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Stocks Coiled In Anticipation Of Today's Eurogroup Meeting
The only question on traders' minds today, with the lack of any macro news out of the US (except for the DOE crude oil inventory update at 10:30am Eastern expecting a build of 3.5MM, down from 6.33MM last week, and the 10 Year bond auction at 1pm) is which Greek trip abroad is more important: that of FinMin Varoufakis to Belgium where he will enter the lion's den of Eurogroup finance ministers at 3:30pm GMT, or that of the foreign minister Kotzias who has already arrived in Moscow, and where we already got such blockbuster statements as:
- LAVROV: RUSSIA WILL CONSIDER AID REQUESTS, IF GREECE MAKES THEM
- KOTZIAS: GREECE IS WILLING TO MEDIATE BETWEEN EU, RUSSIA
Or perhaps both are critical, as what happens in Brussels will surely impact the outcome of the Greek trip to Russia?
In any case, flashing red headlines - both factual and trial balloony - today will be fast and furious, with many kneejerk responses, and with the "market" reaction most likely to be the opposite of the expected, logical one as the ECB and SNB both intervene fast and furiously to make sure Greece doesn't get any ideas and become emboldened to demand even more should risk sell off on any increase to its hard line negotiating stance.
Although Greek asset have seen some slight selling since the open and the National Bank of Greece trades as the worst performing stock in Europe, this has failed to fully carry over into the core and the DAX trades flat with no standout out-or-underperforming names in the index to drive firm direction.
The GR/GE 10y yield spread sits wider by over 30bps on the day at just under 1000bps as the ASE trades lower by 3.5%. Impending supply of EUR 5bln from Germany weighed on bunds at the Eurex open ahead of Germany hitting the market with the equivalent 24K 2y Schatz futures with their zero coupon 2y again expected to receive a cool reception. The UK tapped the market with a 30y and the US are due later on today with their benchmark 10y note (266K Mar 10y futures equiv). But perhaps the most notable developments in fixed income was that both Germany and Sweden (for the first time ever) sold paper with negative yields earlier today, getting negative 22 bps for 2 year and 5.03 bps for 4 year paper, respectively. In the meantime, someone continues to hit the sell button with clockwork precision on the Treasury long-end, just because suddenly US paper has become as hated to central bankers as gold.
For the time being, the EUR/USD was seen drifting lower (with the USDJPY rising) in early trade as most algos expect to see "worse than expected" headlines out of Brussels and are pricing it in. The pair has traded in a range of just under 30 pips and inbetween yesterday’s low of 1.1274 and high of 1.1355 despite some weakness in EUR against other major currencies.
A slide in the EUR/GBP cross to lows last seen in Jan 2008 has helped support a bid in GBP/USD and short-covering ahead of tomorrow’s BOE inflation report is helping to lift the pair in quiet conditions. The prospect of a slightly more hawkish report from the BoE tomorrow has also led to a slight climb in UK rates with the short sterling strip trading heavy relative to its peers. Conversely CAD continues to weaken this morning as oil prices slide, exacerbated by a break back below USD 50 in WTI crude futures, and once again this morning the CHF has seen choppy trade as the EUR/CHF cross sits near 1.0500.
Asian equity markets traded mixed after failing to take the impetus from a strong Wall Street (S&P 500 +1.1%) close ahead of the Greek and Eurogroup talks today. ASX 200 (-0.7%) was dragged lower by energy and health sectors amid yesterday’s fall in oil and poor earnings from CSL (-7%), Australia’s largest pharmaceutical. Hang Seng (-0.8%) tumbled with the Shanghai Comp (+0.6%) swinging between gains and losses amid dampened expectations of further PBoC easing. As a reminder, markets in Japan were closed today for the National Foundation Day holiday so markets were relatively quiet throughout the overnight session.
Bulletin Headline Summary From RanSquawk and Bloomberg
- Markets drift as all await the arrival of the Greek finance minister in Brussels for today’s Eurogroup meeting where Greece are expected to push to negotiate a loan agreement but reject an extension of their current bailout program
- Today’s Eurogroup timeline: 1530GMT All Arrivals, 1730GMT Roundtable, 1900GMT Press Conference
- Treasuries steady before quarterly refunding continues with $24b 10Y notes; WI bid yield 1.995% vs 1.93% award in January.
