Greece Issues Statement On PSI, Says €172 Billion Of Bonds Tendered In Swap, Will Enact CACs, ISDA To Meet At 1pm To Find If CDS Trigger

The biggest sovereign debt restructuring in history is now, well, history. The headlines are finally come in:

• GREECE ISSUES STATEMENT ON DEBT SWAP
• GREECE COMPLETES DEBT SWAP
• GREECE SAYS EU172 BLN OF BONDS TENDERED IN SWAP
• GREECE GETS TENDERS, CONSENTS FROM HOLDERS OF 85.8%
• GREECE SAYS 69% OF NON-GREEK LAW BONDHOLDERS PARTICIPATED

We learn that €152 of the €177 billion in Greek law bonds have tendered, which is 85.8%. This means that €25 billion in Greek law bonds have not - these are the hedge funds that could not be Steven Rattnered into participating, and will now sue Greece for par recoveries.This is also the number that ISDA will look at today to determine if, in conjunction with the CAC, means a credit event has occurred. And yes, the CACs are coming, as is the Credit Event finding:

• GREECE SAYS WILL AMEND TERMS OF GREEK LAW BONDS FOR ALL HOLDERS

NFP Prints At 227K On Expectations Of 210,000, Unemployment Rate At 8.3% Boosted By Temp Jobs

NFP 227,000 on expectations of 210,000; Previous revised from 243K to 284K; Unemployment Rate (U-3%) at 8.3%, U-6 at 14.9%. While for the first time in a long time those not in the labor force declined (from 87,874 to 87,564) and the participation rate rose as a result from 63.7% to 63.9%, here is what the market is focusing on currently: "Professional and business services added 82,000 jobs in February. Just over half of the increase occurred in temporary help services (+45,000)." Also, that Birth Death added 91K is also taking away from the lustre of the headline which is diamtetrically opposite of what Reuters has found. The market reaction is one indicative of the realization that QE3 may have been delayed once again, and this time substantially.





First…
International Permission Trumps Congressional Permission For Military Actions
http://www.youtube.com/watch?v=5zNwOeyuG84

According to Article 1 of the U.S. Constitution, only Congress has the right to declare war; however, that has now been circumvented; in that according to Obama’s cabal, international permission is all that is needed. I wonder, when they arrived to the congressional hearing were Leon Panetta and General Martin Dempsey asked for their swastikas? Guess, the oath about defending the Constitution is null and void folks.

Next…
Greece: Over 75% of Bondholders Have Agreed to Swap
http://www.cnbc.com/id/46667586

75% of private investors have agreed to a 53.5 percent lower face value for their investments. As Greece continues to plow through the safety railing into the abyss, will these investors be asked to take another 50%, or more, in the coming days? We will see.

Next…
Ben Bernanke Hints he won’t do Anything to Stop Higher Inflation
http://www.thedailycrux.com/content/10070/Inflation/eml (Thanks trangenusa)

Sugar Daddy Benji Bernanke told lawmakers that he will temporarily increase inflation to reduce unemployment. The problem is that Benji is still living in fantasy land where people will part from their savings to increase demand. The fact is, many Americans are tapped out and are in debt. In short, there is nothing meaningful that can be done to stop this fiat economy from crashing.

Next…
TSA Tacitly Admits $1 Billion Dollar Body Scanner System Is Critically Flawed
http://www.infowars.com/tsa-tacitly-admits-1-billion-dollar-body-scanner-system-is-critically-flawed/
http://blog.tsa.gov/2012/03/viral-video-about-body-scanners.html

The viral TSA video, by Jon Corbett, has been called crude by the TSA; however, the video clearly shows that the TSA imaging scanner system is a pointless and dangerous waste of time and money. In short, these $200,000 dollar Airporn machines were easily circumvented with a simple sewing kit.

