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Greek mirage hid the cracks
2 articles. First on local situation, seoond on ECB's Governing Council
Talk of US DJI down 200-250 in am -1% to 2%? Admit I wasn't fully aware of the severe reversal in Greece's fortunes. Never gave them much credit for the success they had showed. Just figured all this was more of the old Greece quiet days.
Guess another of those Irish Celtic Tiger collapse stories.
ATHENS--Last year, Greece looked as if it were on the way up. The economy was growing--at one point, faster than Germany's . International investors jostled to buy the government's bonds. Banks were rebuilding. Politicians talked about a "clean exit" from Greece's yearslong bailout: no more loans, no more money, no more humiliating reviews by bureaucrats from Brussels .
But many Greeks were still on the way down.
Katerina Papalevizopoulou was out of work. Her husband had lost his job driving a truck and was driving a cab. In 2014, he made around EUR7,000 ($8,000) , down from EUR9,000 the year before and half of what he had earned in 2008. They owe EUR70,000 on a mortgage on their apartment here.
They sold their wedding rings. They sent their car to the scrap yard, for EUR250 . They sent their boy, now 10, to live with his grandparents outside the city. "I don't want my son to be around this," Ms. Papalevizopoulou says in their small and cluttered apartment.
"If you want to look at my fridge, my pantry, it is empty," she says. She apologizes that she has nothing to offer visitors. "The priest brings me food," she says.
For many Greeks, any economic improvement has been a mirage, even before the financial chaos of recent weeks. Debt burdens have become harder to bear. Wages have tumbled, pushed down by policies intended to make Greek workers more competitive internationally. Social services have been cut to help close the budget gap.
As a result, Greek households have cut their own spending--and they have fallen behind on their debts.
The consequence, as Greece heads in to a momentous referendum Sunday, is a country broken both socially and economically. The rupture has helped elevate Alexis Tspiras, leader of the radical-left party Syriza, to prime minister. It has also been a force behind him as he has urged Greece to vote "no" to a deal with its European creditors.
And no matter what outcome--a break with Europe or a rapprochement--the economic devastation means Greece will need a lot of fixing.
Its banking system may be first in line, and a look at the country's mortgage market shows why. When it entered the euro in 2001, Greece had a relatively small amount of consumer borrowing: Its banks had extended EUR24 billion in loans to domestic households at the end of that year. By the end of 2009, just before the debt crisis exploded, the figure had quadrupled to EUR99 billion .
Greece has high rates of homeownership, which Greek banks have financed with mortgages. Those are now in trouble. The crumbling economy has pushed many in the middle class to the lower middle class and many in the working class into poverty. Delinquencies on loans have soared.
The four big Greek banks reported in the first quarter that between 32% and 39% of their Greek loans were nonperforming. And the pace of souring loans appears to have increased sharply this year: National Bank of Greece , the country's largest lender, reported that EUR154 million in Greek mortgages became overdue, by 90 days or more, in the fourth quarter of last year. For the first quarter of this year, the figure jumped to more than EUR280 million .
"Because of all the measures the government chose to take, there is no money," says Joanna Stentoumi, a legal-aid lawyer whose clinic is helping Ms. Papalevizopoulou and her husband. They intend to file paperwork seeking judicial relief from their loans.
Under a 2010 law that introduced a sort of personal bankruptcy process, judges can suspend or reduce debt payments and ultimately restructure most debt. But the courts are so clogged with such cases that many won't be heard for years. Maria Saridaki , an Athens lawyer who handles debt cases, says petitioners pay a fraction of their debt each month while waiting for a hearing. The minimum is EUR40 a month. One of her clients, who is paying that sum, has a court date in 2024.
There is also a moratorium on foreclosures of most primary residences, though some residences and small business premises aren't covered. And banks voluntarily modify many loans--reducing payments but tacking accrued interest on to the end.
In the northern Athens neighborhood of Ilion, a group of residents meets every Wednesday at 4 p.m. at the local civil court, the hour when foreclosure auctions are supposed to take place. They block lawyers from entering, says Fotini Kokoni , an organizer of the group. She describes the effort as a "social movement."
"For us, it was a choice between paying the loans and being able to feed ourselves and our children, and we chose the second," she said Saturday night in a book-lined cafe and meeting space in Ilion festooned with "Oxi" signs--Greek for "no." Conversation came to a halt when, on a big projector television, Mr. Tsipras began to speak at a referendum rally.
Greek banks have been closed for a week, and their cash is fast running out. It is impossible to say when they'll reopen. But when they do, they will have a giant task. The flood of delinquencies, clogged courts and inability to foreclose have left the system in a sort of suspended animation, with few good options.
Widespread foreclosures would cause severe social disruption, and probably wouldn't do a great deal for the banks anyway: "Greek people can't buy anything," says Ms. Stentoumi, the legal-aid lawyer. And writing down the value of the loans might push the banks under while the prospect of government aid is nil.
Syriza and Mr. Tsipras have seized on the problem of troubled loans, especially to poorer Greeks with little prospect of paying. "Dealing with 'red loans' is a crucial issue to restart the economy," says Zois Pepes , a member of Syriza's central committee and longtime bank worker and union organizer.
Mr. Pepes says Syriza wants to create a regulatory framework for a vast restructuring of private debt. It is "still on the table," he says.
What is possible after the referendum is far from certain, but the economic burdens have animated voters. "Thirty percent of people are lost. They can't feed their children. They can't go to the doctor. There is no social structure right now," says Ms. Stentoumi. "Both choices are bad--very bad and very, very bad. With a 'no,' if we are smart, we might get a better deal. With a 'yes,' we have no chance of anything better."
Ms. Papalevizopoulou, who is 33 years old, had a son in 2008. He had a birth defect that led to a build-up of fluid around his brain. Her husband had inherited their apartment, but they mortgaged it to pay for medical equipment so that their son could come home. She ticks off the expenses-- EUR24,000 for a ventilator, thousands of euros for oxygen canisters--little of which was covered by the health system.
The boy, Panagiotis, died in 2011. They sank in grief. Their finances were collapsing, too.
Their mortgage payment had been EUR337 a month. They got the bank to reduce payments by more than half, but it wasn't enough. "We paid whenever we could," Ms. Papalevizopoulou said. The bills came in. Her husband's taxi income went down. He pays EUR52 a day to rent the cab, EUR10 for insurance, EUR10 in taxes and close to EUR25 in gas, she says. Some days, "we are left with EUR5 , EUR3 , EUR6 " in earnings.
She applied for a state welfare stipend of EUR500 a year for low-income people, and got it last year. A week ago, with Greece's government down to essentially no cash, she learned that this year's sum wouldn't be paid.
Ms. Papalevizopoulou long supported Greece's mainstream Socialist party, whose leader signed Greece's first bailout in 2010. But with no economic relief in sight, she switched her allegiance and in January voted for Mr. Tsipras's Syriza party.
She remains staunchly behind the prime minister and his vow to make a break with austerity measures demanded by Greece's creditors. "He runs from Athens to Brussels trying to do something, but these people abroad only want to hear 'yes,'" she says. On Sunday, "I will vote, and I will vote 'no.' "
Apostolis Fotiadis contributed to this article.
Write to Charles Forelle at charles.forelle@wsj.com
(END) Dow Jones Newswires
07-05-15 0200ET
Copyright (c) 2015 Dow Jones & Company, Inc.
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MW Will Greece now leave the euro? Watch the money to find out
By Michael Kitchen , MarketWatch
With initial results from Greece (http://www.marketwatch.com/story/first-official-projection-says-at-least-61-of-greeks-voted-no-in-referendum-2015-07-05) late Sunday showing voters there had decided to reject the terms of their nation's bailout deal, European leaders were scrambling to figure out their next move, with a rush of meeting due in the coming hours.
These are slated to include an emergency conference of top eurozone finance officials, as well as a meeting of European leaders Tuesday.
But most important of all such gatherings will likely be the one that takes place Monday at the European Central Bank . There, the ECB's Governing Council will discuss Greece's monetary lifeline, the Emergency Liquidity Assistance (ELA) program, which provides vital funds to the country's financial system.
"We have long argued that the day the ECB cuts off ELA is, de facto, the day that Greece would leave the euro," Société Générale chief economist Michala Marcussen wrote several hours ahead of the Greek referendum result.
While leaders in Athens have said they want to retain the euro as Greece's currency, Barclays analysts posit that a Greek exit from the euro -- as soon as the ELA goes dry -- would be a simple matter of mathematics.
