en Greek Deputy FinMin Confirms Athens Is "Prepared For Rift" With Europe <p><strong>Just days after Greek FinMin Yanis Varoufakis&#39; comments </strong>about hoping the Greek people will continue to back the government &quot;after the rift,&quot; were played down by Syriza; <a href="">ekathimerini reports</a> that Alternate Finance Minister Euclid Tsakalotos on Friday made waves by seeming to confirm that the <strong>Greek government was &quot;always prepared for a rift&quot; with its European creditors</strong> - <em>&quot;If you don&#39;t entertain the possibility of a rift in the back of your mind then obviously the creditors will pass the same measures as they did with the previous [government],&quot; </em>(which perhaps explains why default risks are soaring back to post-crisis highs).</p> <p>&nbsp;</p> <p><a href=""><em>As ekathimerini reports,</em></a> alternate Finance Minister Euclid Tsakalotos on Friday made waves by saying that the <strong>Greek government was &quot;always prepared for a rift.&quot;</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Tsakalotos, who is the<strong> ministry&#39;s key official for international economic relations,</strong> made the comment during an interview on Star television channel, prompting a flurry of reactions and criticism on social media.</p> <p>&nbsp;</p> <p>Tsakalotos was speaking just <strong><span style="text-decoration: underline;">two days after Finance Minister Yanis Varoufakis was caught on camera during a visit to Crete on the occasion of Greece&#39;s Independence Day telling a citizen that he hoped Greeks would continue to back the government &quot;after the rift.&quot;</span></strong></p> <p>&nbsp;</p> <p><strong>Varoufakis&#39; comment was subsequently played down by SYRIZA </strong>commentators who said he might have been referring to a possible rift with vested interests in Greece rather than with the country&#39;s creditors.</p> <p>&nbsp;</p> <p>Apparently in the same vein, Tsakalotos said on Friday, <strong>&quot;If you don&#39;t entertain the possibility of a rift in the back of your mind then obviously the creditors will pass the same measures as they did with the previous [government].&quot;</strong> &quot;We are creating ambiguity with the creditors intentionally because they have to know that we are prepared for a rift, otherwise you can&#39;t negotiate,&quot; he said.</p> <p>&nbsp;</p> <p>He added that <strong><span style="text-decoration: underline;">the new government is intent on backing &quot;those who lost a lot in the crisis, and that we are prepared, if things do not go well, for a rift.&quot;</span></strong></p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>Prior to his comments, Tsakalotos took part in a meeting with Varoufakis and Prime Minister Alexis Tsipras.</strong></span></p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>So is the plan to bleed the EU for as much as possible for as long as possible... then pull the Grexit &quot;rift&quot; card, pivot to Russia/China? Time is ticking loudly...</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="609" height="366" alt="" src="" /> </div> </div> </div> China Creditors default Greece Fri, 27 Mar 2015 16:02:14 +0000 Tyler Durden 503918 at Will Cash Always Be Trash, Or Will It One Day Be King? <p><a href=""><em>Submitted by Charles Hugh-Smith of OfTwoMinds blog</em></a>,</p> <p><span><i>When the phantom wealth evaporates and risk assets go bidless, cash will once again be king, for the simple reason there will be so little of it.</i></span></p> <p><span><b>Occasionally it&#39;s a good idea to step away from the daily grind to consider the larger issues we all face</b>--for example, the future of the money we earn and the bits we invest in something we hope holds or increases its value.</span></p> <div><span><b>At present, cash is trash:</b>&nbsp;cash earns almost no yield, and in some countries it now earns a negative interest rate, meaning it costs you to park your cash in a bank.</span><br />&nbsp;</div> <div><span>Even cash equivalents such as one-year Treasury bonds pay almost nothing.</span><br />&nbsp;</div> <div><span><b>Those who avoided debt and risky assets since 2009 have seen their cash lose value when adjusted for inflation,</b>&nbsp;while those who borrowed to the hilt and bought risk-on assets such as stocks, junk bonds and high-end housing have skimmed monumental gains for doing what the central banks incentivized: borrowing money and buying speculative risk-on assets.</span><br />&nbsp;</div> <div><span>Correspondent Kevin K. recently sent me a link to a home in the San Francisco Bay Area that was purchased around the crash era (2008-09) for $1.4 million, and sold last year for $2.1 million.</span><br />&nbsp;</div> <div><span>Assuming a conventional 20% down payment of $280,000, the savvy buyer borrowed $1.12 million at historically low rates and offloaded the house 6 years later for a cool $560,000 profit (assuming a 6% sales commission and closing costs).</span><br />&nbsp;</div> <div><span>That&#39;s a 200% return on the $280,000 cash down payment--a healthy reward for borrowing to the hilt for a mere 6 years.</span><br />&nbsp;</div> <div><span>Anyone who margined to the hilt in 2009 and rode the stock market higher with borrowed money easily earned returns in excess of 200%.</span><br />&nbsp;</div> <div><span><b>Yet how many people did so?</b>&nbsp;Consider this chart of the wealth of U.S. households before and after the Global Financial Meltdown and Great Recession.</span><br />&nbsp;</div> <div><span><b>By the look of it, even the top 5%</b>--individuals earning taxable incomes of $120,000 or more, according to&nbsp;<a href="" target="resource">the Social Security Administration</a>, or households with total incomes around $350,000, according to the&nbsp;<a href="" target="resource">U.S. Census Bureau</a>&nbsp;(Table F-3. Mean Income Received by Each Fifth and Top 5 Percent of Families, XLS file)--<b>have yet to regain the value of assets owned in 2007, before the Global Financial Meltdown/Great Recession.</b></span><br />&nbsp;</div> <div><span><img align="middle" border="0" src="" /></span></div> <div><span>If the top 5% had borrowed/margined to the hilt and dumped all that dough into risk assets, their net wealth would have skyrocketed. Clearly, few did so.</span><br />&nbsp;</div> <div><span><b>This suggests those who did margin/borrow to the hilt were in the top 1% or .1%.&nbsp;</b><a href="" target="resource">95% of 2009-2012 Income Gains Went to Wealthiest 1%</a>:&nbsp;<i>Average inflation-adjusted income per family climbed 6% between 2009 and 2012, the first years of the economic recovery. During that period, the top 1% saw their incomes climb 31.4% &mdash; or, 95% of the total gain &mdash; while the bottom 99% saw growth of 0.4%.