- Germany and Greece drew battle lines ahead of an emergency meeting of official creditors today, with German Finance Minister Schaeuble saying there are no plans to discuss a new accord or give the country more time
- Greek Finance Minister Varoufakis says in interview with Stern magazine that “Greek debt cannot be repaid in the near future” and that Europe suffers from a “deficit of democracy”
- Germany sold 2Y notes with a more-negative yield than the ECB’s deposit rate as investors chose to forfeit more cash to own the securities than banks pay to park funds with the central bank
- Denmark rejected all bids in a Treasury-bill auction today as policy makers struggle to stop investors from hoarding kroner in an effort to save the country’s euro peg
- Sweden sold SEK3.5b 2019 bonds at -0.0503%, drawing a negative yield for first time on record; bid-to-cover 3.21 vs 2.71 at April 23 auction
- BOJ’s Kuroda said G-20 nations didn’t criticize his monetary policy or discuss the yen’s weakening, signaling confidence to proceed with easing that has driven down the currency
- China’s monetary policy has room for easing as financing difficulties and high funding costs remain, according to a commentary published on China Securities Journal’s front page, written by reporter Gu Xin
- Russia indicated Putin will attend talks in Minsk to negotiate a cease-fire in Ukraine and that a deal is likely, as officials wrangle over the degree of autonomy to give rebel- held eastern regions after 10 months of fighting
- Top Democrats remained skeptical of a White House plan for using force against Islamic State extremists, saying the Obama administration is going too far in seeking the right to send ground troops on certain missions
- Sovereign yields mostly lower; Greece 10Y surges ~40bps. Asian stocks mostly higher, Tokyo closed for holiday; European stocks, U.S. equity-index futures mixed. Brent and WTI lower, with latter trading below $50/bbl; gold little changed, copper higher
US Event Calendar
- 7:00am: MBA Mortgage Applications, Feb. 6 (prior 1.3%)
- 2:00pm: Budget Statement, Jan., est. -$19b (prior -$10.250b) Central Banks
- 8:00am: Fed’s Fisher speaks in New York Supply
- 1:00pm: U.S. to sell $24b 10Y notes in quarterly refunding
* * *
DB's Jim Reid concludes the overnight recap
Despite optimism yesterday of a move towards a deal for Greece, ahead of the much anticipated emergency Eurogroup meeting today, it doesn't feel anywhere near close enough to one minute to midnight for us to see resolution yet. It also doesn't feel markets are stressed enough to focus minds at this point. It seems to us there needs to be a bit more tension before any agreements can be made if indeed they eventually are.
Greek equities rebounded nearly 8% yesterday and 3y government bond yields pared back some of Monday’s weakness to tighten over 150bps by the close. Yesterday saw a constant stream of headlines ahead of today’s main event. Initial reports out of MNI reported that the European Commission would ‘table a compromise at the emergency Eurogroup meeting’ and that the proposal would be expected to be the platform for discussions. The report was quickly downplayed however with Reuters reporting that there is no such plan from the EC’s Juncker at this stage although ‘very intense contacts are going on between the President, Prime Minister Tsipras and other players’. The same article also quoted the EC’s Moscovici as saying that ‘they know the program is our reference and framework and we have to see what kind of solutions we can decide inside this framework’. Meanwhile the Guardian reported that Greek finance minister Varoufakis could pledge to implement around 70% of the existing bailout package and negotiate the remaining 30% around new measures.
