- Greece licks wounds after bailout vote, ECB move expected (Reuters)
- Lose-Lose: Pushing Greece Out of Euro Is Costlier Than Write-Off (BBG)
- EMU brutality in Greece has destroyed the trust of Europe's Left (Telegraph)
- Schaeuble Shrugs Off Greek Vote Saying Euro Exit Is Best (BBG)
- Merkel’s tough tactics prompt criticism in Germany and abroad (FT)
- Investors Get Caught in Oil’s Slippery Wake (WSJ)
- Obama Girds for Battle With Congress on Iran Deal (WSJ)
And so the 2015 season of the Greek drama is coming to a close following last night's vote in Greek parliament to vote the country into even more austerity than was the case before Syriza was voted into power with promises of removing all austerity, even with Europe - which formally admits Greece is unsustainable in its current debt configuration - now terminally split on how to proceed, with Germany's finmin still calling for a "temporary Grexit", the IMF demanding massive debt haircuts, while the rest of Europe (and not so happy if one is Finnish or Dutch) just happy to kick the can for the third time.
China Stocks Slump Over 10% Post-Intervention: Derivatives Dealers Reveal $150 Billion In "Questionable" ExposureSubmitted by Tyler Durden on 07/15/2015 21:15 -0400
"Right now, dealers are going through their books trying to work out what their positions are worth," explains a major participant in the Asian derivatives market as Reuters reports the suspension of hundreds of mainland China stocks has created disputes between banks and their clients over the valuation of billions of dollars of equity derivatives. "In the end, someone is going to have to call the value of those deals, and someone else will lose out," and with over 1000 stocks still suspended, and Chinese stocks now 12% off post-intervention highs, ISDA - the body that represents the world's largest dealers - is worried that at least $150 billion of outstanding OTC equity derivatives on mainland-listed shares may not have the appropriate language to deal with these events. After 3 days of "you will never learn" rises, margin debt declined following China's great data last night and the continued good news is bad news sell off today.
Update: TSIPRAS TELLS LAWMAKERS IT WILL BE DIFFICULT TO REMAIN PM WITHOUT THEIR SUPPORT
Today, the Greek parliament is being asked to legislate away its sovereignty in exchange for a bridge loan and a third bailout program that should allow the country to remain in the euro. Facing a rebellion from within Syriza, Tsipras will have to rely on opposition party support to secure approval for what is effectively a German coup.
- Tsipras Braves Parliament on Aid as Greek Outlook Worsens (BBG)
- European markets rise before Yellen speech, Greek vote (Reuters)
- China’s Growth Beats Economists’ Forecast as Stimulus Kicks In (BBG)
- China stocks drop again, positive data shrugged off (Reuters)
- Yellen intensifies Republican outreach amid Fed probe, Senate bill (Reuters)
- Iran deal holds both promise and peril for Hillary Clinton (Reuters)
- Iranians Party Into the Night as Khamenei Backs Accord (BBG)
The high debt to GDP and the gross financing needs resulting from this analysis point to serious concerns regarding the sustainability of Greece's public debt. A very substantial re-profiling, such as a long extension of maturities of existing and new loans, interest deferral, and financing at AAA rates would allow to cater for these concerns from a gross financing requirements perspective, though they would still leave Greece with very high debt-to-GDP levels for an extended period.
As if the long-suffering Greek people need more tragedy in their lives, here comes an admission from their chosen "leader" that Greece, as a sovereign nation, no longer exists: GREEK PM TSIPRAS SAYS LENDERS GIVE A MESSAGE THAT IN COUNTRIES UNDER A BAILOUT THERE IS NO POINT IN HOLDING ELECTIONS.
IMF Rips Pandora's Box To Shreds, Demands Greek Debt Relief "Far Beyond What Europe Has Been Willing To Consider"Submitted by Tyler Durden on 07/14/2015 23:05 -0400
Just like the first IMF report, which we correctly compared to the IMF opening a Pandora's box, and with which the IMF also obliterated the careful plans of the Troika, so with this follow up, the IMF effectively crushes the Greek bailout process and literally tears Pandora's box to shreds, with the following summary assessment: "Greece’s debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far."
"The International Monetary Fund has sent its strongest signal that it may walk away from Greece’s new bailout programme. Under its rules, the IMF is not allowed to participate in a bailout if a country’s debt is deemed unsustainable and there is no prospect of it returning to private bond markets for financing. The IMF has bent its rules to participate in previous Greek bailouts, but the memo suggests it can no longer do so," FT reports.
"The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date - and what has been proposed by the ESM. European countries would have to give Greece a 30-year grace period on servicing all its European debt, including new loans, and a very dramatic maturity extension, or else make explicit annual fiscal transfers to the Greek budget or accept 'deep upfront haircuts'."
Or, more simply: "Mark it zero."
While slightly later than expected, a comprehensive deal on Iran’s nuclear weapons program has now been reached. As Reuters reports, the agreement will be greeted with alarm in several quarters, both in Washington and Tehran and internationally too, and could yet unravel. Internationally, the deal will accelerate unease in some Arab states, including Saudi Arabia, but it is Israeli Prime Minister Benjamin Netanyahu who remains the fiercest public critic and has issued a warning that the accord will "inevitably lead to a nuclear war." The deal profoundly changes the balance of power in the region, but averts the conflict that was likely otherwise, but as ECStrat notes, Iran offers exceptional investment opportunities, but the near term impact will be to continue oil’s decline back to its lows, potentially taking energy stocks with it.
“Greeks cannot withdraw cash left in safe deposit boxes at Greek banks as long as capital restrictions remain in place”, Nadia Valavani, a Deputy Finance Minister in Greece told local television station according to a Reuters report.
- Greek lawmakers split over bailout as vote looms (Reuters)
- Greek Bailout Rests on Asset Sale Plan That Already Failed (BBG)
- Greece Needs $25 Billion to Get Through August, Scicluna Says (BBG)
- Tsipras Enters Parliament Den to Sell Aid Deal to Greeks (BBG)
- Greece makes samurai bond repayment (FT)
- Iran, World Powers Have Reached Nuclear Agreement (BBG)
- Janet Yellen’s Fed Flounders in Political Arena (WSJ)
One day after the Greek "pre-deal" was announced and the world breathed a sigh of relief, sending US stocks soaring and Greek halted stocks, well, tumbling (via ETFs and ADRs), things are oddly quiet and in fact quite red in Europe, with futures in the US modestly lower, following both China's first red close in several days (SHCOMP -1.2%), and a Europe which is hardly looking very euphoric at this moment: it is almost as if the algos finally got to read the fine print of the Greek deal after trading all day on just the headlines.
It is only fitting that almost exactly 24 hours after the Greek "pre-deal", which may and will end up crashing and burning in very short notice, another long expected "deal", one which has been about a decade in the making, was reached, when Iran reached a landmark nuclear agreement with the U.S. and five other world powers, a long-sought foreign policy goal of the Obama administration. However, just like with the Greek deal celebrations, these too will likely be short lived as the outcome sets the White House on course for months of political strife with dissenters in Congress and in allied Middle Eastern nations.