ECB Stops Monetary Policy Operations To Some Greek Banks

Just as we predicted moments ago, and as Dutch Dagblad warned overnight:

• ECB STOPS MONETARY POLICY OPERATIONS TO SOME GREEK BANKS AS RECAPITALISATION NOT IN PLACE -CENBANK SOURCES

The beginning of the end? Or just more political posturing? In the meantime, EURUSD tumbles.

 

 

Did Draghi Just Give Greece The All-Clear To Leave?

ECB President Draghi just admitted that while the ECB Governing Council would like Greece to stay, there is a limit to what they will do to save it and will do everything they can to preserve their 'pristine' balance sheet - which sounds a lot to us like - 'we are not lending/printing/supporting your financial system anymore as you are far too big a risk (and are asset-stripped) and to be honest, it might be better if you just left - since we have encumbered all your assets anyway'. As a reminder, when thinking of Europe, the shorthand rule is: assets. And specifically, the lack thereof. Why is the ECB scrambling to collateralize every imaginable piece of trash that European banks can procure at only some valuation it knows about? Simple - quality, encumbrance and scarcity. When one understands that the heart of Europe's problem is the rapid "vaporization" of all money good assets, everything falls into place.

Greece: Before And After

In one of the most fascinating psychological shifts, there has been a massive shift in the perspective of the Greek electorate since the election two weeks ago. Almost as if the size of the actual votes for Syriza, the far-left anti-bailout party, gave citizens 'permission' to be angry and vote angry. The latest opinion polls, as per Credit Suisse, show the center-right New Democracy party crashing from 108 seats to only 57 as Tsipras and his Syriza colleagues soar from 52 seats to a hugely dominant 128 seats. Is it any wonder the market is pricing GGBs at record lows and 'expecting' a Greek exit from the Euro as imminent given the rhetoric this party has vociferously discussed. On the bright side, the extreme right Golden Dawn party is seen losing some of its share. As UBS notes, "expressions of frustration in debtor countries have their analogue in creditor countries as well. No one is happy with the status quo." Still, how Europe's political leaders address voters' grievances will go a long way to determining the fate of the Eurozone and, quite possibly, the course of European history in the 21st century. Europe's politicians will undoubtedly prevaricate and deny. The troika will, with minor modifications, probably insist on 'staying the course'. Yet it seems to us that ignoring clear voter demands for change might well be Europe's worst choice.

Rupee: Oversold In the Near Term

Admin at Marc Faber Blog - 12 minutes ago

Rupee seems to be oversold in the near term. - *earlier today on NDTV* *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.* 

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Follow the Money Not Intentions

Eric De Groot at Eric De Groot - 34 minutes ago

The recipients of free money are rarely those originally targeted by the policy. That's how it works. As Jim often says QE will approach infinity (because it must), redirection and abuses will become the norm rather than the exception. Headline: Needy States Use Housing Aid Cash to Plug Budgets Hundreds of millions of dollars meant to provide a little relief to the nation’s struggling... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

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Goldman Data Admits to Naked Short Selling, Disclosing Client Positions, Abusive Legal Practices

  

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Stock Market Outlook

Admin at Jim Rogers Blog - 1 hour ago

Jim Rogers shares his bearish outlook on stocks with CNBC`s Maria Bartiromo. Related: S&P 500 Index ETF (SPY), Dow Jones Industrials, Nasdaq 100 Index, IShares Emerging Markets ETF (EEM) *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.* 

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If Someone Really Wants To Take Speculative Positions...