It was comments towards the end of day however that have caught our attention. Appearing to take a much tougher stance than his European counterparts, German finance minister Schaeuble commented at the G20 that ‘it’s over’ for Greece should they refuse the final tranche of the current aid package and that Greece’s creditors ‘can’t negotiate about something new’ according to Bloomberg. In the same article the Bundesbank’s Weidmann meanwhile noted that any sort of bridge facility must be built by fiscal policy given that it’s forbidden for monetary policy to finance states. Specifically Weidman said that ‘the question of a bridge loan via T-bills has a precondition, in my view, that it’s not a bridge to nowhere’. Finally, late last night we also learned that Greece’s new government had received a vote of confidence ahead of today’s meeting. In a similarly defiant speech to Sunday, Tsipras continued his adamant stance, saying that he is optimistic the EU will accept Greek proposals and that the Greek government will not ask for a bailout extension. He was quoted in Reuters specifically as saying that ‘we are not negotiating the bailout; it was cancelled by its own failure’. Attention now turns to today’s Eurogroup meeting which is due to kick off at 4.30pm GMT and where we should hear something in the evening.
In terms of the early reaction in Asia this morning, markets are mixed with the Hang Seng (-0.79%) and ASX (-0.54%) lower whilst the Shanghai Composite (+0.14%) is firmer – although the latter perhaps still buoyed by hopes that the yesterday’s weak inflation print will help fuel stimulus measures. Gold (+0.38%) is also firmer this morning. The Euro is more or less unchanged at $1.132.
As well as Greece, focus today will also be on the Russia talks where hope is resting on a ceasefire agreement being announced in a meeting today between Ukrainian PM Poroshenko, German Chancellor Merkel, French President Hollande and Russian President Putin. A Russian ETF rallied late last night in the US session after news that Obama had spoken to Putin yesterday urging him to seize the opportunity this week to seek some sort of diplomatic resolution. US Treasury Secretary Lew was also noted yesterday as saying ‘its critically important that the international package comes together quickly’ and that encouragingly ‘there’s been progress in the last few days’.
Back to markets, in the US the S&P 500 (+1.07%) finished more or less at its highs for the day to take the index back into positive territory YTD. Energy stocks (-0.19%) were weaker as oil markets reversed some of the recent gains whilst Halliburton reported that it’s looking to cut as much as 8% of its workforce, following in the footsteps of recent energy company announcements. WTI (-5.37%) and Brent (-3.27%) dropped after reports out of the IEA that US production will still remain at high levels over the next five years. Yesterday’s results out of Coca-Cola also appeared to support the better sentiment. In fact earnings season on the whole has been supportive for equity markets, with Bloomberg reporting that of the two-thirds of S&P 500 companies to have reported so far, 77% have beaten profit estimates and 56% have beaten sales forecasts. Amazingly, Apple yesterday also became the first company to close with a market valuation greater than $700bn. At $711bn, Apple’s market cap is now over $300bn more than the next most valuable US company Exxon Mobil.
Treasuries closed wider yesterday with the 10y benchmark yield finishing +1.9bps at 1.997% following further encouraging employment data. The JOLTS job openings report for December showed the US creating 5.03m jobs, up from 4.85m previously and ahead of expectations (4.98m). The print was in fact the highest since January 2001. Bolstering the case for a June rate hike, the San Francisco Fed President Williams (FT) said that the time for the Fed to start raising rates is getting ‘closer and closer’ whilst elsewhere the Fed’s Lacker said that ‘at this point, I think June looks like the attractive option’. Wrapping up the data, wholesale inventories (+0.1% mom vs. +0.2% expected) and sales (-0.4% mom vs. -0.3% expected) for December printed more or less in line, although there were softer than expected readings out of the NFIB small business optimism survey for January (97.9 vs. 101 expected) and IBD/TIPP economic optimism survey (47.5 vs. 51.9) for February.
With markets hopeful of a more favorable outcome today following yesterday’s earlier headlines, risk assets in Europe firmed with the Stoxx 600 finishing +0.64 and the DAX closing +0.85% better. Crossover too finished 9bps tighter. The Euro meanwhile swung around with the various headlines, only to end the day more or less unchanged at $1.132. With the better tone generally, government bond markets in Europe finished weaker. 10y yields in Germany (+1.5bps), Spain (+4.9bps) and Italy (1.4bps) all weakened. It was a quiet day data wise. France posted a better than expected industrial (-0.1% yoy vs. -1.3% expected) and manufacturing production (+0.3% vs. -0.8% expected) print whilst in the UK, industrial production was in line at +0.5% yoy and manufacturing production came in above consensus (+2.4% yoy vs. +2.0% expected).