</i></span><br />&nbsp;</div> <div><span><b>What would have to happen for cash to be transformed from trash to &quot;cash is king&quot;?</b>&nbsp;The basic answer is:&nbsp;<i>all the risk-on credit/asset bubbles that have richly rewarded those who have speculated with borrowed money will have to implode and be impervious to central bank attempts to re-inflate the bubbles.</i></span><br />&nbsp;</div> <div><span>What conditions would have to be present for credit/assets to implode and not recover?</span><br />&nbsp;</div> <div><span>We are in uncharted territory in terms of the global bubble in credit and risk-on assets, so the answer isn&#39;t immediately clear. Here are some possibilities:</span><br />&nbsp;</div> <div><span>1. Credit growth falters.</span><br />&nbsp;</div> <div><span>2. Borrowing dries up (despite abundant credit).</span><br />&nbsp;</div> <div><span>3. A global scramble for cash to pay debt and the costs of lavish lifestyles triggers the liquidation of risk-on assets.</span><br />&nbsp;</div> <div><span>4. The risk-on assets go bidless, i.e. nobody wants luxury yachts, super-cars, estates, etc. at any price&nbsp;<i>because the value is plummeting</i>.</span><br />&nbsp;</div> <div><span>5. As&nbsp;<i>phantom wealth</i>&nbsp;evaporates, everyone realizes the collateral propping up the mountains of debt is either impaired or non-existent.</span><br />&nbsp;</div> <p><span><b>When the phantom wealth evaporates and risk assets go bidless, cash will once again be king, for the simple reason there will be so little of it.</b>&nbsp;When the opposite of the present dynamic is &quot;impossible,&quot; then the &quot;impossible&quot; becomes not just likely but inevitable. </span></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="582" height="605" alt="" src="" /> </div> </div> </div> Census Bureau Central Banks ETC Meltdown Recession recovery Fri, 27 Mar 2015 15:44:23 +0000 Tyler Durden 503917 at Are We In A Biotech Bubble? You Decide <p>To let everyone’s favorite “diminutive” Fed chair tell it, biotech valuations have been “substantially stretched” for the better part of a year. <strong>Despite that, blockbuster M&amp;A deals and IPOs for pre-revenue newcomers have managed to sustain the insanity despite the objections of both bubble-spotting naysayers and some industry insiders like Roche Ventures’ Carole Nuechterlein who recently <a href="">predicted</a> that “the end is coming.” </strong>Earlier this week we saw the sector slide amid a broad market decline and you can count us among those who think the fact that 109 out of the 150 companies in the NBI lost money over the last year is cause for concern given the sector’s absurd outperformance. Credit Suisse has now weighed in on the subject, as a new note out today asks <strong>“Are We In A Biotech Bubble?”&nbsp;</strong></p> <p>Here are a few fun facts to kick things off, including the rather astonishing note that biotechs have been the best performing sector for a half decade:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>(a)<strong> Since 1/1/2011 the BTK has delivered 204% performance vs. 64% for the S&amp;P500.</strong> The BTK is up nearly 400% since the previous peak reached during the mother of all bull markets, i.e. the dotcom fuelled 1999/2000 frenzy. The cumulative market cap of the 5 large caps is $513B currently up from $128B at the beginning of 2011 (and $82B at the beginning of 2001); (b) <strong>Biotech was the top performing sector for the last 5 years - 2011-2015;</strong> (c) <strong>The number of IPO's in 2014 (82 IPOs) has eclipsed the previous peak (67 IPOs) in 2000. </strong>There have been 12 IPOs YTD; (d) Multi $B valuations for SMID caps are now the norm. There are currently 44 public biotechs with &gt;$2B market caps (outside the 5 large caps), 1 year ago there were only 26 and in 2011 just 14.</em></p> </blockquote> <p>Ok so to summarize, t<strong>he space has outperformed the broad market by a count of 3.5:1 over the past four years, is up four fold over a decade that included the worst financial crisis since the Depression, is riding a 5-year reign as the top performing sector, and the number of public companies in the sector with $2B market caps has tripled in four years. </strong>That all looks a bit bubblish to us. Not so, says Credit Suisse:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>...we do not think we are in a "biotech bubble" per se (ok maybe the pendulum has over-swung a little!), but rather in a new era for biotech driven by fundamental changes in large and SMID cap biotech.&nbsp;</em></p> </blockquote> <p>So basically, “this time is different.” Here’s why according to the bank:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>"Biotech 1.0" is the “Hopes And Dreams Model”– Make great drugs for unmet medical needs (using great science) and sell them thus creating a unique (different to major pharma) infrastructure (high priced drugs with relatively small sales forces). Successful implementation of Biotech 1.0 allows a company to progress (or attempt) to "Biotech 2.0"– The “Nirvana Model” – Next (2nd) gen. blockbusters deliver unprecedented growth and profitability – this is what happened to BIIB, GILD, CELG and to a lesser extent AMGN 2012 to present (Exhibit 9). Biotech 2.0 not only delivered exceptional topline growth that was further leveraged to even higher bottom line growth but a massive improvement in operating margins…</em></p> <p>&nbsp;</p> <p><em>Bottom line is that companies (both early stage and now even late stage - e.g. RCPT has raised $820M from its 2013 IPO to now) do not have to license/partner products to get them through the development process given the robust financing window. What would have been the take-out for Pharmacyclics if Ibrutinib was not partnered, likewise where would Medivation be trading if Xtandi economics were 100%?&nbsp;</em></p> </blockquote> <p>Breaking that down, CS appears to be saying that we’re not in a biotech bubble because four companies managed to make it from the aptly named “Hopes And Dreams” stage to the “Nirvana Model” and because in a world where everyone is chasing after any semblance of yield, pre-revenue companies which normally would have needed to partner with a major or go bankrupt, were able to raise money and stay alive.&nbsp;</p> <p>It’s interesting that in the world of biotechs, reaching “nirvana” is apparently when you are able to deliver top-line and bottom-line growth. There’s a name for that magical combination in other sectors as well: it’s called the “Running A Successful Business Model” and as it turns out, really isn't all that uncommon. Also, it’s not entirely clear that a “robust financing window” is something to be especially enthusiastic about. Obviously if a company that otherwise would have went out of business is able to stay around long enough to produce a lifesaving drug by issuing shares that’s great, but as we’ve seen with US shale plays, allowing otherwise insolvent companies to lumber around zombie-like by virtue of a market eager to snap up secondaries and HY issuance isn’t everywhere and always a good thing and it certainly is not a sign that the sector isn’t frothy. <strong>In fact, one might easily argue that if people are financing huge risks at non-economic spreads, we’re probably in a bubble.