Admin at Marc Faber Blog - 2 hours ago

If someone really wanted to take speculative positions, he should look to quality non-financial stocks in countries such as Spain, Italy, France, Greece, and so forth. - *in The Globe and Mail* *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.* 

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If Greece Exits The Eurozone, Markets Will Rally

Admin at Marc Faber Blog - 2 hours ago

"Markets are down because of the economic slowdown in China; they will rally if Greece exits the Eurozone" - *in NDTV* *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.* 

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Greeks Withdraw Nearly $1 Billion From Local Banks

Eric De Groot at Eric De Groot - 3 hours ago

The market is demanding liquidity while policies and politician counter with austerity. The mismatch in expectations is eroding confidence both on a domestic and international scale. Headline: Greeks Withdraw Nearly $1 Billion From Local Banks Greek depositors withdrew 700 million euros ($900 million) from the nation's local banks recently, said President Karolos Papoulias, though the exact... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]






Today’s Items:

First…
European Leaders and Financial Markets Braced for Greece Exit from Euro
http://www.guardian.co.uk

Here we go folks, Greece has essentially been handed its hat and coat and the door is being opened to exit. Politicians, after two years have come to the conclusion that many in the alternative media have already come to. There is no saving Greece, or the Euro, in the present framework. With that said, thanks to other nations like Spain, Italy and France, the EU is doomed.

Next…
Germany’s Gold
http://www.goldcore.com

Germany’s Bundesbank confirmed that the German gold reserves are held overseas by the Federal Reserve. Well, they can kiss that good-bye. Benji Bernanke probably sold that a long time ago. After all, for him gold is a tradition; thus, if you have physical gold, there is a good chance, you may have some of that German gold Reserve.

Next…
World Edges Closer to Deflationary Slump
http://www.telegraph.co.uk

All key indicators of China’s money supply are flashing warning signs. What seems clear is that China’s economy did not bottom out as expected in the first quarter and is in deflation. China’s central bank, with others, could begin turning up the presses to counteract the deflation with quantitative easing.

Next…
As the Boomers Head for the Barn
http://townhall.com

Only 63.6 percent of the U.S. working age population is now in the labor force, the lowest level since December 1981. 342,000 workers had stopped looking for work in April. The number of Americans of working age not in the labor force grew in April from 87,897,000 to 88,419,000.  And the Recovery before the election continues!

Next…
Three Reasons Silver Prices Will Rally
http://moneymorning.com

1. Increased demand from both countries and individual investors
2. The emergence of Chinese silver futures
3. Manipulation of silver will come to an end against the open market.

Next…
How Horrific Will It Be For The Non-Prepper?
http://www.shtfplan.com

1. Unclean or no water
2. Lack of food
3. Unreliable or no communications
4. forget about any extended traveling
5. Groups of non-preppers preying on the vulnerable.
All this, and more, for those who prefer to believe the fantasy of the mainstream media.

Next…
That Which is Unsustainable Will Go Away
http://www.oftwominds.com

Publicly funded pensions and Medicare are two examples of unsustainable systems that will go away in the decade ahead. Yes, promises were made from everyone from Washington to U.S. cities; however, they were made in a vacuum, void of common sense, and reality has seeping in. The only true retirement a person may have in the very near future is the one they can put their hands on today… Specifically, commodities like silver and gold; thus, keep stacking.

Finally, Please prepare now for the escalating economic and social unrest. Good Day

Rumor Time: Stocks, EUR Surge On Renewed LTRO 3 Speculation

Now that we have entered the summer phase of 2012 it is time to recall how the summer of 2011 ran: in a nutshell - unsubstantiated rumor emerges usually one involving central banks being "generous", sending stocks higher, rumor is then denied a few hours later, but the ramp persists. Sure enough, it has begun anew (because 2012 is 2011). Minutes ago we got the first such instance, where a European "think tank" came up with the brilliant conclusion that any minute now the ECB will be dragged back into the fray, announcing either LTRO 3 (because it will be different this time), or after 9 weeks of inactivity, the ECB's SMP program will resume buying plunging peripheral bonds. Any factual basis to this? Of course not. But once the algos pick up the headline and create buying momentum for the sake of buying momentum, it is all uphill from there. So just as the market was on the verge of turning red for the day, the "think tank" appeared. Prepare for many more such short covering instances, because there really is nothing else left in the status quo arsenal.

