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24Jun2015 Market Close: Continuing Worries Over Greek Debt Crisis Sent Investors Seeking Haven Assets Pushing Equities Lower

Written by Gary

Afternoon markets fell in a broad decline down to almost -1% as concerned investors are becoming increasingly skeptic regarding a resolution between international creditors and the Greek government. The quick ending to what had been billed as a make-or-break meeting renewed worries over Greece's debt crisis stoked demand for haven assets.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

U.S. Stocks Fall on Greece Worries

U.S. stocks fell Wednesday as recent optimism about a bailout deal for Greece faded.

Wall Street ends down as Greek debt woes go on

NEW YORK (Reuters) - U.S. stocks closed lower on Wednesday, dropping in a broad decline as the outcome of negotiations between Greece and its international creditors remained up in the air, prompting investors to drop riskier assets like equities.

Greek debt talks snarled again before EU leaders gather

BRUSSELS (Reuters) - Greece and EU finance ministers hit a new impasse on Wednesday as creditors accused Athens of failing to compromise despite a looming default next week that risks bouncing it out of the euro.

U.S. Government Bonds Higher

U.S. Treasury bonds strengthened Wednesday for the first time this week as renewed worries over Greece's debt crisis stoked demand for haven assets.

Wall St. Heads Lower With an Eye on Greece's Debt Talks

Two European supermarket giants with operations in the United States announced a deal; the owner of Food Lion agreed to merge with the owner of Stop & Shop and Giant.

Abbott & Costello Explain The Unemployment Situation

Sometimes you just have to laugh!!

h/t Feral Irishman via Jim Quinn's Burning Platform blog,

COSTELLO: I want to talk about the unemployment rate in America .

ABBOTT: Good Subject. Terrible Times. It's 5.6%.

COSTELLO: That many people are out of work?

ABBOTT: No, that's 23%.

COSTELLO: You just said 5.6%.

ABBOTT: 5.6% Unemployed.

COSTELLO: Right 5.6% out of work.

ABBOTT: No, that's 23%.

COSTELLO: Okay, so it's 23% unemployed.

ABBOTT: No, that's 5.6%.

COSTELLO: WAIT A MINUTE. Is it 5.6% or 23%?

ABBOTT: 5.6% are unemployed. 23% are out of work.

COSTELLO: If you are out of work you are unemployed.

ABBOTT: No, Congress said you can't count the "Out of Work" as the unemployed. You have to look for work to be unemployed.

COSTELLO: BUT THE ...

U.S. economy contracts mildly in first quarter, but growth rebounding

WASHINGTON (Reuters) - The U.S. economy contracted in the first quarter but less than previously estimated as it struggled with bad weather, a strong dollar, spending cuts in the energy sector and disruptions at West Coast ports.

The Mystery Of The "Missing" Inflation Solved: Record Number Of US Renters Can't Afford Housing

Looking at a long-term chart of the BLS' core CPI chart or the Fed's preferred inflation metric, the Core PCE, reveals that the US is patiently trudging below the Fed's goalseeked goal of roughly 2% inflation per year. Even when stripping out just the "shelter" component of CPI reveals inflation that is barely higher at just under a 3% annual increase.

Of course, by now everyone knows that the artificially suppressed, "hedonically-modified" and seasonally-adjusted inflationary readings is what has permitted the Fed to not only grow its balance sheet to $4.5 trillion but to keep rates at 0% for 8 years. Because "how will the economy recover if there is no broad inflation", the Keynesian brains in the ivory tower scream, demanding more, more, more easing just to push inflation higher.

There is only one problem with this: it is all a lie - just ask any average American whose cost of living has soared in the past decade.

Still, with reality diverging so massively from the government's official data, reality just had to be wrong somehow.

Turns out reality was right all along, as revealed by the latest "State of the Nation's Housing" report released by the Center for Housing Studies at Harvard, which showed that while inflation among most products and services may indeed be roughly as the Fed and BLS represent it, when it comes to re ...

Eurogroup Meeting Ends With No Deal

Given that the Greek delegation already left, this is hardly a surprise but...

Finland FinMin says it's over...

That's it for tonight. #Eurogroup will continue tomorrow at 13.00.

Alexander Stubb (@alexstubb) June 24, 2015

It appears Greek stock investors remain convinced a deal is coming...

As The Nikkei 225 Spikes To 19 Year Highs; How Do You Say Deja Vu In Japanese?

With real incomes collapsing, approval ratings at record lows, and PMIs back in contraction; is it any surprise that the last thing standing for Shinzo Abe to "show" the world his 'progress' is the stock market... the all-knowing arbiter of monetary and fiscal policy-maker success (and completely divergent indicator of real economic health). To wit, overnight saw Japan's Nikkei 225 surged to its highest since Nov 1996 (up almost 150% since Abenomics devaluation was unleashed). The last time we saw such a surge brings a chill air to the conversation as Japanese stocks pass the halfway-back mark to 1989's epic bubble peak, it is begining to look a lot like peaking once again.

19 Year Highs... The REAL Japanese economy must be awesome right?

Wrong?

And we suspect time is running out...

There is always a limit.

US Equities Give Up Greek Deal Hope Gains

But "Greece was Rescued"...

Trannies are in trouble...

Next stop FOMC gains...

Carl Icahn Crushes CNBC's Perma-"Buy Stocks"-Bull$hitness

We suspect this will be the last time billionaire investor Carl Icahn is invited on CNBC. Having sold CNBC darling NFLX, he crushed the two main memes of CNBC's raison d'etre - buy stocks, because where else are you going to put your money - "what's better - making 2% or losing 30% as people did in 2008...right now it's an extremely dangerous time;" and the next leg of this bull market will come from an improving real economy - "the economy is not picking up, it is artificial due to low interest rates." The market has way over-estmated how long this will last, Icahn concludes, "keep your powder dry - why do have to own anything risky? It's just nonsensical."

"The longer [The Fed] waits to take the patient off the medicine, the more difficult it's going to be"

Enjoy... (a very quiet CNBC crowd)

Poor 5 Year Auction Despite Earlier Notable Collateral Shortage

Moments ago, the US Treasury concluded an auction which we admit fared far worse than we had expected, as it was a clear breach with a recent pattern seen of strong than expected primary issuance into a market that had a significant collateral shortage ahead of auctions.

As a reminder, one recurring pattern that we had noticed months ago, and which had a nearly 100% predictive hit record, was that on auction days when there is a major lack of collateral as evidenced by a negative repo rate, Tsy auctions were stellar. Today, was just such a day, with the 5 Year repo printing well special at -0.85% this morning as ICAP reported.

All else equal this would have meant a big scramble to cover shorts into the auction and a high yield well tighter than the When Issued.

Only not today. Because for all those who expected the yield to price through the when issued, the result was a surprising 1 basis point tail to the 1.700% W.I., with the auction of $35 billion in 5 Year bonds pricing at 1.710%.

Worse, the internal were rather poor as well with a 2.39 Bid to Cover, below the 2.58 TTM average, and the lowest since March. Indeed, as the black line in the chart below shows, the downward trend in Bids to Cover for the 5 year tenor is once again sliding downward.

Finally, with Directs taking down only 5.6%, or just over half of the TTM average, leaving Indirects with 56.6% of the lowest since March, it meant Dealers had to back up the truck and be left holding the remaining 38.0% of the final take down.

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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