Greece Is In Trouble Again: Bonds, Stocks Plunge As Bailout Talks Collapse; IMF Sees “Explosive” Debt

It may – or may not – shock readers to learn that Greece is once again on the verge of collapse.
10-year bond yields shot up and stocks tumbled on Friday, a day after euro zone finance ministers acknowledged the country’s fiscal progress but once again failed to break an impasse with the IMF over the country’s future bailout targets. Early on Friday morning, the greatest Greek nemesis alive, and surely in the afterlife, German Finance Minister Wolfgang Schaeuble said that Greece’s creditors won’t unlock further financial aid to the country unless the government meets its reform promises, which he said it hasn’t done yet.
Two years after its third bailout, Athens and the Troika, or is that Quadriga, i.e., its European and IMF creditors, are still at odds over the fiscal goals Greece can achieve after 2018, when its third rescue programme ends. According to Reuters, the talks have dragged on for months, hindering the conclusion of a bailout review that would help Athens qualify for inclusion in the ECB’s much desied bond-monetization programme and return to bond markets as early as this year.
And, yes, the ongoing disagreements have rekindled fears of a new crisis in Greece, which never really emerged from any of the previous ones, which was forced to sign up to another bailout in July 2015 in order to stay in the euro zone.
Worse, hinting that there may not be a 4th bailout simply because the Greek people will snap by then, the Greek parliament’s budgetary office warned on Friday that “the fiscal cost of the delays may prove bigger than the benefit of a deal”.

This post was published at Zero Hedge on Jan 27, 2017.

Make Stocks Volatile Again

The general sentiment on the Convergex trading desks continues to be bearish, so today Nichaolas Colas reviews seasonal patterns for the CBOE VIX Index going back to its starting point in 1990 to see what that math says about current market risk.
Over the last 27 years, the VIX has tended to bottom in three specific months: January (15% of the time), July (22%), and December (30%). When the VIX does bottom in January, its average low reading is 12.2; today’s close was 11.9. That doesn’t guarantee that we’re at the lows on the VIX for the year, but given January’s propensity to represent an annual low it does merit your attention. And since changes in the CBOE VIX index are strongly (and negatively) correlated to equity market returns, this is a warning sign about the near term direction of US stocks. Potential hiding places are few and far between, but we’d look at yield sensitive groups like Utilities, Consumer Staples and REITs, plus precious metals.
Nothing much typically happens in January, right? It is cold out, daylight is in short supply, and everyone is economizing after spending too much around the Holidays. More recently, the ‘Dry January’ movement seems to have emptied out the bars and nightspots in New York as well.
Yet a quick look at the history books shows that January (and not just the one in 2017) does get its fair share of excitement. A few examples.

This post was published at Zero Hedge on Jan 27, 2017.

Is It Smart For Trump To Embrace “Big League” Dow Gains? History Says No

President Trump is anything but traditional. He frequently says things that his predecessors would never have dared to utter publicly. But, for the most part, his supporters applaud the candor and straight talk.
That said, one Presidential tradition that Trump may not want to break is celebrating stock market gains because what goes up, at least on Wall Street, usually comes crashing down in spectacular fashion at some point soon thereafter. Alas, that didn’t stop Trump from celebrating #Dow20K over twitter:
Great! #Dow20K — President Trump (@POTUS) January 25, 2017

This post was published at Zero Hedge on Jan 27, 2017.

JAN 27/ SILVER RISES BY 29 CENTS AND WAS THE STANDOUT TODAY/GOLD FELL BY $1.40/JAPAN’S CENTRAL BANK SURPRISES WITH MORE QE TO LOWER THE 10 YR JAPANESE BOND YIELD BUT THAT INTERVENTION FAILED!/THE…

Gold at (1:30 am est) $1188.10 DOWN $1.40
silver at $17.10: up 29 cents
Access market prices:
Gold: $1191.60
Silver: $17.14
THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON .
The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning
The fix for London is at 5:30 am est (first fix) and 10 am est (second fix)
Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.
And now the fix recordings:
FRIDAY gold fix Shanghai
Shanghai FIRST morning fix Jan 27/17 (10:15 pm est last night): $ 1204.39
NY ACCESS PRICE: $1185.20 (AT THE EXACT SAME TIME)/premium $19.19
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Shanghai SECOND afternoon fix: 2: 15 am est (second fix/early morning):$ 1213.15
NY ACCESS PRICE: $1183.15 (AT THE EXACT SAME TIME/2:15 am)
HUGE SPREAD/ 2ND FIX TODAY!!: $20.06
China rejects NY pricing of gold as a fraud/arbitrage will now commence fully
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
London FIRST Fix: Jan 27/2017: 5:30 am est: $1183.15 (NY: same time: $1183.15 (5:30AM)
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
London Second fix Jan 27.2017: 10 am est: $1184.85 (NY same time: $1185.10 (10 AM)

This post was published at Harvey Organ Blog on January 27, 2017.

