Stocks Go Green, Euro Spikes On Report Greece To Ask Request Program Extension Tomorrow

Now where have we seen this before? Surprise contradictory headlines that occur shortly after vehement statements by leaders:


This comes after Varoufakis and Tspiras specifically saying that they will not extend the current loan accord: "Salvation will not come by extending the mistake," adding that compromise on the current program "is not an agreement but a surrender that would complete the euthanasia of our country." How long until the denial?

Algos love it:


And of course, this was again all about getting the S&P green from Friday - sucking in the stops:


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Update: as Reuters clarifies (well after the kneejerk reaction to the wrong headline), "Greece intends to ask for an extension of its loan agreement with the euro zone on Wednesday, a source in Brussels said, distinguishing this from the country's full bailout programme."

As a reminder, the extension of the "loan agreement" but not the bailout programme, was part of the Eurogroup draft which Varoufakis had agreed to yesterday, until it was struck out and replaced with "programme", which is what the Greek threw up all over.

What we said yesterday:

Some of the key variations:

  • the addition that the Greek authorities "intend to successfully conclude the programme taking into account the new government plans", something which when listening to the Varoufakis presser was clearly not the case.
  • the addition that Greek authorities will commit to "refrain from unilateral action"
  • the addition of specific reform parameters including "tax policy, privatisation, labour market, financial sector and pensions"
  • the addition of a Greek commitment (not agreement) to guarantee (not ensure) "debt sustainability in line with the targets agreed in the November 2012 Eurogroup statement."

And the punchline: the language about the "six month technical extension" not of the current loan agreement as an intermediate step, but of the "programme", and the addition of the explicit "bridge" language.

In other words, total non-news, but don't worry: while stocks ramped on the "good news", they will once again forget to revert to pre-headline levels, as every incremental piece of good, if false, Greek news sends stocks higher, even if there is no subsequent selling on the inevitable refutation.