martes, 16 de junio de 2015

Mañanitas griegas

Mientras la prensa argentina te hace creer que acá en la Argentina pasa algo (cuando lo que hay es calma chicha), en otras partes del mundo la cosa viene movida. Huele a “Grexit”, chicos. Miedo en el aire de los mercados globales. Mucho miedo. Leemos en Zero Hedge de esta mañana:

Título: It’s Not Only Greece This Morning

Subtítulo: Some broad macro commentary from Bloomberg's Richard Breslow

Texto: This morning doesn’t have the feel of full blown risk aversion, but there is a queasiness out there that is causing markets to feel every spin and lurch uncomfortably. The metaphor would, of course, be more apt if this unease was causing the screens to look green rather than decidedly red, but there you have it.

It’s not only Greece this morning. Things just don’t seem to be functioning smoothly anywhere. More arrests in Hong Kong, delays to the Shenzhen-Hong Kong Exchange link, Kuroda having to say he didn’t mean what he said, weaker start to the new month’s numbers in the U.S., an Indian export number that put paid to any hopes of a reversal of what has been an inexorable six-month collapse, disappointing European car sales (slowest in 6 months) with noted weakness in Latin America being cited, peripheral bond spreads widening out, Spanish 10-yr hitting highest yield in 10 months. Well you get the idea.

But base case remains from a clear plurality of analysts that Greece will be saved (can kicked), China growth expectations are rising, monsoons will pour rain and the FOMC will thread the needle and be both optimistic and placatory. 

And this is actually a sign of healing. The market is trying to see the bright side of life. Of course if this optimism expectation is based solely on the belief that central banks will “provide” it may require a measure of temperance.

The BOJ’s Kuroda held a press conference today and tried to walk back the dog of his JPY comments that sent USD/JPY down 3 big figures. Today’s “retraction” was worth a fleeting 50 pips. People have the short JPY position and it turned into a thank you very much moment. And markets are growing tired of serial official comments being retracted, refined and modified. Perhaps global bankers are simply making too many speeches. Fed and EU speakers, please take note.

RBA minutes came and went with little affect. Broke no new ground and won’t do until new 2016 forecasts are prepared. Back to data dependency. AUD fell modestly several hours later in sympathy with the general risk slump, not from the RBA.

Volatility in equities is going to continue and coming from still very lofty levels. Keep an eye on the Shenzhen-Hong Kong link issue. It was a big reason for the explosion of market values and we may get a rise, profit-take, rinse repeat.

But the profit taking could be short-term roiling. The political news in Hong Kong is also important, especially if the mainland wants to teach HK a lesson in politics. At the end of the day, the PBOC, and most central banks, believe in the equity market wealth effect and will err on preserving it.

Bottom line is the markets feeling a bit nauseous today but are not ready to vomit and people are still looking for opportunities to prudently add.


Título: "Lehman Weekend" Looms For Greece As Europe Readies "Emergency" Sunday Meeting

Texto: Last week, Greek PM Alexis Tsipras submitted two three-page proposals that were ostensibly designed to close the gap with creditors. EU officials were incredulous, calling the drafts “not serious.”

Tsipras had effectively resubmitted Greece’s previous proposal (i.e. a proposal that did not include concessions on a VAT hike or pension cuts) only this time, he included a second document that outlined how Athens hoped to tap leftover bank recap funds from the EFSF and bailout money from the ESM. Greece took that same proposal to Brussels over the weekend and it didn’t fly there either, leaving Europe to wonder just how far Tsipras was willing to go with the brinksmanship.

The problem is simple and it’s been outlined in these pages extensively. The game of chicken can theoretically go on at the political level for some time. That’s because the bundled IMF payment isn’t due for another two weeks and even if it were missed, Christine Lagarde has quite a bit of discretion as it relates to sending an official failure to pay notice to the IMF board and triggering cross acceleration rights for Greece’s other creditors. In other words, a formal default is a matter of politics and it can be put off for at least 30 days past the end of this month.