"The bank liquidity crisis is likely to turn into a solvency crisis once the ECB shuts down ELA, probably no later than July 20 (when a EUR4.2 billion payment to the ECB becomes due)," the Barclays team wrote following initial news of the referendum's outcome.
"Fiscal problems would become more acute; the government may be forced to issue IOUs, which effectively become a parallel currency to the euro. A new currency by the central bank of Greece is likely to eventually become necessary to inject both liquidity and recapitalize banks," they wrote.
This, of course, begs the question as to whether the ECB will cut off Greece's ELA on July 20 or earlier. While most analysts said such a move is unlikely this week, there is less consensus as to whether the ELA will last the month.
SocGen's Marcussen says the ECB would wait until negotiations are completely and utterly exhausted before pulling the plug.
"It is clear that the ECB has no appetite to front-run the political process, and as long as discussions are ongoing between the Greek administration and the euro area, we consider it unlikely that the ECB would fully cut the ELA and Greek banks' access to ECB liquidity facilities," she wrote late Sunday.
Barclays , meanwhile, sees a so-called "Grexit" from the euro system as the more likely scenario now that Greek voters appear to have rejected the current rescue deal, but nor does Barclay dismiss other, less likely potential outcomes.
"Can an exit be avoided? We believe the answer is potentially yes; we see two possibilities, even if both are less likely than an exit. Europe and Greece could agree on a program on the [ International Monetary Fund's ] terms. A more disruptive scenario would be one in which financial and macroeconomic conditions rapidly worsen, and social unrest could result in a political crisis, yielding a more moderate pro-deal government," they wrote.
That last consideration about who will lead Greece could be a deciding factor, with many commentators saying the referendum's result now ensures the left-wing Syriza party of Prime Minister Alexis Tsipras will remain in power.
Pantheon Macroeconomics chief eurozone economist Claus Vistesen wrote early Monday that while he believes some sort of agreement will be brokered to keep Greece from losing the euro, "this assumption is riddled with uncertainty."
That uncertainty, Vistesen wrote, revolves around the Tsipras government and its counterpart in Germany , which has served as the unofficial leader of Greece's European creditors (http://www.marketwatch.com/story/emerging-no-vote-in-greece-poses-merkels-biggest-challenge-2015-07-05) during the crisis.
"Syriza's gamble that a 'no' will force EU leaders to 'respect' Greek democracy is a bold one. If the German government considers its mandate to stand firm, a Grexit is the only option we can see with Syriza at the helm in Athens ," Vistesen wrote.
- Michael Kitchen ; 415-439-6400; AskNewswires@dowjones.com
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(END) Dow Jones Newswires
07-05-15 1848ET
10 Consequences of Greece's 'No' El-Erian
Noticed PredictIt.org picked No just before polls opened. The European books mainly had Yes. Even Paddy Picks Yes was so strong they closed bets Weds saying Yes was a done deal.
At PreditIt the early am bets went from $0.50 for 50/50 to a low of $0.04 for Yes as traders went to the No outcome.
time Jul 5, 2015 5:37 PM EDT
By Mohamed A. El-Erian
http://www.bloombergview.com/articles/2015-07-05/10-consequences-of-greece-s-no-
Using some like TVIX GREK and /NQU5
US STOCK INDEX FUTURES OPEN 1.5 PCT LOWER AFTER GREEKS OVERWHELMINGLY VOTE 'NO' IN REFERENDUM
First official Greek projection 'NO' ahead 61%
Bloomberg also @same result.
ATHENS--A first official projection of Greece's referendum outcome, based on early counting, said that at least 61% of Greeks voted "no" to creditors' demands on Sunday, an outcome that--if confirmed--would set the country on a collision course with the rest of the eurozone.
The projection, announced by the company Singular Logic, the official partner of Greece's interior ministry in carrying out the referendum, was announced after some 20% of the vote had been counted.
"The estimate from Singular Logic is that the result in favor of 'no' will exceed 61%," a spokesman for the organizing company said.
The official projection, if confirmed when all votes are counted, points to a heavier-than-expected victory for the "no" campaign against the austerity policies demanded by Greece's creditors: the rest of the eurozone and the International Monetary Fund . Voter turnout, based on the partial counting of votes, was reported at 58%.
Four opinion polls conducted during Sunday by private broadcasters had pointed to a narrower majority for the "no" camp.
The projected outcome would strengthen the domestic standing of Greek Prime Minister Alexis Tsipras , who campaigned vehemently for Greeks to reject lenders' terms for further bailout funding.
But Mr. Tsipras might soon find it difficult to deliver on his promise to secure a more lenient bailout deal from Europe , where other governments, led by Germany , are in no mood to offer Greece more generous terms.
The country's government faces a race to secure financing before a major bond held by the European Central Bank falls due on July 20 . Default could precipitate an escalation of Greece's already severe financial and economic paralysis.
German Chancellor Angela Merkel will fly to Paris Monday for talks on Greece with French President François Hollande, her spokesman said after polls closed in Greece .
The referendum appeared to have split Greece along lines of age, affluence and ideology. The young, many pensioners, the poor and those with pronounced left-wing or nationalist right-wing views were leaning toward a "no." Middle-class, middle-aged and politically centrist voters were more likely to have voted "yes" to protect Greece's place in the eurozone.
Banks have been shut for a week, with daily ATM withdrawals severely restricted.
"Any person who is able to think for themselves will vote 'no.' I did," said Anna Stavrouli, a 46-year-old public- sector employee after casting her vote in the working-class Athens neighborhood of Dafni. "It is time to stand up and defend ourselves."
"My vote was a loud 'yes,' " said 33-year-old graphic designer Georgia Hatzisava . "I have worked hard to build up a business and now it could collapse."
Workers for the well-organized "no" campaign had a more dominant presence in inner-city areas such as Dafni on Sunday. Their posters easily outnumbered those for "yes." Flyers have depicted a stern-faced German Finance Minister Wolfgang Sch äuble, who has been one of Europe's biggest proponents of the Greek austerity measures throughout the country's debt crisis, and the word "OXI," or "NO."
Mr. Tsipras cast his vote in the central Athens district of Kypseli amid a media scrum and hundreds of supporters chanting "no."
"The Greek people are sending the message that they are taking their lives into their own hands," he said. "One can ignore a government's will. Nobody can ignore a nation's will."
The crisis is also rattling nerves outside the eurozone. U.S. Treasury chief Jacob Lew in a May visit to Europe urged policy makers to find a swift resolution. British Prime Minister David Cameron plans to lead a meeting Monday with the governor of the Bank of England and other top officials to assess the fallout from the vote, U.K. Treasury chief George Osborne said on Sunday.
Investors in European stocks and bonds are gearing up for some big market moves, with volatility expected to last for a while as political wrangling continues no matter the final outcome.
"They tell us we will be kicked out of the euro. I don't believe them: I voted 'no,'" said Greek retiree Aristotelis Georgantas . Under Greece's austerity program since 2010, the country's creditors and past Greek governments have cut his pension to a third, he said, and he is supporting his unemployed son and his three children.
In Thessaloniki, Greece's second-biggest city, full cafes and tourists braving the heat gave the impression of a normal Sunday. But that was belied by the long queues at ATMs and at schools where polling stations were operating throughout the day.
"I voted 'yes' because I want to be in Europe ," said veterinarian Athina Konduri , as she left a polling station in a graffiti-covered school. "If 'no' wins I am afraid the crisis will deepen. We will go back to the drachma and that is a very bad idea."
Georgi Kantchev and Matina Stevis contributed to this article.
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(END) Dow Jones Newswires
07-05-15 1449ET
Copyright (c) 2015 Dow Jones & Company, Inc.
China Moves to Stabilize Stock Markets; Initial Offerings Halted
By KEITH BRADSHER and CHRIS BUCKLEY JULY 4, 2015
HONG KONG — Struggling to respond to precipitous declines on China’s stock markets over the last three weeks, the country’s biggest brokerage firms unveiled a government-endorsed plan on Saturday to buy shares starting on Monday, while both of the country’s stock exchanges suspended all further initial public offerings of stock.
The government-controlled Securities Association of China said that 21 big brokerage firms had agreed to set up a fund worth at least 120 billion renminbi, or $19.4 billion, to buy shares in the largest, most stable companies, and to stop selling shares from their own portfolios. But some experts said the moves might not be enough to stop the hemorrhaging of money from the stock market, particularly given that $105 billion in shares changed hands in Shanghai on Friday.
The association did not specify whether the fund would be allowed to use its initial purchases of shares as collateral to borrow money, probably from the government, and buy more shares. That could give it the leverage to have a bigger effect on the market.
