Who could have seen that coming? With Treasury yields pressing lows of the day since the US open, and AAPL in the red; the stop-hunt in stocks this morning is now starting to fade back into reality as Crude oil prices gave up gains and went red and reports appear that Greece is preparing to default... The Dow and S&P are now red on the day.
The US stock market is trading at 1929-bubblesque valuations, with a CAPE of 27.34 (the 1929 CAPE was only slightly higher at 30. And when that bubble burst, stocks lost over 90% of their value in the span of 24 months.
Greek Negotiator "Shocks" Eurozone Officials, Behaves Like "Taxi Driver": Hope Of Greek Deal "Blown"Submitted by Tyler Durden on 04/12/2015 12:29 -0400
The mood between Greece's leftist government and its euro zone partners, especially Germany, has deteriorated in the last few weeks, with personal recriminations flying between ministers and calls from Athens for Berlin to pay war reparations. The paper said at last week's meeting the Greek representative just asked where the money was "like a taxi driver", according to sources, and insisted his country would soon be bankrupt. The euro zone sources told the paper that Greece's creditors do not believe this is the case and that it would be a domestic political issue if Athens is unable to fully pay salaries and pensions.
The Middle East’s ongoing descent into chaos and China’s impending ascendancy to the status of global superpower are just two of the many threats that the US, European Union and Russia all share. Each of these issues should certainly occupy a higher position on their respective agendas than the breakup of Ukraine or the insolvency of Greece. Leaders of all three governments would be well-advised to set aside their differences, or at least to prevent those differences from obstructing cooperation on more important issues. Unlike its predecessor, the Second Cold War will not be bilateral. Today’s world is far more chaotic, kinetic and dangerous than it was fifty years ago.
In recent weeks, Ruble appreciation against the USD has pushed it out of its traditional long term alignment with oil prices, and left it as the best-performing global currency of the year. There are several possible factor that can account for this...
- Nikkei tops 20,000, Europe hits 15-year high (Reuters)
- GE to sell real estate holdings, sets $50 billion share buyback (Reuters)
- Iran’s Middle Class Plans for Life After a Deal (BBG)
- Walgreens to Close 200 Stores as It Expands Cost Cuts (WSJ)
- Hillary Clinton expected to announce presidential run as soon as this weekend (Reuters)
- It will cost $1.5 billion to keep Deutsche Bank Libor Manipulators out of prison (USA Today)
- Police Cameras Bring Problems of Their Own (WSJ)
- Obama says concerned China bullying others in South China Sea (Reuters)
- Investors Revive Appetite for Asian Junk Bonds (WSJ)
Wiping out creditors by inflation is the easy part. Re-establishing money to restart the world economy is the harder one.
While Germany has pre-emptively, and somewhat defensively, come out proclaiming Russian aid to Greece as 'no big deal' - a "routine event" - we suspect the signal that it would send would not be entirely great for the EU (and Obama's) 'Russia is evil' meme. Nonetheless, as Greek Prime Minister Alexis Tsipras meets Russian President Vladimir Putin today - just one day before The IMF loan repoayment is due, topics for discussion vary from lifting sanctions (bilaterally) or bankrolling a bailout to gas discount from Gazprom. Here's a summary...
When Will Bad News Cease to be Good News for Stocks? It is quite amazing to watch this. Even as one economic datum after another indicates that a major slowdown is underway that could well turn into a recession (keep in mind that this is not a certainty – at similar junctures in recent years, aggregate economic data recovered just in the nick of time), the US stock market continues to take everything in stride. The longevity, intensity and persistence of a bubble is per se not proof that it will inevitably continue – it is only an indication of the likely amount of pain the market will eventually dispense.
- Political Battle Ramps Up Over Iran Nuclear Deal (WSJ)
- Greece moves to quell default fears, pledges to meet 'all obligations' (Reuters)
- Isolated Greece pivots east to Russia, China and Iran. But will it work? (Telegraph)
- Frustrated officials want Greek premier to ditch Syriza far left (FT)
- Greek political unrest and deepening debt crisis fuel talk of snap election (Guardian)
- Rand Paul’s Challenge: Charting His Own Course (WSJ)
- In Greenspan Conundrum Redux, Odds Are on Bond Traders’ Side (BBG)
- Yemen's Aden suffers amid clashes, aid deliveries delayed (Reuters)
- Record Gasoline Output to Curb Biggest U.S. Oil Glut in 85 Years (BBG)
As market participants slowly make their way back to trading desks around the post-Easter world, and especially the US where a truncated session on Friday morning ended in tears for anyone hoping for a 2015 US recovery following an abysmal March nonfarm payrolls print, they find that unlike on previous occasions, the equity futures liftathon is nowhere to be found this morning, with the S&P set to resume trading in the red for 2015. Away from Greece, whose future remains in limbo, the biggest development over the holiday weekend was a Goldman note in which the central-bank friendly firm said that "the right policy would be to put hikes on hold for now."
Germany has been kind enough to provide an idea where the foundering Greek "radical leftist" government can find some additional funds: by freezing and raiding the bank accounts of wealthy Greeks. Of course, the legal loophole provision is that only those suspected (not convicted) of tax fraud would be eligible for such an asset freeze, however since in Greece virtually nobody pays the amount of tax they should, this is essentially a carte blanche to freeze and raid the funds of the wealthiest Greeks who have bank accounts in Germany (and soon in all other European nations) no questions asked.
"...the deterioration in both economic data and profitability data leave a good bit of cause for near-term concern..."
Amid growing pressure from their 'Troika colleagues' with Eurogroup Chair Dijsselbloem noting there is "still a long way to go" on Greek proposals and The IMF withdrawing its staff in Athens; new prime minister Alexis Tsipras heads to Russia to meet with Putin early next week. As Kremlin spokesman, Dmitry Peskov noted - somewhat intriguingly - "Greece has not asked [Russia] for financial aid... yet," as Tsipras is expected to seek agreement for a 'road map' of initiatives on the political and economic levels. Greek default risk has resurged in the last few days to its highest since the last 'restructuring'...