The Trader has covered the Spanish economic problems over the past months. With the Greek mess soon to be “resolved”, focus should be shifting towards the Iberian Peninsula and more specifically Spain. Spain is up for more pain ahead. By Marshall Auerback via NEP.
Another day and the markets remain fixated on whether Greece comes to a “voluntary” arrangement with its creditors. The key word is “voluntary” because the myth of “voluntary compliance has to be sustained so that those deadly credit default swaps avoid being triggered.
But let’s face it: Greece is a pimple. If the rest of the euro zone could cut it lose with a minimum of systemic risk, Athens would have long gone the way of Troy. The real issue is whether the credit default swaps trigger such a huge mess with the counterparties that it creates renewed systemic stress which more than offsets the benefits to the holders of the CDSs.
The more interesting question is: suppose Greece finally does get a deal? I realize everybody says it is a “one-off”, but do you really think the Irish, Portuguese, or even the Spanish and Italians will go along with that, particularly if (as is likely) they continue to experience double digit unemployment and minimal growth? (Full reading here.)
To say the market structure is broken is an understatement. The newest fashion in town is getting a chimney for your HFT rack. From Securities Technology Monitor;
Nasdaq OMX Group said it will upgrade the amount of power and speed available to customers using its Carteret, N.J., data center for executing trades.
The operator of the Nasdaq Stock Market said it would immediately make available to its customers a chimney system that would increase by 70 percent the amount of computing power that can be installed in a rack of computing appliances.
The exchange operator also said it had filed an application with the Securities and Exchange Commission to increase the capacity of communications within the Carteret data center to 40 gigabits a second on a given channel, from 10 gigabits. (Full reading here.)
Greece missed another deadline to approve conditions for a second €130bn bail-out on Tuesday night, after a meeting with political leaders was postponed until Wednesday because of last-minute haggling with international lenders over emergency spending cuts. A government official said Lucas Papademos, the technocrat prime minister, would hold the talks on Wednesday morning and expected a deal to be presented for approval at a meeting of eurozone finance ministers later in the week. http://www.ft.com/intl/cms/s/0/b10af3b0-517f-11e1-a9d7-00144feabdc0.html#axzz1lfiiEgbH
Several large investors have threatened to block Glencore and Xstrata’s proposed all-share merger, which would create a $90bn commodities giant in the largest global mining deal on record, reports the FT.http://ftalphaville.ft.com/thecut/2012/02/08/873091/glencore-and-xstrata-face-blocking-threat-2/
The White House has quietly injected itself into ongoing settlement discussions aimed at resolving regulators’ allegations that leading US banks abused struggling homeowners, underscoring the deal’s potential impact on the broader housing market and the presidential election, http://ftalphaville.ft.com/thecut/2012/02/08/872921/us-mortgage-deal-nears/
General Motors is preparing to disclose “horrendous” fourth quarter losses out of its European Opel/Vauxhall unit and wants to cut costs in a plan that could involve job cuts and plant closures, the WSJ says,http://ftalphaville.ft.com/thecut/2012/02/08/872951/gm-wants-to-cut-opel/