- Greek Markets Shudder as Tsipras Stands Ground on Economic Plans. Greece’s bonds and stocks fell as Prime Minister Alexis Tsipras showed little sign of backing down in a standoff with international creditors as he began three days of debates on his government’s policy plans. The selloff sparked the biggest increase in yields on three-year Greek notes since 2012. Equities dropped, led by Piraeus Bank SA, and the nation’s lenders were the worst performers in Bank of America Merrill Lynch’s Euro Financial High Yield index.
- Greek Risk Draws Global Concern on Lehman Echo Warnings. (video) A country accounting for less than 0.4 percent of the world economy is again rattling those responsible for three-quarters of it. Greece topped the list of worries for Group of 20 finance chiefs as they started talks in Istanbul on Monday with calls for the nation and its creditors to strike a new aid deal amid concern its membership of the euro has never been more tenuous. Although global economic growth and Europe’s defenses are stronger than when Greece flirted with exit from the single currency three years ago and financial markets aren’t yet signaling panic, a departure would still come as a shock. That could ultimately trigger a flight from risk by investors, bank runs and another downturn in European demand.
- Obama Says U.S. Examining Options in Ukraine If Talks Fail. (video) President Barack Obama said the U.S. is examining “all options” for aiding Ukraine, including supplying defensive weapons, if the latest round of diplomatic efforts fails to bring a resolution with Russia. Obama and German Chancellor Angela Merkel said continued Russian aggression in Ukraine has stiffened the resolve of the U.S. and European Union to make President Vladimir Putin pay a price for violating Ukraine’s sovereignty. Merkel, who opposes delivering weapons to Ukraine’s army, said tactical differences over lethal aid won’t shake the unity of the alliance.
- Russian 2015 Car Sales Seen Plunging 35% as Economy Seizes Up. Car sales in Russia will probably fall 35 percent this year as U.S. and European sanctions over Ukraine and a ruble collapse batter the economy and raise prices, according to PricewaterhouseCoopers. The market may shrink to 1.52 million cars this year, Sergei Litvinenko, head of the audit company’s automotive practice, told reporters Monday in Moscow. Under an optimistic forecast, the decline this year may be 25 percent, he said.
- European Banks’ Dollar Swap Costs Most in 2 Years on Greece. The cost for European banks to fund in dollars, a gauge of risk in the region’s financial system, rose to the most expensive level in almost two years as Greece’s rejection of the country’s bailout program raised concern the government may run out of money. The one-year cross-currency basis swap, the rate for banks to convert euro payments into dollars, was 26 basis points, or 0.26 percentage point, below the euro interbank-offered rate at 5 p.m. in London, according to ICAP Plc data. That’s the most negative reading on a closing basis since April 2013. The measure reached as much as 107 basis points below Euribor in December 2011. A negative cross-currency swap rate signals traders are paying a premium to exchange euro-based cash flows for comparable flows denominated in dollars.
- Indian Stocks Decline With Rupee After Delhi Vote, U.S. Job Data. Indian stocks declined for a seventh day, the longest streak in 15 months, after local election exit polls indicated a setback for Prime Minister Narendra Modi’s party and U.S. jobs data strengthened the case for higher interest rates. The rupee and bonds retreated. The S&P BSE Sensex slid 1.7 percent to 28,227.39 at the close,the lowest level since Jan. 16. The rupee touched 62.2175 per dollar, the weakest level in almost four weeks, while the yield on government bonds due in July 2024 climbed two basis points to 7.72 percent.
- European Stocks Retreat Amid Greece Concern as Lenders Decline. (video)
A drop in banks led European stocks lower, with concern growing over the political situation in Greece as Prime Minister Alexis Tsipras reaffirmed his rejection of the country’s international bailout program. The Stoxx Europe 600 Index fell 0.7 percent to 370.55 at the close of trading in London after dropping as much as 1.4 percent. With a 1.6 percent decline, lenders contributed the most to the gauge’s retreat. Greece’s ASE Index lost 4.8 percent as National Bank of Greece SA and Piraeus Bank SA slid more than 9.8 percent. Spanish and Italian stock measures fell the most in the region after the Greek gauge.
- Oil Jobs Start Drying Up. Energy prices can be a frenemy of the American worker.
- Bond Dangers Compounded by U.S. Pushing Out Debt Maturities. Uncle Sam is going long. As the insatiable demand for Treasuries pushes down yields, the U.S. has locked in low-cost financing for years to come by issuing more long-term debt. The average maturity of Treasuries is now poised to reach an all-time high this year. The shift is saving money for American taxpayers -- but it’s also made Treasuries more perilous for bond investors as the strength of the U.S. economy bolsters the Federal Reserve’s case for raising interest rates. Holders stand to lose about $570 billion if yields rise by a percentage point, data compiled by Bloomberg show. In 2009, it was $170 billion.
- McDonald’s(MCD) Slump Lingers With Drop in Global January Sales. (video) McDonald’s Corp., which is replacing its chief executive officer in a bid to reignite growth, posted a worse-than-projected decline in global sales for January, dragged down by a slump at its Asian restaurants. McDonald's January global comp. sales drop -1.8% vs. estimate down -1.2%. U.S. comps. +.4%, est. +.3%. Europe comps. +.5%, est. -.5%. Asia-Pacific/Middle-East/Africa -12.6%, est. -8.4%.
- Obama Will Allow New Push for Peace Before Deciding on Arms for Ukraine. Merkel Disagrees With Lethal Aid, but Says Alliance Will Remain Solid Regardless. President Barack Obama said Monday he would allow one last push for peace to play out before deciding whether to provide lethal assistance to Ukraine, as he and German Chancellor Angela Merkel pledged to continue to work together toward a diplomatic solution with Russia.
- OPEC Sees More Demand for Its Oil, Less U.S. Output. Report Points to Benefits From Strategy of Letting Prices Fall.
- Analyst who called China’s late 2014 rally isn’t so bullish now. China’s easing move last week hasn’t impressed that much, and Monday’s disappointing trade figures for the world’s No. 2 economy have rattled investors. One analyst who turned particularly bullish on Chinese equities in mid-November now has changed his tune. “The failure of the market to respond to the recent RRR cut” — meaning last week’s lowering of the reserve requirement ratio for banks — “may indicate that the market’s belief in policy is waning,” says a note dated Sunday from J.P. Morgan’s chief emerging market equity strategist, Adrian Mowat, and his team. “The focus is back on deteriorating economic growth.”
- Obama confirms arming Ukraine on the table if diplomacy with Russia fails. (video) President Obama confirmed Monday that his administration is weighing the possibility of sending arms to Ukraine to help the country beat back Russian-backed separatists, if diplomacy fails. The comments came during a joint press conference with German Chancellor Angela Merkel, following a meeting between the two leaders at the White House.
ZeroHedge:
- Why Citi Thinks Oil Is Going To $20. (graph)
- UBS Says "A Market Dislocation Is Necessary To Focus Minds" And Stop "Underestimating Grexit Risks".
Telegraph:
- Greece's leaders stun Europe with escalating defiance. "The euro is like a house of cards. If you pull away the Greek card, they all come down,” says Yanis Varoufakis, the Greek finance minister.
