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22Jun2015 Pre-Market Commentary: Investor Optimism On Averting A Greek Default Moves U.S. Stock Futures Index Higher

Written by Gary

Elevator Monday has started with U.S. stock index futures higher this morning on optimism that Greece may be able to strike a last-minute deal with its international creditors to avert a default.

Watch for volatility after markets open higher this morning. Any negative news from Greece will send the markets tumbling, everyone place your bets.

Here is the current market situation from CNN Money

European markets are sharply higher today with shares in France leading the region. The CAC 40 is up 2.62% while Germany's DAX is up 2.54% and London's FTSE 100 is up 1.09%.

What Is Moving the Markets

Here are the headlines moving the markets.

Mood brightens after latest Greek offer to creditors

ATHENS/BRUSSELS (Reuters) - A new Greek offer for a cash-for-reforms deal raised hopes of an agreement as euro zone leaders prepared for an emergency summit on Monday, with EU officials welcoming the proposals as a "good basis for progress" to avert a default by Athens.

Frontrunning: June 22

Mood brightens after latest Greek offer to creditors (Reuters)

ECB's Nowotny - Greek banks have funding extension for today (Reuters)

Any Greece deal must match party manifesto, minister says (Reuters)

Greece says now up to lenders to move on an agreement (Reuters)

Greece sends wrong documents to monitors... Again (FT)

U.S. won't let Russia 'drag us back to the past': Pentagon chief (Reuters)

Belgium unblocks part of Russian diplomatic missions' frozen accounts (Tass)

Fed Scoop Heralded Era of Closed Doors for $100,000 Newsletters (BBG)

How Chinese Billionaire Li Hejun's Solar Bet Soured (WSJ)

Health Mergers Could Cut Consumer Options (

Oil rises on Greek deal hopes

LONDON (Reuters) - Oil prices rose toward $64 a barrel on Monday, joining stronger financial markets on speculation that European Union leaders could avert a Greek bankruptcy.

Cabin crew give Lufthansa deadline to avoid strike

FRANKFURT (Reuters) - German airline Lufthansa faces a June 30 deadline to make concessions to cabin crew over pay and pensions or suffer further strikes that would compound the effects of a costly dispute with its pilots.

U.S. futures rise on optimism over Greek deal

(Reuters) - U.S. stock index futures were higher on Monday on optimism that Greece may be able to strike a last-minute deal with its international creditors to avert a default.

Becoming A Large Bank? It's Not Easy

by Liberty Street Economics

-- this post authored by Rajlakshmi De and Hamid Mehran

Size is usually seen as the leading indication of the costs that a bank failure would impose on society. As a result, the Dodd-Frank Act of 2010 requires banks to have adequate capital and liquidity to mitigate default risk and imposes additional requirements on larger banks to enhance their safety. In this post, we show that it is highly uncommon for banks to reach sizes at which they are considered systemically important.

Why Stocks Are Soaring (For Now)

Some interesting observations from Bloomberg's Richard Breslow, seeking to explain why stocks are soaring (although the optimism appears to be waning in the last few minutes as reality intervenes) on absolutely nothing.

The market has shaken off Friday's Greece jitters and has convinced itself a deal remains the base case, or indeed the only case.

Even with capital controls as an interim step, the argument goes, such a harsh reality will bring compromise. This argument is proffered by those who think Greece is being "difficult."

Another argument says the EU and IMF know that a Greece default is a bad thing, perhaps a really bad thing (despite all the protesting to the contrary) and will see their way to a deal. If only Greece would give them a face-saving way to pull it off.

What an unexpected irony it would be if the IMF had to be the fall guy. It is quite clear that the rest of the world has no appetite to experiment whether there will be contagion and have made that clear to the EU.

So today equities are flying, risk is bid and peripheral spreads are tightening at speed. Read another way, excess cash suddenly feels, well, excess, and long-standing short EUR positions are being wiped out ad seriatum. So what might happen when the dust settles?