</strong></p> <p>In any event, have a look at the following charts and judge for yourself:</p> <p><a href=""><img src="" width="600" height="318" /></a></p> <p><a href=""><img src="" width="600" height="322" /></a></p> <p><a href=""><img src="" width="600" height="311" /></a></p> <p><a href=""><img src="" width="600" height="441" /></a></p> <p>* &nbsp;* &nbsp;*</p> <p>As a reminder, here are the <a href="">facts</a>:</p> <ul> <li>Below is a chart of the 150 companies that make up the Nasdaq Biotech Index (NBI), broken down by Net Income. <ul> <li>Of the 150 companies, in the last 12 months only 41 had earnings, i.e., Net Income, amounting to just under $31 billion</li> <li>Of this $31 billion in earnings, just 5 companies - Gilead, Amgen, Shire, Biogen and Celgene - had net income over $1 billion</li> <li>Just these 5 biotechs represented 83% of all the earnings generated in the NBI</li> </ul> </li> <li>109 companies in the NBI lost money in the last 12 months.</li> <li>In summary: <strong>only 41 companies in the index were profitable, which means 72.5% of biotechs lost money</strong></li> <li>83% of Biotech earnings were generated by just 12% of the companies</li> </ul> <p>Visually this is shown as follows:</p> <p><a href=""><img src="" width="600" height="1041" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="928" height="494" alt="" src="" /> </div> </div> </div> B+ Credit Suisse NASDAQ Fri, 27 Mar 2015 15:20:03 +0000 Tyler Durden 503916 at Oil Slides As Inventories Trump Iran-Yemen Push-Pull <p>Crude oil prices have rallied sharply this week on headlines that a coalition of Sunni-ruled nations initiated airstrikes on Yemen against Shiite Houthi rebels. Goldman's Damian Courvalin notes that this rally reversed the sell-off that occurred in part on the rising odds of a deal with Iran being reached. Courvalin expects both events to <strong>have negligible near-term supply impacts, with the build in crude inventories set to continue in 2Q15</strong>. <em>Longer term, a deal with Iran could lead to greater OPEC supplies although the timing of the sanction relief remains uncertain. </em>It appears today's weakness indicates a dawning realization that there's still too much...<em><br /></em></p> <p>&nbsp;</p> <p>Big roundtrip in crude but supply will build...</p> <p><a href=""><img src="" width="600" height="351" /></a></p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>YEMEN:</strong></span> While Yemen is a small producer (145 kb/d in 2014), the price rally is driven by fears of potential escalation and the proximity of the Bab el-Mandeb strait. While the conflict points to worsening Shiite-Sunni relations in the region, the near-term potential impact on oil production is limited, with the conflict far from Saudi’s oil fields and limited to targeting the Houthi rebels.<strong> While closure of the strait could impact 3.8 mb/d of crude and product flows (2013 EIA estimate), the strait is a transit point rather than a chokepoint.</strong> Its closure would keep tankers departing the Persian Gulf from reaching the Suez Canal and the SUMED Pipeline, diverting them around Africa, for an additional 10 to 15 days transit time. </p> <p><span style="text-decoration: underline;"><strong>IRAN:</strong></span> Reports of progress in the negotiations to lift the Iran sanctions increase the odds that a deal may be reached by month end. The pace of relief from US sanctions seems to remain the key unresolved issue given the need for US Congress to vote to permanently lift them. If a deal is reached, a tentative timeline for it to be finalized would be the end-of-June deadline and the lift of sanctions would likely be progressive, contingent on observed progress in implementing the deal. <strong>As a result, the impact of any sanctions relief on Iran’s production could potentially not occur until 2H15 or later and could initially be limited to Iran drawing down its floating storage of c. 30 mb if the EU crude import ban and shipping insurance restriction get lifted.</strong></p> <p>While sanctions relief could lead Iran production to increase by a few thousand barrels per day initially, a sustainable increase in Iranian production would however only occur gradually given (1) the required investment to reverse the field output restrictions and decline rates, (2) the need for more favorable contracts and signs that sanctions relief are sustainable to attract foreign investment. As a result, we don’t see a deal as dramatically impacting the global oil cost curve but instead contributing to our expectation for gradually rising OPEC production in the New Oil Order.<strong> Independently of the sanctions, we expect Iran exports to ramp up in April once India starts its new fiscal year, contributing to the 2Q stock build. </strong></p> <p>* * *</p> <p>It appears the reality of accelerating production and static storage capacity is starting to overhwelm geopolitical events.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1620" height="948" alt="" src="" /> </div> </div> </div> Crude Crude Oil headlines India Iran OPEC Reality Fri, 27 Mar 2015 14:59:27 +0000 Tyler Durden 503915 at Euro Basis Swaps Keep Diving <p><a href=""><em>Submitted by Pater Tenebrarum via Acting-Man blog</em></a>,</p> <h3><strong>An Accelerating Trend</strong></h3> <p>While the euro itself has recovered a bit from its worst levels in recent sessions, <strong>euro basis swaps have fallen deeper into negative territory.</strong> In order to bring the current move into perspective, we show a long term chart below that includes the epic nosedive of 2011. We are not quite sure what the move means this time around, since there is no <em>obvious</em> crisis situation &ndash; not yet, anyway.</p> <p data-spx-slot="1"><strong>A negative FX basis usually indicates some sort of concern over the banking system&rsquo;s creditworthiness and has historically been associated with euro area banks experiencing problems in obtaining dollar funding. </strong>This time, the move in basis swaps is happening &ldquo;quietly&rdquo;, as there are no reports in the media indicating that anything might be amiss. Still, something <em>is</em> apparently amiss:</p> <p style="text-align: center;"><a href=""><img alt="" src="" style="width: 600px; height: 317px;" /></a></p> <p style="text-align: center;">Party like it&rsquo;s 2011: Three month, one year, three year and five year euro basis swaps &ndash; click to enlarge.</p> <h3><strong>Worries About Greece?