Away from the Eurogroup meeting and Russian talks it’s a quiet macro calendar today in Europe with just inflation data due out of Portugal although the ECB’s Coeure is due to speak. It’s a similar picture in the US with just the monthly budget statement due up. Fedpseak continues with Fisher due to speak in New York this afternoon.
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Stocks Coiled
Don't touch it......it could go off!
"is going to enter the lion's den" ... give me a break
how about barbarians den?
Urkel will cave at the behest of the world hebrew banking cartel
there were about 65 thousands greek jews that were killed by nazis during World War II, along side hunderds of thousands of greeks.
Hitler imposed famine on greeks for 3 years, greece was the only country that resisted the germans for weeks on a frontal war ... it didnot happen in other countries ... hence the famine.
You kinda sorta got it backwards...
Just who forgot to lower the seat and FLUSH?
Someone is mis-remembering...
Stocks coiled.....dog turds do too.
The DeadFred guess is that at the end of the day we still don't know. If you want to put on a strangle option position do it for next week. Bad news is reserved for Friday after closing (unless you're Swiss). What we'll hear at the end of the meeting was that a constructive discussion occurred and the the Greeks will be considering the options before them. The market will love it but later they might find how misplaced that love was. The Greeks should seriously consider buying some deep out of the money puts on the banks and the market in general if they wish to exit. They could fund their little economy for years with the correct positions now.
Is that a Panzer division I hear warming up their engines?
Nope, motorsickle.
Ah, the good ol days when we were sending Panzer divisions. Pitty, but we don´t do that anymore, sending a few bankers will do the job too.
To bad they scraped most of the b36s. It's the only thing big enough to drop a mk4 puke aka paper bomb on europe
talk to Hans privately ... many here do not have the stomach for that kind of nostalgia
WWWHHHHHHHHAAAAAAAAAAAAHHHHH!!! B-36 NOSTALGIA!!
WWHHHAAAAAAAAAHHHH!!
AND GLOBAL WARMING!! WHHHHHHAHHHHH!
WHAT A BUNCH OF FAGS..
Just how negative do negative yields have to go before the entire world bond market implode/explode?
-1% ?
-2% ?
It depends on how much Soma they're feeding the investors.
Now just who would buy that paper.
So with the BLS BS unemployment number getting ever lower, it seems the FED is contemplating lowering the definition of full employment to possibly sub 5% in an attempt to relieve pressure to raise rates. I can't wait until the "official" unemployment rate is 0% and Yellen will still come up with an excuse not to raise rates considerably.
http://www.reuters.com/article/2015/02/11/us-usa-fed-employment-insight-...
You can't get there from here, they would change the mandate to suit the Federals new policy (whatever the policy of the day is) at 4%. Unemployment would become moot and their new day begins.
The question is how low they let the official numbers get before changing the mandate and, by doing so, admits the BLS numbers are utter bullshit. You say 4%, I say alot lower before the FED ever admits that mistake, or should I say truth.
They will do anything to not admit fault, we already proved that.
Brian Williams should have been suspended for not having a problem that his daughter got her ass eaten on tv.
Obviously I need to watch more TV.......cause I totally missed that.
For your viewing pleasure:
http://morningafter.gawker.com/while-you-watched-the-globes-allison-will...
Liked the part where he wiped his mouth off. Yea. LOL
So true, after you just ate ass, do you really need to wipe your mouth off?
Perhaps Brian William's daughter should do the evening news....she seems qualified.
Have her sign the contract in blood...and let's get it done.
A couple tips from Walter Cronkite....from the grave....and she should be good to go.
https://www.youtube.com/watch?v=w2isCEoEmN8
He fakes, she fakes. MSM perfection.
Would you do us a favor.....and quack for us?
I'd eat that.
But not on TV.
And I would not tell her dad.
Cocks coiled in anticipation of a shag fest.
LAVROV: RUSSIA WILL CONSIDER AID REQUESTS, IF GREECE MAKES THEM
Which does not mean they will be accepted... oh poor Greece, gonna be squeezed by whoever ends up putting the money in...