What cannot be controlled at the political level is what happens on the ground in Greece. That is, the economy is bleeding jobs and businesses and the banking sector is hemorrhaging hundreds of millions of euros every day. If suppliers cut off credit to the Greek economy and deposit flight turns into a panicked bank run, the glacial pace of political logrolling will prove hopelessly inadequate to contain the situation, meaning the country could descend into chaos while both sides watch in horror from the negotiating table in Brussels. Yesterday, Germany's EU Commissioner Guenther Oettinger warned of exactly this and suggested that Europe plan for a “state of emergency” in Greece. 

And plan they did. Midway through US trading on Monday the German press reported that Europe was prepared to implement capital controls over the weekend should Greece fail to table a workable proposal at a meeting of EU finance ministers in Luxembourg on Thursday. We’ve outlined what capital controls could look like in Greece on a number of occasions (most notably here and here), but for those needing a quick reference, consider the following flowchart:

Here’s Open Europe summarizing the drama:

"German daily Süddeutsche Zeitung reports that Eurozone countries have agreed on a contingency plan if no deal between Greece and its lenders is struck by this weekend. According to the paper, if this week’s Eurogroup meeting failed to yield an agreement, Eurozone leaders would hold an emergency summit – potentially as early as Friday evening. The contingency plan would involve imposing capital controls on Greek banks over the weekend."

As for the Eurogroup meeting and the rumored emergency summit, Greece contends it will not be submitting a new proposal and some EU officials are skeptical about the utility of holding a summit if no progress is made in Luxembourg. FT has more:

"Eurozone officials are discussing holding an emergency summit on Sunday for leaders to tackle the crisis in Greece amid mounting fears a deal to break an ongoing impasse between Athens and its bailout creditors will not be reached at a high-stakes finance ministers meeting on Thursday."

According to two senior officials, the idea of holding a summit of eurozone heads of government was mooted in meetings among representatives of Greece’s creditors on Monday, a day after last-ditch negotiations to reach a deal to release €7.2bn in much-needed bailout aid collapsed.

They said that although the idea was discussed, there is considerable resistance to convening the summit among several creditors since technocratic issues like Greek pension reforms and tax rates are not normally the province of EU presidents and prime ministers.

“If there’s nothing to discuss among finance ministers, there wouldn’t be anything to discuss among heads,” said one official from a Greek creditor institution.

Yanis Varoufakis, Greece’s finance minister, said the country has no plans to present new proposals at the finance ministers meeting, signalling the country won’t make further concessions to unlock bailout funds needed to avoid default.

He told Germany’s Bild newspaper: “The eurogroup is not the forum for presenting positions and plans which have not previously been discussed and negotiated at a lower negotiating level.”

“The next and hopefully decisive step is the eurogroup [on] Thursday,” said the spokesman, Preben Aamann. “Any further steps will be decided in light of the eurogroup outcome. There should be no illusions that an agreement becomes easier or more advantageous over time.”

Alexis Tsipras, the Greek prime minister, has publicly insisted that he will not be presenting any new compromise proposals at the Thursday meeting, and officials said the discussion at the eurogroup of finance ministers on Greece could end up being perfunctory as a result.

In addition, some officials believe Athens’ decision to send Mr Varoufakis, the combative finance minister, to the eurogroup session could preclude a deal being worked on Thursday
Recall that the last time Varoufakis attended a meeting of EU finance ministers, he ended up eating dinner alone in Riga and tweeting out FDR quotes after his antics at the negotiating table prompted EU officials to phone Tsipras and plead with the PM to sideline his FinMin or risk throwing the entire process into disarray. Varoufakis was soon demoted on the negotiating team.

All signs thus point to the imposition of capital controls, setting up a potential "Lehman Weekend 2.0" unless all sides suddenly realize what they've wrought, convene an emergency meeting among heads of state, and strike some manner of hastily construed stopgap agreement. Whether or not that's feasible remains to be seen and it appears as though Sunday may be the day of reckoning.