</strong></h3> <p>It is possible that concerns over Greece find expression in this rather obscure market &ndash; apart from the Greek government bond market itself that is. The Greek yield curve remains steeply inverted, with 2 year notes yielding 20.14%, 5 year notes yielding 15.47% and 10 year bonds yielding 11.19%. Such steep yield curve inversions have been a typical feature of sovereign debt crisis conditions in the past. Greece&rsquo;s bond yields are actually slightly below recent peaks, as the Tsipras/Merkel meeting has briefly rekindled hopes.</p> <p>However, the Greek government is indeed running out of money &ndash; it has adopted all sorts of stop-gap measures to keep the ship afloat, as a result of which it is now running out of those as well. The ECB meanwhile has tightened the screws by making a drip-feed operation out of ELA and telling Greek commercial banks that they are no longer allowed to increase their holdings of Greek government bills.</p> <p>EU officials are reportedly discussing the possibility of Greece being forced to impose capital controls (similar to what happened in Cyprus) if the government misses any upcoming debt repayments. The ECB&rsquo;s recent decisions have been justified by a) the prohibition of direct central bank financing of governments and b) its need to limit its exposure because it appears as though Greece may not come to an agreement with its creditors after all.</p> <p>Time to pry further aid tranches from the wallets of its creditors is running short for the Greek government. It will very soon have to present a reform plan that pleases the EU, something it has not been very adept at so far. Bondholders have every reason to be worried. 5 year CDS spreads on Greek sovereign debt have recently jumped to 1,840 basis points, moving up by 110.50 bps in a single day yesterday. This implies a very high default probability (CPD: 78.95%). By comparison, 5 year CDS spreads on Cypriot government debt stand only slightly above 500 bps at present.</p> <p style="text-align: center;">&nbsp;</p> <p data-spx-slot="1" style="text-align: center;"><a href="" target="_blank"><img alt="2-Greece 5-Year Bond Yield(Daily)" class="aligncenter wp-image-36637" height="584" src="" width="600" /></a></p> <p data-spx-slot="1" style="text-align: center;">Greece, 5 year government bond yield &ndash; short term volatility is largely driven by news flow, but the larger trend looks definitely ominous &ndash; click to enlarge.</p> <p>If Greece were to exit from the euro, the euro area could well emerge stronger, as its weakest link would be gone. The problem is only that the often repeated assertions about the euro&rsquo;s &ldquo;irreversibility&rdquo; would no longer be credible, since a Greek exit would <em>ipso facto</em> prove that euro membership can indeed be reversed.</p> <p>However, European banks have scarcely any exposure to Greek government debt anymore, which has by now been largely shifted to assorted tax payers. They may still have to write off some loans to the private sector though and could fall victim to whatever fallout ensues if a Greek default actually occurs. Another potential problem are dollar-denominated loans extended by euro area banks to emerging market borrowers, as many EM currencies have plummeted relative to the dollar.</p> <p>Many of these assets are therefore likely on shaky ground. Consider the case of the Swiss franc: In Austria, Hypo Alpe Adria Bank&rsquo;s successor Heta (a &ldquo;bad bank&rdquo; that is tasked with winding Hypo&rsquo;s assets down) just wrote off 85% (!) of its outstanding CHF loans, as a result of the SNB ditching the minimum exchange rate. This leads us to suspect that dollar loans extended by euro area banks to EM borrowers with plunging local currencies could prospectively be in far worse shape than is generally assumed.</p> <p>&nbsp;</p> <h3><strong>Speculation in Euro Futures</strong></h3> <p>Speculators meanwhile are holding a massive net short position in euro futures. Although the standardized futures market is small relative to the size of the total FX market, it definitely tells us something about overall sentiment and positioning. It can be seen as akin to a poll; although it is a comparatively small market, the information conveyed by its structure is nevertheless statistically significant.</p> <p data-spx-slot="1">Below is a chart of the net commercial hedger position in euro futures, which is the inverse of the net speculative position (big and small speculators combined).</p> <p data-spx-slot="1" style="text-align: center;"><a href="" target="_blank"><img alt="3-euro hedgers" class="aligncenter wp-image-36638" height="380" src="" width="600" /></a><br />Speculators continue to bet heavily against the euro. Their net short position (the other side of the net long position of hedgers shown in the chart) remains close to its previous all time highs, which were reached when talk of the euro&rsquo;s imminent demise was rife everywhere &ndash; click to enlarge.</p> <p>This large bet against the euro is potentially vulnerable. For one thing, the Greek problem may yet be resolved by a resumption of the giant &ldquo;troika&rdquo; (sorry, &ldquo;institutions&rdquo;) extend &amp; pretend scheme. For another, euro area macro-economic data have strengthened of late, while US macro-data have weakened rather noticeably. So far this development has been ignored by FX traders, but that doesn&rsquo;t necessarily mean they will keep ignoring it. If perceptions about the likely duration of the current central bank policy divergence were to change, a great many well laid plans would stand to be revised quite suddenly.</p> <p>On the other hand, the Greek situation evidently represents a sizable event risk for the euro, though we hasten to add that the currency&rsquo;s reaction to a &ldquo;Grexit&rdquo; is not set in stone. It could well become a &ldquo;sell the rumor, buy the fact&rdquo; situation. Incidentally, the event has recently been renamed &ldquo;Graccident&rdquo;, i.e., &ldquo;Grexit&rdquo; by means of misfortune dispensed by the Fates. Under this new terminology, it would no longer be anyone&rsquo;s fault; obviously a blessing in disguise from the perspective of the politicians/bureaucrats involved.</p> <p>&nbsp;</p> <p style="text-align: center;"><img alt="fates" class="aligncenter wp-image-36640" height="460" src="" width="600" /></p> <p style="text-align: center;">Among the three Fates, Atropos is currently the most dangerous to Greece, on account of the Fates&rsquo; division of labor: Clotho spins the thread, Lachesis measures it, and Atropos cuts it.