30Jun2015 Market Close: Volatility, Market Closes Up As Expected, But Fails At Key Resistance

China orders Airbus jets, factory agreement looms

PARIS (Reuters) – China placed a landmark order on Tuesday for dozens of wide-body jets from Airbus in a multi-billion-dollar deal that paves the way for a second European aircraft plant in the world’s fastest-growing aviation market.

Banks Shrink Weapons Stockpiles

Big-bank holdings of derivatives have fallen sharply in the years since the financial crisis.

As default looms, Merkel rules out more negotiations with Greece

ATHENS (Reuters) – German Chancellor Angela Merkel ruled out new negotiations with Greece until after it votes on a proposal from creditors, leaving virtually no hope left to avert a midnight default despite a plea from Athens for a last-minute bailout extension.

Greece Asks for a New Bailout

Greece requested a new bailout amid a last-minute diplomatic push before the country’s current rescue deal expires and it defaults on a payment to the International Monetary Fund.

Hedge Funds Keep Greek Exposure Low

By the time Greece closed its banks and stock market on Monday, few hedge funds had much direct exposure to the country.

Gross Says Hold Cash, Prepare For “Nightmare Panic Selling”

Ever since bond market liquidty became the topic du jour across Wall Street (just a few short years after it was first raised in these pages), analysts, pundits, and reporters alike have begun to question what might happen should investors who have piled into mutual funds and ETFs (especially fixed income products) suddenly decide to sell into illiquid secondary markets.

Some have suggested, for instance, that if corporate bond fund managers were suddenly inundated with a cascade of redemptions, the absence of dealer liquidity in the secondary market could create the conditions for a firesale.

The problem, as we’ve been keen to point out, is that when fund flows are one-way (i.e. everyone is selling), fund managers must either i) meet redemptions with cash, or ii) trade the underlying securities. Note that the latter option is so undesirable in illiquid markets (indeed, trading large blocks into illiquid markets poses a systemic risk), that some fund managers are now lining up emergency liquidity lines with banks so that they can at least meet an initial wave of selling with cash and avoid, for a time at least, sparring with illiquidity.

In his latest Investment Outlook, Bill Gross addresses the above, describes what events might trigger a retail exodus (thus tipping the first domino), and says investors should hold enough cash to ride out the storm without participating in a firesale caused by rising rates or some manner of exogenous shock.

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From “It Never Rains In California”:

Wall St. turns up on Greece hopes despite looming default

(Reuters) – U.S. stocks turned positive around mid-afternoon in choppy trading on Tuesday as investors hoped for a last-minute deal to keep Greece in the euro.

Emirates reveals fuel contract details in U.S. airline subsidy claim riposte

DUBAI (Reuters) – Dubai’s Emirates airline [EMIRA.UL] on Tuesday denied claims its parent company absorbed fuel hedge losses from the carrier, giving its most detailed response yet to allegations it has violated the U.S. Open Skies agreement with the United Arab Emirates.

U.S. economy nearing full employment, bounced back in second quarter: Fed’s Fischer

WASHINGTON (Reuters) – The U.S. economy probably bounced back to an annual growth rate of around 2.5 percent in the second quarter, and the labor market is approaching full employment, Federal Reserve vice chairman Stanley Fischer said on Tuesday.

Goldman Sachs to Pay $7 Million Penalty Over Options Glitch

The S.E.C. says the 2013 erroneous trading highlights the need for Wall Street firms to maintain better systems to prevent technological glitches that can roil markets.

No Easy Way Forward for Markets

The stock market has shifted to neutral, and investors don’t expect the rest of 2015 to be a joy ride.

Global Stocks Calmer on Decisive Day for Greece

Share prices around the world were holding steady as investors watched to see if Athens would make a critical loan repayment to the I.M.F.

Goldman settles SEC charges over 2013 trading incident

(Reuters) – Goldman Sachs Group Inc will pay $7 million to resolve U.S. Securities and Exchange Commission charges stemming from a programming error that caused the stock options market to be flooded with erroneous orders, roiling traders and prices.

Disney names treasurer Christine McCarthy as CFO

(Reuters) – Walt Disney Co said it named Christine McCarthy as its chief financial officer.