01Jul2015 Market Close: Markets Close Solidly In The Green, Greece Remains In Default, WTI Oil Testing Key Support

The Latest: Slovak minister: No more bailout talks with Greece until after its vote Sunday

ATHENS, Greece (AP) — The latest news on Greece’s financial woes (all times local): ___ 8:05 p.m. Slovakia’s finance minister says the eurozone finance ministers have agreed not to have any more talks on aid to Greece before the country holds its referendum on Sunday. After the 19 ministers held a teleconference Wednesday, Pater Kazimir of Slovakia wrote on his official Twitter account: “Eurogroup united in decision to wait for the outcome of the Greece referendum before any further talks.”

Strong truck, SUV demand helped Ford, GM raise prices in June

DETROIT (Reuters) – Strong demand for sport utility vehicles and trucks in June helped General Motors Co and Ford Motor Co offset slowing demand for sedans by allowing them to raise prices on their trucks.

U.S. sues to stop Electrolux acquiring GE’s appliance business

WASHINGTON (Reuters) – The United States filed a lawsuit on Wednesday to stop Sweden’s Electrolux AB , which owns the Frigidaire and Tappan brands, from buying General Electric Co’s appliance business, the Justice Department said in a statement.

These Six States Just Raised Their Gasoline Tax

With the Fed slowly losing the war of attrition with Saudi Arabia, leading to the recent fade in the dead cat bounce of oil prices witnessed earlier today when oil dropped to the lowest level in 10 weeks, some states have decided that since the shale crisis will continue indefinitely and that gas prices will remain “lower for longer”, there is no point in letting yet another crisis go to waste and have decided to promptly take advantage of what may have been a brief boon to consumers by minimizing the “oil crash” windfall and imposing additional gas taxes.

According to the Citizens for Tax Justice and the Institute on Taxation and Economic Policy (ITEP), starting today, six states will increase their gas taxes to help pay for transportation projects.

Beginning July 1, drivers in Idaho, Georgia, Maryland, Rhode Island, Nebraska and Vermont will be charged more at the pump as a result of laws taking effect at the start states’ new fiscal year.

There is some good news: a seventh state, California, is decreasing its gas tax by 6 cents, according to the group.

Then again, after putting the California gas price in context with the rest of the US even after the recent gas price drop…

… the “good news” for California is hardly all that good.

Now back to the bad news for residents in the six states named above, soon spreading to residents of many more states which are sure to take advantage of these low, low gas prices and layer “just a little extra” tax on them.

From

Greece’s Tsipras digs in against bailout

ATHENS/BRUSSELS (Reuters) – A defiant Prime Minister Alexis Tsipras urged Greeks on Wednesday to reject an international bailout deal, wrecking any prospect of repairing broken relations with EU partners before a referendum on Sunday that may decide Greece’s future in Europe.
…

Bullish U.S. jobs, factory data brighten growth picture

WASHINGTON (Reuters) – U.S. private employers hired the most workers in six months in June and factory activity accelerated, providing fresh evidence the economy was gathering solid momentum after contracting at the start of the year.

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.

Airlines Under Justice Dept. Investigation Over Possible Collusion

With bigger planes and fewer flights, the major carriers reported record earnings in the first quarter of this year, helped as well by low fuel prices.

Domestic Auto Sales Tumble, Miss For 6th Of Last 7 Months (Don’t Tell Phil LeBeau)

Judging by the smiling Phil LeBeau who earlier opined of an 8.9% plunge in For F-Series sales that “I don’t know if I’d Call that a slowdown,” you would think the US Auto industry was killing it. Apart from the fact that all but the most luxurious brands missed expectations, we sum up the month of June’s results by nothing the credit-spewed spike in May is now over and domestic car sales are continuing to trend lower. This is the biggest MoM drop since Sept 2014. As Ward’s notes, they have now missed expectations for 6 of th elast 7 months…

Auto Sales SAAR dropped from 17.71mm to 17.11mm – the biggest percentage drop MoM since Sept 2014.

Charts: Bloomberg

Wall St. trims gains; energy stocks fall, Greece hopes fade

(Reuters) – U.S. stocks rose on Wednesday afternoon but pared earlier gains as energy stocks declined and Greece’s debt crisis showed no signs of resolution.

The Greek Bluff May Be Working: ECB Does Not “Haircut” ELA Collateral

Following our post yesterday, in which we calculated the levels of ELA haircuts that would result in corresponding deposit haircuts, we – and the rest of the world – were patiently waiting to see if the ECB would commence using its nuclear option, first with a small increase in haircuts, then as we got closer to Sunday, with larger ones.

Even Goldman this morning wrote that “we see a sharp increase in haircuts as unlikely.” but as we showed, even a modest increase, for example from 50% to 65%, would promptly impair Greek deposits and require deposit haircuts.

Of course, the far bigger question in any ECB haircut decision was whether the central bank would tip its hand that it is indeed a political entity, and perhaps tip the scales either way in Sunday’s referendum.

Moments ago we got the answer, when the ECB not only kept the ELA frozen as expected, thus requiring the continuation of the Greek capital controls, but decided against a collateral haircut.

ECB SAID TO KEEP GREEK EMERGENCY LIQUIDITY CEILING UNCHANGED

ECB SAID TO TAKE NO DECISION ON GREEK COLLATERAL HAIRCUT

In other words, so far Varoufakis’ thesis remains intact, and the ECB has refused to push the “nuclear option” launch button.

U.S. probing whether airlines collude to keep airfares high

WASHINGTON (Reuters) – The U.S. Justice Department is investigating whether U.S. airlines are working together to keep ticket prices high, spokeswoman Emily Pierce said on Wednesday.