</p> <h3><strong>Conclusion</strong></h3> <p>Something is odd about the recent move in euro basis swaps. Last time a a similar move occurred, there was a palpable sense of panic in the markets, with European bank stocks plunging, bond yields in peripheral euro area countries soaring and gold rising to almost $2,000/oz. The only similarity this time is the weakness of the euro (which is even more pronounced than in 2011/2012). Other than that, the markets don&rsquo;t seem very concerned, given that yields in e.g. Spain and Italy are sitting at record lows and European stock markets are strong.</p> <p>There are certainly concerns about Greece, but they seem strangely subdued and isolated (Greek stocks and bonds are obviously doing badly). We can be fairly certain though that the soaring dollar represents a problem for a great many borrowers, many of whom happen to be clients of European banks. We plan to continue to keep an eye on this and will post updates if anything momentous seems to happen.</p> <p>&nbsp;</p> <p style="text-align: center;"><a href="" target="_blank"><img alt="4-Euro, daily" class="aligncenter wp-image-36639" height="358" src="" width="600" /></a></p> <p style="text-align: center;">The euro has a small bounce &ndash; quite possibly of the dead cat variety. However, the large speculative short position remains vulnerable to a change in perceptions &ndash; click to enlarge.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="962" height="509" alt="" src="" /> </div> </div> </div> B+ Bad Bank Bond CDS Creditors default Default Probability Futures market Greece Italy Sovereign Debt Swiss Franc Volatility Yield Curve Fri, 27 Mar 2015 14:34:45 +0000 Tyler Durden 503914 at Explaining The Latest War In The Middle East With One Cartoon <p>Because one cartoon is worth a thousand "sponsored post" <em>all you need to know</em> explainers.</p> <p><a href=""><img src="" width="600" height="428" /></a></p> <p><em>h/t @ianbremmer</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="600" height="428" alt="" src="" /> </div> </div> </div> Middle East Fri, 27 Mar 2015 14:17:02 +0000 Tyler Durden 503913 at UMich Consumer Sentiment Drops For 2nd Month In A Row, First Time Since Oct 2013 <p><strong>For the first time since October 2013, UMich Consumer Sentiment dropped for consecutive months </strong>(printing a final 93.0 for March down from 95.4 in Feb, but above the flash print earlier in the month). Under the surface there are concerns with an <strong>increasing number of respondents noting that household finance are worse than 5 years ago</strong>, and an increasing number of people seeing now as a &quot;bad time to buy&quot; a house or car.</p> <p>&nbsp;</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 302px;" /></a></p> <p>&nbsp;</p> <p><em>Charts: bloomberg</em></p> <p>&nbsp;</p> <p><em>Charts: Bloomberg</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="963" height="484" alt="" src="" /> </div> </div> </div> Consumer Sentiment Fri, 27 Mar 2015 14:09:25 +0000 Tyler Durden 503912 at Euro Zone "Danger Zone" - Greek Bank Runs and UK, Irish Property Prices Falling ... Again <p><strong>- Gold looks set for second consecutive week of gains</strong><br /><strong>-&nbsp;Japan’s QE fails - Returns to zero inflation</strong><br /><strong>-&nbsp;‘Master of the universe’ central bank speeches today</strong><br /><strong>- ETF and COMEX holdings fall as gold flows East</strong><br /><strong>- JP Morgan to be part of new gold ‘fix’</strong><br /><strong>- Greeks pull €8 billion from banks</strong><br /><strong>- “No one knows how to solve the situation in Greece”</strong><br /><strong>- Bundesbank warns debt in euro zone has entered “danger zone”</strong><br /><strong>- UK and Irish house prices are falling … again</strong></p> <p>Today’s AM fix was USD 1,198.00, EUR 1,106.70 and GBP 805.32 per ounce.<br />Yesterday’s AM fix was USD 1,209.40, EUR 1,097.26 and GBP 809.23per ounce.</p> <p>Gold climbed 0.65 percent or $7.80 and closed at $1,203.40 an ounce yesterday, while silver rose 0.47 percent or $0.08 at $17.05 an ounce.</p> <div class="mceTemp"> <dl id="attachment_2265"> <dt><a href=""><img src="" alt="Gold in U.S. Dollars - 1 Week" width="606" height="369" /></a></dt> <dd><em>Gold in U.S. Dollars - 1 Week</em></dd> </dl> </div> <p>In the end of day trading in<a href="">&nbsp;Singapore, gold prices</a>&nbsp;climbed 0.3 percent to $1,199.95 an ounce after reaching a high on Thursday of &nbsp;$1,219.40. Gold surged &nbsp;after news of the&nbsp;<a href="">bombing in Yemen</a>&nbsp;but prices were capped at the $1,220 level prior to a retracement of much of the initial gains.</p> <p><strong>Oil&nbsp;</strong>prices jumped over 6 percent at one stage and stock markets worldwide slumped yesterday after Saudi Arabia and allies carried out air strikes, which fueled worries internationally that global energy shipments may be put at risk.</p> <p>The U.S. claims that&nbsp;<strong>Saudi Arabia</strong>&nbsp;kept some key details of its military action in Yemen from Washington until the last moment. Saudi Arabia’s more aggressive role is said to be in order to compensate for perceived U.S. disengagement. &nbsp;U.S. President Obama's Middle East policy increasingly relies on proxies rather than direct U.S. military involvement. He is training Syrian rebels to take on the government of President Bashar Assad and this week launched air strikes to back up Iraqi forces trying to retain the city of Tikrit.</p> <p>All of this has the real potential for&nbsp;‘<strong>blowback</strong>’&nbsp;in the classic sense and risks leading to a hot war involving Russia.</p> <p>Gold pulled back today as traders took profits after a seven-day rally in the yellow metal. In spite of the price dip gold is expected to rack up a weekly gain of around 1.5 percent.&nbsp;<strong>Gold looked overvalued</strong>&nbsp;after the 7 days of price gains and the final rally to over $1,219/oz. The last winning streak of 7 consecutive days in a row was in August 2012. Gold appeared&nbsp;<strong>overbought&nbsp;and was due a correction.</strong></p> <p>As tends to happen, gold is now testing previous resistance at $1,200/oz which may become support.</p> <p><strong>Gold may have a second week of gains&nbsp;today</strong> and if this happens we would be constructive on further price gains next week. Momentum is a powerful force in markets and the recent gains could see technical traders pile in the long side pushing prices higher next week.</p> <div class="mceTemp"> <dl id="attachment_2267"> <dt><a href=""><img src="" alt="Gold in GBP - 1 Week" width="617" height="364" /></a></dt> <dd><em>Gold in GBP - 1 Week</em></dd> </dl> </div> <p>However, a lower weekly cose today could lead to sharp selling on futures markets near the close today and at the open in Asia which could push prices lower.</p> <p>The question is whether the recent rally is another flash in the pan for gold or the start of a more meaningful rally in prices. We believe it is too soon to tell. However, we are confident that gold is in the process of bottoming prior to<strong>&nbsp;further gains in the coming months.