These Are Mexico’s Top Exports

While readers are aware by now of the intricate trade link that binds Mexico to the US, it is more than merely autos and avocados. As the chart below shows, of the $302 billion in total Mexican exports (offset by $179 billion in imports), the largest two categories were electrical machinery & equipment, followed by nuclear reactors, boilers machinery & equipment, with motor only coming in third spot. But no matter the breakdown in categories, one thing is clear: Mexico needs the US – which imports over 80% of Mexico’s net exports – and the NAFTA agreement far more than the US does (which is not to say that the US won’t be impacted once NAFTA is eliminated).
Here are some further thoughts from SocGen’s Dev Ashish on the trade relationship between Mexico and the US:
Apart from the rhetoric coming out of the US in the past two-three months, particularly after the US election results, this week’s executive order by President Trump, essentially pulling the US out of the TPP trade agreement, has removed some of the uncertainty over the trade and investment outlook for Mexico. To a large extent this was already priced in by the market and few were hopeful of the deal going through under the new US regime.

This post was published at Zero Hedge on Jan 27, 2017.

Modern Delusions, Part 1: Japan Thinks It Can Balance Its Budget

A recurring problem for most developed-world governments is explaining why last year’s plan didn’t work while convincing voters that this year’s new and improved plan will do the trick. This is especially tough when the new plan is pretty much the same as the old one and therefore just as likely to fail.
Let’s take Japan as our first object lesson. Its government is the world’s most deeply indebted relative to GDP. Its population is the world’s oldest, with the number of retirees on public assistance soaring. Yet for some reason its leaders keep promising to balance the budget, only to be forced to push the date further into the future with each new report.
Japan’s budget surplus goal elusive with worsening fiscal health (Mainichi) – Japan foresees a bigger-than-expected primary deficit of 8.3 trillion yen ($73 billion) in fiscal 2020, highlighting the daunting challenge of achieving a surplus that year, the latest estimates by the Cabinet Office showed Wednesday.
The figure is a sharp revision from its previous forecast of a 5.5 trillion yen deficit in July. The government expects tax revenues to be smaller than initially projected in the face of slowing income growth and sluggish consumer spending.

This post was published at DollarCollapse on JANUARY 27, 2017.

Trump, Mexican President Hold Hour-Long Phone Call, Agree Not To Discuss Payment For “The Wall”

Is the Mexican president looking to salvage something from yesterday’s dramatic diplomatic devastation?
According to AP, shortly before his meeting with Theresa May, President Donald Trump spent one hour talking on the phone to the president of Mexico, Pena Nieto, amid “rising tensions” over Trump’s proposed wall along the border. Two administration officials confirmed Friday’s call.
According to Reuters, citing the Mexican government, the conversation between the two presidents included discussions on the trade deficit between the US and Mexico, and also discussed the need for both to work together to stop trafficking of drugs and illegal arms. Furthermore, the president agreed not to speak publicly for now on the “controversial” subject of payment for the border wall. During the Theresa May press conference, Trump said that the call was “very good” and “friendly”, and has a “very good relationship” with Nieto, but added that “Mexico has made us look foolish” and the trade deals will be renegotiated.
The Peso has drifted higher all day, and was up 1.7% on the news of the amicable phone call, with the USDMXN tumbling over the past 24 hours.

This post was published at Zero Hedge on Jan 27, 2017.

27/1/17: Eurocoin Signals Accelerating Growth in January

Eurocoin, leading growth indicator for euro area growth published by Banca d’Italia and CEPR has risen to 0.69 in January 2017 from 0.59 in December 2016, signalling stronger growth conditions in the common currency block. This is the strongest reading for the indicator since March 2010 and comes on foot of some firming up in inflation.

This post was published at True Economics on Friday, January 27, 2017.

