Capital Markets

As we await the final capitulation by the ECB, EU and IMF to provide Greece another bailout (or not), we have assembled a list of reading for you that has ABSOLUTELY NOTHING to do with Greece.

"You're cruisin' for a bruisin'." - Kenickie, Quote From "Grease"

Today will almost certainly be the busiest trading day of the year, as the Russell indexes go through their annual rebalancing/reconstitution. But, as ConvergEx's Nick Colas notes, Friday’s close will be the end of a trade that began almost 2 months ago, as traders began handicapping which equities would be included for the first time or swapped between various Russell indices. Since the beginning of May, for example, the stocks that will be added to the Russell 2000 are up 11%, and those being deleted from the same index are down 2% over the same time period.  In short, for one day – and this is the day - every U.S. equity market participant, no matter what their investment mandate, needs to think like a trader.  Throw in a little Greek drama going into the weekend, and it could be quite a day...

“Any of these events would likely trigger asset price volatility [and] attempts by institutional investors to redeem illiquid corporate bonds in crisis circumstances would amplify volatility.”

2/2 If more respected investors had warned about the market in ’07, we might have avoided the crisis in ’08.

— Carl Icahn (@Carl_C_Icahn) June 24, 2015

"We've won a few months' respite but the problem will come back," France's Marine Le Pen said of Greece... "Today we're talking about Grexit, tomorrow it will be Brexit, and the day after tomorrow it will be Frexit." We shouldn’t need Le Pen to voice the obvious. But that no other ‘leader’, save for Nigel Farage, puts it into these crystal clear terms, does tell us a lot about all other European leaders. And unfortunately that includes Alexis Tsipras. Though we hold out some hope for him yet. Here’s hoping he will not sign that deal, whichever it may be in the end, and thereby set in motion the disintegration of the unholy Union.

“The real problem is the following: we have paleolithic emotions; medieval institutions; and god-like technology. And it is terrifically dangerous, and it is now approaching a point of crisis overall.”

“We ran the model forward to the year 2040, along a business-as-usual trajectory based on ‘do-nothing’ trends - that is, without any feedback loops that would change the underlying trend. The results show that based on plausible climate trends, and a total failure to change course, the global food supply system would face catastrophic losses, and an unprecedented epidemic of food riots. In this scenario, global society essentially collapses as food production falls permanently short of consumption.”

A Greek exit from the euro would change everything. The greatest change being simply doubt and fear regarding the outlook for other vulnerable EU nations, EU banks and the EU banking and financial system. We discuss short and long term considerations, best and case outcomes, and wealth preservation strategies.

We decided to do a little research to find out the size of different investable asset classes globally, to try to get some color on the money flows in this extraordinary period. The data is from various dates from 2013 to 2014, but the differences don’t matter much.

The troika of Greek creditors has gone into full-frontal morals-be-damned attack mode. This has turned into the kind of economic warfare one would expect to see between sworn and lethal enemies, that the US would gladly use against Russia for instance, but not between partners in a union founded on principles based entirely and exclusively on being mutually beneficial to everyone involved. And all EU nations should understand by now that this is not about Greece anymore, it’s about all of them.

"The time it takes for the global regulatory community and central banking world to find a solution this time may be longer than the time where one episode of big illiquidity happens. Then the question is what to do. In my view the only thing that can be done at that time is that central banks should become again market makers of last resort."

Is Goldman right that the Bundesbank really is sabotaging Draghi's QE effort by "under-extending" its bond purchases? Or...

Is this a warning From Draghi's mouthpiece to Weidmann to stop being stingy with the bond buying?

Today’s style of heavy-handed monetary central planning destroys capitalist prosperity. Real capitalism cannot thrive unless inventive and enterprenurial genius is rewarded with outsized fortunes. Warren Buffett’s $73 billion net worth, and numerous like and similar financial gambling fortunes that have arisen since 1987, are not due to genius; they are owing to adept surfing on the $50 trillion bubble that has been generated by the central bank Keynesianism of Alan Greenspan and his successors.

Another day of constant Grexit chatter, and this time the futures are really starting to react as what was seen as mostly impossible for the past 4 months is now almost inevitable. The first tremors emerged when Greece announced it would not present a new proposal to the Eurogroup to unlock aid, relying instead on what has already been submitted and which the Troika said was inadequate. Then, confusing matters, a new GPO poll posted on Greece's Mega TV showed that increasingly more, or over 56% at last count, of Greece would prefer a "bad" deal with creditors than being kicked out of the Eurozone putting the future of Tsipras' cabine tin jeopardy. And then, hinting that the endgame is officially here, the FT reported that "Eurozone officials discuss holding emergency summit on Greece", suggesting a second Lehman weekend may be just around the corner.

Facing its first current account deficit in seventeen years amid low oil prices and a war with Yemeni rebels, Saudi Arabia picks a convenient time to open its stock market to direct foreign investment.