Wouldn't you know it, the sentiment report from last Friday said retail was expecting a bounce in the S&P to $1390 this week, NEVER SHOW WALL STREET YOUR CARDS.
Here was the bad news just as of last night, this is why I knew things would get worse once Europe opened...
SCANDAL AT IMF with chief economist of 20 years saying he is ashamed to have had anything to do with the organization in his resignation letter...
As a distraction perhaps? The IMF decides to cut Greece lose. In a Speigel article...
Senior IMF officials patience has clearly come to an end and has decided that, with Greece likely to go bust by September, it is no longer willing to provide additional Greek aid
Which seems to be fine with Anti-Bailout party leader, Tsipras of Syriza, in Athens News the leader of the anti-bailout party that forced Greece in to a second election is forecasting that the government will "soon present a return to a national currency (drachma) as a national success."
He went on to state rather honestly for a politician, that any payment extension (of the already re-negotiated TROIKA deal) is "essentially a longer rope with which to hang ourselves.", he notes the Greek finance minister is the definition of a finance minister that the TROIKA would have chosen.
You'll get no argument from Germany's Roesler; from the AP...
"The German vice-chancellor has a "More than skeptical" view that Greece can fulfill its obligations; after which "There can be no further payments", adding, Roesler said he was "very skeptical" that Greece can be rescued.
Adding fuel to the fire, Germany's Roesler continued, "for many experts,... a Greek exit from the eurozone has long since lost its horror." We've seen what the EU experts are capable of, it's not very comforting.
Greece must pay its next round of bond redemptions on August 20, and with the over the weekend announcement that the IMF stated they are suspending Greece's future aid tranches due to lack of reform, August 20 might be the most important day of the entire summer and very well could turn into the credit event that breaks the camel's back-all back to where it started-sort of...
Spain is the LAST DOMINO...
That wasn't it for the fireworks, after a horrendous European close Friday (perhaps the 3C intraday positives were in fact scenario 1, just support to hold the market in an op-ex pin position as the flow of fundamentals was clearly more negative than we could have imagined) and the region of Spain's Valencia said they'd need a bailout, 4 more regions in Spain are seeking bailout help brining the total to 6.
Remember when the 2.5 hour EU Fin Min teleconference came out with their Bazooka to calm the markets pledging $100 bn euros to Spain's banking system and we said back then, that day in fact that the bailout mechanism would subordinate sovereign debt holders and send Spain from a banking sector bailout to a full national sovereign bailout as their 10 year yields went through the sky? Remember that? That is EXACTLY what is happening. Spanish 10 year yields trading at a new all time high at 7.565%
Liborgate...
This one is just getting worse and worse, engulfing the entire financial system including regulators as banks, all of which should have ended up as bailed out utilities in the aftermath of the Lehman collapse, will now be forced to fork over billions in cash to the same governments and administrations that bailed them out in the first place, under the guise of civil and criminal penalties in what will almost certainly end up as the biggest financial settlement in history, one which will leave most of the world's banks sorely undercapitalized and force the Basel implementation of various capital requirements to be scrapped indefinitely.
If you're not sure what the Libor Scandal is all about, check this link. I think my favorite part is this,
In a July 14 editorial in the Guardian, Naomi Wolf suggests that only a short time ago the "notion that the entire global financial system is riddled with systemic fraud – and that key players in the gatekeeper roles, both in finance and in government, including regulatory bodies, know it and choose to quietly sustain this reality – is one that would have only recently seemed like the frenzied hypothesis of tinhat-wearers". Looking at the fact that Tim Geithner went on to be promoted to Treasury Secretary. Wolf commented, "It is very hard, looking at the elaborate edifices of fraud that are emerging across the financial system, to ignore the possibility that this kind of silence – "the willingness to not rock the boat" – is simply rewarded by promotion to ever higher positions, ever greater authority. If you learn that rate-rigging and regulatory failures are systemic, but stay quiet, well, perhaps you have shown that you are genuinely reliable and deserve membership of the club."
Since last night's barrage of bad to worse news, we can add the following...
In what we first covered last week from an Italian member of ours, 10 Italian cities, including Naples and Palermo are also seeking state aid, however, as we first noted on the release of the news of the $100 bn for the Spanish Banking sector, the real concern is that Spain has moved from needing a banking sector bailout to a full blown sovereign bailout, and to think we could see this as soon as the Fin Min Teleconference decision had been announced, how could they have not seen it? They actually thought they'd be hitting the market with a Bazooka! Italian 10 year yields are rising, don't be surprised to see them at 7% soon.
Because it worked so great last time (SARC.), Italian financial regulators are re-introducing a Financial "Short Selling Ban". This ban is set to last a week, last time it actually seemed to do more damage and create more panic than any good.
Shortly thereafter Spain instituted its own short selling ban, but not just on Financial stocks, but market wide, this one could be extended up to 3 months!!! The Spanish stock market is now down 12% over the last 2 days.
Have I mentioned recently that the next trend we should be looking for is a move down, a pullback, but more aggressive than what we'd normally consider a reasonable pullback?
Market updates coming, news is just fast and furious.
No comments:
Post a Comment