Greece

A Spanish Casa (And Residency) Es Su Casa For $200,000

Unwilling to sacrifice their sovereignty at the altar of the ECB's contingent OMT (and unable to wrench 'help' from their previously colonized friends in Latin America; it seems Rajoy and friends are more than willing to sacrifice their actual land... and citizenship in order to maintain their 'independence'. Reuters reports that Spain is considering offering rich investors from countries such as Russia and China the right to settle in return for them buying up property in the stagnant housing sector. For buying property worth as little as $200,000, wealthy foreigners could be offered a residency permit, the country's commerce secretary said on Monday. This is the same nation with near 11% loan delinquencies, greater-than-50% youth unemployment, and a bad-bank loaded with heavily discounted real-estate assets that are still too expensive to encourage investors, and an ever-present devaluation risk hanging over its paralyzed economy. We wonder how the other nations of the EU will feel about Spain 'diluting' the citizen-asset pool with this new non-tax-paying, non-labor-utilizing 'wealth'. How long before Greece sells plots on Santorini (w/passport)?

Stocks Jump Most In 5 Months But Bonds Ain't Buying It (Again)

Best day in 5 months for stocks. AAPL jumping to one-week highs with its 2nd biggest low to high swing in 3 years. Wherever you look, the worst came first and so the talking heads re-appeared saying the worst is over and all is rainbows, unicorns, and mountains are once again molehills. Unfortunately, while ETFs were smashed higher (HYG biggest move in a year on 2nd largest volume ever back above its 200DMA, VXX crushed -9%), risk assets broadly speaking were not playing along with Treasuries especially drifting lower in yield from the European close (and EURUSD) as stocks surged to the highs of the day. Commodities soared with Oil leading the way - though post-Europe everything flattened and leaked lower. VIX collapsed 1.2vols to end just above 15% (notably ahead of stocks relatively speaking) but equity volume on the day was dismally low as S&P 500 futures broke back above the 200DMA amid larger than average trade size.

Broke Beggars Again Are Choosers: Greece Refuses To Comply With Latest Troika Demands

It has been a while since broke Greece, which has been begging Europe for the 5 month delayed €31.5 billion tranche, which will be used to pay the ECB and other German banks, and not to enter the Greek economy, was a chooser. Today, the little country that could not, has once again stretched its feeble repo'ed muscles:

  • GREEK OFFICIAL SAYS GOVERNMENT WON'T ACCEPT NEW TROIKA REQUEST
  • GREEK OFFICIAL SAYS TROIKA WANTS 20,000 STATE EMPLOYEE SACKINGS 
  • GREEK OFFICIAL SAYS COALITION PARTIES TO SET UP C'TEE FOR GOVT

Perhaps Greece forgot to clarify "by email" but certainly by fax, telex, or even carrier pigeon, because once the Troika calls it bluff, the "lost in translation" explanations will commence. Until then, the farce continues.

For Greece: "Nothing Is Gonna Be Alright"

During a week in which Americans are supposed to give thanks, we thought this inside look at the reality on the streets of Greece was worthwhile comprehending. From the May 2011 Syntagma Square uprising to "the 'firesale' of their country, their labor rights, and their livelihoods to corrupt domestic elites and foreign financial interests" the brief documentary follows the dramatic portrait of a country veering to the brink of collapse - and the people who choose to struggle to build a new world from the ruins of the old. "For [the elites] Greece is a guinea pig, to find out up to what point they can 'milk' [us]" is how one narrator describes the situation, adding that "they are refusing to see the reality [saying] it's not happening, it's not happening, it's not happening, everything is gonna be alright; Nothing is gonna be alright" as "loans enslave people." Utopia remains on the horizon...

AVFMS's picture

European equities ripping and squeezed after Friday’s dismal close. Credit the same and, as more often than not lately, overdoing the equity move. EGBs rather muted with the Core pretty much where it stood throughout last week – with exception of Friday afternoon. Spain back on the radar. Europe still under US influence. Huge relief. From what and why exactly still needs to be seen. In the meantime: Rip & Tear!

