Just 3 short months ago, Greek bank bonds were trading near par and every over-leveraged, over-confident, over-full-of-propaganda hedge fund was buying them "for the yield" - well, S&P had upgraded Greece and implied 'all-clear'. Today, Greek bank bonds are trading at 60% of face-value, having dead-cat-bounced last week before re-collapsing today. Greek bank stocks are also careening lower with most at record lows (below the lows reached during the peak of the crisis). The reason to focus on these instruments is that, while somewhat illiquid, they are the most sensitive to the day-to-day headlines and overall sentiment on Greece (and Grexit) as a pure reflection (redenomination risk aside) of trouble ahead.
The world economy stands on the brink of a second credit crisis as the vital transmission systems for lending between banks begin to seize up and the debt markets fall over. The latest round of quantitative easing from the European Central Bank will buy some time but it looks like too little too late.
In the absence of any notable developments overnight, the market remains focused on the rapidly moving situation in Greece, which as detailed over the weekend, responded to Europe's Friday ultimatum very vocally and belligerently, crushing any speculation that Syriza would back down or compromise, and with just days left until the emergency Eurogroup meeting in three days, whispers that a Grexit is imminent grow louder. The only outstanding item is what happens to the EUR and to risk assets: do they rise when the Eurozone kicks out its weakest member, or will they tumble as UBS suggested this morning when it said that "the escalation of tensions between the Greek government and its creditors is so far being shrugged off by investors, an attitude which is overly simplistic and ignores the risk of market dislocations" while Morgan Stanley adds that a Grexit would likely lead to the EURUSD sliding near its all time lows of about 0.90.
Europe Fractures: France Pivots To Putin, Cyprus Offers Moscow Military Base, Germany-US Splinter On UkraineSubmitted by Tyler Durden on 02/08/2015 21:30 -0500
Following yesterday's summary of the utter farce that the Minsk Summit/Ukraine "peace" deal talks have become, the various parties involved appear to be fracturing even faster today. The headlines are coming thick and fast but most prescient appears to be: Despite John Kerry's denial of any split between Germany and US over arms deliveries to Ukraine, German Foreign Minister Steinmeier slammed Washington's strategy for being "not just risky but counterproductive." But perhaps most significantly is France's continued apparent pivot towards Russia.
Most Americans just assume that the economic numbers that we are being given accurately reflect reality. That is why it is so refreshing to have men like Gallup CEO Jim Clifton step forward and tell the truth. Don’t be fooled by all the happy talk from the mainstream media and from politicians like Barack Obama. The truth is that the percentage of U.S. adults that do have “good jobs” is actually far lower than 44 percent.
And just like that, instead of praising the January jobs report, Goldman's Jan Hatzius is far more interested in pounding the table on its one scariest chart...
It has been a quiet overnight session, following yesterday's epic short-squeeze driven - the biggest since 2011 - breakout in the S&P500 back to green for the year, with European trading particularly subdued as the final session of the week awaits US nonfarm payroll data, expected at 230K, Goldman cutting its estimate from 250K to 210K three days ago, and with January NFPs having a particular tendency to disappoint Wall Street estimates on 9 of the past 10. Furthermore, none of those prior 10 occasions had a massive oil-patch CapEx crunch and mass termination event: something which even the BLS will have to notice eventually. But more than the NFP number of the meaningless unemployment rate (as some 93 million Americans languish outside of the labor force), everyone will be watching the average hourly earnings, which last month tumbled -0.2% and are expected to rebound 0.3% in January.
It's been an odd few days for Greece's new PM Alexis Tsipras. From being lambasted by Jeroen Dijsselbloem, shunned by Angela Merkel's henchmen, holding hands with Jean-Claude Juncker, and losing a key funding channel from Mario Draghi; Tsipras' anti-austerity platform has been 'supported' by Barack Obama and he has been invited for a visit to Russia by Vladimir Putin, and reminded that Russia is willing (and able) to provide financial aid if asked by finance minister Anton Siluanov. So headlines this evening from ekathimerini should not be entirely surprising that Putin and Tsipras have agreed to boost cooperation in the economy and energy, tourism, culture and transport sectors; and discussed the possible creation of a pipeline to carry natural gas from Russia to Europe via Turkey and Greece.
Six years on from the financial crisis and central banks are still hacking away at interest rates. Australia and Romania's did this week and while Poland and India held off, both are expected to prune rates later in 2015.
ECB's Jazbec: QE Could End Sooner Than Sept. 2016
Deflation goes hand in hand with releasing the individual from the debt enslavement that was created with the monetary policies of the past 100 years. Nigh unlimited printing of money has become the orthodox strategy to avoid deflation. Deflation was made the scapegoat for all sorts of economic ills in a century of pro-inflation propaganda. For deflation to happen government interference in money and the economy needs to stop. The endorsement of deflation goes hand in hand with safeguarding liberty. “Paper money has become the technical foundation for the totalitarian menace of our days.”
SNB Said To Be Buying EUR Crosses In Aftermath Of ECB's Greek Fiasco; Europe Boosts Its Own Growth ForecastSubmitted by Tyler Durden on 02/05/2015 06:33 -0500
“Keep Fear Alive”
Despite headlines proclaiming better-than-expected earnings Gilead is collapsing this morning (down around 10%) on the heels of concerns that drug discounts were larger than expected (and thus 2015 revenue expectations will be lower). This has dragged the Broad Biotech index down by the most since Dec 23rd and all the way down to the key 50-day moving average.
The Layoffs Begin: ADP Misses, Lowest Since September As "Businesses In The Energy Industries Are Scaling Back Payrolls"Submitted by Tyler Durden on 02/04/2015 08:21 -0500
Having beaten expectations for the past 4 months, in the face of a surge in jobless claims across Shale states, it appears January's print is finally catching down to a weaker expectations as layoffs dominate headlines as even Mark Zandi is forced to admit "Businesses in the energy and supplying industries are already scaling back payrolls in reaction to the collapse in oil prices, while industries benefiting from the lower prices have been slower to increase their hiring." At 213k, this is the lowest print in 4 months, missing expectations of 223k and dramatially down from December's upwardly revised 253k (from 241k) - the biggest drop since August as small business job growth slides significantly.