“If it’s only 120 billion renminbi, to be honest, it’s too small,” said Hao Hong, the chief strategist of the Bank of Communications International, the global finance unit of China’s fifth-largest bank. “But if you can add leverage on top of it, that could support the large-cap, blue-chip stocks.”
On Saturday evening, China’s two stock exchanges — in Shanghai and in the far southern city, Shenzhen — issued notices suspending initial public offerings until further notice even for companies that already had provisional approval to list their shares.
Halting initial public offerings encourages investors to keep their cash in existing stock listings instead. The Shenzhen exchange issued suspension notices on Saturday for 18 planned initial public offerings, citing “the recent significant market turbulence” in each case, and Shanghai issued notices for 10 offerings for the same reason.
The announcements came as the government has been scrambling to halt the steepest plunge in the Shanghai stock market in nearly a quarter-century. Share prices have fallen nearly a third since June 12, erasing more than $2 trillion of value and inflicting immediate hardship on millions of families who not only invested their savings but also borrowed heavily at steep interest rates to buy more shares.
The design of the brokerage industry’s fund bore some similarities to the Hong Kong Exchange Fund, a government-run fund that played a crucial role in reversing the fall of the Hong Kong stock market in 1998, during the Asian financial crisis. The fund previously invested the Hong Kong government’s fiscal reserves cautiously in deposits at low interest rates. But when it began buying stocks heavily, it set off a stock market turnaround and produced a large profit for the government.
A statement by the Securities Association of China on Saturday to its members was an odd mix of capitalist and Maoist rhetoric urging them to take collective action to help the stock market.
“Excessively rapid rises and falls in the stock market are not conducive to the stable and healthy development of the market,” the statement said, “and as major players in this market, securities companies must take the initiative to shoulder responsibility, to unify as one, merge our wills and safeguard market stability with all our strength.”
The Securities Association also called on its members to buy back some of their own shares, supporting prices. China’s largest oil companies and big banks, in which the government holds controlling stakes, are widely believed to have used some of their money in the last week to buy back shares, and their shares have fared much better than those of smaller companies.
But the design of the securities industry’s fund, with an emphasis on blue chip stocks, could end up protecting wealthy Chinese and foreign investors much more than the young workers and families all over China who have borrowed heavily in recent months to buy stocks that seemed to be soaring skyward, Hong Kong financiers said. Shares in large companies represent only about 30 percent of the overall value of the Shanghai stock market.
As Chinese stocks soared in the 12 months until their peak on June 12, the small- and medium-size companies with weak financial fundamentals fared the best. Many of them quadrupled, or rose even more, in value, while the overall index doubled because large-cap stocks lagged far behind.
The small-cap and medium-cap stocks overwhelmingly tended to draw middle-class and working-class investors who were buying whatever stocks were rising fastest. The Shanghai market rose 149 percent in the year until June 12. By comparison, a stock price index of 100 large mainland Chinese companies that are traded in Hong Kong — and many of them in Shanghai, too — rose 24 percent over the same period.
Hong Kong sets tougher listing rules than Shanghai to reduce fraud, and also keeps closer controls on trading with borrowed money. Official statistics suggest that loans to investors for stock purchases climbed ninefold in mainland China over the last two years and were supplemented by widespread lending by informal financial companies at annual interest rates exceeding 20 percent.
The bailout funds could also end up helping big state-owned enterprises at the expense of smaller businesses, which tend to be in the private sector. President Xi Jinping and Prime Minister Li Keqiang have spoken of their desire to increase the role of the private sector to improve the efficiency of the Chinese economy.
Other officials have even hinted at selling more shares in state-controlled enterprises on stock markets — the reverse of what now seems to be happening, as state-controlled companies use part of their cash reserves to buy back shares from the public.
Hours after the securities industry’s statement, the government-backed Asset Management Association of China gathered representatives from 25 mutual fund companies, who announced plans to help shore up the stock market by speeding the issuance of funds investing in equities. But the association did not introduce its own market stabilization fund like the brokerage industry, contrary to initial reports on Chinese social media that it would do so.
Another worry lies in whether many Chinese mutual funds and other investment funds may be required to liquidate suddenly. Many of these funds have rules on losses in the underlying contracts that formed them: If the value of the fund falls 30 percent, it must return the remaining money to shareholders, typically by cashing in all of its shares.
With the Shanghai stock market down 28.6 percent since June 12, that rule is starting to appear to be a possible risk to the broader market, Mr. Hong said.
Don't forget DWTI a trader. And GREK
DWTI is to be treated as a liquid trader, nothing longer term unless something monumental occurs. Then these things tend to trend the way a FX can.
Article on GREK as sole short term play on Greek situation.
Nothing much on the Puerto Rico one, bond issues is key.
http://www.investmentnews.com/article/20150703/FREE/150709965/three-year-old-etf-becomes-only-game-in-town-for-investors-hoping-to
Despair and Anger as Puerto Ricans Cope With Debt Crisis
http://www.nytimes.com/2015/07/04/us/despair-and-anger-as-puerto-ricans-cope-with-debt-crisis.html?emc=edit_th_20150704&nl=todaysheadlines&nlid=16092731
Chinese market correction continues
......despite a slew of measures 00:24 ET private link
- Chinese stock markets continue to decline with the Shanghai Comp. falling over 7% intraday which has seen the index move deeper into bear market territory and is now down around 30% from its June 12th highs.
- The correction in stocks has resumed despite recent measures by China to support markets as the nation recently cut interest rates, reduced trading fees, eased margin restrictions and even halted some accounts from short selling in a space of a week, all to no avail.
- The weakness has seen Chinese stocks suffer its worst 3-week period in over 2 decades, which is a continuation of the volatility seen as stocks correct from its stellar YTD ascent, while margin trading fell again for a 9th consecutive day with brokers further expected to reduce exposure to margin debt.
- There has also been reports of further IPOs in China which drain liquidity as they compete for funds in the market, with investors’ preference towards them given the temptations of shares soaring limit up on trading debut, which has been the case with several IPOs.
- In addition, Chinese money market rates have been increasing following the PBoC’s CNY 35bln 7-day reverse repo injection yesterday, which is effectively just a roll-over of last week’s operation and could signal the PBoC maintaining and not adding funds to the market.
Ayn Rand's 1934 short novel "Ideal"
This is some mighty fine lousy writing! Short one page sneak peek at link.
http://blogs.wsj.com/speakeasy/2015/07/01/read-an-excerpt-of-ayn-rands-novel-ideal-exclusive/
Ayn Rand fans, the time is near. “Ideal,” Rand’s first novel to be published in more than 50 years, is coming out next week. Speakeasy premieres an exclusive sneak peek today.
“Ideal” tells the story of a screen actress who is accused of murder and visits six of her most devoted fans to ask for help. Rand wrote it as a 135-page novel in 1934, when she was in her late 20s. She was dissatisfied with it, however, and the same year, she rewrote it as a play. The theatrical version didn’t have its premiere until 1989 – 55 years after she wrote it.
Rand, the author of “Atlas Shrugged” and inventor of Objectivism, has sold more than 25 million books around the world.
The original version of “Ideal” was rediscovered in 2012 by Richard Ralston, publishing manager at the Ayn Rand Institute.
late nite Asian econ news soft. quake
21:32 News Bot: Australian Retail Sales (Jun) M/M 0.3% vs. Exp. 0.5% (Prev. 0.0%, Rev -0.1%)
21:35 News Bot: Japanese Nikkei Services PMI (Jun) M/M 51.8 (Prev. 51.5)
- Nikkei Composite PMI (Jun) M/M 51.5 (Prev. 51.6)
(BBG)
21:45 News Bot: Chinese HSBC Composite PMI (Jun) M/M 50.6 (Prev. 51.2)
- HSBC Services PMI (Jun) M/M 51.8(Prev. 53.5)
(BBG)
--------------
21:32 News Bot: USGS reports magnitude 6.3 quake strikes western Xianjiang, China
‘Backwardation’ Boosts VIX ETFs — But for How Long?
http://blogs.barrons.com/focusonfunds/2015/07/02/backwardation-boosts-vix-etfs-but-for-how-long/?mod=yahoobarrons&ru=yahoo
July 2, 2015, 2:21 P.M. ET
By Chris Dieterich
Like a solar eclipse, or the spotting of a resplendent quetzal, a rare formation has appeared in the market for stock volatility.
Futures in the CBOE Volatility Index (VIX) have moved into “backwardation,” a posture that means the current reading for the market’s fear gauge is higher than the readings for futures contracts a couple months from now. The VIX is an options-based measure of expected prices swings in the SPDR S&P 500 (SPY).