It would be so interesting to see how the NATO / lawyers would react to Greece giving Russia bases in return for loans. Words in NATO charter about sleeping with the enemy?
I wonder if our friend William can come up with some visuals for Greece and Russia and sleeping with the enemy?
http://www.reuters.com/article/2015/02/09/us-russia-crisis-mortgages-idU...
(Reuters) - Russians with foreign-currency mortgages have written an open letter to President Vladimir Putin seeking help with repayments that have soared because of the ruble's plunge, saying they were misled by banks.
The letter, published by the Vedomosti and Kommersant business newspapers on Monday, reflects discontent over the ruble's slide and accelerating inflation following the fall in global oil prices and Western sanctions over Ukraine.
"We are the first to feel the shock from the economic sanctions and political intrigues of the West," the letter read. "We are faced with answering to the banks with our lives for the risky way they run their profitable business."
The ruble has fallen about 50 percent against the U.S. dollar in the past year, pushing up the cost not only of imported goods but also of foreign-currency mortgages that were attractive because banks offered lower interest rates than on rouble-based mortgages.
Russia's central bank last month advised banks to convert foreign-currency mortgages into ruble-denominated ones at the exchange rate of the start of October to ease the stress on mortgage holders.
But in their letter, members of the All-Russian Movement of Foreign-Currency Mortgage Holders declared the move a "half-measure" and said the majority of banks were unlikely to follow the regulator's advice.
And just as it's getting darker outside.
Russia offers trade.
EU offers debt.
Easy choice.
EU already bailed them out of collapse for trillions....why stay with them and pay them back when you could get more free money elsewhere?
Is it just me, or did that article have a hard time getting up to speed. Like reading words in a maze
The EU needs to call Greece's bluff. realistically why would Russia want a country that will be nothing but a drain? They have refused to get their house in order, taken money without living up to the terms ( lets not forget that they lied in order to get into the EU in the forst place ), and elected communist rabble rousers to try to get them out of paying their debts.
Who needs sanctions? Our best 'cold war' strategy would be to let that trojan horse into Russia. Putin will be screaming uncle in about 3 years.
Every single country lied to get into the Euro, there are studies, news items, reports, all available to prove that.
The difference is that some thrived under rules made by themselves, to suit themselves whilst others slowly went under.
The EU needs to call Greece's bluff.
Then it needs to call Italy's bluff.....then Spains......then Portugals.....then Ireland's. At which point Germany can be it's own country again.
Get real! Better owing poncy Troika than ANY Russian Business Gent.
What ? ???? They obviously got you convinced. Surely every man and
his dog knows its about control. What's money got to do with it. LOL
"Agreement between Greece and Eurogroup unlikely at today's meeting according to Germany"
One more day to BTFATH! Or is it.............?
1. How much would America charge to 'lend' to Greece.
2. How much would American people charge to lend to Greek people
http://in.reuters.com/article/2015/02/11/usa-fed-employment-idINKBN0LF0AF20150211
Shifting goal posts on employment may signal slower Fed rate hikes
(Reuters) - Federal Reserve officials are debating a historic shift in one of its core economic gauges that could lead the central bank to move even slower than now thought once it lifts its rates from rock bottom levels.
According to interviews with half a dozen current and former Fed policymakers and staff, the concept that the economy can produce far lower levels of unemployment without stoking inflation is being built into Fed models and becoming increasingly entrenched in the central bank's views.
That shift may not delay the timing of the Fed's first rate increase, still expected in mid-year. But it does offer Chair Janet Yellen a good reason to move at a snail’s pace from then on to bring as many people as possible back to work and to push inflation back up to the Fed's 2-percent target.
Fed policymakers' December projections show most expect the Fed's benchmark rate to rise to 2.5 percent or above by the end of 2016 from the 0-0.25 percent range now.
On Monday, Fed governor Jerome Powell became the latest of policymakers to suggest the "natural" rate of unemployment, also referred to as a level of full employment, had fallen.
"Maybe the natural rate is lower...That it is five (percent) or even lower," Powell said. That would be significantly below current unemployment rate of 5.7 percent and the 5.2 percent to 5.5 percent range Fed officials have recently estimated as the level of unemployment at which inflation is likely to increase.
