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02Jul2015 Market Close: Markets Close In The Red, Bond Prices Up, WTI Oil Down, Have A Happy Weekend

Written by Gary

Major indexes closed in the red ahead of the U.S Holiday weekend as investors drove bond prices up in a bet that the Federal Reserve will be in no hurry to raise interest rates as wage growth stalls.

With opinion polls suggesting the vote on Greek austerity may be close, many investors are opting to ride out the storm and stick with their holdings of European stocks.

Todays S&P 500 Chart

The kingdom is poised to break records for crude production this summer, but its ravenous energy needs threaten its ability to ramp up exports.

(Reuters) - U.S. stocks extended losses on Thursday after the International Monetary Fund warned Greece may need a large debt write-off, and muted U.S. jobs data dampened the economic outlook.

U.S. stocks fell and bond prices strengthened as the latest U.S. jobs report reaffirmed investors' belief that the Federal Reserve would be patient in raising interest rates.

The Market in Perspective

Here are the headlines moving the markets.

Jobs Jolt Sparks Bond Bid; Stocks Skid As "Day Of Greckoning" Looms

A little premature but...

Deja Vu all over again...

Stocks limped higher into the payroll print - running stops above yesterday's highs... then dropped to yesterday's lows before trying to melt up into the last illiqui hour...

Small Caps were weak out of the gate today...

On the week, Small Caps are worst...

But since the peak of "Greece is rescued" last weekend, Trannies are the biggest loser...

US stocks slip on mixed US jobs report, fear of fallout from Greece as referendum nears

NEW YORK (AP) — U.S. stocks are ending slightly lower as investors reacted to news that Greece's finances are deteriorating and a mixed report on the job market. Investors drove bond prices higher Thursday in a bet that the Federal Reserve will be in no hurry to raise interest rates. Stocks ended the week down more than 1 percent, the worst weekly loss in three months. The Dow Jones industrial average fell 27 points, or 0.2 percent, to 17,730. The Standard & Poor's 500 index slipped a point, less than 0.1 percent, to 2,076. The Nasdaq composite fell three points, or 0.1 percent, to 5,009.

"It Could Never Happen Here" - America Is Not Greece

Tick, tock... "it could never happen here?"


But as Jared "The 10th Man" Dillian writes on MauldinEconomics, a financial crisis of similar magnitude will happen in the US someday... it's just a matter of when...

I was watching the 6 o'clock news and saw images of closed banks in Greece and people lined up at ATMs. I'm sure you did, too.

This must seem surreal to most people because it seems so remote. But put yourself in these people's shoes for a second. You have money in the bank. Suddenly you can't get to it. After standing in long lines, you can only get 60 euros at a time, which isn't going to last you very long.

What if you didn't plan adequately and haven't stashed away any cash? The banks will be closed for a while. What happens?

How do you pay for rent? Or food?

How does your employer pay you?

Do you go homeless? Or hungry?

Do you get really angry, take to the streets, blame someone or something (probably the wrong thing), break stuff, set things on fire?

Will Greece descend into anarchy?

It might.

Doomsday Preppers

Of course, not everyone in Greece is hurting. Many people saw this coming and took action. They took all their money out of the banks, ...

Investors on Edge Ahead of Greek Referendum

With opinion polls suggesting the vote on Greek austerity may be close, many investors are opting to ride out the storm and stick with their holdings of European stocks.

The Latest: Greek premier says 'the bigger the 'no' vote, the better agreement we'll achieve'

ATHENS, Greece (AP) — The latest news on Greece's financial woes (all times local): ___ 10:45 p.m. Greece's prime minister says "the bigger the 'no' vote, the better agreement we'll achieve" and that a powerful "no" in Sunday's austerity referendum would "send tremors" throughout Europe. Alexis Tsipras told private Antenna TV station in an interview Thursday that he wants Greece to remain within the eurozone, but with a sustainable bailout agreement. He said a "yes" win would lead to a deal that puts additional burdens on Greece without growth.

Top U.S. regulator expects action on Fiat Chrysler over recalls

WASHINGTON (Reuters) - The top U.S. auto safety regulator said on Thursday he will move quickly to take action in response to Fiat Chrysler Automobiles NV's mishandling of recalls involving up to 11 million vehicles.

As Saudis Keep Pumping, Thirst for Domestic Oil Swells

The kingdom is poised to break records for crude production this summer, but its ravenous energy needs threaten its ability to ramp up exports.

Did The IMF Just Open Pandora's Box?

By now it should be clear to all that the only reason why Germany has been so steadfast in its negotiating stance with Greece is because it knows very well that if it concedes to a public debt reduction (as opposed to haircut on debt held mostly by private entities such as hedge funds which already happened in 2012), then the rest of the PIIGS will come pouring in: first Italy, then Spain, then Portugal, then Ireland.

The problem is that while it took Europe some 5 years to transfer a little over €200 billion in Greek private debt exposure to the public balance sheet (by way of the ECB, EFSF, ESM and countless other ad hoc acronyms) at a cost of countless summits and endless negotiations, which may or may not result with the first casualty of the common currency which may prove to be reversible as soon as next week, nobody in Europe harbors any doubt that the same exercise can be repeated with Italy, or Spain, or even Portugal. They are just too big (and their nonperforming loans are in the hundreds of billions).