Bunds don't look very good. No matter where you draw the retracements from, 10-year yields look technically set to test 0.88% and through there have another go at 1%. Not really what the ECB intended with QE. Let's not forget that the Bundesbank has not been exactly bund-friendly, as it has been cutting the duration of its QE purchases.

The U.S. 10-year yield is also remembering this morning that whether it is September or December, official rates are set to go higher. It was only June 10 when 10-year rates were pushing up against 2.50%. What if those numbers we are data dependent on start to pick up, as forecast?

In the last period, the back-up in ...

Global markets rally on Greek optimism

LONDON (Reuters) - Global stocks, the euro and peripheral euro zone bonds all rose on Monday, lifted by a wave of optimism that Greece and its international creditors will strike a last-minute deal that will see Athens avert default.

Suit Sheds Light on Secret Trading Technology

A legal dispute in San Francisco has shed light on a tool that some of the biggest quantitative hedge funds, including WorldQuant and Renaissance Technologies, use to predict how stock prices will move.

Facebook gaining ground on YouTube in video ads, report says

FRANKFURT/PARIS (Reuters) - Facebook is gaining ground on Google's YouTube as an outlet for big companies to market their products via online videos, the fastest growing category of Internet ads, a report published on Monday said.

Cigna rebuffs Anthem's 'deeply disappointing' proposal

(Reuters) - Health insurer Cigna Corp rebuffed Anthem Inc's $47 billion merger proposal on Sunday, saying it was "deeply disappointed" with Anthem's recent actions and the offer was not in the best interest of shareholders.

"It's Time To Hold Physical Cash", Fidelity Manager Warns Ahead Of "Systemic Event"

As Jamie Dimon recently noted while discussing the perils of illiquid fixed income markets, the statistics around "tail events" can no longer be trusted.

In other words, 6, 7, or 8 standard deviation moves that in theory should only happen once every two or three billion years may now start to show up once every two to three months. Evidence of this can be found in October's Treasury flash crash, January's fantastic franc fuss, and last month's Bund VaR shock.

Why is this happening? Simple. There's no liquidity left and the idea of efficient markets facilitating reliable price discovery is an anachronism.

Today's broken, "mangled" (to use Citi's descriptor) markets come courtesy of: 1) frontrunning, parasitic HFTs, 2) the post-crisis regulatory regime which, to the extent it's well meaning, was conceived by people who never had any hope of evaluating the likely knock-on effects of their policies, and 3) central banks, who have commandeered sovereign debt markets, leaving a trail of illiquidity and shrunken repo in their wake.

Meanwhile, equity and fixed income bubbles continue to inflate on the back on central bank largesse and the only two options for rescuing a highly leveraged world are writedowns and/or inflating away the debt.

So what is a savvy investor to ...

Greece's Banks Teeter as Brinkmanship Prevails

Greek banks are running out of money. Daily warnings about deposit flight should be applying pressure to Greece's leaders to end the crisis.

Europe Markets Show Caution Not Contagion on Greece

Greece has in the past been the spark that has set off explosive financial fireworks. Yet European markets are showing few signs of panic, even after Thursday's Eurogroup meeting ended with no deal.

BOJ says factory output likely hit soft patch in April-June

TOKYO (Reuters) - The Bank of Japan said it expects factory output to fall for the first time in three quarters in April-June on weak Asian demand, underscoring the fragile nature of the economic recovery.

Williams Companies Rejects $48 Billion Takeover Offer

The American natural-gas pipeline giant turned down an unsolicited proposal from Energy Transfer Equity, its former rival in a bidding war for Southern Union Company.

Exclusive: CVC and Temasek to buy $2 billion generic drugs firm Alvogen

LONDON (Reuters) - European private equity fund CVC and Singaporean sovereign wealth fund Temasek [TEM.UL] are to buy a controlling stake in the pharmaceutical firm Alvogen, its chairman and chief executive said.

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