For now, the official line is that Europe will only restart talks if Greece "submits something new", and if the last several weeks are any indication, "something new" is not forthcoming. 

Finally, Bild is reporting that Greece will seek to delay its June 30 IMF payment by six months.

Via Bloomberg, citing Bild:

The Greek government is seeking to delay a 1.55b euro payment to the IMF by six months. 

Greece has found technical option to delay IMF payment due at the end of June.
And because this is Europe, the Greek government has promptly denied the above:



Título: Russian Pivot: Greek PM Schedules Putin Meeting Ahead Of "Lehman Weekend"

Texto: Earlier this month, we reported that Greece is prepared to sign an MOU of political support for Gazprom’s Turkish Stream Pipeline, when Alexis Tsipras visits St. Petersburg for the International Economic Forum this week. 

The deal is a blow to Washington, which attempted to persuade Athens to support an alternative pipeline. In April, US State Department envoy Amos Hochstein met with Greek foreign minister Nikos Kotzia to pitch The Southern Gas Corridor, a project which, when complete, will  allow the EU to tap into Caspian gas via a series of connecting pipelines running from Azerbaijan to Italy. The corridor is aimed at breaking Gazprom’s stranglehold in Europe. 

Greece, defiant in the face of US pressure and no doubt intent on preserving the last bit of leverage it has in negotiations with European creditors, contended that it did not view the two pipelines as competitors and would pursue participation in both projects. Greece will not, Greek Energy Minister Panagiotis Lafazanis said, be swayed by pressure from The White House:

“We do not considered them to be rivals. On the contrary, we think they both contribute to energy supply of European countries.That’s why it is odd that the Russian project is raising concern and doubts in the US and the European Union. We will not submit to the interests and wishes of any third country. Greece is nobody’s property. We move based on the interests of our people and our national interests. The country must become a development hub for Europe’s energy supply."

Since then, the situation between Greece and its creditors has deteriorated meaningfully. Athens is now reportedly set to delay a June 30 IMF payment for six months and faces the imposition of capital controls over what could end up being a “Lehman Weekend.” With his back against the wall, and with Syriza party hardliners apparently no closer to backing concessions, Tsipras looks set to once again play the ‘Russian pivot” card because as Kathimerini reports, a “working meeting” between the Greek PM and Russian President Vladimir Putin is now scheduled for Friday in St. Petersburg:

Greek Prime Minister Alexis Tsipras is due to travel to Saint Petersburg on Friday to meet with Russian President Vladimir Putin, the state-run Athens-Macedonian News Agency (AMNA) quoted Kremlin spokesman Dmitry Peskov as saying on Tuesday.

"A working meeting has been scheduled with Alexis Tsipras on Friday, July 19, on the sidelines of the World Economic Forum," Peskov was quoted as saying.

The Kremlin spokesman did not reveal what the two men would be talking about.
If we had to venture a guess, the two leaders will be talking about options for Russian aid in the event the relationship between Athens and Brussels continues to deteriorate in the coming weeks.

There are a number of possibilities, including a multibillion euro advance on Greece’s Turkish Stream revenue and the arrangement of a loan from the BRICS bank. Note that this is a perfect time for Greece to explore the BRICS option. As we've noted on serveral occasions, Russia has invited Greece to join and reports indicate Athens could be eligible for a loan immediately and would be allowed to tender its paid in capital in installments to ease the financial burden of joining. Further, Russia will host this year's BRICS summit in Ulfa on July 8-9 where the $100 billion bank will officially be launched along with a $100 billion currency reserve, meaning Greece could serve as a kind of pilot project for the new fund.

All of the above serve to underscore Angela Merkel's insistence on going to extra mile to keep Greece in the euro even in the face of staunch opposition both from lawmakers and from the German finance ministry. In short, the Chancellor fears the geopolitical ramifications of a Grexit could, in the long run, prove more detrimental than the economic consequences, especially considering the situation in Ukraine. 

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