Update: after widening by 2bps earlier, Malaysia CDS is now +4 at 167bps and starting to move as macro "analysts" finally catch up on the entire story and comprehend the implications.
Malaysian CDS rose to near 3-month highs and the Ringgit has spiked over 300 pips - back near recent lows - after the Malaysian slushfund government investment fund 1MDB is reportedly in default. This is exactly the scenario we laid out last week that initially sent the currency lower and CDS higher, as the Abu Dhabi sovereign wealth fund has by all appearances started a potential waterfall default on Malaysian sovereign debt (due to cross-default triggers at the sovereign).
Is Deutsche's gaming of the London precious metals fix the same thing as - or even tangentially related to - the main manipulation of the gold price, which is the practice of central banks “lending” their gold to big commercial banks, which then sell that gold on the open market to depress the price?
Well, that didn't take long.
In a stunning victory for "conspiracy theorists" within the precious metals space, overnight Deutsche Bank not only agreed to settle a lawsuit accusing it of manipulating the silver fix, but also agreed to help the plaintiffs pursue similar claims against other banks as part of the settlement by providing instant messages and other communications. And so the former cartel members are turning on each other.
"Tomorrow we wake up and China has devalued 20%, the world is over. The world is over. Euro breaks up. The world is over. The euro breaks up. Everything hits a wall. There's no euro in that scenario. The US economy, I mean everything hits a wall! Everything hits a wall! It's a 'Mad Max' movie, right. OK, China gets to be the king in 'Mad Max' world. How appealing is that?"
While the saying goes "good fences make good neighbors," it appears the leadership of The EU is starting to get frustrated with the lack of acquiescence among some of the 'union's' newer or more marginal members. In a somewhat stunning statement, following ongoing and contentious meetings to discuss solutions to the migrant 'problem', EU Commissioner Timmermanns appeared to warn disagreeable member states, "There is an alternative to everything. I believe in EU cooperation because of all other forms in history have been tried to help Europeans get on better, and with the exception of this one, all other forms have led to war - so let's stick to this one."
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.
Varoufakis: Greek Deal Is "Coup", Turns Greece Into "Vassal" State, And Deals "Decisive Blow" To European ProjectSubmitted by Tyler Durden on 07/14/2015 20:33 -0400
Europeans, even those who give not a damn for Greece, ought to beware.The Euro Summit statement of yesterday morning has nothing to do with economics, nor with any concern for the type of reform agenda capable of lifting Greece out of its mire. It is purely and simply a manifestation of the politics of humiliation in action.
"Exit from the currency block is now officially something that can be used as a threat to those that don’t behave the German way."
"The last six months' crisis has exposed weaknesses in the Eurozone's governance framework that will likely reverberate for months and years into the future."
Deal Struck Following Total Capitulation By Tsipras: Market Awaits Greek Reaction To Draconian Deal TermsSubmitted by Tyler Durden on 07/13/2015 06:16 -0400
Just around 9am CET, after a 17-hour mammoth all-night session, Greece did manage to cobble together a "deal" if one may call this latest embarrassing can-kicking that, which was nothing short of total capitulation by Tsipras. As part of the deal, Greece "surrendered to European demands for immediate action to qualify for up to 86 billion euros ($95 billion) of aid Greece needs to stay in the euro" in the words of Bloomberg.
Me: How are the talks going?
EU source: "Shitty."
Me: "Getting more shitty or less?"
Source: "Pretty steady level of shittiness
"Russia intends to support the revival of Greece's economy by broadening cooperation in the energy sector. Accordingly we are studying the possibility of organising direct deliveries of energy resources to Greece, starting shortly."
Facing abject humiliation at the hands of the German finance ministry, Alexis Tsipras arrived at Sunday’s Eurosummit a broken man. Still, the PM did his best to fight the good fight, debating both the IMF's role in the third Greek program and the treatment of the country's debt with German Chancellor Merkel late Sunday evening in Brussels.
"In case no agreement could be reached, Greece should be offered swift negotiations on a time-out from the euro area with possible debt restructuring."
After a day-long meeting of the Eurogroup, the European FinMins were unable to reach a conclusion on the third Greek bailout and instead once again punted the revised term sheet, this time with absolutely draconian terms, back to Tsipras, and told him he has until tomorrow to agree to the terms, and until Wednesday to pass them into law, for talks to even begin!