The current shape of the VIX futures curve means that, temporarily, owners of volatility products such as the Barclays iPath S&P 500 VIX Short-Term Futures ETN (VXX), VelocityShares Daily 2x VIX Short Term ETN (TVIX and ProShares Ultra Vix Short-Term Futures ETF (UVXY) benefit, rather than getting “eaten alive” by the so-called roll costs. Volumes in these products have surged this week amid uncertainty about Greece and Puerto Rico debt.
Paul Weisbruch at Street One Financial explains:
“We are witnessing “Day 3” of a move reflective of very rare ‘backwardation.’
If we look at the [VXX], it is up more than [6.5%] … with spot VIX only up about [5%], and yesterday during the VIX’s sharp [12%] pull-back, VXX was only down about half that amount [6.6%].
As most ETP market participants and followers know, ‘Long Volatility’ ETPs have been much maligned for their tendency to trade in contango, as the VIX futures market itself is often mired in deep contango for prolonged periods of time.
One takeaway that we have noted in the past, perhaps on a continual basis, is whether the end user loves them or hates them, the products have not gone away, and continue to not only attract investment assets and interest, but trading volume in some of these, especially in the last couple days, is astounding.
If we look at just VXX alone, it was among the most active across all ETFs and equities earlier this week on several occasions, trading over 100 million shares during more than one session, whereas the average daily volume in the product is about 63 million shares. Likewise, UVXY which averages about 11.2 million shares traded on a daily basis, has traded more than 20 million shares during more than one session this week.
Most importantly … given the all of a sudden dynamic of ‘backwardation’ in the VIX futures market (but will it last) coupled with equity-market worry and dislocation this week, we expect the interest in these products (Long and Short Vol) to continue to climb.”
Glad ya caught that oil icon, and #s
Yes I got sick of bottom fishing among the dead & dying. Easier to play the macros like DWTI UWTI TVIX that reflect general conditions rather than specific stocks trending abnormally.
That game worked only well in 90s. Market more 'forgiving' when flush. Now it's flushed....
17:44 News Bot: US Q2 tracking GDP reduced to 2.7% from 2.9% at Nomura
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http://www.nytimes.com/2015/07/03/upshot/the-new-jobs-numbers-are-weaker-than-they-look.html?em_pos=small&emc=edit_up_20150702&nl=upshot&nlid=16092731&ref=headline&abt=0002&abg=1
The New Jobs Numbers Are Weaker Than They Look
Which brings us to the next reason for disappointment in the latest numbers. For years now economy-watchers have been wondering when robust job creation would pull people who left the labor force during the recession back in.
The reverse happened in June. The labor force participation rate — the proportion of the population either working or looking for a job – tumbled three-tenths of a percentage point to 62.6 percent, which is the lowest in modern times. You have to go all the way back to 1977 to find a month when it was lower.
DWTI strong up off 11am lod. em
Gallup US Job Creation Index
Released On 7/1/2015 2:30:00 PM For Jun, 2015
Highlights
Gallup's U.S. Job Creation Index remained high in June at plus 32. The index score is based on 43 percent of workers saying their employer is hiring workers and expanding the size of its workforce and 11 percent saying their employer is letting workers go and reducing the size of its workforce and is the same as in May, which is the highest Gallup has found for the index.
The percentage of workers who say their company is expanding its workforce is not only well above the percentage who say their company is letting people go, but since April, it has also exceeded the percentage who report their workforce is not changing. So far in the index's history, this has only happened a few times.
Regionally, the index score in each region has generally followed the national trend, with a steep decline in 2008 through 2009 and improvement since then, including record highs in recent months. No one region has consistently outperformed the other regions over the last seven years. However, the East continues to slightly lag behind the other regions, as it has since 2013.
U6 jobs & household employment
And Prez just released statement about being "unhappy" with wage growth lag. Ya think!?
----------
Employment in the household survey fell by 56k in June, the first such monthly decline since March 2014 . The household survey is frequently volatile on a month-to-month basis. It is expected to be clearer in longer-term moving averages. The six-month moving average increase in household employment now stands at 216k, in line with the 208k reading in the establishment survey. the drop in household employment as indicative of a weakening in trend employment growth and, instead, look for household employment to track payroll growth in subsequent months.
The unemployment rate declined by three-tenths to 5.3%.. The anomalous reading on household employment likely contributed to the sharp three-tenths decline in labor force participation to 62.6% on the month and the decline in the unemployment rate. Nevertheless, even if household employment rose in line with payroll employment, the participation rate would have declined by one-tenth, consistent with estimated outlook for a flat participation rate over the forecast horizon. The underemployment rate (U6) also fell three-tenths to 10.5% from 10.8% says, Barclays.
MSFT soft day & R2K lows
Technical Alert: Russell 2000 crosses below 1250 at 11:19am $RUT http://scharts.co/Yi7r2K #sccalerts #stockcharts
Greeks & Natty
IMF SAYS EVEN IF GRACE AND MATURITY PERIODS OF EU LOANS ARE DOUBLED, GREEK GROSS FINANCING NEEDS WOULD AVERAGE 10 PCT OF GDP IN 2015-45
IMF SAYS FULL WRITE-OFF OF STOCK OUTSTANDING IN 53.1 BLN EURO GREEK LOAN FACILITY MAY BE NEEDED UNDER WORST SCENARIO
IMF ASSUMPTIONS NOW EXPECT GREECE TO RAISE JUST 500 MLN EUROS FROM PRIVATISATION OVER THE NEXT FEW YEARS, CREATING 9 BLN EURO FUNDING GAP FROM PRIOR ASSESSMENT
Natural-gas prices are rising Thursday after stockpiles grew slightly less than already-low expectations suggested.
The U.S. Energy Information Administration said storage levels grew by 69 billion cubic feet in the week ended June 26 . That is 2 bcf less than the 71-bcf average of forecasters surveyed by The Wall Street Journal . It is also less than the five-year average addition for that week, 75 bcf and far below the 102-bcf producers added to stockpiles during the same week a year ago.
The EIA update is widely considered one of the best measures of supply and demand for the natural gas market. This draw would indicate slightly lower supply or larger demand than expected, although the difference is likely relatively small.
The front-month August contract recently traded up 5.9 cents , or 2.1%, at $2.842 a million British thermal units on the New York Mercantile Exchange . It had already rose to $2.83 /mmBtu ahead the update, and then jumped more afterwards.
"It was hot," said Kyle Cooper , managing director of research at IAF Advisors , a Houston consulting firm. "You saw temperatures more in line with July and August, so we should have burned a lot more."
Hot weather usually leads people to turn on their air conditioners, increasing demand for gas-fired power. The first eight weeks of the summer had been the hottest ever in Washington , and the hottest since the 1990s in cities including New York , Pittsburgh and Charlotte, despite many forecasters predicting normal or below-normal temperatures, according to Weather 2000 Inc.
That helped push gas futures this spring to their best quarterly performance since the end of 2013, despite money managers amassing a near-record amount of bearish bets. The U.S. Energy Information Administration released April consumption data late Tuesday showing power plants consumed 22.3 billion cubic feet a day that month, up nearly 22% from April 2014 .
Stockpile additions have routinely been larger-than-average during the past 12 months as the U.S. oil-and-gas boom has kept production surging. But a 40% fall in energy prices since last June has encouraged drillers to cut back. This was the second-straight below-average addition to stockpiles, which is probably a sign that the supply dynamic is also changing, said Bob Yawger , director of the futures division at Mizuho Securities USA Inc.
"It looks like the (production) pace has slowed down," he said. "Natural gas: looking pretty good this morning."
Prices have, however, fallen in recent sessions as many expect oversupply to continue. Mild weather forecasts have some expecting soft demand for gas-fired power to run air conditioners, and there are also signs that production is still coming strong. The 69-bcf addition brings storage levels to 2.6 trillion cubic feet, 35% more than a year ago and 1.1% above the five-year average.
The EIA late Tuesday raised its estimates for production during the first three months of the year. It reversed prior estimates that said monthly production growth ended in March. It now says production has increased every month since January, hitting 74.63 bcf in April, just shy of the 74.69 record set in December.
Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.81 /mmBtu, compared with Wednesday's range of $2.775-$2.835 . Cash prices at the Transco Z6 hub in New York last traded at 70 cents an mmBtu, compared with Wednesday's range of $1.15 to $1.50 .
Write to Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
07-02-15 1111ET
Copyright (c) 2015 Dow Jones & Company, Inc.
Some Greek links Astoria Queens
I'm still aware of the old Manhattan slurs about the Greek coffee shop restaurants with the huge all-purpose menus. "Don't tip too big since they send it all back home anyway." Implication was they weren't for USA. Those shops are nearly all gone from Man’h now.
