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10Jul2015 Pre-Market Commentary: U.S. Futures Up Over One Percent, Greece Accepts Austerity Deal, World Markets Rejoice With Surging Investor Optimism

Written by Gary

A falling market was supposed to be the name of the day, but news, rumor and Hopium wins every time. U.S. stock index futures are up over one percentage point this morning as it appears that Greek Prime Minister Alexis Tsipras has offered to meet most creditor demands for a new bailout package.

Markets across the globe are all toasting the news but, considerable risks remain ahead of this weekend and beyond.

Markets are expected to open higher and may slide off the morning highs. Volatility is expected; but what goes up may come crashing down.

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 3.33% while Germany's DAX is up 2.36% and London's FTSE 100 is up 1.54%.

What Is Moving the Markets

Here are the headlines moving the markets.

Greek PM Tsipras seeks party backing after abrupt concessions

ATHENS (Reuters) - Greek Prime Minister Alexis Tsipras appealed to his party's lawmakers on Friday to back a tough reforms package after abruptly offering last-minute concessions to try to save the country from financial meltdown.

"Greece Doesn't Matter" - Dow Unchanged On Week After 2200 Points Of Turmoil

The Dow has whipsawed over 2200 points this week... behold the price stability...

IEA Says Oil Prices May Fall More

The world's appetite for oil will continue to grow but at a slower pace this year and next, the International Energy Agency said, warning that crude prices could dive again.

China stocks jump again as emergency measures bite

SHANGHAI (Reuters) - Chinese stocks rose strongly for a second day on Friday, buoyed by a barrage of government support measures, but worries persist about the long-term impact that four weeks of market turmoil may have on the world's second-largest economy.

Tsipras Sells Out Referendum 'No' Vote Ahead Of Weekend Deadline

"We got a mandate to bring a better deal than the ultimatum that the Eurogroup gave us, but certainly not given a mandate to take Greece out of the eurozone," Greek PM Alexis Tsipras reportedly told Syriza lawmakers on Friday, underscoring the fact that his government's mandate is, for all intents and purposes, impossible to achieve.

As detailed Thursday evening, the proposal (or, the "thorough piece of text" as Jeroen Dijsselbloem called it) submitted by Tsipras looks quite a bit like the proposal the Greek people rejected at Tsipras' urging last Sunday. Here are the basics:

The broad strokes: a 3 year, €53.5 billion bailout program, including €35 billion of growth measures, lasting through June 30, 2018 requesting funds from the ESM, seeking to finally put the IMF off to the side.

The program is heavy on revenue promises and lite on actual spending cuts. Greece hopes to achieve a 1% primary budget surplus in 2015, rising to 2%, 3%, and 3.5% by 2018, all of which are now impossible due to the total collapse of the economy in the past week. Among the tax reform will be a modest increase in corporate tax from 26% to 28%.

The changes to the VAT system are as noted previously, keeping the VAT on hotels at 13% but raising it to 23% for restaurants; Greece also promises to eliminate discounts on islands, starting with the islands with higher incomes and which are the most popular tourist destinations.

Create strong disincentives to early retirement, incur penalties for early withdrawals, make all supplementary pension funds financed by own contributions; and so on. Greece will seek to "gradually phase out the solidarity grant (EKAS) for all pensioners by end-Decemb ...

Frontrunning: July 10

Fed Chair Yellen To Speak As Global Tensions Rise (WSJ)

Greek PM Tsipras seeks party backing after abrupt concessions (Reuters)

France Hails Greek Aid Proposals as Germany Reserves Judgment (BBG)

Greek PM says does not have mandate to exit eurozone (Reuters)

France Intercedes on Greece's Behalf to Try to Hold Eurozone Together (WSJ)

Frozen Funds, Fleeing Tourists: Greek Startups Feel the Pinch (BBG)

Doubts Simmer Despite China's Gain (WSJ)

China New Car Sales Post Drop in June (WSJ)

Millions more Americans hit by government personnel data hack (Reuters)

Japan interested ...

Historical Echoes: The Year Of The . . . Pigeon?

by Liberty Street Economics

-- this post authored by Amy Farber carrier pigeon

One could say that Sesame Streetcharacter Bert's extreme interest in paper clips is misguided, but hisobsession with pigeons? Maybe not so much. Pigeons have played a role in financial history, with one such role described by Tony Chen during his walking tour of the Hutong district in Beijing. When his group of tourists reaches the Qianshi hutong (see video), he gives an almost unbelievable account of pigeons, exchange rates, and bank robbers during the Ming dynasty, as reported in Time Out Beijing:

U.S. futures rise on hopes of Greek debt deal

(Reuters) - U.S. stock index futures were sharply higher on Friday after Greece made substantial concessions in its latest bid to win new funds from creditors and avert bankruptcy.

Greece and Creditors Move Toward Deal, and Investor Optimism Surges

Markets responded after the government agreed to meet most of the terms demanded by its creditors and requested a bailout as a starting point for talks.