</strong></p> <p><strong>Japan has returned to zero inflation</strong>&nbsp;after recently emerging from recession, once again highlighting how ineffective QE has been at creating a real, sustainable economic recovery.</p> <p>It's a day of&nbsp;<strong>‘master of the universe,’ central bank</strong>&nbsp;speeches as both Bank of England governor Mark Carney and Fed chief Janet Yellen preach their ultra loose policies and certain market participants lap up the ‘Gospel according to Mark’ … and Janet. Central bank believers will be watching for indications of their position on rate rise timings and their crystal ball view on the economies of the UK and US respectively.</p> <p><strong>U.S. GDP</strong>&nbsp;estimates for the fourth quarter are forecast for an upward revision from 2.2 per cent to 2.4 per cent on the back of an increase in consumer spending.</p> <p>Yesterday saw a huge withdrawal of 5.97 tonnes from the world's largest&nbsp;<strong><a href="">gold ETF</a></strong>, New York-listed SPDR Gold Shares. The nearly 6 tonne fall to 737.24 tonnes on Thursday, its lowest level since January.This month's outflow from the SPDR has totalled just over 34 tonnes so far, the largest of any month since December 2013.</p> <p><a href=""><img src="" alt="goldcore_chart2_27-03-15" width="660" height="458" /></a></p> <p><a href=""></a>Over on the&nbsp;<strong>COMEX,&nbsp;</strong>withdrawals continue. Earlier this year, the COMEX had 303 tonnes of total gold inventories. Yesterday the total inventory fell to 248.27 tonnes. This is a loss of 55 tonnes over that period and lately the withdrawals have been intensifying.&nbsp;<a href="">Gold continues to flow from the West to East.</a></p> <p><strong>JPMorgan&nbsp;</strong>will be one of seven participants in the&nbsp;<strong>LBMA gold price&nbsp;</strong>according to ICE as reported by Eddie van der Walt in Bloomberg.</p> <p>JPMorgan is to be among seven companies able to participate in LBMA Gold Price benchmark, ICE said today in statement published online. Other participating banks are Barclays, Goldman Sachs, HSBC, Bank of Nova Scotia, SocGen and UBS.</p> <p>The new LBMA gold price has all the hallmarks of the old fix with just a few banks taking part in it and little participation from large players in the industry - miners, mints and refiners. Also it is noteworthy that there is no non Western banks taking part in the new gold fix. None from Africa, South America or Asia and none from China where there has been speculation of involvement in the new fix.</p> <p>The crisis in&nbsp;<strong>Greece looks set to escalate in the coming days</strong>.&nbsp;Greek bank deposits plunged to an almost 10 year low in February as some €8 billion ($8.7 billion) were withdrawn from lenders, amid rising political uncertainty and worries over the country’s possible exit from the eurozone.</p> <p>Total deposits fell to €152.4 billion euros in February, down from €160.3 billion in January, data from Greek central bank showed yesterday. This is the lowest level since June 2005.</p> <p>Greece is hurrying to compile a list of economic overhauls that satisfies its creditors and secures desperately needed euros, as it runs increasingly low on cash and debt payments loom.</p> <p>Officials in Greece's new government, led by the leftist Syriza party, aim to submit a list of overhauls by Monday at the latest, officials have said. Greece hopes that eurozone finance ministers can meet and approve the country's overhaul programme by next Wednesday.</p> <p>Austria's Finance Minister Hans-Joerg Schelling admitted today that&nbsp;<strong>“no one knows how to solve the situation in Greece”</strong>.</p> <p>"We have a crisis of trust with Greece. Every day something is agreed upon and the next day it's invalid," Mr Schelling said speaking to the Klub der Wirtschaftspublizisten, a group of financial journalists in Vienna.</p> <p>The head of Germany’s&nbsp;<strong>Bundesbank&nbsp;</strong>has warned&nbsp;<strong>debt in the euro zone</strong>&nbsp;had entered the&nbsp;<strong>“danger zone”</strong>&nbsp;and called for banks’ exposure to the debt of individual countries to be capped.</p> <div class="mceTemp"> <dl id="attachment_2269"> <dt><a href=""><img src="" alt="Gold in Euros - 1 Week" width="607" height="370" /></a></dt> <dd><em>Gold in Euros - 1 Week</em></dd> </dl> </div> <p>He is opposed to more emergency funding for Greece, accusing Athens of gambling away “a lot of trust”.</p> <p>Speaking to the weekly Focus magazine Jens Weidmann said: “Until the autumn, an improvement in the economy had been discernible. But the new government has gambled away a lot of trust.”</p> <p>“I am opposed to an increase in the emergency loans,” Mr Weidmann, who also sits on the European Central Bank’s decision-making governing council, said.</p> <p><strong>UK and Irish house prices are falling</strong>.&nbsp;The UK’s Nationwide house price index has revealed a seventh consecutive month of a slowdown in the UK property market. House price falls in central London have start to spread out across the capital to South West London.</p> <p>In&nbsp;<a href="">Ireland, property</a>&nbsp;prices fell again in February. Residential property prices fell by 0.4 per cent nationally last month, with the decline in Dublin rising to 0.7 per cent, according to latest official figures. Results show more than 2 per cent has been wiped off the value of homes in the capital since the beginning of the year.</p> <p>In London in late morning trading gold is at $1,201.73 or down 0.30 percent. Silver is at $17.24, up 0.23 percent and platinum is $1,142.70 down 0.72 percent.</p> <p><strong>Updates and Award Winning Research&nbsp;<a href="">Here</a></strong></p> Bank of England Barclays China Creditors Eurozone Gambling Goldman Sachs goldman sachs Greece Ireland Janet Yellen Japan Middle East None Recession recovery Saudi Arabia SocGen Fri, 27 Mar 2015 13:52:23 +0000 GoldCore 503911 at How Strong Will The Next Precious Metals Rally Be? <p><a href=""><img src="" alt="gold trading COMEX" width="547" height="367" style="display: block; margin-left: auto; margin-right: auto;" class=" wp-image-10862 aligncenter" /></a> </p> <p style="text-align: justify;"><span style="line-height: 1.5em;">Exactly one week ago, gold was trading close to its multi-year low and a lot of observers were convinced that gold was ready to collapse to $1,000 per oz in a similar fashion as it did in April and June of 2013.</span></p> <p style="text-align: justify;">However, gold has repeatedly misguided investors in the past and it did so once again. <strong>A rally has started in the precious metals complex</strong>, namely, triggered by the Fed's announcement that it would not raise interest rates in the short term.</p> <p style="text-align: justify;"><strong>The rally looks constructive so far.