-------------------------
By Jillian Berman
In this Greektown 'everyone has their own opinions' on the crisis
They may be 4,000 miles away from Greece , but the people sitting in Astoria's Athens Square Park on a recent afternoon have opinions on the country's economic crisis, according to 82-year-old Constantine Makris , who was catching some sun on a bench outside the park.
"Everyone you ask around here is going to give you a different answer," to the question of what to make of the news out of Greece this week, Makris said.
That's because the Mediterranean country's financial turmoil is particularly relevant to many in Astoria , one of the nation's many so-called Greektowns, where people of Greek descent make up 8.8% of the population (http://www.nycedc.com/sites/default/files/filemanager/Resources/Economic_Data/neighborhood_trends/Astoria_Trends_04152004.pdf). Much of the Greek immigration to that area took place in the 1960s, but for many of these Greek-Americans the connection to Greece is still quite strong, according to Nicholas Alexiou , a sociology professor at Queens College , who lives in Astoria .
"Everybody here, they have families in Greece ," said Alexiou, noting that many also have investments such as real estate. Despite their strong ties to the country, many Greek-Americans feel powerless to help; many are holding off on booking annual trips to Greece to see how events play out over the next few days, Alexiou said.
"The only thing to do is to show our support to the Greeks in Greece and show them they are not alone," said Alexiou, who launched the Hellenic-American Oral History Project in 2013 (http://www.qc.cuny.edu/Academics/Degrees/DSS/Sociology/GreekOralHistory/Pages/Default.aspx).
Greece is teetering on financial collapse as officials haggle with the country's creditors over terms to receive a much-needed bailout. Meanwhile, financial institutions have been shut down for days to prevent a bank run and Greek voters will head to the polls on Sunday to decide whether they should accept the creditors' terms, which include austerity measures and increased taxes, in exchange for a renegotiation of its debt and further bailout funds. A "no" vote could also mean lead to Greece's exit from the Eurozone.
"Everyone has got his own opinions," on the matter Markis said before proceeding to share his.
"It's so much corruption (in Greece ), I don't believe anything that they say," Markis, who came to the United States with his family in 1946 as a teen, said of government officials. "I don't trust them and I don't like them. Greece is the most historic country in the world and now people are starving in the streets, I don't believe it."
About 40% of children in Greece are living in poverty (http://www.unicef-irc.org/publications/pdf/rc12-eng-web.pdf) and the jobless rate hovers at around 25% (http://www.marketwatch.com/story/greek-unemployment-rate-stable-at-256-2015-06-04). For Nina Anastaspoulos, Greeks' economic struggles, which she called "the worst situation," lead her to a different political conclusion than Markis -- that the country's creditors are to blame.
When asked how her fellow countrymen should vote on Sunday, Anastaspoulos, said "of course no, because we respect our history." Anastaspoulos is apparently not alone in that opinion in Astoria -- a rally in favor of a "no" vote organized by a major Hellenic-American association is slated to take place Wednesday night, according to Alexiou.
Anastaspoulos moved to the United States 11 years ago because "I didn't have a job in Greece ," she said as she manned the cash register at Pharamakolojie, a Greek-themed wellness store. She still has about 70 members of her family living in Greece -- "every Greek family is a big family," -- and she's regularly communicating with friends, which makes her all the more concerned about the situation there.
A moment later, Anastaspoulos turned around an iPad to reveal a Skype conversation with a friend in Greece , "he's voting no too," she said.
Next door at La Mode salon, surrounded by an eclectic mix of electrolysis supplies, consignment furniture and Greek-themed clothes for sale, Joanna Spanos said she also thinks Greece shouldn't accept its creditors' terms. "The Greeks are a strong people, they work hard," the 66-year-old said, but its creditors "don't let the Greek people live. Greece is going to be slaves to the Europeans."
The 66-year-old said she wakes up at 1 a.m. , 3 a.m. and 5 a.m. to watch the news from Greece and she's supportive of Prime Minister Alexis Tsipras's efforts to get her fellow Greeks a break. "This government is excellent," she said, though she noted that some friends coming in and out of the shop disagree with her take.
Spanos would like the U.S. to back Tsipras up, a scenario that seems unlikely given President Barack Obama's relatively neutral stance on the issue. He told reporters yesterday that American officials have been encouraging the Greek government and its European creditors to work towards a solution that allows Greek's economy to grow without leaving the eurozone, noting the crisis won't have a major impact on the American people (http://www.cbsnews.com/news/obama-greek-crisis-is-a-big-problem-for-europe-less-so-for-america/).
Savos Nekolaedes said he's taking comfort in that fact. "I live here, never mind what happens in Europe ," Nekolaedes said sitting on a small bench inside Akropolis meat market, in between gentle ribbings from his friend who works among the baby duck and baby back rib carcasses sold in the shop.
"I came to America for the same reason everyone comes to America, I wasn't satisfied with my country," said Nekolaedes, who is in his early 60s. "Now I love it here."
Even though Nekolaedes came to the U.S. 40 years ago, he still regularly follows news from his home country. When asked to spell his name, he wrote it down on a copy of the Greek language newspaper he was reading. Still, he doesn't have much of an opinion on the goings on in his home country.
"For me, never mind, whatever happens, happens," he said. "I don't have drachmas, I don't have euros, I don't care."
- Jillian Berman ; 415-439-6400; AskNewswires@dowjones.com
RELATED: ECB's dilemma: To keep Greek banks alive, or not? (http://www.marketwatch.com/story/ecbs-dilemma-to-keep-greek-banks-alive-or-not-2015-07-01)
RELATED: 10 things they're not telling you about the Greek crisis (http://www.marketwatch.com/story/10-things-theyre-not-telling-you-about-the-greek-crisis-2015-07-01)
RELATED: This is why the Greek bailout failed (http://www.marketwatch.com/story/why-the-greek-bailout-failed-2015-07-01)
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(END) Dow Jones Newswires
07-02-15 1012ET
USD lower post am data
U.S. DOLLAR EXTENDS LOSSES AFTER U.S. MAY DURABLE GOODS, FACTORY ORDERS DATA, HITS SESSION LOW AGAINST SWISS FRANC OF 0.94200 FRANC
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CRK and CLF soft as resource stocks get banged, COP up touch >60 after <60 yest.
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The US labor market continued to recover in June but all in all the employment report failed to meet expectations. While the number of jobs increased by 223k, wages were flat. The unemployment rate fell to 5.3%, a level close to the Fed's target, but largely because fewer persons were looking for work. With diminishing signs of wage increases, the Fed might feel inclined to remain in wait-and-see mode for longer, says Commerzbank
BBC to Cut Over 1,000 Jobs
LONDON-- The British Broadcasting Corp. , the U.K.'s venerable state-funded broadcaster, said Thursday it is cutting more than 1,000 jobs to cope with the increasing migration of television viewers to the Internet.
The broadcaster cited an unexpected increase in households that don't own televisions, meaning traditional viewing of live TV is being replaced by demand for online catch-up services. While the trend isn't a new challenge for the BBC and others globally, the nearly 100-year-old broadcaster is accelerating its financial belt-tightening ahead of a review of its funding model at the end of next year.
The BBC is mainly funded by a public tax. Households that watch any live video programming, whether streaming or broadcast, are required to buy an annual TV license, which currently costs GBP145.50 ($227) . Authorities enforce the tax through inspections.
The U.K. government has frozen the license fee since 2010, constraining the BBC's budget at a time of austerity in spending for public services.
The BBC said it expects its license-fee income in fiscal 2017 to be GBP150 million less than it had forecast in 2011, as consumers watch more archived video or on-demand programming via the Internet.
"The percentage of households owning televisions is falling faster than predicted. This means they don't always pay the television license fee," the BBC said. "A new financial challenge means additional savings must now be found."
On Thursday, it said the job cuts--which would save the corporation GBP50 million a year--would mostly come from management and support areas, such as marketing and finance, as well as through the merging of technology departments. The BBC has around 18,000 employees.
"We've already significantly cut the costs of running the BBC , but [these are] times of very tough choices," BBC Director-General Tony Hall said.
Separately, the U.K.'s communications regulator, Ofcom, said on Thursday that British broadcasters must better adapt their business to suit rapid growth in demand for online content, amid competition from rival media operators and streaming platforms.
Write to Simon Zekaria at simon.zekaria@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
07-02-15 0951ET
Copyright (c) 2015 Dow Jones & Company, Inc.
