Monday, 29 June 2015

Financial Orbit wrap 29/06/15

Five sentences or graphics which sum up the Financial Orbit output over the last 24 hours across the website, twitter account and anything else thought about...

1. So...Greece.  I used my Yahoo Finance Contributors column (link here) to observe that 'Greece: without compromise tragedy awaits':

'A debt restructuring/reform combination for me still remains by far the preferred ending.  It involves compromise from both sides including an acceptance of the need for reform by the Greek government of the pension and taxation systems plus importantly also a probable acknowledgement by the holders of Greek debt that they will need to accept a repayment restructuring. 
In the current environment a compromise solution feels as far away as ever but to strike such a deal would be the most sensible at all levels, assist consumer, business and financial market confidence globally…and take a small European country off the front pages. 
The alternative risks simply being…tragic'.  

2. Some of the Greek related quotes of the day...

Merkel: "Of course, the outcome of the referendum has something to do with the future of the euro."

Tspiras: "I don't think they want to throw us out of the euro and they are not going to do that because the financial cost is huge."

MSCI any change in the classification of Greece would be "preceded by a public consultation"

S&P cuts to CCC- with a -ve outlook - one notch below Moody's (Caa2) and Fitch (CCC)

My observation: compromise or risk volatility...

3. And talking about volatility...the last five days have been quite exciting:

4. Not a good day for creditors with Puerto Rico also warning maybe cannot pay their debts in this article here!  Spot the theme…liked the penultimate paragraph in this report

As the island is a US territory, not a state, it cannot seek Chapter 9 bankruptcy protection as Detroit did, and since it is not a sovereign country, Puerto Rico cannot ask the IMF for help or loans to tide it over while it restructures its debts and its economy.

5. What a round trip on the Shanghai bourse!  Amazing 10% range today (+2.5% to -7.5%).  You can cut rates but it may not have the impact you want but as this analysis from Fast FT (which was calculated before the full extent of the volatility today was apparent).

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