</strong> Chart-wise there is plenty of upside, evidenced by the RSI reading in the 50ish area (upper pane) and a rising MACD (lowest pane).</p> <p style="text-align: center;"><a href=""><img src="" alt="1" width="450" height="352" class="aligncenter size-full wp-image-10841" /></a></p> <p style="text-align: justify;">Gold has been hovering between the $1,280 – $1,320 area for almost two years now. The long-term consolidation pattern is a constructive development, as it will function as a solid foundation for a new rally.</p> <p style="text-align: justify;">However, all of this does not give any additional insight into the <em>strength of the new rally</em> that started last week. <strong>What indicator provides reliable information to that end?</strong></p> <h2 style="text-align: justify;">The Indicator</h2> <p style="text-align: justify;">Our empirical evidence shows that <strong>the weekly Commitment of Traders (COT) report</strong> provides the best clues, in particular the evolution of the short positions of commercial traders.As readers probably know, the COT reports highlight the futures positions of large speculators, small speculators and commercials in the COMEX gold and silver futures market.</p> <p style="text-align: center;"><em>We often get the feedback from readers that gold and silver prices are manipulated because of the COMEX, so why analyze futures positions?</em></p> <p style="text-align: justify;">While it is true that the futures market is the epicenter of manipulation, it also provides clues for the direction of the prices of precious metals, because it reveals the positions of ‘da boyz’, so why not use those insights?</p> <p style="text-align: justify;">To that end, the key is to follow the movement of the short positions of commercials. In particular, it is the <em>rate of change</em> in accumulation of short positions that mostly determines the duration and strength of a rally. <strong>The opposite is true as well</strong>: the rate of change of the reduction of commercial shorts provides clues about the duration of the price decline.</p> <p style="text-align: justify;">The latest Commitment of Traders Report for futures positions held at the close of trading on Tuesday March 17th 2015 is shown below (courtesy of <a href="">Sharelynx</a>, annotations on the chart are ours). The chart contains week-on-week data since April 2012.</p> <p style="text-align: justify;">As readers can easily observe, the four substantial price rallies in the last three years are indicated with the green dotted line on the upper pane.</p> <p style="text-align: justify;">Note what happened with the short positions of commercial traders in each of those four instances: the blue bars on the second pane grew very fast. The faster the accumulation of shorts <em>compared to prior rallies</em>, the higher the probability that the rally will be short-lived.</p> <p style="text-align: justify;">That pattern has become pretty clear since June 2013. Look at the intermediate tops (marked by 1, 2 and 3) and the rate of change of commercial short positions during each rally. The rallies have been consistently shorter, while commercials bought faster and more short positions during each rally.</p> <p style="text-align: center;"><a href=""><img src="" alt="2" width="440" height="429" class="aligncenter size-full wp-image-10842" /></a></p> <p style="text-align: justify;">The opposite is true as well here. During the big price decline from October 2012 till June 2013, commercials were slow in covering their short positions. On the other hand, mainly after the intermediate tops 2 and 3 (see chart above), the short covering process went very fast. That pattern is even more outspoken since the last intermediate peak at the end of January.</p> <p style="text-align: center;"><strong><em>Based on the data we can conclude that the current setup in gold is truly perfect, and it points to a meaningful rally, at least in the short term.</em></strong></p> <h2 style="text-align: justify;">The Setup</h2> <p style="text-align: justify;">In other words, the ongoing cycle of selling seems behind us and a new short-term cycle should have started last week. Whether this rally will be short-lived or not depends on how fast commercials will buy shorts <em>compared to previous rallies</em>.</p> <p style="text-align: justify;">A similar view on the Commitment of Traders report in<strong> silver paints a less bullish picture.</strong> As seen on the next chart, the reduction of commercial shorts in the last month was impressive, but in absolute terms the short positions are not at an extreme low. When compared to previous intermediate bottoms, this is a good setup but not THE perfect setup (not as good as in gold).</p> <p style="text-align: justify;">Let's zoom in on the below chart. Note how each rally since June 2013 (annotations 1, 2, 3 and 4) has been sold each time in a more aggressive way. Commercial shorts added more shorts with each rally, and they did so faster. That is reflected in the shorter duration of each subsequent rally.</p> <p style="text-align: center;"><a href=""><img src="" alt="3" width="447" height="438" class="aligncenter size-full wp-image-10843" /></a></p> <p style="text-align: left;">Although the absolute number of commercial shorts does not stand at an extreme low, there is certainly the possibility of a substantial rally. Again, the setup is good but not perfect. It is the change during the rally that will determine its strength and duration.</p> <p style="text-align: justify;">Mind that there is a <strong>major divergence on the chart</strong>, and we are not sure at this point what that means, although we have an interesting working assumption. The open interest has been steadily rising; it currently is close to its all-time high of 2008 (not visible on the chart).</p> <p style="text-align: justify;">Rising open interest in an uptrend pushes the price higher. Rising open interest in a downtrend, as seen on the chart above by the green bars until June 2013, pushes prices lower.</p> <p style="text-align: justify;">What is interesting is that, at this time, more and more effort is needed (rising open interest) to push the price lower, with a diminishing effect on the silver price itself. We have a strong feeling that this points to selling exhaustion, which if correct, <em>would set the scene for a trend change</em>.</p> <h2 style="text-align: justify;">The Conclusion</h2> <p style="text-align: justify;">The <strong>perfect setup in gold</strong> combined with a good setup in silver, along with the U.S. dollar seemingly entering a cooling-off period, points to a short-term rally in metals. This has also been confirmed in the <em><strong>price action of mining companies</strong></em>.</p> <p>&nbsp;</p> <p><strong><a href="" target="_blank">&gt;&gt;&gt; Check Out Our Latest Gold Report!