LOWER DESTINATION
Atlanta Fed President Dennis Lockhart said the question of the true level of full employment will come into focus when the Fed will have to decide whether to allow unemployment to drift to unusually low levels to push inflation towards its target.
“I am quite open to the idea that the destination we are trying to get to is lower than we have cited in the past,” he said on Friday.
The chiefs of the Boston Fed and the Minneapolis Fed have also said they are considering lowering their estimates, as did several staff at other Fed branches who declined to be quoted, in line with the central bank's policy for briefing the media.
For months, Fed policymakers have been puzzling over how the accelerating economy kept adding jobs but failed to spur wage and price increases that would cement the recovery and allow them to wind-down crisis era policies.
Now, there is growing sense that the point where the job market tightens enough to start pushing up wages and prices may be further away than earlier thought.
The U.S. central bank has no official target for full employment - generally expressed as the unemployment rate that is consistent with stable prices. But accurately estimating it is critical for the Fed, given its mandate is to safeguard economic conditions that allow maximum employment consistent with stable prices that the bank defines as 2 percent inflation.
Since the 1960s estimates of that "natural rate of unemployment" have averaged 6.3 percent, according to data published quarterly as part of the Fed's main economic model.
Beginning in 2013, however, its staff has been marking that rate down, from 5.6 percent to 5 percent by late last year. That may lead regional Fed presidents and board members to cut their quarterly estimates due next month.
Research at several Fed banks, both published and unpublished, puts the estimate as low as 4.7 percent.
The EU might be too over-bloated and bureaucratic to be able to change course. In my opinion, Greece's hope lies with Russia, an infinitely more flexible, dynamic and responsive partner.
Greece can not now and likely never will be able to pay. One of the mainstays of the greek economy is shipping, which is in the tank. The other mainstay is tourism, which is down across all venues worldwide, and is going to take discretionary money in the hands of people to revive, of which there is no nearby fat chance.
Enough of all this EU bullshit. Just get it over with. The EU made a bad bet and is squealing like a stuck pig - bad bets are made all the time.
"bad bets are made all the time."..well there you said it..to bad it's only for the likes of U or I, not the international banks ..remember 2008 and who got bailed out..
think the debt holders will take a hair cut..only when a Fed Chairman is not a jew will that happen and we all know the chance of that.
LAVROV: RUSSIA WILL CONSIDER AID REQUESTS, IF GREECE MAKES THEM
KOTZIAS: GREECE IS WILLING TO MEDIATE BETWEEN EU, RUSSIA
Bet the white chimp and "the three John(s)" are having a case of very bad indigestion and insomnia with this announcement.
For the "Stars" in Tel Aviv it's like being paranoid about Russian ballistic missile deliveries already being inside Iran.
And for their bitch in D.C. losing all of that military infrastructure and hardware that's been sitting inside Greece for 65 years!
Varoufakis best be wearing a bullet proof vest from here on out
Varoufakis best be wearing a bullet proof vest from here on out
True.
But with the white chimps announcement two Sunday's ago, and john McCain's admission of the U.S. already having sent cluster munitions to Ukraine before official authorization from Congress has been given because of course Russia has all the proof!...
The strategy of tension is all on the West at this stage. And if anything happens to the president or the finance minister it's just more 'blowback" for D.C. laid bare with nothing to fix it with AGAIN!
The hole just keeps gettin deeper as the Russian Federation gives them more rope to hang themselves with!
Anyone who thinks this guy has any intention of caving to the Troika is sadly mistaken. Grexit will be good for Greece but bad for the EU.
Varoufakis has an interesting take on how the global economies got into trouble. He calls it "The Global Minotaur".
http://www.globaldeflationnews.com/the-global-minotaur-a-global-finance-...
Great watch frem
Thx
The EU will promise everything to save the union.
EU Bureaucrats remain committed to keep Greece within it's control.
"Varoufakis best be wearing a bullet proof vest from here on out"
The ECB has a Goldman Sachs European technocrat bankster already slated to replace Varoufakis.
Plenty of fodder here for the HFTs to spike the S&P. Bullish!