Asian Shares: China Shares Slide as Beijing's Moves to Calm Markets Fall Short -- 2nd Update
Chinese shares slumped as Beijing's fresh measures to stabilize plunging equity markets failed to halt selling.
The Shanghai Composite fell as much as 3.5% earlier Wednesday before pausing for its midday break down 1.2%. The smaller Shenzhen market was down 2%, while the ChiNext board, composed of small-cap stocks, rose 0.5%.
Officials have taken a number of steps in recent days to shore up investor confidence--from cash injections into the financial system to interest-rate cuts--after nearly three weeks of volatile trading has wiped out some gains from a yearlong rally. Even after recent declines, though, China's main stock market has almost doubled in value over the past year.
On Wednesday, the Shanghai and Shenzhen stock exchanges lowered fees on securities transactions by about a third, after sharp stock selloffs left both indexes down more than 20% from recent highs, marking bear territory.
Also Wednesday, regulators amended rules governing stock purchases funded by borrowed money, a move intended to limit the forced selling of shares as losses incur. Such selling has added pressure to an already battered market in recent weeks, though so-called margin trading has driven much of the increase in China's stock prices over the past year. The China Securities Regulatory Commission abolished regulations that forced brokers to recall loans of customers whose leverage exceeds maximum levels, allowing brokers instead to negotiate rollovers of loans directly with clients, Xinhua reported.
"The CSRC announcement will bring forward the point at which sufficient leverage has been bled out of the system for the rally to resume," analysts from ING wrote in a research report.
Elsewhere in Asia , stocks rose in early trading after European markets stabilized on Wednesday amid recovering investor confidence, despite the absence of progress in debt talks between Greece and its creditors.
Greece will hold a referendum Sunday to decide whether to accept creditors' demands--a vote that effectively is over whether the country should stay in the eurozone.
"If it's Armageddon, the markets seem oblivious to it and despite some risk aversion there's hardly any panic," analysts from Société Générale wrote in a research report. "Some assets are even gaining ground against the odds."
Japan's Nikkei 225 Stock Average rose 1%, while Australia's S&P /ASX 200 index gained 1.2%. South Korea's Kospi Composite was up 0.5%. The euro rose against the dollar, up 0.3% at $1.1070 .
Hong Kong's market is up 0.6%, reopening Thursday after a public holiday on Wednesday. Hong Kong listings of Chinese companies, known as H-shares, fell 0.7%.
Macau casino stocks soared after June casino revenues declined by the slowest rate since January--albeit by a sharp 36%--and China eased visa restrictions for travelers to the former Portuguese colony. Galaxy Entertainment Group rose 13.6% while Sands China Ltd. jumped 16.9%.
Write to Gregor Stuart Hunter at gregor.hunter@wsj.com
(END) Dow Jones Newswires
07-02-15 0014ET
Copyright (c) 2015 Dow Jones & Company, Inc.
SBLK sudden reversal from hod
Sharp drop going on now from hod. Greek shipper. 2.85 -0.09 -3%
UWTI also down as oil slides.
ECB KEEPS EMERGENCY LIQUIDITY CAP FOR GREEK BANKS UNCHANGED - BANKING SOURCE 14:36 ET
some late nite Asian manufact econ #s
22:13 News Bot: Japanese Nikkei Manufacturing PMI (Jun F) M/M 50.1 (Prev. 49.3%)
22:13 News Bot: South Korean Nikkei Manufacturing PMI (Jun) M/M 46.1 (Prev. 47.8); weakest reading since Sep'12
22:13 News Bot: Chinese HSBC Manufacturing PMI (Jun F) M/M 49.4 vs. Exp. 49.6 (Prev. 49.6); 4th month of contraction
- New orders rose to 50.3
(BBG)
22:13 News Bot: Taiwanese Nikkei Manufacturing PMI (Jun) M/M 46.3 (Prev. 49.3); lowest level in 33-months
22:13 News Bot: Vietnamese Nikkei Manufacturing PMI (Jun) M/M 52.2. vs. (Prev. 54.8)
22:13 News Bot: World Bank forecasts China's GDP growth by 2017 to be 6.9% from 7.1%
DEJ votes allow R/S up to 1:5
Canada company on US Exchange so can do it any time.
19:24 ET
http://www.noodls.com/view/8EA184C78EBC7B79940E9C61ED15A233DF74AE2C
To approve the ordinary resolution on an up to "one(1) for five(5)" basis Passed
DEJ votes allow R/S up to 1:5
Canada company on US Exchange so can do it any time.
19:24 ET
http://www.noodls.com/view/8EA184C78EBC7B79940E9C61ED15A233DF74AE2C
To approve the ordinary resolution on an up to "one(1) for five(5)" basis Passed
------------------
On 6/4 @2pm ET, gave a hint.
Dejour Energy Inc. (NYSE MKT:DEJ) (TSX: DEJ) (“Dejour” or the “Company”), an independent oil and gas exploration and production company operating in North America’s Piceance Basin and Peace River Arch regions, today announced that it has received notification on June 1, 2015 from the NYSE MKT (“the Exchange”) that it has regained compliance with Section 1003(a)(iv) of the Exchange’s Company Guide as of the end of the maximum eighteen month cure period that ended on May 22, 2015. This requirement addresses a company’s ability to continue to operate as a going concern.
The Company noted that the Exchange is continuing to actively monitor its liquidity position on an ongoing basis, including its progress on several near term milestones communicated to the Exchange in connection with its business plan.
API Crude Oil Inventories Cushing
19:23 News Bot: API Crude Oil Inventories (Jun 26) W/W 1900K vs. Prev. -3200K
- API Cushing Inventories (Jun 26) W/W -19K vs. Prev. -2000K
- API Gasoline Inventories (Jun 26) W/W 334K vs Prev. -419K
- API Distillate Inventories (Jun 26) W/W 263K vs Prev. -606K
- API Refinery Capacity Utilization (Jun 26) W/W 94.6% vs Prev. 94.1%
(RTRS)
GERS Serial for sure #6. Add plz
Has had several names and lot of baggers too. CleanTech reminds me of some cleaning scam but not sure it's this one.
Company Notes
•Formerly=GS CleanTech Corp. until 2-2008
•Formerly=Veridium Corp. until 7-06
•Note=10-03 State of Incorporation New York changed to Delaware concurrent with name change
•Formerly=KBF Pollution Management, Inc. until 10-03
Share Structure
Market Value1 $113,176 a/o Jun 26, 2015
Authorized Shares 2,500,000,000 a/o Dec 22, 2014
Outstanding Shares 1,131,756,793 a/o Dec 22, 2014
-Restricted Not Available
-Unrestricted Not Available
Held at DTC Not Available
Float 131,756,793 a/o Dec 22, 2014
Par Value 0.0001
Transfer Agent(s)
Company Acts as its Own Transfer Agent
Shareholders
Shareholders of Record 930 a/o Mar 31, 2014
Corporate Actions Ex. Date Record Date Pay Date
Dividends are not adjusted for stock splits
Security Notes
•New Issue=3-87 1,000,000 shs in units (6 shs Com, 2 Class A Warr 11-11-88 & 2 Class B Warr 3-11-90) at $1.25 per unit (best efforts-3,840,000 min.) by the company
•Capital Change=shs decreased by 1 for 20 split. Pay date=10-21-03.
•Capital Change=shs decreased by 1 for 50 split Pay date=12/12/2007.
•Capital Change=shs decreased by 1 for 10 split Pay date=08/10/2010.
•Capital Change=shs decreased by 1 for 1000 split Pay date=11/14/2011.
•Capital Change=shs decreased by 1 for 100 split. Ex-date=04/15
Meanwhile in Egypt Top Prosecutor killed
9:54am ET
Egypt's Top Prosecutor Hisham Barakat Dies After Convoy Is Attacked
China's Li weighs in on Greece & EU
9:46am
CHINA'S LI SAYS SAYS WANTS TO SEE GREECE STAYING IN THE EURO ZONE, URGES CREDITORS TO REACH A DEAL WITH ATHENS
LOL stuffit Greeks! LNKD does 3.57m common
LinkedIn (LNKD -0.90%) filed to sell 3.57 million shares of Class A common stock for holders.
Schaeuble bends?
Geez dangle carrots?
9:01am ET
SCHAEUBLE IN LETTER TO GERMAN LAWMAKERS: GREECE REMAINS IMPORTANT PARTY OF EUROPEAN FAMILY
------------------
MOO Order imbalance US DJI 26 of 30 on sell side
KIPS quits. Liquidation
Kips Bay Medical Announces an Orderly Wind Down of Operations With the Termination of eMESH I Clinical Feasibility Trial
http://finance.yahoo.com/news/kips-bay-medical-announces-orderly-124920807.html
The Company cannot determine with certainty the amount of any liquidating distribution to its stockholders and it is possible that there will be no liquidating distribution to stockholders. The amount of any cash distributed to its stockholders will depend upon, among other things, the Company's current liquid assets offset by its known and unknown liabilities as well as operating expenses associated with the dissolution.