</a></strong></p> <p><em>Sprout Money offers a fresh look at investing. We analyze long lasting cycles, coupled with a collection of strategic investments and concrete tips for different types of assets. The methods and strategies from Sprout Money are transformed into the <a href="">Gold &amp; Silver Report</a> and the <a href="">Commodity Report</a>.</em></p> <p><em>Follow us on Twitter <a href=""><strong>@SproutMoney</strong></a></em></p> Commitment of Traders Futures market MACD Precious Metals Price Action Rate of Change Twitter Twitter Fri, 27 Mar 2015 13:40:33 +0000 Sprout Money 503910 at Will Greece Call A Referendum On Euro Membership? <p>The rumor mill was alive Friday morning with<strong> reports that the resignation of Greek FinMin Yanis Varoufakis was imminent. Unsurprisingly, the Greek government is out calling the reports “unfounded”:&nbsp;</strong></p> <p>Via Bloomberg:&nbsp;</p> <ul> <li><span style="font-size: 1em; line-height: 1.3em;">Speculation a long way from reality: Sakellaridis</span></li> </ul> <p>Although we don’t know exactly what that means, what we do know is that Bundesbank chief <strong>Jens Weidmann isn’t buying what the Greek government is selling, isn’t enthusiastic about perpetuating the charade by allowing for more room under the ELA cap, and suggested that a “disorderly insolvency” may be a foregone conclusion.</strong> Here’s more (again, via Bloomberg):&nbsp;</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em style="font-size: 1em; line-height: 1.3em;">Weidmann ‘doesn’t buy’ argument Greek debt insurmountable.</em></p> <p>&nbsp;</p> <p><em>Bundesbank President Jens Weidmann says he’s against expanding emergency liquidity for Greece, Focus magazine reported, citing an intv.&nbsp;</em></p> <p>&nbsp;</p> <p><strong><em>“When a member country of a currency union decides not to meet its obligations and stops payment to creditors, then a disorderly insolvency can’t be avoided”</em></strong></p> <p>&nbsp;</p> <p><em>New Greek government has “squandered a lot of trust”</em></p> <p>&nbsp;</p> <p><em><span style="font-size: 1em; line-height: 1.3em;">There’s “not much time left” to reach solution on Greece</span></em></p> <p>&nbsp;</p> <p><em>“Greek interest burden relative to economic performance in the current year is lower than Italy, Portugal or Ireland”</em></p> </blockquote> <p>Meanwhile, the Germans note that they have no idea what Syriza is likely to come up with:&nbsp;</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>German govt doesn’t have any information about expected Greek proposals for economic reforms, Finance Ministry spokeswoman Marianne Kothe tells reporters in Berlin.</em></p> <p>&nbsp;</p> <p><em>Impact of Greek proposals will have to be “quantifiable,” in line with euro-area agreements: Kothe.</em></p> </blockquote> <p>And it now appears as though the reforms list is indeed ready for review:</p> <ul> <li><strong><span style="font-size: 1em; line-height: 1.3em;">GREEK REFORMS LIST IS READY, GOVT OFFICIAL SAYS</span></strong></li> <li><span style="font-size: 1em; line-height: 1.3em;">GREEK DELEGATION FLIES TO BRUSSELS TODAY: GOVT OFFICIAL</span></li> </ul> <p>So that’s where the situation stands. For their part, UBS isn’t optimistic. “The negotiations between the Greek government and its international partners on the long-stalled Troika review have not progressed well,” the bank notes dryly. UBS goes on to discuss why April is likely to be the toughest month yet for Athens as the government races to find a solution ahead of looming debt payments in July. Here’s more:&nbsp;</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong><em>Although the government has pledged to present a reform list early next week, we expect negotiations to remain protracted, and given substantial debt service in the coming weeks, we think market sentiment might turn a lot more nervous again in April. This could also trigger further deposit outflows from the Greek banking sector, which is heavily reliant on the Eurosystem's Emergency Liquidity Assistance (ELA)...</em></strong></p> <p>&nbsp;</p> <p><em><strong>The government's budget position looks increasingly stretched, and sharply lower tax revenues have triggered a steep year-on-year decline in Greece's primary surplus. </strong>This has forced the government to resort to increasingly desperate measures to fend off cash shortages...</em></p> <p>&nbsp;</p> <p><em><strong>Given the complicated nature of Greece's fiscal situation and the highly controversial discussions around structural reforms, we would not rule out the list falling short of the Troika's demands and the negotiations proceeding only very slowly</strong>. And to keep the pressure on the Syriza government, Greece's European partners are unlikely to grant quick financial relief…</em></p> <p>&nbsp;</p> </blockquote> <p>Here’s what the government is up against in terms of financial obligations in the coming days:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>At the end of March it will have to mobilize an estimated €1.7bn for salary and pension payments. On 9 April, it faces IMF repayments of SDR360.45m/€457.8m. On 14 and 17 April, respectively, it must roll over T-bills worth €1.4bn and €1.0bn. Most of these are held by Greek banks, but a proportion is reportedly owned by foreign investors, who might not want to stay involved in the T-bill trade; this could make the rolling-over more difficult.</em></p> </blockquote> <p>The cash situation does not look good:&nbsp;</p> <p><a href=""><img src="" width="600" height="236" /></a></p> <p>And neither does the timing of repayment obligations:&nbsp;</p> <p><a href=""><img src="" width="464" height="317" /></a></p> <p><a href=""><img src="" width="472" height="392" /></a></p> <p>In the end, UBS suggests that the government might well put the whole thing to a popular vote and should Greeks opt to remain in the currency bloc, Syriza could use that as leverage when it comes to securing popular support (or at least acquiescence) for tougher economic reforms:&nbsp;</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em><strong>One of the potential options Syriza might eventually consider could be a popular referendum on Eurozone membership – a step that would obviously involve great risks and uncertainties.</strong> But if, presumably, a majority of Greek voters were to endorse Greece's ongoing membership in the monetary union, Syriza could then argue that this will require the government to make unpopular concessions to the "institutions". If this scenario were to materialize, we believe a referendum might be called in late April or early May, once the end-April deadline nears or expires.</em></p> </blockquote> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="701" height="277" alt="" src="" /> </div> </div> </div> Creditors Eurozone Greece Italy Market Sentiment Portugal Reality Fri, 27 Mar 2015 13:35:05 +0000 Tyler Durden 503909 at