SPX is forming that big hedge and shoulder formation, with the even bigger wedge. The set up is for some rather big declines, if we get a close below 1300. This move, that just started, should take us down to 1220, for starters. We have just breached the 100 day moving average.

Below is the Vix index. We have argued, volatility is mispriced. We expect a big pop in volatility over the coming months. Yes, skew is steep, and people are buying protection, but simply put, Vix is too low at these levels, even if it can fall a couple of points.

From the three horses, Troica, pulling the wagon. If this is the news people have waited for, we can only conclude, this is no news.

• GREECE WILL REDUCE PUBLIC SECTOR EMPLOYMENT
• GREECE TO REDUCE TAX EXEMPTIONS, RAISE PROPERTY TAXES
• OVERALL ASSESSMENT GREEK PROGRAM `SIGNIFICANT PROGRESS
• GREEK ECONOMY TO STABILISE AT TURN OF YEAR
• GREECE NEEDS TO REINVIGORATE STRUCTURAL REFORMS

Everybody decided to go all in long on that Troika deal. With the deal being on/off every 5 minutes, we turn the attention to some figures. It actually doesn’t matter if Greece gets more money or not, they need to restructure/reprofile or whatever you want to call it.

But let us look at the issue in terms of numbers: Even on the off chance that Greece’s primary debt is completely wiped out, in 2012 it will have to pay some 52 billion euros (35 billion in mature bonds and 17 billion in interest), while it is expected to receive 12 billion euros from the troika. In 2013, Greece is not expecting to receive anything from the troika, but it will still need to pay approximately 44 billion euros (27 billion in mature bonds and 17 billion in interest). Basically, it needs to have more than 84 billion euros for the 2012-13 period alone, so even if it receives a loan of 60-65 billion euros, it will still have a shortfall of 20-25 billion. Ostensibly, this amount is supposed to be covered by privatizations and the sell-off of state assets.

Life, however, does not end in 2013. Where will Greece find the tens of billions of euros it need annually to service its massive debt? And what will happen after 2014, when the amount to cover interest rises?

The recipe of spending cuts cannot alone make Greece’s debt sustainable so that it can begin borrowing from the markets. Inclusion in the permanent European mechanism, meanwhile, will merely recycle rather than solve the problem by feeding speculation over Greece’s possible expulsion from the eurozone.

The revival of the Greek economy can be achieved only with a bold reform program and tidying up expenses and revenues, in combination with a major boost in the country’s potential through the exploitation of flagging growth potential on the one hand, and a debt haircut on the other. Figures from Kathimerini.

Risk on, risk off, risk on market in charts below. No trend, no volumes. People in total confusion of what to buy/sell. All assets moving on zero volume.

Only figure hitting highs related to Jobs is the average duration of unemplyment. No comments.

Remember those last 10 minutes on the last day of trading in May. “Somebody” bought DAX futures and lifted the index 0,5% during the last 10 minutes on 31st of May. That, “have to buy futures at any price”, “investor”, is down close to 4%  on the Dax futures in 2 days. That is pretty crap yoy….

Lets us not forget what smart money did some weeks ago, prior to these bad numbers. From our older post some weeks ago;

Both Goldman (IPO 99) and Blackstone (IPO 07), top trading firms in the world, went public near the very highs over the past two great rallies. Today we are getting Glencore IPO priced. According to many, people at Glencore are even more intelligent than the Goldman guys. Is this another perfect market top timing?

Both Goldman (IPO 99) and Blackstone (IPO 07), top trading firms in the world, went public near the very highs over the past two great rallies. Today we are getting Glencore IPO priced. According to many, people at Glencore are even more intelligent than the Goldman guys. Is this another perfect market top timing?

Some quick updates of the risk off. Today’s actuion is creating a perfect set up for the Flach Crash scenario we have been arguing for. Everybody is now “sucked” into being long the market. As we have written, risk in equities market, has been mispriced for way too long, and we could now expect some major valatility to start occuring. Don’t forget, LinkedIn at P/E 1000, Groupon IPO and this time it is different. Peoples minds never change, and this time is not different. For a bearish summary see our post from earlier this week;

http://www.thetrader.se/2011/06/01/the-top/

http://www.thetrader.se/2011/06/02/credit-anticipates-and-equity-confirms-danger-ahead/

NFP below all expectations. This is sooo bad. SPX futures below 1300. Double Dip here we come. GDP revisions to follow, again. Look for US to sue Moodys after the rating agency revises US credit.