German CPI & Baltic Dry lower. NBG -24% .96
08:14 News Bot: German CPI (Jun P) Y/Y 0.3% vs. Exp. 0.5% (Prev. 0.7%)
- German CPI (Jun P) M/M -0.1% vs. Exp. 0.2% (Prev. 0.1%).
(BBG)
Baltic Dry Index 813 points -1.2%
08:19 News Bot: German press reporting that Greece have provided EUR 50,000 to the European Financial Stability Fund in order to avoid default
08:30 News Bot: Canadian Industrial Product Price (May) M/M 0.5% vs. Exp. 0.3% (Prev. -0.9%)
Puerto Rico’s Governor Says Island’s Debts Are ‘Not Payable’
By MICHAEL CORKERY and MARY WILLIAMS WALS HJUNE 28, 2015 NYT
Puerto Rico’s governor, saying he needs to pull the island out of a “death spiral,” has concluded that the commonwealth cannot pay its roughly $72 billion in debts, an admission that will probably have wide-reaching financial repercussions.
The governor, Alejandro García Padilla, and senior members of his staff said in an interview last week that they would probably seek significant concessions from as many as all of the island’s creditors, which could include deferring some debt payments for as long as five years or extending the timetable for repayment.
“The debt is not payable,” Mr. García Padilla said. “There is no other option. I would love to have an easier option. This is not politics, this is math.”
It is a startling admission from the governor of an island of 3.6 million people, which has piled on more municipal bond debt per capita than any American state.
A broad restructuring by Puerto Rico sets the stage for an unprecedented test of the United States municipal bond market, which cities and states rely on to pay for their most basic needs, like road construction and public hospitals.
That market has already been shaken by municipal bankruptcies in Detroit; Stockton, Calif.; and elsewhere, which undercut assumptions that local governments in the United States would always pay back their debt.
Puerto Rico’s bonds have a face value roughly eight times that of Detroit’s bonds. Its call for debt relief on such a vast scale could raise borrowing costs for other local governments as investors become more wary of lending.
Perhaps more important, much of Puerto Rico’s debt is widely held by individual investors on the United States mainland, in mutual funds or other investment accounts, and they may not be aware of it.
Puerto Rico, as a commonwealth, does not have the option of bankruptcy. A default on its debts would most likely leave the island, its creditors and its residents in a legal and financial limbo that, like the debt crisis in Greece, could take years to sort out.
Still, Mr. García Padilla said that his government could not continue to borrow money to address budget deficits while asking its residents, already struggling with high rates of poverty and crime, to shoulder most of the burden through tax increases and pension cuts.
He said creditors must now “share the sacrifices” that he has imposed on the island’s residents.
“If they don’t come to the table, it will be bad for them,” said Mr. García Padilla, who plans to speak about the fiscal crisis in a televised address to Puerto Rico residents on Monday evening. “What will happen is that our economy will get into a worse situation and we’ll have less money to pay them. They will be shooting themselves in the foot.”
With some creditors, the restructuring process is already underway. Late last week, Puerto Rico officials and creditors of the island’s electric power authority were close to a deal that would avoid a default on a $416 million payment due on Wednesday.
With other payment deadlines looming, Mr. García Padilla and his staff said they would begin looking for possible concessions on all forms of government debt.
The central government must set aside about $93 million each month to pay its general obligation bonds — a crucial action in Puerto Rico because its constitution requires such bonds to be paid before any other expense. No American state has restructured its general obligation debt in living memory.
The government’s Public Finance Corporation, which has issued bonds to finance budget deficits in the past, owes $94 million on July 15. The Government Development Bank — the commonwealth’s fiscal agent — must repay $140 million of bond principal by Aug. 1.
“My administration is doing everything not to default,” Mr. García Padilla said. “But we have to make the economy grow,” he added. “If not, we will be in a death spiral.”
A proposed debt exchange, where creditors would replace their current debt with new bonds with terms more favorable to Puerto Rico, signals a significant shift for Mr. García Padilla, a member of the Popular Democratic Party, who was elected in 2012. His party is aligned with the Democrats on the mainland and favors maintaining the island’s legal status as a commonwealth.
He said that when he took office, he tried to balance the fiscal situation through austerity measures and fresh borrowing. But he saw that the island was caught in a vicious circle where it borrowed to balance the budget, raised the debt and had an even bigger budget deficit the next year.
Residents began leaving for the mainland in droves, and Puerto Rico’s credit was downgraded to junk, making borrowing extremely expensive.
Only a few months ago, the administration was considering borrowing as much as an additional $2.9 billion, which would be paid for by a fuel tax.
But recently, Mr. García Padilla’s team has been laying the groundwork for more drastic action. The governor commissioned a study of the financial situation by former officials at the International Monetary Fund and the World Bank. Concluding that the debt load is unsustainable, the report suggests a bond exchange, with the new bonds carrying “a longer/lower debt service profile,” according to a confidential copy reviewed by The New York Times. The García Padilla administration plans to make the report public on Monday.
“There is no U.S. precedent for anything of this scale or scope,” according to the report, one of whose writers was Anne O. Krueger, a former chief economist at the World Bank and currently a research professor at the School of Advanced International Studies at Johns Hopkins University.
The “Krueger Report,” as it is being called, also seems aimed at the Obama administration and Congress, both of which have taken a largely hands-off approach to Puerto Rico’s fiscal problems.
In June, Puerto Rico hired Steven W. Rhodes, the retired federal judge who oversaw Detroit’s bankruptcy case, as an adviser. The government is also consulting with a group of bankers from Citigroup who advised Detroit on a $1.5 billion debt exchange with certain creditors.
In Washington, the García Padilla administration has been pushing for a bill that would allow the island’s public corporations, like its electrical power authority and water agency, to declare bankruptcy. Of Puerto Rico’s $72 billion in bonds, roughly $25 billion were issued by the public corporations.
Some officials and advisers say Congress needs to go further and permit Puerto Rico’s central government to file for bankruptcy — or risk chaos.
“There are way too many creditors and way too many kinds of debt,” Mr. Rhodes said in an interview. “They need Chapter 9 for the whole commonwealth.”
Hedge funds holding billions of dollars of the island’s bonds at steep discounts are frustrated that the government has not seemed willing to reach a deal to borrow more money from them.
“We want to be a part of the solution to the commonwealth’s fiscal challenges,” a group of investment firms, including Centerbridge Partners and Monarch Alternative Capital, wrote in a letter last week.
An aide to the governor said the hedge funds’ debt proposal was too onerous. And the deal would only postpone Puerto Rico’s inevitable reckoning.
“It will kick the can,” Mr. García Padilla said. “I am not kicking the can.”
Greek banks, stocks closed Monday. Cap controls
Never on Monday! Let's see how plays out. Lot news breaking all the time.
5:15 ET CBSMW
As Greece’s financial crisis worsens and the possibility of a Tuesday default on its international debt grows greater, Greece’s banks will remain closed Monday and capital controls will be imposed, according to media reports Sunday.
Greece’s stock market also reportedly will be closed.
The bank closure may extend through the July 5 referendum on Greece’s debt proposal to its international creditors, according to reports.
Analysts had expected the bank move.
It was triggered in part by the decision of the European Central Bank to maintain emergency lending to Greek banks at current levels.
3 headers on Greek bank matters
Never On Sunday??
16:17 ET
MACEDONIAN CENTRAL BANK SAYS ORDERS BANKS TO WITHDRAW ALL DEPOSITS AND LOANS FROM BANKS SITUATED IN GREECE AND IN BRANCHES OF THOSE BANKS AROUND THE WORLD
FOREIGN BANK CARD HOLDERS WILL BE ALLOWED TO WITHDRAW MAXIMUM LIMIT SET BY THEIR BANKS- REUTERS' SOURCE
FOR CAPITAL CONTROL MEASURES TO TAKE EFFECT GREEK CABINET MUST APPROVE COUNCIL RECOMMENDATIONS, PRESIDENTIAL DECREE NEEDED
Greek parliament gives green light to Tspiras' bailout referendum
http://www.buenosairesherald.com/article/192628/greek-parliament-gives-green-light-to-tspiras-bailout-referendum
People queue at a national Bank of Greece ATM in central Athens on June 27, 2015, fearing default.
