Monday, June 22, 2015

Today's Headlines

Posted by Gary .....at 2:51 PM
Bloomberg:
  • Greek Optimism Tempered by Finance Chiefs. (video) Euro-area finance chiefs tempered optimism that a deal on Greece was in the offing, saying expectations of a breakthrough were inflated amid confusion over new proposals intended to unlock aid. With markets surging on speculation an accord was near, ministers closed ranks to douse hopes of an imminent deal as they arrived for a meeting in Brussels on Monday. Dutch Finance Minister Jeroen Dijsselbloem said it was “impossible to have a final assessment” of the Greek proposals since they had arrived so late, while his Irish counterpart, Michael Noonan, said he expected ministers to have to meet again on Thursday.
  • Greek Parliament Vote Is Indispensable to Aid Deal, Germany Says. Germany outlined its terms for parliament to approve any aid deal for Greece, including a demand that Greek lawmakers take the first step by passing economic policy changes. Time is too short for a “normal parliamentary procedure” in Germany in the “last days” before Greece’s aid program expires on June 30, the Finance Ministry said in a document prepared for euro-area officials. While German lawmakers can invoke a fast-track procedure, that is likely to depend on the “quality and persuasive power” of an agreement with Greece, according to the document obtained by Bloomberg.
  • Greek Headline Fatigue Numbs Investors to Mask Euro’s Downside. Headline fatigue may be the biggest risk to investors from the Greek debt saga. Money managers lulled into a sense of complacency amid dragged out negotiations to avert a default will be shaken from their malaise by euro losses, should the heavily indebted nation exit the 19-member currency union, according to Guillermo Felices, head of asset allocation in Europe at Barclays Plc. “Maybe we’re all being a bit too over-optimistic,” said Chris Gaffney, president at EverBank World Markets in St. Louis. While most believe a solution will be found, “the worry is the contagion effect.” Of 899 hedge funds, money managers and other trading desks surveyed by Barclays this month, more than half forecast only “a small negative” from Greece leaving the common currency, thanks to its minor contribution to regional growth and buffers to limit contagion. A further 28 percent see contagion limited to peripheral economies.
  • Greece ‘Certain’ to Stay in Euro Region This Year, Odds Signal. Worried about a Greek exit from the euro region ruining your summer vacation plans? Fret no more, it isn’t going to happen. At least that’s what bookmakers say. Betfair Group Plc puts the odds of Greece not leaving the euro zone this year at 1/5, meaning a successful 5 pound bet wins 1 pound. William Hill Plc is offering 1/4 Greece will stay in the euro area in 2015.
  • China Margin Trades Buckle Leaving $364 Billion at Risk. The biggest tumble in Chinese shares since 2008 is proving especially painful for margin traders as their favorite stocks sink faster than the benchmark index, raising the risk of forced liquidations. The 30 equities in Shanghai with the highest levels of margin debt relative to tradable shares have dropped 17 percent on average since the market peaked on June 12, versus a 13 percent decline for the Shanghai Composite Index. Margin positions on the city’s bourse fell for the first time in a month on Friday, a sign that leveraged investors are unwinding bets after they grew more than five-fold in the past year. With at least $364 billion of borrowed money riding on stocks in Shanghai and Shenzhen, losses on those positions threaten to magnify market declines as traders sell shares to meet margin calls. 
  • Greek Stocks Lead a Europe-Wide Rally. European stocks rose, with equities from France to Germany and Spain rallying the most since 2012, on optimism that a deal between Greece and its creditors is close, and as deals activity intensified. Greek banks jumped the most since May 2013. The Stoxx Europe 600 Index rallied 2.3 percent to 394.25 at the close of trading in London, with all its industry groups up. Greece’s ASE Index surged 9 percent, and a gauge tracking its banks soared 21 percent as Alpha Bank AE, National Bank of Greece SA and Piraeus Bank SA all jumped. Benchmark indexes of Germany, France and Spain climbed more than 3.8 percent.
  • TCW Braces for Bond-Market Collapse by Piling the Cash Up High. TCW Group Inc. is taking the possibility of a bond-market selloff seriously. So seriously that the Los Angeles-based money manager, which oversees almost $140 billion of U.S. debt, has been accumulating more and more cash in its credit funds, with the proportion rising to the highest since the 2008 crisis. “We never realize what the tipping point is until after it happens,” said Jerry Cudzil, TCW Group’s head of U.S. credit trading. “We’re as defensive as we’ve been since pre-crisis.” TCW isn’t alone: Bond funds are holding about 8 percent of their assets as cash-like securities, the highest proportion since at least 1999, according to FTN Financial, citing Investment Company Institute data. Cudzil’s reasoning is that the Federal Reserve is moving toward its first interest-rate increase since 2006, and the end of record monetary stimulus will rattle the herds of investors who poured cash into risky debt to try and get some yield.
  • California Climate Plan Has Inland Condemning Coastal Elitism. The way inland California lawmakers see it, the only benefit to their constituents from Governor Jerry Brown’s expansion of carbon pollution laws will be cleaner air to breathe as they wait at the unemployment office. “Families losing their jobs cannot afford solar panels on their homes when they can no longer afford their homes because they have no job,” state Senator Jeff Stone, a Republican from Riverside County, told colleagues during a debate on Senate Bill 350 this month. He called it “coastal elitism at the worst, an act that will cut jobs in Central Valley communities and benefit rich urban areas that already have more jobs and economic diversity.” Opponents such as Stone praise the goals of climate-change regulations but say private-sector innovation should drive clean technology, not government mandates. They warn that tightening California’s rules, already the nation’s toughest, will increase gas and electricity costs for companies, farmers and the poor, eliminating jobs and driving business to less-expensive states. Rural residents traveling long distances to work, school and medical care will be disproportionately hurt, they say. 
Wall Street Journal:
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