Art Cashin On Ostrich Rallies, ATM Lines And MOC Bluffs

You saw it all unfold here blow by blow yesterday. Now Art Cashin gives the post-mortem.

Ira Sohn 1 Year Post-Mortem: Absolutely Abysmal

Today begins the 17th annual pilgrimage of hedge-funders near and far to the Ira Sohn conference, where some of the "best and brightest" share their top picks with everyone else in an attempt to generate a buying (or shorting) frenzy and more hedge fund hotel traps. Sadly, this is what to many passes for alpha these days. Yet does the Ira Sohn conference actually lead to any outperformance? Well, Absolute Return has compiled the 1 year return of the recommended investments from last year's conference. The results are absolutely abysmal. Which makes us wonder if the time of groupthink has peaked, and instead the time to fade absolutely everything to come out of such conferences, where analysts pretend to do homework by piggybacking on others' often times very, very wrong research, and which confuse beta expansion with alpha, has come.

Global Systemic Risk Soars To 5 Month Highs

Only two weeks ago, we noted that the 30 most systemically important financial institutions in the world were seeing risk surging to 3-month highs. Today has seen that eclipsed dramatically as the credit risk of these entities soars to the year's worst levels jumping 22% in the last two weeks alone. At 264bps, we are now close to the 3/9/09 peak crisis levels (of 274bps) and pushing up to the Q4 2011 peaks over 300bps as every region is deteriorating systemically - with the US and Europe worst (US below previous peak levels but Europe at record wides), Asia accelerating wider, and even the Aussie banks now losing it. While markets are staging a mini-recovery this morning, financials are not really participating as this index of global systemic risk has now retraced all of the LTRO benefits.

Mark Grant On Europe's Plan B, Greek Bank Runs, and Why We Need New Sunglasses

If indications become reality then we are faced with a leftist government in Greece that will either renegotiate a new bailout agreement with Europe or it will head back to the Drachma or be forced there by the refusal of European Union to provide any additional funds. In Spain we are faced with bare bones arithmetic where the country cannot bailout its Regional debt and its back debt because they do not have the capital to do either; much less both. Both countries can flop about for a brief period of time but the conclusions are unavoidable we are afraid and so a very unpleasant landscape awaits us in the coming days. We have warned about all of this for quite some time and we have hammered upon it in recent days as equities, credit/risk assets, the Euro have all declined in value as I had predicted. There may well be a bounce or two along the way but we continue to maintain that dark days lie ahead based not only upon fundamentals but based upon a union in Europe that has been deceptive in presentation and deceitful in practice.

Housing Starts Beat, Permits Miss; Both Crawl Along Record Bottom

Following several months of permits rising even as starts flatlined, today we get the opposite, as forward looking construction came weaker than expected, with permits printing at 715K on expectations of 730K, while starts coming ahead at 717K on expectations of 685K. Completions soared as backlogs caught up with inventory started and under construction. Really, that's all one can say about these two series, who long-term charts can be seen below. What can one say but crawling at the bottom, and increasing modestly courtesy of trillions in fiscal and monetary stimulus, and as of recently full-blown mortgage debt forgiveness courtesy of this country's desperate administration to get some traction in at least one metric of economic improvement.

Dart 1: Greece 0; And Just Desserts For Lemming PSI Participants

Two months ago, to much fanfare, Greece and the IIF announced what a smashing success the forced cram down that was the Greek PSI (memories of GM and Chrysler should be flooding back here) was. The thinking went that Greece avoided bankruptcy, co-opted lemming creditors avoided pursuing what is rightfully theirs in exchange for a 75% haircut, hold out hedge funds would be blown out of the water for daring to not go with the herd of 96.6%, but most importantly, Europe was saved! Today, Europe is no longer saved, and all those hedge funds that folded like cheap lawn chairs in agreeing to Europe's extortion are getting annihilated, because as the chart below shows, the NEW Greek bonds have now seen their dollar price cut in half since the PSI. Which means that total looses on original Greek debt, for those who did agree to the PSI's arm-twisisting terms are now about 90%. Just desserts. But what happened to those other few who followed our advice, bought UK-law bonds, and told the group to shove it? Here's what...