Trump, May Press Conference Key Highlights

In President Trump’s first official press conference with a foreign leader, the president sounded calm and collected, and reaffirmed the special relationship between the US and UK Some highlights:
NATO: May said Trump told her that “he is 100% committed to NATO” A stab at globalism and veiled praise for populism: “A free and independent Britain is a blessing to the world.” May said both governments would “work for ordinary people” and hoped to achieve “progress for workers” “There goes that relationship” Trump joked when pressed by the BBC’s Laura Kuenssberg on torture, but he reaffirmed that he’d adhere to the recommendations of Sec. Mattis even if he personally believes in the efficacy of torture. A reciprocal visit: May announced that Trump has accepted an invitation to visit the U. K. later this year. Mexican trade relations: Trump says that May has “other things to worry about” than U. S.-Mexican relations; May passed on commenting. Trump said “Mexico has out negotiated the US and beat us to a pulp. They made us look foolish.” Also Trump pointed gave some specifics about his phone call with Peno Nieta held earlier and discussed here.

This post was published at Zero Hedge on Jan 27, 2017.

Mexico’s Richest Man Carlos Slim Calls Rare Press Conference As Trump Tensions Rise, Live Feed

Update: Speaking at a press conference in Mexico City, Mexican billionaire Carlos Slim said announced he is willing to help the government negotiate with Donald Trump, and called on Mexicans from all political parties to unite behind President Enrique Pena Nieto. In a rare news conference by the generally media-shy mogul, Slim said Mexico needed to negotiate from a position of strength, noting that Trump, who he called a “great negotiator,” represented a major change in how politics is conducted.
Here are a couple of the key comments so far:

SLIM SAYS HE’S PLEASED TO SEE HOW MEXICO HAS UNITED MEXICANS COMING TOGETHER IN SUPPORT SURPRISED ME, SLIM SAYS THIS IS AN ARDUOUS, DIFFICULT NEGOTIATION W/U. S. SLIM SAYS BORDER TARIFFS WOULD BE PAID BY U. S. CONSUMERS TRUMP HAS MORE STRENGTH DUE TO STRENGTH OF U. S. ECONOMY MEXICO SHOULD TURN TOWARD DEVELOPING DOMESTIC ECONOMY I DON’T AGREE W/MEXICAN BOYCOTT OF U. S. GOODS PESO EXCHANGE RATE ARTIFICIAL, INFLUENCED BY PEOPLE LIKE TRUMP’S TWEETING MEXICO’S SLIM SAYS TRUMP IS NOT THE TERMINATOR, HE IS A NEGOTIATOR

This post was published at Zero Hedge on Jan 27, 2017.

Market Talk – January 27th, 2017

A quiet market for many in Asia ahead of Chinese New Year and the subsequent national holidays. In Japan the inflation data was marginally better than previous ( 0.1% v’s prev. 0%) which helped the Nikkei add additional gains but were slowed somewhat by Consumer Price data. However, this had an effect on the JPY which drifted more into the 115’s handle in late trading as focus again starts to turn more toward US Dollar recovery than JPY weakness.
European markets closed weaker but appeared more on weekend lethargy and profit-taking rather than any real concerns as trading volumes remained low. FTSE was the only core performer but that was probably on the back of a slide seen in sterling. As we listened to the US/UK press conference, markets were very much in control with no madness headline reactions or exaggerated rumors surrounding subject matter. This is the first the two have met and on appearance looked open, considerate and friendly and comes at a time when queue jumping was necessary. On European bourses banks stock led much of the decline with talk that UniCredit was down over 5% and UBS missing on Q4 comparable numbers also hindering the wider sentiment. Oil prices were heavy today also declining expectations surrounding the OPEC optimism drifted and US production steadily increases.

This post was published at Armstrong Economics on Jan 27, 2017.

Grad Student Exposes Massive Network Of Over 350,000 Fake Twitter Accounts

A computer scientist in London has stumbled upon massive networks of fake Twitter accounts – with the largest consisting of over 350,000 profiles – which may have been used to ‘fake‘ numbers of followers, send spam, and boost interest in trending topics.
On Twitter, bots are accounts that are run remotely by someone who automates the messages they send and activities they carry out.
Some people pay to get bots to follow their account or to dilute chatter about controversial subjects.
As The BBC reports, UK researchers accidentally uncovered the lurking networks while probing Twitter to see how people use it.

This post was published at Zero Hedge on Jan 27, 2017.

A Self-Described “Permabull” Explains Why He Is Worried

From Mark Cudmore, a former FX trader who writes for Bloomberg.
I Fear the Complacency
The market is full of counterintuitive price action. This should erode confidence and equities may see a sharp reversal lower soon.
U. S. stocks hit yet another record yesterday. It seems a weird time to suddenly turn bearish, but I’m overwhelmed by a large sense of concern as I gaze across markets.
Equity investors seem to be in denial of the threat to the global economy from Trump’s proposed protectionist policies, and instead solely concentrated on stimulus we’re not seeing yet

This post was published at Zero Hedge on Jan 27, 2017.