Losing Money Is “Inevitable” This Year, SocGen Warns Citing Economic “Elephant”

The entire financial world has been fixated on two things since last Friday, Greece and, to a lesser extent, China’s collapsing equity bubble.

Admittedly, it’s been almost impossible to turn away from the slow motion trainwreck-turned high-speed, head-on collision that is the Greek tragicomedy.

On Sunday, the world woke up to the fact that a Greek default has very real consequences. As surreal images began to circulate on social media showing ATM lines, empty grocery store shelves, and long queues at gas stations, it became apparent that Greece does in fact matter, and once capital controls were announced, the flight to safety was on and global stock markets proceeded to plunge.

This was precisely what the PBoC did not need after moving to support its flagging stock market by cutting both the benchmark lending rate and the RRR rate on Saturday (the first time the two policy rates have been cut on the same day since 2008).

Fast forward to Wednesday and capital markets are still transfixed with Greece and China, and while we’ll be the first to say that both Grexit and the collapse of China’s margin-fueled equity bubble pose very real threats to global financial markets, Soc Gen is out warning investors not to lose track of the ‘real’ problems that threaten to undermine economic growth and keep a lid on gains going forward. Here’s more:

The situation i …

Pre-Blame-Game Begins: Fed’s Brainard Fingers HFT For “Amplifying Market Shocks”

We warned previously that when (not if) the market crashes next, The Fed is going to need a scapegoat (other than British traders living at home with their parents) and judging by The Fed’s Lael Brainard’s comments today, high-frequency-traders (HFT) are in the crosshairs. Crucially, Brainard warns that HFT “may amplify market shocks,” and The Fed is “studying possible changes in liquidity resilience.” As Brainard hints, if liquidity is less resilient, that “could be significant” in times of stress if “it acted as an amplification mechanism, impeded price discovery, or interfered with market functioning.”

As Bloomberg reports,

Federal Reserve Governor Lael Brainard says central bank is closely watching for changes in the resilience of market liquidity, in prepared remarks Wed. at panel discussion about future of financial market intermediation.

Brainard speaks in Salzburg, Austria, at global forum on finance

“An upcoming study of the October 15 event will shine some light on the functioning of the U.S. Treasury market, but there is still much we need to learn,” Brainard says, referring to intraday gyrations in 10-year Treasury yields that day

“Although anecdotes of diminished liquidity abound, statistical evidence is harder to come by,” Brainard says

If liquidity is less resilient, that “could be significant” in times of stress if “it acted as an amplification mechanism, …

Airlines Stocks Plunge After DoJ Probes Collusion On High Prices

Low oil prices must be good for airlines profits, right – especially if they keep ticket prices artificially high…

*DOJ SAID PROBING WHETHER AIRLINES COLLUDING ON HIGH AIRFARE:AP

Airline stocks are plunging on this news…

As AP reports,

A document obtained by The Associated Press shows the Justice Department is investigating whether airlines are colluding to grow at a slower pace as part of an effort to keep airfares high.

The government has requested information from airlines as part of the antitrust investigation.

Justice Department spokeswoman Emily Pierce confirmed Wednesday that the department was investigating potential “unlawful co-ordination” among some airlines. She declined to comment further, including about which airlines are being investigated

As a result of a series of mergers starting in 2008, American Airlines, Delta Air Lines, Southwest Airlines and United Airlines now control more than 80 per cent of the seats in US skies. They have eliminated unprofitable flights, filled a higher percentage of seats on planes and worked to slow growth in order to command higher airfares.

American Airlines drops 1.8%; Delta drops 1.9%; United Continental falls 2.2%; LUV erases gain; JBLU falls as much as 3.4%

And now we look forward to the next headline:

*DOJ SAID PROBING WHETHER CENTRAL BAN …

Aero-engine makers seek boost from major Airbus China deal

PARIS (Reuters) – After Airbus’s success it was the turn of engine makers to seek a boost from China’s spending power on Tuesday as a major plane order generates lucrative follow-on opportunities.

Eurogroup’s Dijsselbloem Says “No Grounds For Further Talks”, Will “Wait For Outcome Of Referendum”

Update: Here is the statement:

And the highlights from Bloomberg:

DIJSSELBLOEM SAYS GREEK POLITICAL GROUNDS HASN’T CHANGED

DIJSSELBLOEM SAYS GREEK GOVT AMENDED PROPOSALS FROM CREDITORS

DIJSSELBLOEM SAYS EUROGROUP TOOK NOTE OF GREEK PROPOSALS

DIJSSELBLOEM SAYS SEES NO GROUNDS FOR FURTHER GREECE TALKS

DIJSSELBLOEM SAYS WILL BE NO TALKS IN COMING DAYS

DIJSSELBLOEM SAYS WILL WAIT FOR OUTCOME OF GREEK REFERENDUM

DIJSSELBLOEM SAYS WILL TAKE INTO ACCOUNT OUTCOME OF SUNDAY VOTE

DIJSSELBLOEM SAYS HE IS VERY SORRY ABOUT GREECE SITUATION

Finally, he also released a letter responding tto varoufakis which can be found here.

* * *

The first of today’s two key catalysts following Tsipras’ defiant speech has concluded: the Eurogroup teleconference chaired by Jeroen Dijsselbloem. And, as he tweeted moments ago, he will post his remarks momentarily.

#Eurogroup conference call on #Greece just ended; video with my remarks will be online shortly on http://t.co/9b0ZXi2aT4

— Jeroen Dijsselbloem (@J_Dijsselbloem) July 1, 2015

What will he announce? Probably not much, if the F …