Another day of constant Grexit chatter, and this time the futures are really starting to react as what was seen as mostly impossible for the past 4 months is now almost inevitable. The first tremors emerged when Greece announced it would not present a new proposal to the Eurogroup to unlock aid, relying instead on what has already been submitted and which the Troika said was inadequate. Then, confusing matters, a new GPO poll posted on Greece's Mega TV showed that increasingly more, or over 56% at last count, of Greece would prefer a "bad" deal with creditors than being kicked out of the Eurozone putting the future of Tsipras' cabine tin jeopardy. And then, hinting that the endgame is officially here, the FT reported that "Eurozone officials discuss holding emergency summit on Greece", suggesting a second Lehman weekend may be just around the corner.
Last week the government reported personal income and spending for April. After months of blaming non-existent consumer spending on cold weather, shockingly occurring during the Winter, the captured mainstream media pundits, Ivy League educated Wall Street economist lackeys, and Keynesian loving money printers at the Fed have run out of propaganda to explain why Americans are not spending money they don’t have. The corporate mainstream media is now visibly angry with the American people for not doing what the Ivy League propagated Keynesian academic models say they should be doing. An economy built upon the consumption of iGadgets, Cheetos, meat lovers stuffed crust pizza, and slave labor produced Chinese baubles, along with the production of enough arms to blow up the world ten times over, and the doling out of trillions to the non-productive class, is doomed to fail.
In what amounts to still more evidence that investors are moving into derivatives in order to avoid illiquid cash markets, UBS finds that over the "past three months, daily average futures volume stands at nearly 70% of cash Treasuries, based on the notional amounts transacted... up from about 50% in 2011."
In Dramatic Decision Judge Finds Fed Bailout Of AIG Was "Illegal", Government "Violated Federal Reserve Act"Submitted by Tyler Durden on 06/15/2015 16:44 -0400
"Starr alleges in its own right and on behalf of other AIG shareholders that the Government’s actions in acquiring control of AIG constituted a taking without just compensation and an illegal exaction, both in violation of the Fifth Amendment to the U.S. Constitution.... Having considered the entire record, the Court finds in Starr’s favor on the illegal exaction claim. As the Court noted during closing arguments, a troubling feature of this outcome is that the Government is able to avoid any damages notwithstanding its plain violations of the Federal Reserve Act. "
- U.S. Court of Claims Judge Thomas Wheeler
Euro & Stocks Maintain Losses Before EU Open As China Market Cap Tops $10 Trillion For 1st Time EverSubmitted by Tyler Durden on 06/14/2015 23:15 -0400
The total market capitalization of China's stocks is now over 40% the size of the US stock market and topped $10 trillion for the first time in history. This represents at 8-fold increase in Chinese market cap since Lehman. But after that initial pop, Chinese stocks are weak too. Meanwhile in other markets the EUR is notably lower against the JPY and USD but appears to be protected from a plunge for now hovering at 138.40 and 1.1200 respectively after the Greek Deal failure news. US equity futures are tumbling, down 9 points but off the initial lows for now.
"We have a problem with this, and that is central bank hubris. They now think that they are omnipotent, because, essentially the government has said we are going to pass over all control of the economy to the central banks, they say to everybody else including financial market participants that “you don’t know, you don’t understand, we have our models and they are right”. And that kind of hubristic approach is when you sow the seeds of your own destruction."
And just like that, Goldman wins again.
Looking back at the Lehman Brothers collapse of 2008, it’s amazing how quickly it all happened. In hindsight there were a few early-warning signs, but the true scale of the disaster publicly unfolded only in the final moments before it became apparent that Lehman was doomed. Could this happen to Deutsche Bank?
Approximately two years ago, a commentary was published entitled “The One Bank”. The empirical foundation for the article (and the paradigm) was an extensive computer model, produced by a trio of academics at a university in Switzerland, and originally reviewed in an article from Forbes.
The Question Is Not Is Deutsche Bank the Next Lehman, It's "Is Lehman the Face of Banking in the FutureSubmitted by Reggie Middleton on 06/12/2015 19:56 -0400
Is Deustche Bank the next Lehman is likely the wrong question to be asking. Is Lehman the template for European banking may be more to the point. Take it from the guy that called the Lehman debacle 5 months before the fact.
For a sense of what is driving sentiment this morning look no further than the Athens stock market which exploded higher yesterday on a Bloomberg story based on "two sources" that Germany was willing to compromise, only to close just as the IMF pulled a classis bad cop and announced it was halting work on Greece, and before further news from Bild that Germany was preparing for a Greek default while Europe had given Greece 24 hours to submit a final, workable proposal. As a result, it tumbled promptly at the open even as optimism persists and since the opening plunge, Greek stocks have continued to climb and are now back to yesterday's euphoric opening levels.
Gold bugs weren’t wrong - just super early. If central banks ever got religion and pulled a Volcker and hiked rates to the moon, it would be a remarkably bad time to hold gold. However, throughout history, there have been times where people were very sad that they didn’t own gold. We talk about one of them here. It’s very real, and the history of fiat currencies is also quite sad.
While Pope Francis has called for an end of "the cult of money and the dictatorship of an economy," The Vatican City has been forced into sharing information with the US. Despite the oft-quoted Book of Proverbs prose that "[T]he borrower becomes the lender's slave," in the case of the world's largest borrower - the US government - it still acts like everyone’s master, including dictating the most ridiculous terms on financial agreements like this.
Bloomberg's Consumer Comfort Index dropped to its lowest since November having fallen 9 straight weeks (despite all that exuberant equity market hope). Under the covers the situation is even more worrisome as the US consumer propensity to 'buy' has crashed by the most since Lehman. The drop in high income earners' comfort continues to diverge from the new highs in stocks...
After a Chinese session which following the MSCI failure to include Chinese stocks in its EM index, if only for the time being, was largely a dud with Shanghai stocks actually dropping by 0.1% after a late day selloff, eyes turned to Europe, which once again did not disappoint and where the bond rout continued apace, with the 10Y Bund yield spiking just after the European open, and rising above 1.05%, the widest level since September 19, before recouping some losses and trading just around 1.00% at last check.