Greek lawmakers have authorized Prime Minister Alexis Tsipras' proposed July 5th bailout referendum, setting Greece on course for a plebiscite that has enraged international creditors and increased Greece's chances of exiting the euro zone.
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Greece Calls Referendum on Bailout Terms
ATHENS--Greek Prime Minister Alexis Tsipras called a surprise referendum for July 5 on the tough economic policies the country's creditors want in exchange for more rescue funding, escalating the drama surrounding the country's long- running bailout and deepening doubt over Greece's fate in the eurozone.
Addressing the nation at 1 a.m. in Athens , Mr. Tsipras told a television audience that Greek voters should have their say on the economic retrenchment that other eurozone countries and the International Monetary Fund are demanding of Greece . He said he couldn't accept the list of policies that creditors presented in Brussels this week, which include some drastic tax hikes and sharp cuts to government spending, including on pensions.
Most European policy makers were taken by surprise by the Greek premier's announcement, though Mr. Tsipras said he had informed German Chancellor Angela Merkel and French President François Hollande about his decision.
The surprise referendum announcement means Greece will almost certainly be unable to repay EUR1.55 billion ( $1.73 billion ) of loans to the IMF that fall due on Tuesday. Defaulting on the IMF loans doesn't automatically put Athens in default on other debts. The practical consequences of falling into arrears with the IMF depend on whether such an event spooks Greek bank depositors, who have withdrawn large amounts of money from Greek banks in recent weeks, putting the banks under strain and leaving them reliant on central-bank aid.
The scheduled referendum means that the eurozone's portion of Greece's EUR245 billion bailout will expire as scheduled on Tuesday. European officials in Brussels said eurozone finance ministers will discuss alternatives to more bailout aid for Greece at a meeting Saturday--including the introduction of capital controls.
It isn't certain whether Greece's banks will be able to stay open until the referendum has been held, nor whether Greece will have to impose capital controls--up to and including bank holidays--to cope with deposit withdrawals. Much depends on the willingness of the European Central Bank to offer emergency liquidity to Greek banks to cover potentially heavy deposit withdrawals.
If the ECB's governing council curtails assistance for Greek banks, Greece's government could be forced to pass legislation limiting ATM withdrawals and other financial transactions--or face the closure of the country's banks. Either way, Greece's battered economy could be pushed into an even deeper slump.
The referendum will present Greek voters with the clearest choice they have faced since the country's bailout began five years ago, after the country could no longer control its budget deficit and lost access to bond markets: Are they willing to accept heavy austerity measures as the price for staying in the eurozone?
"The referendum will be held July 5 with the question of whether or not to reject the proposal put forth by the institutions" overseeing Greece's bailout--the IMF, the ECB and the European Commission--Mr. Tsipras said.
He accused creditors of confronting Greece with a "blackmailing ultimatum" this week.
It wasn't immediately clear from Mr. Tsipras's speech whether he would campaign to reject the creditors' terms for bailout financing or leave the choice to voters. While attacking creditors' demands, he also said that Greece's place is in Europe .
" Europe is the common home of our people. In Europe there are no owners and guests. Greece is and will remain an undetachable part of Europe , and Europe an undetachable part of Greece ," the prime minister said.
Acceptance of the creditors' terms could bring greater stability to Greece , dispelling much of the uncertainty about whether the country will remain in the euro. Rejection, however, would probably leave Greece with no source of financing to service its foreign debt, putting the country on a course toward default and exit from the euro.
Greece's government, led by the left-wing Syriza party, has argued for months that creditors should soften their demands for austerity in Greece to respect the result of the country's elections this January, which Mr. Tsipras won on an antiausterity platform. "Democracy deserved a boost in euro-related matters. We just delivered it. Let the people decide," Greece's finance minister Yanis Varoufakis tweeted on Friday night after his premier's address. "Funny how radical this concept sounds," Mr. Varoufakis added.
Other eurozone governments such as Germany's , however, argue that they owe it to their own voters to stick to the bailout contract agreed with Athens previously: Loans only in return for stringent economic overhauls.
A Greek euro exit is less likely to spark financial-market contagion than a few years ago, but it could render the eurozone less stable in the longer term by proving that membership of the common currency is reversible. That could invite financial speculation against other countries that might succumb to financial crises in the future, economists and European policy makers say. A Greek exit might well force the rest of the eurozone, led by Germany , to embark upon deeper political union to signal that the bloc is committed to staying together under the euro.
Greek Deputy Prime Minister Yannis Dragasakis is due to visit the ECB in Frankfurt to ask for ECB help in keeping Greece's banks open and operating during the referendum, Greek officials said.
The Greek premier appealed to Europe to extend his country's bailout program while the referendum takes place, and to avoid cutting off Greek banks from central-bank liquidity support. It wasn't immediately clear how far other European governments or the ECB are willing to go to offer Greece continued support and financing until the dust settles.
Some European Union officials in Brussels suggested it would be difficult to persuade other eurozone governments to extend Europe's bailout program beyond June 30 , the current expiration date, while Greeks decide whether to adhere to creditors' conditions or not.
As they emerged from a cabinet meeting at the prime minister's office, some Greek ministers said the government would ask voters to reject creditors' conditions for bailout aid--adding that this wouldn't mean Greece has to leave the eurozone.
However, eurozone governments led by Germany have frequently said Greece must comply with the economic policies demanded by its bailout monitors, including the IMF, if it wants further aid loans. Without concessionary financing, Greece is likely to be unable to sustain either its public spending or its banking system for long. Unless its government gives in to the policies lenders want, the country will likely be forced into issuing a national currency eventually.
The referendum announcement is the latest twist in a Greek bailout saga that has often gripped the attention of global financial markets and economic policy makers since 2009, when Greece revealed a ballooning budget deficit that led to the collapse of its government bond market. After years of struggling to comply with the heavy austerity demanded by the eurozone and IMF, Greece in January elected a Syriza-led government that embarked on a strategy of confrontation with lenders.
Syriza, led by Mr. Tsipras, first challenged the eurozone's insistence on financing Greece only in return for austerity, then insisted on smaller amounts of austerity than lenders wanted. In early June, lenders led by Germany and the IMF presented Greece with the outlines of a final offer: The country would have to meet tough fiscal targets through a mix of tax hikes and spending cuts if it wanted fresh loans.
On Monday this week, with time running out before Europe's part of Greece's EUR245 billion bailout lapses, Greece presented lenders with a counterproposal that strove to meet the creditors' fiscal targets, mainly by raising taxes, including on business. That course was politically easier for the left-wing Syriza party than cutting pension spending as the IMF wanted.
But creditors have in recent days made it clear to Greece that they want a different mix of policies, including major spending cuts--prompting Mr. Tsipras to throw the choice to his electorate.
Gabriele Steinhauser contributed to this article.
Write to Marcus Walker at marcus.walker@wsj.com and Stelios Bouras at stelios.bouras@wsj.com
(END) Dow Jones Newswires
06-26-15 2014ET
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CLDN may Bk for cash out -37% pre
Celladon Corp.'s stock (CLDN) plunged 37% in premarket trade Friday, after the biotechnology company said it will suspend further research or development, and could liquidate the company if it can find a buyer or merger partner. Celladon said the net cash available for distribution to shareholders would be $25 million to $30 million . With 23.91 million shares outstanding, according to FactSet, that implies cash disbursements of $1.05 to $1.25 a share, below the current share price of $1.38 . The company also said about half the jobs that weren't previously cut will be eliminated. "Our employees have been performing with exceptional professionalism under difficult circumstances, and on behalf of the Board I would like to thank them for their efforts," said Chief Executive Paul Cleveland . The stock had tumbled 89% year to date through Thursday's close.
- Tomi Kilgore ; 415-439-6400; AskNewswires@dowjones.com
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06-26-15 0746ET
CLDN Bk threat -37% pre
Celladon Corp.'s stock (CLDN) plunged 37% in premarket trade Friday, after the biotechnology company said it will suspend further research or development, and could liquidate the company if it can find a buyer or merger partner. Celladon said the net cash available for distribution to shareholders would be $25 million to $30 million . With 23.91 million shares outstanding, according to FactSet, that implies cash disbursements of $1.05 to $1.25 a share, below the current share price of $1.38 . The company also said about half the jobs that weren't previously cut will be eliminated. "Our employees have been performing with exceptional professionalism under difficult circumstances, and on behalf of the Board I would like to thank them for their efforts," said Chief Executive Paul Cleveland . The stock had tumbled 89% year to date through Thursday's close.
- Tomi Kilgore ; 415-439-6400; AskNewswires@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
06-26-15 0746ET