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30Jun2015 Pre-Market Commentary: Greek D-(efault) Day, Grexit Almost Assured, Markets Relatively Stable, Investors Obviously Concerned

Written by Gary

U.S. stock index futures are rising as the rumor mills are churning and the charts are going to be volatile. The Greek D-(efault) day has arrived, a day after the Dow and the S&P 500 registered their worst session since October.

Markets are expected to open higher, however, technicals see further decline very possible.


Here is the current market situation from CNN Money

European markets are lower today with shares in London off the most. The FTSE 100 is down 0.54% while France's CAC 40 is off 0.08% and Germany's DAX is lower by 0.01%.

What Is Moving the Markets

Here are the headlines moving the markets.

June 2015 Thumbtack Small Business Sentiment Shows Decline in Economic Conditions

by Thumbtack

In June, respondents nationwide indicated reduced optimism about the economy for the third month in a row, though sentiment about current and future conditions continues to be higher than it was one year ago.

EU in last-ditch bid to Greece, urges 'yes' vote to bailout

ATHENS (Reuters) - The head of the European Commission made a last-minute offer to try to persuade Greek Prime Minister Alexis Tsipras to accept a bailout deal he has rejected before a referendum on Sunday which EU partners say will be a choice of whether to stay in the euro.
...

Markets on edge as Greece heads for default

LONDON (Reuters) - Euro zone stocks and low-rated bonds recovered the worst of their losses on Tuesday but remained on edge as Greece looked set to default on a debt repayment to the IMF and plunge deeper into financial crisis.

GE to sell European private equity financing unit to SMBC

TOKYO (Reuters) - General Electric Co said it would sell its European private equity financing business to a unit of Japan's Sumitomo Mitsui Banking Corp (SMBC) for about $2.2 billion as the U.S. conglomerate sheds financial assets amid a restructuring.

Frontrunning: June 30

EU in last-ditch bid to Greece, urges "yes" vote to bailout (Reuters)

In? Out? In between? A Greek legal riddle for EU (Reuters)

Tsipras Says EU Won't Eject Greece as Cost â€'Immense' (BBG)

Empty Greek ATMs Force Tourists to Stiff Santorini Cabbies (BBG)

Anti-austerity protests in Greece as bank shutdown bites (Reuters)

Puerto Rico governor calls for bankruptcy; adviser says island 'insolvent' (Reuters)

Puerto Rico Urges Concessions From Creditors (WSJ)

Beijing works to calm tumbling stock market (FT)

Hilsenrath - For Fed to Delay Rate Hikes, Global Tumult Would Need to Infect U.S. (WSJ)

The Stimulative Effect Of Wealth Redistribution

by San Francisco Fed

-- this article authored by Bart Hobijn and Alexander Nussbacher

Policymakers often consider temporarily redistributing income from rich to poor households to stimulate the economy. This is based in part on the idea that poor households spend a larger share of their income than rich ones do. However, ample evidence suggests that the difference in spending between these groups is significantly smaller than commonly assumed. A second assumption is that redistribution through policy is more efficient than through capital markets. Whether this is true is important to consider when proposing this type of stimulus policy.

U.S. futures rise on hopes of last-minute Greece deal

(Reuters) - U.S. stock index futures rose on Tuesday, a day after the Dow and the S&P 500 registered their worst session since October, as investors hoped for a last-minute deal on Greece.

Varoufakis Confirms Greece Will Default To IMF Today

May as well spoil the ending of what happens at midnight local time today. Nothing (as previously reported). From Reuters:

GREEK FINANCE MINISTER SAYS GREECE WILL NOT PAY IMF ON TUESDAY.

Visually:

AP has the well-known by now details:

Greek Finance Minister Yanis Varoufakis confirmed that the country will not make its payment due later to the International Monetary Fund.

When asked while walking out of the Finance Ministry about whether Greece will pay the 1.6 billion euros due to the IMF, Varoufakis said "no."

His comment came amid speculation that Greek Prime Minister Alexis Tsipras is trying to craft some sort of last-minute deal with creditors before the payment is due and before the European part of Greece's bailout comes to an end.

A Greek official said Tsipras has spoken with European Commission President Jean-Claude Juncker, European Central Bank chief Mario Draghi and European Parliament president Martin Schulz.

The official did not reveal what was discussed.

To which Merkel had a prompt reply:


MERKEL SAYS GREECE'S BAILOUT RUNS OUT AT MIDNIGHT

The default may be in the books, but the bluff continues: can Greece default in the Eurozone as Varoufakis has claimed all along, or will the collapse of the Greek banking system tomorrow after the ECB makes the ELA illegal topple the government? Find out in a few short days.

Foreign Property Investors Flock to Poland

Many are attracted to the country's expanding economy and low real-estate prices compared with other markets on the Continent like the U.K. and France.

European Regulators Suspend Trading In Greek Bonds Citing "Trading Harmony"

Regulators across Europe are beginning to curtail trading in Greek assets as the country's stock market remains closed and Greeks grapple with capital controls and prepare for a default to the IMF at midnight.