Daily US Opening News And Market Re-Cap: May 16

European equities are seen lower across the board with the exception of the CAC-40 index as markets remain nervous towards the prospect of a second wave of Greek general elections. The outperformance of the CAC-40 follows the news from oil major Total, who have stemmed the gas leak from their Elgin well successfully after conducting intervention. As such, Total are seen higher by over 2%, strongly above the Oil & Gas sector. The Bank of England have released their latest projections for the UK economy, revising lower their growth forecasts and higher their near-term inflation expectations, alongside analyst forecasts. The BoE have stuck to their long-term predictions that there will be a slow but steady return to recovery, but reiterated that major downside risks exist from Europe. Governor King’s subsequent press conference has shown him to remain somewhat dovish, commenting that an increase in downside risks would prompt the bank to commit to further actions, leaving the door to a boost in asset purchases open. The forecast revisions prompted a sharp move lower in GBP/USD, falling around 75 pips and Gilt futures moving 55 ticks to the upside after the opening comments. At the midpoint of the session, GBP/USD remains in negative territory despite seeing support before the inflation report after better than expected UK jobless claims data.

Soros, PIMCO, Paulson, Texas Teacher Retirement Fund Buy Gold in Q1

Billionaire investor George Soros significantly increased his shares in the SPDR Gold Trust in the first quarter. Soros Fund Management nearly quadrupled its investment in the largest exchange-traded gold fund (GLD) to 319,550 shares - compared with 85,450 shares at the end of the fourth quarter. John Paulson maintained his large stake, the ETF’s largest stake and other large and respected institutional buyers were PIMCO and the Teacher Retirement System of Texas. Paulson, 56, who became a billionaire in 2007 by betting against the U.S. subprime mortgage market, told clients in February that gold is a good long term investment, serving as protection against currency debasement, rising inflation and a possible breakup of the euro. Eric Mindich’s Eton Park Capital also bought  739,117 shares in the SPDR Gold Trust during the first quarter. The New York-based fund held no shares of the exchange-traded product as of December 31. Overall holdings in the SPDR Trust rose just over 8% in the first quarter, after a 2% gain in Q4 2011.

Frontrunning: May 16

• Facebook's selling shareholders can't wait to get out of company, increase offering by 25% (Bloomberg)
• Boehner Draws Line in Sand on Debt (WSJ)
• Romney Attacks Obama Over Recovery Citing U.S. Debt Load (Bloomberg)
• BHP chairman says commodity markets to cool further (Reuters)
• Merkel’s First Hollande Meeting Yields Growth Signal for Greece (Bloomberg)
• Greek President Told Banks Anxious as Deposits Pulled (Bloomberg)
• EU to push for binding investor pay votes (FT)
• Martin Wolf: Era of a diminished superpower (FT)
• China’s Hong Kong Home-Buying Influx Wanes, Midland Says (Bloomberg)
• U.N. and Iran agree to keep talking on nuclear  (Reuters)
• US nears deal to reopen Afghan supply route (FT)

Overnight Sentiment: More Of The Same

Overnight: just more of the same, as markets collapsed, first in Asia, then in Europe, on ever more concerns what a Greek exit would do to Europe. The most important story of the night was a report in Dutch Dagblad claiming that ECB has turned off the tap for Greek bank liquidity: "At the end of January, Greek banks had received EUR73 billion in liquidity support from the ECB, but this amount has dropped by more than 50% now, according to the newspaper. The ECB is cutting back support because Greece has been holding off on recapitalizing its banking system, despite receiving EUR25 billion in funds for that purpose, the paper says." Whether this move is to force Greece to blink (even more) by making the previously reported bank run even more acute, or just general European stupidity, is unclear but it is certain to make the funding stresses across all of Europe far more acute. The news sent all peripheral bond yields soaring, and the EURUSD tumbling to under 1.27 briefly.



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