Losing Control

By Guy Haselmann of Scotiabank

Losing Control

Markets are beginning to signal that policy makers are losing control. Many second-order-effects of the unprecedented and experimental global actions taken since the 2008 crisis are beginning to manifest. There are always causes and effects that develop; but they do so at different speeds. Many actions in recent years have prioritized 'benefits today' over 'consequences tomorrow'. 'Tomorrow' is approaching ever more quickly. There is no 'free lunch'.

Market damage and volatility due to policy interference, or due to the deliberate influence of security prices, are a shame. Markets should ideally operate with unencumbered fluidity. Markets should operate in a manner where adjustments to new information allow buyers and sellers to rapidly, and seamlessly, find a natural clearing price. Authorities and regulations should be like good referees in a soccer match; they provide the conditions for a fair match, and you rarely notice their presence.

The beginning-of-the-end of official control happened earlier this year when the Swiss National Bank (SNB) retracted its currency-peg-promise, triggering a 40% move in the G-7 currency in 10 minutes.

In early May, shortly after the SNB event and the launch of ECB QE and EU negative interest rate experiments, the EU bond market became dysfunctional. The absurdity of sustaining $4 trillion of negative rates came into focus. The German 10-year Bund moved from 0.05% to 0.75% in under a month.

A series of Greek policy and troika bailout mistakes - actions that never resulted in a realistic and sustainable solution - are now culminating toward a tipping point.

Chinese authorities that have allowed and encouraged an equity bubble to manifest (and other central banks for that matter) are starting to see how â€'bub ...

The Man Who Must Fund Japan's Retirement

Hiromichi Mizuno arrived at Japan's $1.1 trillion public pension fund this January with orders to try to fix a crucial puzzle: How to fund the retirement of the world's oldest wealthy nation.

Groundhog Day All Over Again: Futures Surge On "Greek Hope", China Stock Manipulation

It's officially Groundhog day... and month... and year... and so on.

After futures soared yesterday morning following the Chinese government's halt of the local stock bloodbath, only to fade the euphoria late in the day on Greek concerns and the realization that threatening Chinese sellers with arrest...

... outlawing short selling, while keeping half your stocks frozen (those which would be otherwise sold) and implementing nearly 20 different official measures to halt the market plunge...

... is hardly a basis for bullish sentiment, this morning we again wake up to futures surging about 1% higher, with HFTs taking out all the stops overnight, and with even more Chinese intervention as the local police instead of just threatening have actually started cracking down on sellers and "rumor spreaders."

As a result, after brief early weakness, the Chinese market soared out of the gate rising above 5% before seeing some late session selling to close up 4.5%, up 10% in the past two days, the biggest 2-day surge in Chinese stocks since 2008.

Still, even as half the Chinese stock market has rebounded strongly the other half remains stuck in time at days-old pri ...

Fed's Balance Sheet 08 July 2015 - Essentially Unchanged

Total Fed Balance Sheet:

Fed's Balance Sheet week ending balance sheet was $4,443 trillion..

Ryanair Says It'll Accept I.A.G.'s Takeover Bid for Its Aer Lingus Stake

The offer, which came from the parent of British Airways, removes the final hurdle to a combination that analysts say will bolster Ireland's position as hub for trans-Atlantic travel.

Markets toast Greek bid to clinch debt deal

LONDON (Reuters) - Global financial markets rallied on Friday on hopes that last-minute concessions by Greek Prime Minister Alexis Tsipras would clinch a deal with the country's international creditors and save it from bankruptcy.

Euro-Skeptic William Hague: "I Was Right In 1998, And I Am Right Today"

Authored by William Hague (the British Conservative party leader when the euro was introduced) via The Brisbane Times,

I well remember the furrowed brow of President Chirac, sitting amid the splendid gilt furnishings of the Elysee Palace, as I explained to him in May 1998 why I thought the euro would not work as Europe's leaders intended. The charm of his welcome had evaporated as I set out not only why joining the euro would be very bad for Britain, but also far from a good idea for some of the countries desperate to sign up to it.

After I gave my speech that night at my alma mater, the European Business School at Fontainebleau, Chirac and many others were appalled. I said that joining the euro would exacerbate recession in some countries, and that some would find themselves "trapped in a burning building with no exits" - a phrase that brought me a fair amount of controversy and abuse.

I was regarded around the EU as a rather eccentric figure, almost pitiable in being unable to see where the great sweep of history and prosperity was heading. One former senior colleague in Britain said I had become "more extreme even than Mrs Thatcher", as if this was an unimaginable horror. Idealistic heads in Brussels were shaken in sorrow that the dreaded eurosceptics were not only growing in the Conservative Party but had now taken it over, with me having become, astonishingly, its leader.

There is no doubt that I was wrong about quite a few things when I was leading my party. But I hope the eurozone leaders meeting today will remember that those of us who criticised the euro at its creation were correct in our forecasts. Otherwise they risk adding to the monumental errors of judgment, ...

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