Overnight after Europe opened, there were stories that New Democracy, PASOK and the Democratic Left, "could" strike a deal forming a coalition government by Wednesday, despite what PASOK already said (PASOK would not join a coalition government without Syriza and Syriza ruled out joining a coalition government).
Subsequent updates this morning around 6 a.m. EDT said New Democracy won 129 seats and as they came in first place they receive a bonus of an extra 50 seats which seemingly would be enough to form a government (I believe 151 seats in Parliament are needed), but talks of them needing to form a coalition government are still out there as they met with the Greek President today to formally accept the mandate to try to form a coalition government.
ND leader, Samaras had this to say from Athens News,
"I will try to form a government with the pro-European parties. We have to make the necessary amendments to the programme so that our people will get out of unemployment and out of the hardships that Greek households are going through. The new government has to be decisive on the issue of social cohesion. National understanding is imperative. "
More from Athens News:
Antonis Samaras will meet with Syriza leader Alexis Tsipras at 2pm in parliament and with Pasok's Evangelos Venizelos at 6pm, New Democracy has announced Subsequently Syriza has said they will NOT join the coalition as expected.
After two leading German politicians called for some easing of the deadlines for Greece to meet its memorandum targets (see 10.15am), a government spokesman has said that Germany does not believe the time is right for granting Greece any leeway or additional time on its reform commitments.
"It's decisive now for the troika to be convinced that Greece will stick to its agreements and fully implement the agreed reforms. Now is not the time for any kind of discounts to Greece," said deputy government spokesman Georg Streiter. Asked about whether there was any room for giving Greece extra time to meet its reform targets, as suggested by German Foreign Minister Guido Westerwelle earlier on Monday, Streiter said: "We stand by what has been agreed."
Or in other words, the answer is "No"...
Europe opened strong, but saw risk leak off. Apparently the government not being a done deal, the campaign pledges of ND to seek renegotiations in their bailout terms and Germany reiterating there is very little room for renegotiations saw risk leak off as the European session progressed.
As mentioned last night, this changes nothing for Spain and Italy, we heard from Market News that the Spanish Banking Bailout may not be enough (this $100 bn agreed upon was supposed to be well above and beyond what Spanish banks actually needed to create a "Bazooka effect"). The news this morning suggests Spanish banks may need up to 150 bn Euros to cover loan loss provisions, so just like when the US banking sector hit the point of no return in 2007/8 when each bank would say they wrote off all of their bad home debt only to come out days later with even larger write-offs, we are seeing the same thing in Spain as the point of no return has been reached. Expect this number to continue higher as the snowball effect is in full play.
As the risk on transitioned to risk off, Spanish and Italian 10 year yields moved higher with Spain breaking above 7% again this morning to 7.15%-utterly unsustainable, Greece sought a bailout after they were locked out of the debt markets with a 6% 10 year yield; the Italian 10 year hit 6.05%.
Spain will also try to issue debt tomorrow which will be closely watched by the market. The US economic data is light today so the market will focus on Europe as well as the G-20 summit taking place over the next few days (starting today) in Mexico.
In some other news, as mentioned last week after Spain received a bailout (at least in theory) with few strings attached, Ireland insisted they get the same treatment regarding their bailout retroactively, RTE news reports the Troika "may" be considering this. This is hard to believe though, I suspected it has no basis in fact.
"The Troika is considering making big changes to the terms of Ireland's bailout as part of a concerted effort to organise the country's return to the markets, RTÉ News has learned."
From the G-20...
Europe Gets Emerging Market Crisis Ultimatum As G-20 Meet
Also from Germany's Speigel
"from the G-20, via a senior EU official: "If Germany Doesn't Make A Move, Europe Is Dead".
In other news...
From Reuters...
A resounding Socialist victory in weekend parliamentary elections will allow President Francois Hollande to press ahead with reforms to tame France's deficit and promote economic growth in Europe, a senior minister said on Monday.
Final results from Sunday's ballot showed the Socialists and their affiliates had won 314 seats, comfortably exceeding the 289 needed for a majority in the National Assembly and freeing them from reliance on the anti-austerity and Euroskeptical far left.
With the Senate upper house already controlled by the center-left, the Socialists are now turning their attention to a special parliamentary session next month to push through budget legislation, including tax rises for large firms, particularly banks and energy companies.
The measures are part of Hollande's dual drive to balance France's budget by 2017 while persuading Europe's paymaster Germany to back his call for a growth stimulus package of some 120 billion euros ($152 billion) for Europe.
Egypt Islamists claim presidency as army tightens grip
Egypt's Muslim Brotherhood said on Monday its candidate won the country's first free presidential election, but a sweeping legal maneuver overnight by Cairo's military rulers made clear the generals planned to keep control for now.
An election committee source told Reuters that Islamist Mohamed Morsy, a U.S.-educated engineer, was comfortably ahead of former air force general Ahmed Shafik with most of the votes tallied. But the count, which would make him the first civilian leader in 60 years, had yet to be officially finalized.
In any event, however, the new president will be subordinate for some time at least to the military council which last year pushed fellow officer Mubarak aside to appease street protests.
In the latest twist on Egypt's tortuous path from revolution to democracy, the Supreme Council of the Armed Forces (SCAF) issued a decree as two days of voting ended on Sunday which set strict limits on the powers of head of state. On the eve of the election, it had already dissolved the Islamist-led parliament.
Liberal and Islamist opponents denounced a "military coup".
"Military Transfers Power, to Military," ran the ironic headline in independent newspaper al-Masry al-Youm.
The Brotherhood, however, expressed its joy and defiance on the streets and may challenge moves by the generals that cast doubt on their pledge to hand over to civilian rule by July 1 - a promise supported by Egypt's U.S. and European allies, despite their deep misgivings about the rise of political Islam in the wake of the Arab Spring uprisings across the Middle East.
This news should be no surprise as we have talked about many times, since the election of NASSER, the Egyptian military has been the true power behind Egypt with every leader since Nasser coming from and put in place by the Egyptian Military, this is why I said way back when, There would be no free elections, the Military who behind the scenes put Mubarak in power, also removed him from power, not protesters; the protestors were a convenient cover, but the fact is Mubarak was grooming his son to replace him, he was defying the Egyptian military and that is why he was ultimately removed.
As for the ES open and Euro-Dollar,
The long term resistance level which is crucial to a short squeeze...
As an aside, GLD / gold is down reflecting the disappointment that no Central Bank easing (which was strongly hinted at last week) came out of the Greek elections with the ND winning.
Updates coming...
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