Wednesday, February 1, 2012

Wednesday Wake Up Call !

     Good morning ! Today is Wednesday and much of the new of the day reflects similar topics from tuesday. A greek private debt swap is still just days away , the second rescue is just days away - of course Friday is just away as well ! whether stocks flit up or sink down , the trend is that the greater issues  of the day remain unresolved - day after day. A new normal ? A  bad dream ? Or just the new human condition of imposed dread , fear mongered hysteria and general doldrums.

     Considering Greece received a bailout in 2010 ( which was resolve everything but of course did not )  and has been attempting to receive its second dollop of rescue funds ( 130 billion or 145 billion euros worth of dollop ) , what has changed for the greek people ? Based on the data from yesterday , the greek people have a million reasons to be irate - that was the most recent number of unemployed greeks as per October data ! A 19.2 percent jobless rate , with more harsh austerity just around the corner.  Considering the efforts and track record  of the Troika to date  to  " save  " Greece , thank God the idea of a Budget Commissioner has failed ( for now ) , as one  could expect Greece to swiftly overtake Spain's jobless rate of 23 or 24 percent ( depending on which day of the week  you listen to the Spanish Finance Minister .

     After weekends of frenzied talks , the debt swap is supposed done , it just needs to be announced - so they say. A " voluntary " 70 ( or is it 80 percent )  haircut , which somehow is not a credit event is in the bag , as long as the greek political parties play ball with the Troika. Greece's Prime minister Lucas Papademos , setting up his second planned ( or is it an emergency ) meeting on Wednesday or Thursday  with the three major parties , two of which are resistant to another round of the endless austerity. The battle line for now seems to be the Troika demand that the minimum wage be cut ( sweeteners to make this bitter medicine go down are Troika hints it will drop opposition to their present attacks on the summer and holiday bonus pay .) At present , New Democracy and Laos are strongly opposed to any reduction to the minimum wage - as are the Unions and even Employer Groups. Let's see how long the resistant stands - after all , once these rescue and debt swap talks are wrapped up , the parties can focus on the April elections - New Democracy if it wins may just dump various austerity measures anyway - the political calculus may be agree for now , get the Troika out of the hair for now , win the election - and then do what you plan to do anyway.

     The troubles in Greece are just a precursor for what will come the way of Portugal ( next in line probably ) , Spain ( 23 or 24 percent unemployment and a massive real estate mess )  and Italy ( 120 percent debt to GDP and a so called plan to reduce debt 3 percent a a year to achieve 100 percent debt to GDP by 2020. Meanwhile , their debt issuance is third in the world , trailing only the US and Japan - borrow to reduce debt , sounds like a plan. ) Greece is a test run , as will be Portugal. Spain and Italy will be a greater experiment - might that be when we see fiscal union rammed down the throats of Europe ? And following in the same path , we can see France lurching toward a bailout of some form or fashion - 2013 perhaps ?

    Overnite manufacturing data for January improved   in China ( 50.5 as compared prediction of some shrinkage )  , the UK ( 52.1 as compared with expectations of 50 ) and Germany ( 51 as compared with 48.5 in December .)  However , Greece manufacturing data was dreadful - 41 ( down from 42 in December ) , France dropped to 48.5 from 48.9 indicating contraction , Italy still showing a contraction level of 46.8 ( although up from 44 in December ) and spain shows a lousy 45.1 ( but better than 43.7 in December .)  Switzerland and the Czech Republic also showed shrinkage For now the winners and losers in europe are clear - chinese data , believe what you choose to believe with their data ( kind of like US data. )

     US dat today is the ADP report out shortly , ISM data ( should be interesting after Tuesday's mis on manufacturing and Auto sales data. US futures are higher , Europe Bourses are higher , commodities are higher. ADP just out , 170, 000 private jobs for January supposedly created - we shall see what NFP fiction we see Friday ( but watch out for the annual revisions - do we lose another 300,000 jobs allegedly created last year ? Very hard to believe small and medium businesses are leading the job creation brigade , not these days. As a contrary report to note , Trim Tabs predicts just 45,000 new jobs for Friday - we shall see how the prediction match up with the official data. As we head further  into the political season , take all of the government data with a larger pinch of salt -  a wide discrepancy between data and reality exists . That is likely to follow trend.

     So , there we are , another day , another morning ramp. Tread lightly , it is very treacherous time to invest / speculate / trade as the markets are broken and understand who is the sucker at the proverbial poker table !