economy are doomed. You can create currency out of thin air, but you can't create sound money out of thin air or real capital out of thin air. If the state/central bank surrenders the money-printing press, and accepts the limitations of a currency it can't print into hyper-inflation, then private capital will enter the economy because it can trust that the currency can't be devalued by politicos or the central bank.
"Anybody who's short - and there are a lot of smart people who are in fact heavily short - they have to run for cover, and I think it could get ugly. In our account here, we quite literally were grasping for almost anything we could to reverse our position. Covering… or actually greatly reducing… our short position in the derivatives market was the first course of action.... We’ve learned over the years that when such things occur it is better to “shoot first and ask questions later."
- Oil nudges $50 a barrel as investors bet on shrinking overhang (Reuters)
- From hinterland to wonderland: China's 'teapot' refinery boomtowns (Reuters)
- Peter Thiel Has Been Secretly Funding Hulk Hogan's Lawsuits Against Gawker (Forbes)
- China Wants to Set Prices for the World's Commodities (BBG)
- Big Banks Ladle On the Risk (WSJ)
- China Said to Plan Asking U.S. on Timing of Fed Rate Hike (BBG)
The single biggest event overnight was the PBOC's devaluation of the Yuan to the lowest since March 2011, setting the fixing at 6.5693, the highest in over 5 years and in direct response to a stronger dollar, which however if one looks at the DXY remains well below the recent highs in the 100 range, suggesting for China this is only just beggining. However, the fact that there was not more volatility in onshore and offshore overnight FX also comforted the market that at the same time as its was devaluing the PBOC was also intervening in the FX market, thus providing some assurance it would not allow runaway "risk off" sentiment prevail, nor would it promote another blitz round of capital outflows, leading to another gradual levitation in overnight risk.
The short summary: Greece has promised to implement even more Draconian measures (which may or may not happen) in order to get money that was already promised to it, while the Eurogroup disburses just enough cash to cover the immediate funding needs of the creditors with a little left over to pay for government arrears while demanding even more austerity; future tranches may or may not be paid out if Greece complies with its promises (which will not happen) and meanwhile the Eurogroup says it may someday provide debt relief, once Greece ends its bailout program... which will never happen.
- Asian stocks near 11-week lows, dollar bounces on Fed rate view (Reuters)
- Poll Finds Lack of Enthusiasm for Clinton and Trump (WSJ)
- Oil falls for fifth day as focus returns to growing exports (Reuters)
- The Hedge Fund That Couldn't Stay Open Long Enough for a Big Payday (BBG)
- French police break up refinery blockade in anti-reform showdown (Reuters)
Yesterday's weak dollar headfake has ended and overnight the USD rallied, while Asian stocks dropped to the lowest level in 7 weeks and crude oil fell as speculation returned that the Federal Reserve will raise interest rates as early as next month. The pound jumped and European stocks gained thanks to a weaker EUR.
Fearing a "forced" evacuation, dozens of migrants have left the refugee camp at Idomeni on the Greek-Macedonian border and are reportedly hiding in the surrounding region. It is perhaps no surprise they are fleeing as KeepTalkingGreece reports, ten riot police squads left Athens this morning and are expected to take position at the camp to aid in what officials call "a friendly evacuation." Other police forces from Northern Greece will be deployed in the area for "as long as it takes" to remove the 8,500 men, women, and children.
Buy gold as it is an “extremely low-risk asset” is the advice of Professor Kenneth Rogoff to emerging market, creditor nation central banks including the People’s Bank of China (PBOC). “There is no limit to its price ...” he said ...
Government bonds rose and the yen strengthened as investors weighed the timing of the Federal Reserve’s next increase in interest rates and the outlook for inflation. Commodities slid, led by metals, while stocks in Europe declined. Treasury 30-year yields fell for a third day. The yen rose from near this month’s low. Futures on the S&P 500 also declined after initially jumping higher in thinly traded, illiquid tape.
The IMF wants debt relief now, but Germany wants the IMF to hold off until Merkel wins reelection. Meanwhile, the Greek depression resumes. These tax hikes are insane. The key question remains: Is the IMF bluffing about debt relief or not?
Neither Russia nor China seek conflict. It is a gratuitous and reckless act for Washington to send the message to Russia and China that they must choose vassalage or war.
During today's congress of Turkey's AKP, Erdogan confirmed an impotent lapdog, Binali Yildirim - a close ally for two decades and a co-founder of the ruling AK Party - as his new prime minister on Sunday, which as Reuters explained was "a big step towards the stronger presidential powers [Erdogan] has long sought." In plain English, Turkey is unofficially a dictatorship, in which Erdogan is president only in title and in reality a supreme despot as there is no longer anyone who can politically challenge the president.