And yet, today, in a stunning display of the schism within the Troika, it was the IMF itself which explicitly stated that Greece is no longer viable unless there is both additional funding provided to the country, which can only happen if there is another massive debt haircut.

This is what the IMF said:

Even with concessional financing through 2018, debt would remain very high for decades and highly vulnerable to shocks. Assuming official (concessional) financing through endâ€"2018, the debt-to-GDP ratio is projected at about 150 percent in 2020, and close to 140 percent in 2022 (see Figure 4ii).

Wall St. falls on simmering Greece worries, tepid data

(Reuters) - U.S. stocks extended losses on Thursday after the International Monetary Fund warned Greece may need a large debt write-off, and muted U.S. jobs data dampened the economic outlook.

China State Official Hints Beijing May Bailout Greece

On Monday, after Greek PM Alexis Tsipras' dramatic referendum call sparked a run on Greek ATMs, grocery stores, and gas stations, we did our part to help ameliorate the situation by sending a subtle message to Athens:

Dear Greece, if you want to apply for a loan from the Asian Infrastructure Investment Bank, send an email to:

â€" zerohedge (@zerohedge) June 28, 2015

Indeed, now may be an opportune time to tap Beijing for a few billion given that China officially launched the AIIB this week. As a reminder, the success of China's AIIB membership drive was a political disaster for The White House, which expended considerable effort to discourage US allies from supporting the new China-led venture.

As such, it would be difficult to imagine a more fitting pilot program for the world's newest supranational lender than a rescue package for the birthplace of Western democracy which has been brought to its knees by that most Western of all multilateral institutions, the IMF.

And while any funding to Greece from China would likely be channeled through the Silk Road fund (at least for now, given that the AIIB is just a few days old, officially), any aid from Xi Jingping's deep pockets to Athens would represent a spectacular coup on both an economic and political level.

While the world is by now likely incredulous about the prospects for a Gre ...

IMF warns of huge financial hole as Greek vote looms

ATHENS/WASHINGTON (Reuters) - The International Monetary Fund delivered a stark warning on Thursday of the huge financial hole facing Greece as angry and uncertain voters prepare for a referendum that could decide their country's future in Europe.

Goldman: "Greece Will Remain In Euro Even If It Votes No", And How Markets Will React

The time to negotiate the Greek referendum this Sunday has come and gone and at this point, one can only sit and wait as the vote results start trickling in on Sunday evening. And, as Goldman's Huw Pill prudently observes, the outcome of Sunday's Greek referendum is uncertain. "Regardless of the outcome, Greece will continue to face substantial economic dislocation in the shorter term." What is interesting is that Goldman says "Greece will ultimately remain in the Euro area even in the event of a â€'No' vote."

Clearly, this together with the earlier IMF note, is great news for the Greek government, which can now point to not only the IMF backing its original claim that a debt haircut is absolutely necessary, but that none other than Mario Draghi's former boss, Goldman Sachs, agrees with Varoufakis that Greece will remain in the Eurozone even after a "No" vote.

That said, this is how Goldman handicaps the possible voting outcomes and the subsequent reactions:

Result of referendum likely to prove less pivotal than how Greek domestic politics evolves in response to it. We envisage three main scenarios following the referendum:

1. A 'Yes' vote, followed closely by the resignation of Messrs. Tsipras and Varoufakis and the formation of a new Greek government. This is likely to be the most market-friendly outcome. Clearly, its implications will hinge crucially on the character of the new government. A government committed to reform, credible in the eyes of the creditor institutions and with a mandate to act (e.g., a technocratic government enjoying a broad base of parliamentary support and committed to a limited tenure followed by elections) could move forward to a new programme that would allow a resumption of Greece's financial and liquidity support. Weaker governments that fall short on ...

I.M.F. Says Greece Needs Debt Relief, but Blames Government Lapses

A report by the fund amounted to an indictment of the way Prime Minister Alexis Tsipras has governed the country since taking office in January.

Plunge In Export Prices Is Now Worse Than The Great Financial Crisis

Spot The Recovery... According to the World Trade Monitor, world export prices declined by -15.8% year-over-year in April and are back at level last seen in 2009. World import prices have declined by -15.1% year-over-year as well.



In the developed world, export prices are down-16.6% year-over-year. This a larger drop than what occurred in 2009 and is the largest year-over-year decline since 1990 (when this series began). Import prices have declined by -17.5% year-over-year. The drop it 2009 was slightly larger.



Lastly, in the emerging markets, trade prices have fallen but not quite to the extent that they have in developed world. Emerging market export prices are down -15.1% and import prices are off -12.6% year-over-year.



U.S. regulator says Fiat Chrysler misled agency on Takata recalls

WASHINGTON (Reuters) - Fiat Chrysler Automobiles NV misled U.S. auto safety regulators about recall notifications to the owners of vehicles equipped with defective Takata Corp air bags, a U.S. safety recall analysts said on Thursday.

Airlines: A Justifiable Bet

The Justice Department is probing airline expansion practices. But cheap valuations will allow shareholders to be patient.

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