Luxembourg's market regulator has suspended trading in bonds issued by National Bank of Greece, Alphabank, Eurobank, Piraeus Bank, Eurobank, the Hellenic Railways Organisation and the Hellenic Republic.

"The request for the suspension of trading came from the Luxembourg regulator- the ESSF. A spokesperson for the Bourse said that since the Greek stock exchange was closed meaning trading was not possible in Greece, the Luxembourg regulator said trading should be suspended in Luxembourg too in the interests of European trading harmony," FT says.

"There's a variety of reasons and criteria as to why we would be asked to suspend. I can't remember the last time we were asked, it would have been a while ago. The one I can remember was a request for Banco Espirito Santo when we were asked to suspend trading in shares and bonds," an exchange official told Reuters.

Meanwhile , the UK's FCA has asked Tradeweb to block Greek bond trading.

So while some regulatory bodies are indeed concerned about the idea of "trading harmony", Global X apparently isn't because the FTSE Greece 20 ETF is still trading despite the "holiday" in Athens, meaning any retail investors hoping to BTFD ahead of a "Nai" Greferendum outcome are effectively trading a CEF without knowing it.

German watchdog says Deutsche Bank has catching up to do

FRANKFURT (Reuters) - Deutsche Bank has some "catching up" to do under its new leadership to ensure its systems and processes are up to the requirements of international financial rules, the head of Germany's financial watchdog Bafin said.

Greek D(efault)-Day Arrives, As Does China's Plunge Protection Team

The Greek D-(efault) day has arrived, and with it so has quarter-end window dressing for many underwater hedge funds (recall the S&P is now red for the 2015) which means the rumor mill today will be off the charts.

And sure enough, less than an hour ago, futures exploded higher as did the EURUSD, following another "report/rumor" of a last minute detente between Greece and the Troika when Greek Ekathimerini said that "Tsipras is reconsidering the last-ditch offer made by European Commission President Jean-Claude Juncker, sources have told Kathimerini."

According to the Greek newspaper's rumor "the pressure caused by the closure of banks as well as the expiration of the Greek bailout program on Tuesday has caused some members of the government to urge Tsipras to accept Juncker's offer. Sources said the prime minister's office has already informed the Commission that it is examining the proposal. According to what is known of the proposal Tsipras would have to send a written acceptance of the version of proposals from the lenders published on Sunday, with a pledge to campaign for them to be accepted in the planned July 5 referendum."

This follows a report yesterday that following his clearly intoxicated speech, Juncker had sent a last minute, ad hoc offer to Greece, one without Troika preapproval, which Greece quickly rejected had ever been received.

However, as last night, so today there was little sign that Tsipras was prepared to drop his repeated rejections of the bailout offer, which he has dismissed as a "humiliation" for Greece.

Sure enough, just a few moments after the Kathimerini rumor emerged it was denied.

Oil Prices Rise

Oil prices rose as the Iranian nuclear talks looked set to miss today's deadline while Greece continued to roil the broader financial markets.

Stratfor: Beyond The Greek Impasse

by STRATFOR

-- this article authored by George Friedman

The Greek situation - having perhaps outlived the term "crisis," now that it has taken so long to unfold - appears to have finally reached its terminal point. This is, of course, an illusion: It has been at its terminal point for a long time.

Stock Gains in China Help to Calm Investors

No one knows for sure why prices recovered Tuesday, but some analysts said investors expected the Chinese government to prop up share prices.

Oil Stocks Hit Two-Year High in Europe Hub

More than 60 million barrels were stored at a network of storage tanks in the Dutch ports of Amsterdam and Rotterdam and Belgium's Antwerp in June.

Puerto Rico Urges Concessions From Creditors

Investors in Puerto Rico's bonds braced for losses as soon as this week, after the U.S. commonwealth said it can't pay its debts.

June 26 Silver Flash Crash: A Forensic Analysis

by Keith Weiner

On Friday morning, at around midnight (Arizona time), the price of silver had a little crash. It dropped 30 cents in 11 minutes. More importantly, it dropped more than 10 cents in a single second. Then, the price rose above its level before the event. Here is a graph of the event, with each tick representing one minute.

Silver Price Action

Figure 1: Silver flash crash price action

Let's perform a forensic analysis of this mini flash crash.

Zooming in to the event, here's a look at the bid (green) and ask (red) prices for the September silver future for the period around the crash (which occurred at 12:03am AZ time). On this graph, each tick is one second. We used dashed lined to show bid and ask prices on the September future.

Silver Futures

Figure 2: The bid and ask prices of the September silver contract

That vertical drop occurs largely between one second and the next, 12:03:16 and :17 (AZ time). It slides a few pennies over the next two seconds, and then it's done.

We're very aware of the widespread belief that there is a conspiracy to manipulate downwards the prices of gold and silver, for nonprofit and for profit. This conspiracy is supposed to protect the dollar and/to make money (and by money, it's meant dollars). We know that many folks are firm in this belief.

However, bear with us as we show you the data to support a different theory, an arbitrage theory. The bullion banks are not ...

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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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