Next…
35 Shocking Statistics That Prove That Things Have Gotten Worse In America
http://endoftheamericandream.com/archives/35-shocking-statistics-that-prove-that-things-have-gotten-worse-in-america

Here are a few…
1. Median household income in the United States is down 7.8 percent since December 2007 after adjusting for inflation.
2. 15.1 percent of Americans are living in poverty as compared to 11.3 percent in 2000.
3. The United States is #13 in GDP per capita from #1 in 1950. 4. Government spending is 24 percent of GDP as compared to 18 percent in 2001.

Next…
Govt. Sets Record Deficit in February
http://www.washingtontimes.com/news/2012/mar/8/govt-sets-record-deficit-february/

According the Congressional Budget Office, the U.S. government has spent $1.5 trillion while only raising $869 trillion since the 2012-2012 fiscal year began last October. Or to put it another way, it has borrowed 42 cents for every dollar spent.  The government spent $229 billion in February alone up from $223 billion last year.  Hi deficits cannot continue forever and that is why it is important to be in physical precious metals and keep stacking.

Next…
Massive Physical Silver Orders Filled Near $33
http://kingworldnews.com/

According to the London Tradier, the Chinese are doing the exact same thing in the silver market that they are doing in the gold market, massive accumulation on dips. As long as silver stays below under $34, there is going to be constant accumulation. Bullion banks are so naked short and the last thing they need is to have physical disappear at this time. Even in the virtual market they are running out of sellers they can cover into. The physical market is taking over now and the virtual (paper) market will not be as important going forward as the price of silver begins to rise again; therefore, keep stacking.

Additional Story that did not make it to video…

35 Shocking Statistics That Prove That Things Have Gotten Worse In America
http://endoftheamericandream.com

Here are a few…
1. Median household income in the United States is down 7.8 percent since December 2007 after adjusting for inflation.
2. 15.1 percent of Americans are living in poverty as compared to 11.3 percent in 2000.
3. The United States is #13 in GDP per capita from #1 in 1950.
4. Government spending is 24 percent of GDP as compared to 18 percent in 2001.

GGB2 Bond Rerack

Nothing like having an inverted curve before you even break for trading. GGB2s trading T+4, subject to succesful issuance

US offered Israel advanced weaponry in exchange for delaying Iran attack: report

Eric De Groot at Eric De Groot - 21 minutes ago

The price of oil is the best form of market intelligence on the subject. Chart: West Texas Intermediate Crude Oil (OIL) AND Oil to Gold Ratio (OILGLDR) Headline: US offered Israel advanced weaponry in exchange for delaying Iran attack: report WASHINGTON -- The US offered to give Israel advanced weaponry -- including bunker-busting bombs and refueling planes -- in exchange for Israel's... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] more »

 

 

Accumulation In Gold Shares Hidden By Emotional Bias

Eric De Groot at Eric De Groot - 26 minutes ago

Chart 1: Gold Miners Index (GDX) Chart 2: Junior Gold Miners to Major Gold Miners Ratio Special Donation To Insights Contribute to Insights By March 10th, One Silver Eagle Will Be Purchased For My U10 Girls Soccer Team For Every $100 Donated To Insights By March 10th (click for details) Thank you for your support, Eric [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

Daily US Opening News And Market Re-Cap: March 9

Going into the US open, markets are digesting the news that the Greek PSI deal has been completed, with the announcement being made at 0600GMT. The Greek Finance Ministry have announced that 85.8% of bondholders have agreed to the swap, and with CACs enforced, the participation rate can rise to 95.7%. However it should be noted that the Greek government have not enacted the CACs as yet. This has prompted a muted market reaction as participants await any further news from European officials. In the next few hours, the Eurogroup are holding a conference call concerning the recent activity in Greece, and the ISDA are also meeting to determine whether a Greek credit event has occurred. International market focus will now shift towards the key US Non-Farm Payrolls data, due at 1330GMT: US Change in Non-Farm Payrolls M/M (Feb) Exp. +210K (Prev. +243K, Dec +200K). Chinese demand for US Treasuries could slow for a second year as the country as well as others find themselves holding fewer USD to use on US debt. This could see yields moving higher in 2012, according to analysis by Bank of America.

