European Crisis for Dummies
Quick Friday evening European mezz for Dummies revisited. It started in Greece….Courtesy Omid Malekan. Video below.
Friday Evening in Greece
Greece heating up this Friday evening. From Ekathimerini.
“It goes without saying that whoever disagrees and does not vote for the new program cannot stay in the government,” he said.
Papademos also made it clear that declaring bankruptcy was not an option for Greece. He argued that those who thought it might be better for Greece to default on its debts were “seriously misguided” or guilty of “demagoguery”.
“We cannot allow the country to go bankrupt,” he said. Papademos said that a default would «create conditions of uncontrolled economic chaos and a social explosion.»
“The state would be unable to pay wages and pensions and cover basic operational costs such as those of hospitals and schools.» It would make imports of basic goods such as medicines and fuel problematic and that businesses would close down en masse, he added. «The living standard of Greeks would collapse and the country would be dragged into a spiral of recession, instability, umemployment and misery,» he said. «All these developments would lead, sooner or later, to Greece’s exit from the eurozone.” (Full reading here)
Risk Off Charts Update. Continue selling while you can.
This week started with Roubini joining the bull camp. Later he was followed by Fink, arguing we should be 100% in equities. The Warren Buffet said stocks is the only asset to own, and finally Biggs joined the short term top, proclaiming stocks will move higher due to the fact “nobody” is selling stocks, therefore we have had the low volume melt up. The Trader suggested selling while you can two days ago.
Apparently, people have been waiting for Greece to reach an agreement. We are surprised people still believe in these fairy tales, as people in southern Europe hardly can agree on sharing a parabolic antenna. Meanwhile, below is an essential chart update of some short term charts.
The Tighter HFT Spread Lie
The Trader has been covering the HFT Algo space for the past year. Market is unfortunately broken, and no, the HFT do NOT provide tighter spreads, nor do they provide liquidity, irrespective of how much the exchanges tell us they do. Here is another great piece by the best, Nanex.
We have found significant evidence that overall NBBO spreads have not decreased since the implementation of Reg NMS in March 2007. Combing through over 0.7 trillion quote and trade records, we sorted stocks into bins by NBBO spread every second of the trading day. We then plotted the results and were surprised to find no evidence of tighter spreads. What is worse, we found that the NBBO spread has become less stable since 2007 (See also Part 2 The Liquidity Illusion ~ NBBO Flutter ). Full animated progress over the past years below. A must see.
See also The Rise of the HFT Machines
Greece-We have to make our decisions now
Greece is reaching the inevitable dead line. Nobody really seems interested in saving Greece for real. Germany is pressing the country, and an increasing nationalistic wave is taking form in Greece. People are tired of austerity, and still the West wants more austerity. The country has a few days left to take the historic decision, to be or not to be. From Ekathimerini.
Finance Minister Evangelos Venizelos has told Greece’s political parties that they will have to take a clear decision on whether they want the country to remain in the euro or not by the time the Eurogroup meets again next week after eurozone finance ministers held back from giving the green light for a new loan package for Athens.
“Until the next Eurogroup, which will most likely convene on Wednesday, our country, our people should think and make a final strategic choice,» he said, saying a critical decision needed to be made over private sector bondholder losses (PSI).
“If we see the future of our country within the euro zone, within Europe, we should do what we have to do for the programme to be approved and for the PSI to be concluded on time before major bonds expire in March.” (Full article here)
News That Matters
Ft.com
China’s exports fell and imports slid more than forecast in January, reports Bloomberg, the first declines in two years, as a weeklong holiday disrupted trade and commodity prices dropped. Overseas shipments decreased 0.5 per cent from a year earlier, http://ftalphaville.ft.com/thecut/2012/02/10/876831/chinas-imports-and-exports-fell-in-january/
Eurozone finance ministers dismissed as incomplete a reputed €3.3bn package of Greek budget cuts presented to them in the hope of securing a new €130bn bail-out and sent the country’s finance minister back to Athens with a fresh set of demands and an urgent deadline,http://ftalphaville.ft.com/thecut/2012/02/10/876321/eurozone-dismisses-greek-budget-deal/
Canaccord is to establish a $1bn fund with the state-owned Export-Import Bank of China to invest in Canadian natural resources, as a trade mission to Beijing led by Canada’s prime minister prompts a flurry of deals between the two countries http://ftalphaville.ft.com/thecut/2012/02/10/876611/canaccord-and-china-plan-1bn-resources-fund/
European banks are proposing capital-raising measures that go beyond regulators’ demands and would cut only a small amount of lending to the real economy, according to a preliminary assessment of the plans by the European Banking Authority, http://ftalphaville.ft.com/thecut/2012/02/10/876621/european-banks-offer-new-capital-proposals/
Five big US banks accused of abusive mortgage practices have agreed to a $25bn government settlement that may help roughly one million borrowers, says Reuters, but is no magic bullet for the ailing housing market. Thursday’s announcement brings an end to 16 months of negotiations that culminated in a tense week of round-the-clock dealmaking. http://ftalphaville.ft.com/thecut/2012/02/10/876351/us-mortgage-deal-may-cause-short-term-pain/
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