In a critical disclosure this past Friday which quietly flew under everyone's radar, the Bundesbank director responsible for bank supervision, Andreas Dombret, who is also a member of the board of the European Central Bank’s Single Supervisory Mechanism told Bloomberg in an interview in Johannesburg that "German banks should expect to lose at least half of their investments in bonds of Austrian bad bank Heta Asset Resolution AG and make the appropriate provisions... I think this situation has to be taken seriously by the German banks... if I were to put a number on this I would say it should be a minimum of a 50 percent provision for potential losses."
Gold “Going Higher” and “A Big Buy Here” ...
Greek Negotiator "Shocks" Eurozone Officials, Behaves Like "Taxi Driver": Hope Of Greek Deal "Blown"Submitted by Tyler Durden on 04/12/2015 12:29 -0400
The mood between Greece's leftist government and its euro zone partners, especially Germany, has deteriorated in the last few weeks, with personal recriminations flying between ministers and calls from Athens for Berlin to pay war reparations. The paper said at last week's meeting the Greek representative just asked where the money was "like a taxi driver", according to sources, and insisted his country would soon be bankrupt. The euro zone sources told the paper that Greece's creditors do not believe this is the case and that it would be a domestic political issue if Athens is unable to fully pay salaries and pensions.
A look ahead into next week's macro forces.
The Middle East’s ongoing descent into chaos and China’s impending ascendancy to the status of global superpower are just two of the many threats that the US, European Union and Russia all share. Each of these issues should certainly occupy a higher position on their respective agendas than the breakup of Ukraine or the insolvency of Greece. Leaders of all three governments would be well-advised to set aside their differences, or at least to prevent those differences from obstructing cooperation on more important issues. Unlike its predecessor, the Second Cold War will not be bilateral. Today’s world is far more chaotic, kinetic and dangerous than it was fifty years ago.
Having demanded EUR 278.7 billion from Germany for WWII reparations, which was quickly eschewed by Germany, Greece has decided to up the ante. As KeepTalkingGreece reports, Greek Defense Ministry has published a video with rare footage from the occupation of Greece by the Nazis during the World War II. Among others, the footage shows children suffering from malnutrition and emaciated adults, victims of the Great Famine during the Nazi occupation. The video is designed to provide context for the huge claim and the video voice-over states that the Enforced Loan by the Nazis was to blame for the mass starvation of estimated 300,000 people in Athens alone, “Greece lost 13% of its population during the WWII. One part was lost in the battlefield, but the largest part due to Famine and the Nazis’ atrocities.”
Asia Superbubble Unstoppable: Hong Kong Up 10% In Past Week; Soaring Dollar Pushes Euro Back Under 1.06Submitted by Tyler Durden on 04/10/2015 06:53 -0400
Overnight market news was once again driven by the Asian superbubble, where as expected, the Hang Seng (+1.22%) soared once more and is now up 9.5% for the week, following news the Hong Kong Exchanges and Clearing Ltd (HKEx) expects it will "substantially increase" quotas for the stock connect program between Hong Kong and Shanghai, HKEx Chief Executive Charles Li said on Friday. The exchange could boost the current quotas, which cap how much mainland investors can buy Hong Kong stocks and vice versa under the trading link, by more than 20 or 30 percent, Li said at a media briefing in Hong Kong. Li did not give a precise date for when the quotas would be raised, but one thing is clear: everyone in China, and Hong Kong, must be all in stocks if the Chinese housing bubble can not be reflated. The Shanghai Comp closed higher by almost 2.0% following better than expected Chinese inflation data, while HK stocks continued their recent rally to closer higher by 9.5% for the week.
Spain is not the good example to contrast Greece's bad example.
- Greece pleads cash running out, told to hasten reforms (Reuters)
- ECB Cash Said Likely to Fall Short of Greek Request This Week (BBG)
- Chinese Stock Buying Frenzy Sweeps Into Hong (WSJ)
- Shell’s $70 Billion BG Deal Meets Shareholder Skepticism (BBG)
- Yemen's Houthis seize provincial capital despite Saudi-led raids (Reuters)
- Iran Nuclear Deal Gives Syria’s Bashar al-Assad Reason to Worry (WSJ)
- Slow apps, low battery life limit appeal of Apple Watch (Reuters)
- Gilead’s $1,000 Pill Is Hard for States to Swallow (WSJ)
- The Oil Industry's $26 Billion Life Raft (BBG)
As noted several hours ago, the main story overnight is not that Greece once again narrowly averted a Grexit when it was reported it would make its scheduled payment to the IMF today (adding that next month is a "different story") a development that was met with yet another ultimatum by its "partner", the Eurozone, but the dot com bubble deja vu-esque move in Hong Kong stocks, where the Chinese, seemingly tired of pushing up their local market into the stratosphere have turned their attention southward and are desperate to buy up every single Hong Kong stock.
A central bank official, according to The FT, said that Greece has repaid the €450m it owed the International Monetary Fund today. Bond yields have fallen across the Greek curve with 10Y GGBs now at 11.1% (down 70bps from Tuesday's highs). Greek stocks are not as impressed and are giving back their gains. Tsipras, on return from Moscow, explained Greece "was not a beggar...asking other countries to solve its problem," but as a senior Greek official earlier this week said that while it would be able to make Thursday’s IMF repayment, it will still exhaust its cash reserves very soon and "next month is a different matter." HSBC points out that the real crisis point looms on the 12th May and FinMin Varoufakis warns the "asymmetric union" that they "have learned nothing from economic history."
It was back in June 2011 when we first hinted that the time of Odious Debt is rapidly approaching. Today, nearly four years later, Odious Debt is now a reality in Greece, where Zoi Konstantopoulou, the head of the Greek parliament and a SYRIZA member, released two videos which have promptly gone viral, designed to promote the investigative parliamentary committee to look into the circumstances surrounding the signing of the country’s two bailout agreements that led Greece to implement its austerity measures. According to Greek Reporter, Konstantopoulou has said that the newly established “Debt Truth Committee,” will investigate how much of the debt is “illegal” with a view to writing it off.
Massive misallocations of capital stare at us like wild caged animals through the bars of a cage in the zoo!
"We believe such a scenario would have the potential to 'burst the corporate bond bubble' as bond yields would rise with inflation, corporate confidence would run high and a releveraging/deterioration in credit metrics would materialise resulting in bond fund outflows. The lack of liquidity in corporate bond markets would make the process particularly painful," UBS says, reiterating the perilousness of a secondary market lacking ample liquidity amid voracious investor demand for new issuance.