OpenEurope Verdict On Greek PSI - Pyrrhic Victory Sowing Seeds Of A Political And Economic Crisis In Europe

Minutes ago we presented Goldman's twisted and conflicted take on Greece in a post PSI world. Needless to say, virtually everything goldman says is to be faded. Which is why not surprisingly, the next analysis, a far more accurate and realistic one, does precisely that. In a just released report from Europe think tank OpenEurope, the conclusion is far less optimistic: "The deal sets the eurozone up for a political row involving Triple-A countries. At the start of this year, 36% of Greece’s debt was held by taxpayer-backed institutions (ECB, IMF, EFSF). By 2015, following the voluntary restructuring and the second bailout, the share could increase to as much as 85%, meaning that Greece’s debt will be overwhelmingly owned by eurozone taxpayers – putting them at risk of large losses under a future default. This deal may have sown the seeds of a major political and economic crisis at the heart of Europe, which in the medium and long term further threatens the stability of the eurozone."

Goldman: "Greece Post PSI"

That Goldman would have "thoughts" on the Greek PSI deal and European life in the aftermath, is no surprise: just be sure to take these with a pound of salt. After all Goldman is a key member of the ISDA's European Determination Committee (and co-chairman with JPM of our very own Treasury Borrowings Advisory Committee). Not to mention that Goldman is the firm that allowed the Greek default to happen in the first place, by allowing it to hide its unprecedented debt accumulation far beyond what was allowed by the Maastricht treaty. In either case, here is a summary of what Goldman sees happening next: "After the finalization of the PSI process, only small residual transactional uncertainty remains. The new Greece package ensures low funding costs that under certain assumptions could even be sustainable in the long term. Moreover, the exposure of the Greek private sector to the Greek government declines very substantially… …while the exposure of the European official sector rises to substantial levels. Late-April elections will be a risk; but polls suggest a pro-EUR government is the most likely outcome. The new government will be tasked with creating a better growth environment. Using our GES score, we observe key areas of structural improvement for Greece’s growth environment… …among others, the creation of a more business friendly environment, the establishment of conditions for increased openness to trade and a more effective rule of law." We will shortly present a far more realistic, and far less conflicted.

Greek Creditors Don't Get the Courtesy of a Reach-Around

Only in Greece, can you wipe out €100 billion of debt, and have the new debt that replaces it trade at 20% of face value.  So 85.8% of Greek law bonds “participated”.  The government intends to use the Collective Action Clause to force the holdouts to participate.  It is unclear if the government has actually used the clause already, or just intends to.  Once they use the CAC, that will be a Credit Event for the CDS. English law bonds saw participation less than 70%.  The deadline has been extended until March 23rd.  As discussed all along, the English Law bonds gave some protection to holders and that clearly gave them the confidence to hold out.  Given the Event of Default covenants, and the right to accelerate, some bondholders may push to accelerate after the Greek law bonds get CAC’d. The market now knows that the PSI will be “successful” and a massive amount of debt will be wiped out, but the new bonds are being quoted “when and if issued” at prices ranging from the high teens to mid twenties.   Why are the new bonds so weak?  SUBORDINATION!

The Bad News Begins: Greek Q4 GDP Slide Revised Downward From -7.0% To -7.5%

Not even 6 hours after the PSI exchange offer details, and already the true Greek problem rears its head. Because it is not the crushing debt coupon that is the primary threat to Greece: cutting the cash coupon from infinity to 2.6% is welcome, but utterly meaningless if the debt load is still intolerable (as a reminder, just the Troika DIP is about 130% of Greek GDP, meaning all junior debt is worthless as confirmed by the trading price of the New Greek debt in the 15 cents on the euro region). No - the true threat to the Greek economy is that nobody wants to work anymore. Sure enough, the previously reported -7.0% contraction in Q4 GDP has just been revised to -7.5%. From Reuters: "Greece's gross domestic product (GDP) contracted by 7.5 percent year-on-year in the fourth quarter of 2011, the country's statistics office said on Friday based on seasonally unadjusted provisional estimates. The contraction, which followed a 5.0 percent GDP decline in the previous quarter, was deeper than a previous Feb. flash estimate of -7.0 percent." And one can be absolutely certain that this number will be revised far further lower when all is said and done. Also, with recently released Greek PSI data coming at an all time low, we wish Greece the best of luck in achieving that -1.0% GDP growth in 2013 as per the IMF's downside case. Finally, this explains why the NEW Greek debt is trading with an implied redefault probability of 98%.