"Rip And Tear" (Bunds 1,35% +3; Spain 5,88% +2; Stoxx 2495 +2,7%; EUR 1,281 +110)

Europe Squeezes Back To Wednesday's Reality

Quite a shocker of a day in FX and European corporate bond and stock markets as shorts are squeezed back up to last Wednesday's levels. Sovereign bonds - which one would think the beneficiary of all the exuberance are flat as a Gaza-strip apartment building: +/-2bps in the last 4 days (aside from Portugal which rallied over 30bps today). The following four charts gives a sense of the anxiety both ways in this market with the low volume this week likely to help all those hoping for a final solution. Credit markets gapped tighter and kept going (one of the biggest moves of the year with XOver -35bps) with financials outperforming (more life-lines for the over-levered?); equity markets all retraced last week's losses in large part (aside from Greece); EURUSD broke back above 1.28 and its 200DMA; and Europe's VIX has collapsed from over 22% to 19.6% at the close today.

EURUSD Soars As Eurogroup Calls IMF Bluff

Whether it is a pure low volume technical run for the 200DMA, or fundamental bias as 'officials' comment that the release of a EUR44bn aid tranche to Greece is expected by December 5th, is unclear. One thing is certain, the Eurogroup is placing the decision squarely back in Madame Lagarde's lap as it appears to be behaving as if the IMF's threat not to disburse funds (due to Greece's unsustainable debt load) does not exist. While Lagarde is unlikely to want to be the trigger for GRExit, the non-European members may have differing perspectives or will they all just continue kicking the can down the road - proving once and for all that all the power lies with the Greeks as their supposed overlords "can't handle the truth".

Commodities Gone Wild

It all makes perfect sense. S&P 500 futures are 33 points off Friday's lows (Boehner's 'constructive chatter' and Fiscal Cliff is fixed), EURUSD is rallying decently (Greece is fixed), and commodities in general have gone vertical. Gold is back above $1730 but its Silver and Oil (tensions rising - despite cease-fire?) that is running the high-beta pump this morning. WTI is almost 4% higher than Friday's lows up near $89. The highly correlated nature of everything is perhaps merely sympomatic of a low volume week ahead and short-term oversold conditions - we suspect little is really resolved in any of these three 'event risks' and the same real-money anxious investors will use strength to reduce exposure further - since remember, if the S&P 500 is anywhere near its highs by year-end, there will be no fiscal cliff resolution.

Spanish Bad Loans Hit Fresh Record High Again

In what is becoming a monthly parabolic charting tradition, it is again time to update the Spanish bad loan total: in September, Spanish loans that fell into arrears increased by €3.5 billion from August, reaching €182.2 billion in September. This is 10.71% of the total Spanish bank loans of €1.7 trillion, and an increase from 10.5% in the prior month. At the same time, new bank loans expanded 0.2% in September and dropped 4.9% from a year ago, the Bank of Spain said. Deposits rose 1.4% from the previous month and declined 7.3% from a year earlier.  Putting the bad loan number in context, it is nearly double the €100 billion that the Spanish banks will receive as part of the bank bailout plan disclosed in July, and well above the "only" €40 billion that Spain promises it will need to actually fund bank capital shortfalls. Putting it into further context, as a percentage of GDP, it would be the equivalent of $2.8 trillion in US loans going bad. Naturally, just like with any "forecast" involving Greece, the final bailout (of both Spain's banks, and the sovereign) will be orders of magnitude higher, but for now everyone is forgiven to stick their head in the sand for at least a few more days/weeks.

"Wind The Speakers All The Way Up To 11"

The phrase "Constructive Discussions" will have us all pulling our hair out within a few weeks. Markets will be rock and rolled by anything anyone says about the Fiscal Cliff. The received European news-flow, (ie the stuff the Euro Elites want to you read and believe), says. progress on Greek Compromise and close to a solution on Tuesday with Schaeuble confident of "closing the funding gap". All of which means Greece is essentially solved - well for a while longer. As long as no one asks any difficult questions about debt sustainability and unlikely targets, haircuts for the ECB, or how the economy is doing, the Greece will be just fine and dandy. Unfortunately some folk haven't been reading the script - Lagarde has woken up to the fact she heads an "international" organisation and says a solution must be based on reality, solid and sustainable. Asmussen says a new programme will be needed, and the EU Energy Commissioner (?) says debt restructuring for the "official sector" will happen and therefore real losses are unavoidable. er.. who let him opine?

Key Events In The Shortened Week

With Thanksgiving this Thursday, trading desks will be empty on Wednesday afternoon and remain so until next Monday. So even though it is a holiday shortened week, here are the main things to expect in the next 5 days: Bank of Japan meeting, the European Council meeting and the Eurogroup meeting. Key data releases include European and Chinese Flash PMIs.