Here comes the strawman we've all been waiting for: "Greek deposit withdrawals picked up after talks between Greece and its euro-area creditors on extending its bailout ended in acrimony in Brussels Monday night, said the people, who asked not to be identified because the information is private. The ECB will likely provide ELA to Greek banks as long as there is a chance of an agreement between Greece and its creditors to extend the current bailout, economists at Barclays Plc including Antonio Garcia Pascual and Thomas Harjes wrote in a client note after the meeting ended Monday. If Greek authorities don’t take up euro area finance ministers’ offer this week, ELA funds to Greek banks would likely be shut down, they wrote."
Two months ago we showed, and explained in great detail, how in the new normal the role of gold is nothing more than a funding "currency" to allow the BOJ to sell Yen against it (on a borrowed basis, which is also why the LBMA halted reporting its GOFO data as of the end of February, as it would not be pleasant for the central bank cartel to demonstrate just how much institutional gold shortfall there developed following major BOJ interventions). So for all those who are curious what it looks like when the BOJ "enters the house", here it is...
At the start of Q4 2014, Appaloosa's David Tepper made a series of statements - dismissing Bill Gross as irrelevant (nope - turmoil caused by PIMCO unwinds roiled credit markets), calling the end of the bond bull market (nope - yields went on make lower and lower lows), and finally proclaiming that stocks were inexpensive and multiples not high. So, one wonders, if stocks were inexpensive and multiples not high, why did Appaloosa dump 40% of its US equity exposure in that quarter (only to end the quarter with even more exuberance proclaiming that stocks could rise another 10% in 2015)? It appears that when David Tepper says "buy", he means "buy... from me."
Homebuilder Sentiment slipped from 57 to 55 in February - missing extyrapolated expectations of a 58 print by the most in over 6 months. Present sales slipped very modestly, future expectations remained flat (and hope-strewn) as Prospective Buyers Traffic tumbled from 44 to 39. Of course, the blame for this weakness and dramatic drop in prospective buyer traffic - The Weather!! Except we note that the Northeast region (one of the hardest hit by the storms) rose from 43 to 48.
The rhetoric from both sides in Europe is hotting up but we suggest Tsipras' comments seem far more personal and existential than the Eurogroup's beligerence for now: GREEK DEMOCRACY CAN'T BE THREATENED
*TSIPRAS: GREEK GOVT NOT IN A HURRY, WON'T COMPROMISE, WON'T TAKE A STEP BACK FROM PROMISES TO PEOPLE
With a "strong mandate" to save the country, Tsipras adds that he wants "a solution, not rupture."
It appears the overenight exuberance at the possibility of a Grexit is fading fast... Silver - already weak overnight - was suddenly monkey-hammered lower on massive volume... WTI is down almost $2 from intrday highs, testing towards $51.50 on heavy volume.
Schauble Gives Athens Another 10-Day Ultimatum, Says "Up To Greek Government If It Wants To Keep Euro"Submitted by Tyler Durden on 02/17/2015 09:54 -0400
SCHAEUBLE SAYS GREECE MUST DECIDE WHETHER IT WANTS A PROGRAM
SCHAEUBLE SAYS GREEK SITUATION ISN'T GETTING BETTER
SCHAEUBLE: GREEK PROGRAM EXTENSION BACKING NEEDED BY FEB. 27
SCHAUEBLE: UP TO GREEK GOVT TO DECIDE IF IT WANTS TO KEEP EURO
When it comes to trading the possibility of a Grexit, Bloomberg strategist Vassilis Karamanis writes,that there are three possible outcomes.
Scenario 1: Greece exits the euro
Scenario 2: Capital controls are imposed on Greek banks
Scenario 3: Agreement is reached within the next days
Following January's bounce back from December's collapse to 2-year lows, Empire Fed fell back modestly in Feb. Against expectations of a small drop to 8.00 (from 9.95), it printed 7.78 - basically flat now for 2 years. Under the hood things are a lot more concerning as New Orders tumbled from 6.09 to 1.22 and number of employees slipped from 13.68 to 10.11. What is perhaps the most concerning for the ever-hopeful multiple expanding dreams of equity market wealth, future business expectations collapsed from 48.35 to 25.58 - the biggest drop since Jan 09 (along with a plunge in expected workweek from 11.58 to 1.22).
While the world's attention is glued to events in Greece, the real action continues to evolve quietly thousands of kilometers east, in China, where the near record surge in new loans remains unable to offset the dramatic slowdown in shadow banking issuance. And while China's bubble-chasing, animal spirits have recently reoriented themselves from real estate to the stock market, it is the real estate that holds the bulk of China's wealth. The problem here is that as China reported overnight, new-home prices in the world's most populous country just recorded their biggest annual decline ever!
US equities have miraculously recovered their EU-Greek talks-breakdown losses from yesterday in a mad buyng panic reminiscent of the very best work from FBRNY. As if that did not confirm everything was awesome in the status quo, silver (and to a lesser extent gold) have been take to the woodshed this morning. Treasury yields are still down 2bps from Friday's close but have jumped 3-4bps on this morning's exuberance. The dollar has given back all of yesterday's gains and then some and is now -0.2% from Friday.
- Markets From Stocks to Debt to Euro Show Little No Panic (BBG)
- Greek Euro Exit Risk Increases as EU Delivers Ultimatum (BBG)
- Oil rises to $62, near 2015 high as Mideast risks support (Reuters)
- Texas judge blocks Obama plan to protect undocumented immigrants (Reuters)
- Oil Train Derails and Ignites Forcing West Virginia Evacuations (BBG)
- Battle rages for town where Ukraine rebels reject ceasefire (BBG)
- Chinese Firms Tiptoe Back Into Europe’s Battered Financial Sector (WSJ)
- Putin’s Paradise Becomes Economic No-Go Zone Where Cash Is King (BBG)
- Emerging fund managers stuck in buy-and-hold as trading shrivels (Reuters)
Futures Rebound On Collapse In Greek Negotiations, After Europe's Largest Derivatives Exchange BreaksSubmitted by Tyler Durden on 02/17/2015 07:43 -0400
There was a brief period this morning when market prices were almost determined by non-central banks. Almost. Because shortly before the European market open, a technical failure on the Eurex exchange prevented trading in euro-area bond futures the day after Greek debt talks collapsed. And sure enough, after initially seeing significant downward pressure, which nobody could capitalize on of course courtesy of the broken Eurex, risk both in Europe and the US has since rebounded courtesy of the ECB, SNB and BIS, led by the EURUSD (because a Grexit threat which according to Commerzbank has been raised from 25% to 50% is bullish for the artificial currency), which is now at the level last seen just before yesterday's negotiations broke down, and US futures are about to go green.
Ultimately, then, we are still left with the same three-step process to reach a conclusion to the Greek crisis.
- Step 1 consists of a request for a new program or an application for a 3rd ESM program with Greece committing to some a prior conditionality.
- Step 2 consists of negotiating the substance around this conditionality, in particular the prior actions that would need to be fulfilled to disburse funding to Greece.
- Step 3 would consist of passing such prior actions through the Greek parliament and ultimately servicing Greece's loan obligations.
The more each of these steps is delayed, the shorter the timespans available and the greater the risks of failure.