Goldman's February NFP Forecast: +200,000, 8.2% Unemployment Rate

If a Greek default is not enough for the compulsive speculators out there, as a reminder today we have that all important February NFP number release, which on one hand we have ADP as indicating in line with expectations of a +210,000 print, on the other we saw both Gallup, Initial claims and the ISM as well as various diffusion indices as pointing to a weaker print. Here is Goldman, which has come in slightly below expectations, with a forecast of 200,000 offset by a further reduction in the unemployment rate to 8.2%. Of course, as we noted last month, once the US participation rate hits 58%, the unemployment rate will actually mathematically go negative. And strangers years have happened in an election year...  From Goldman: "We expect tomorrow's employment report to show solid nonfarm payroll growth of 200,000 in February after 243,000 in January. Although unseasonably warm weather should again boost payroll growth in February, we expect a moderation in the rate of job creation due to (1) a likely payback in manufacturing employment; and (2) mixed labor-market news since the last report. Uncertainty around the extent and timing of the weather effect and manufacturing payback suggest risks are probably tilted to the downside of our forecast. We expect the gain in employment to push down the unemployment rate by 0.1 point to 8.2% in February."

Risk-Off Initial Reaction To PSI Deal

Broadly speaking markets are derisking post the PSI deal announcements. Treasuries are 1-2bps lower in yields, EURUSD is down 35pips or so under 1.3230 (and JPY is rallying as carry is unwound), ES has dropped -5pts, Gold and Silver are sliding modestly, and WTI is off its peak but remains over $107.

Has Japan Run Out Of Cans To Kick?

Japan's Trade and Current Account imbalances appear to be hitting some kind of terminal velocity and while neither JGBs nor CDS seem to reflect the ensuing chaotic recognition that perhaps the can that has been so faithfully kicked down the "Nishi-no-michi" or the West Road may have plunged over the lip of Mount Fuji (conjuring images of Mordor), FX markets recent and abrupt weakness brought on by yet more printing (a topic we discussed in great detail recently as the chosen heretical method du decade) may well be coming face to face with reality. We assume Azumi is faithfully watching these market moves but we wonder at what point the quasi-intentional weakening of local currencies flares into a full-blown currency war - and instead of merely encouraging simpleton FX-carry strategies chasing momentum and leverage - quickly becomes the hyperinflationary super nova that many have been waiting for over the last decade. Dismal demographics aside, we wonder how long before Koo prescribes yet more of the same medicine for this constant state of deflation and at what point does inverted-Apple-looking charts for Trade and Current Account balances become simply too hot to handle...

The Stranger Beside You - Spouses And ETFs

ETF fund flows have been a uniformly positive source of capital into U.S. risk markets in 2012. Looking a little deeper at the decidedly 'risk-on' flows, Nic Colas (of Convergex Group) notes perhaps their most provocative feature has been their high degree of net concentration.  When you look at the entire “ETF Ecosystem” of listed funds, just 6 funds represent all the net gains in assets over the past month ($5.4 billion in net inflows) – LQD, HYG and JNK in fixed income, VWO in emerging markets, VXX in risk, and GLD in commodities. With 1,433 different ETFs listed on U.S. markets now, Colas likens the comprehension of the $1.2 trillion in AUM across these ETFs to how well you know your spouse as we know ETF flows are important (just like a wedding anniversary date or what day the trash is picked up at home) but with their still-evolving proliferation it seems a daunting task to keep tabs on them. All in all, this brief analysis points to more of a pause in investor sentiment rather than the opening for a more full-blown correction in the coming weeks.
 

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