World economy talk

[uls]

Intesa Sanpaolo


Banca Monte dei Paschi di Siena




this is gonna spread beyond Italy

expect it

[uls]

risk on

[uls]

US treasury bonds rallied on a risk-on day (treasuries are risk-off assets)



why?

news re US debt ceiling -- there's a plan that raises the debt ceiling AND cuts spending

less govt spending = less inflation pressure

and lower growth

[uls]

Apple - Press Info - Apple Reports Third Quarter Results

CUPERTINO, California—July 19, 2011—Apple® today announced financial results for its fiscal 2011 third quarter ended June 25, 2011. The Company posted record quarterly revenue of $28.57 billion and record quarterly net profit of $7.31 billion, or $7.79 per diluted share. These results compare to revenue of $15.70 billion and net quarterly profit of $3.25 billion, or $3.51 per diluted share, in the year-ago quarter. Gross margin was 41.7 percent compared to 39.1 percent in the year-ago quarter. International sales accounted for 62 percent of the quarter’s revenue.

The Company sold 20.34 million iPhones in the quarter, representing 142 percent unit growth over the year-ago quarter. Apple sold 9.25 million iPads during the quarter, a 183 percent unit increase over the year-ago quarter. The Company sold 3.95 million Macs during the quarter, a 14 percent unit increase over the year-ago quarter. Apple sold 7.54 million iPods, a 20 percent unit decline from the year-ago quarter.

[uls]

WTI spot and futures

CLY00 (Cash) 97.50s
CLU11 (Sep '11) 99.09
CLV11 (Oct '11) 99.46
CLX11 (Nov '11) 99.92
CLZ11 (Dec '11) 100.25

--

optimism

Apple earnings, US debt ceiling, EU officials meeting Thursday

risk on

[Ry_Tower]

Kaya nagtaas fuel eh. hehe

[safeorigin]

ETFC getting sold

[uls]

^^

being sold to whom? who's buying? there's no report of any buyer

Citadel is unhappy with etrade's performance

Citadel owns 9.8% of etrade outstanding stock and wants the company to sell itself

[uls]

Re Greece

selective default possible

[uls]

^^^^
look at that

EFSF (European Financial Stability Facility) to intervene in secondary bond market

EFSF to back up Greece collateral in case of techncial default

Greece debt burden lowered by 20-25%

Banks to swap short-maturity bonds for 30-yr bonds

EFSF loan rates cut to 3.5%

maturities extended to at least 15 years for Greece, Portugal, Ireland

[Monseratto]

The reality is already facored in... Market reaction has been positive so far.

Details of how Greece will restructure its massive debts have emerged as the eurozone braces for a likely default.

The Institute of International Finance said lenders would have four options, all of them designed to give Greece decades more to repay its debts.

It comes after eurozone leaders agreed to give Greece a further 109bn euro ($155bn, £96.3bn) bail-out and to force losses on private lenders.

Asian stock markets reacted quietly to the news, while the euro held gains.

The debt swaps - which will be offered by the European Financial Stability Facility (EFSF), the eurozone's bail-out fund - mimic the "Brady bond" debt exchanges provided to insolvent governments in Latin America, Eastern Europe and Africa since the 1980s.

Three of the four options offered to lenders to swap or relend existing debts would extend Greece's repayment terms by 30 years, while the fourth would do so by 15 years.

They all offer a much lower interest rate than Greece's current 15%-25% cost of borrowing in financial markets.

Two of the options would also involve "haircuts" - reducing the principal amount of debt Greece has to repay.

The terms of the deal imply a loss to Greece's lenders equivalent to 21% of the market value of their debts, said the IIF.

The restructuring is widely expected to be declared by credit rating agencies to be a default by Greece on its debts - something European leaders have been at pains to avert until now.

The ECB and France had been particularly opposed to a default, but it was ultimately insisted on by Germany.

It would make Greece the first ever EU country to default, and could have a number of serious repercussions:

banks would be forced overnight to recognise in their financial accounts billions of euros in losses on Greek debts they own
these losses could in turn leave banks short of capital - making it difficult for them to lend - and could leave the Greek banks insolvent

Greek banks would also be unable to use their government's debts as security to borrow cash from the ECB
the ECB itself stands to make major losses on Greek debts it has bought or accepted as collateral from the Greek banks
separately, the debt restructuring could also trigger payouts on billions of dollars of credit derivative contracts, used by financial markets to hedge against or speculate on a Greek default
The Greek bail-out package will be used to soften the blow to the Greek banks, with 20bn euros being used to recapitalise them, and 35bn euros to facilitate their continued borrowing from the ECB.

The biggest fear of European leaders is that imposing losses on Greece's lenders could lead to contagion - a sharp increase in the rate at which markets are willing to lend to other eurozone borrowers, in particular Italy and Spain.

[uls]

eurozone summit statement

http://www.consilium.europa.eu/uedoc.../ec/123978.pdf

We reaffirm our commitment to the euro and to do whatever is needed to ensure the financial
stability of the euro area as a whole and its Member States. We also reaffirm our determination to
reinforce convergence, competitiveness and governance in the euro area. Since the beginning of the
sovereign debt crisis, important measures have been taken to stabilize the euro area, reform the
rules and develop new stabilization tools. The recovery in the euro area is well on track and the euro
is based on sound economic fundamentals. But the challenges at hand have shown the need for
more far reaching measures.

Today, we agreed on the following measures:
Greece:

1. We welcome the measures undertaken by the Greek government to stabilize public finances
and reform the economy as well as the new package of measures including privatisation
recently adopted by the Greek Parliament. These are unprecedented, but necessary, efforts to
bring the Greek economy back on a sustainable growth path. We are conscious of the efforts
that the adjustment measures entail for the Greek citizens, and are convinced that these
sacrifices are indispensable for economic recovery and will contribute to the future stability
and welfare of the country.

2. We agree to support a new programme for Greece and, together with the IMF and the
voluntary contribution of the private sector, to fully cover the financing gap. The total official
financing will amount to an estimated 109 billion euro. This programme will be designed,
notably through lower interest rates and extended maturities, to decisively improve the debt
sustainability and refinancing profile of Greece. We call on the IMF to continue to contribute
to the financing of the new Greek programme. We intend to use the EFSF as the financing
vehicle for the next disbursement. We will monitor very closely the strict implementation of
the programme based on the regular assessment by the Commission in liaison with the ECB
and the IMF.

3. We have decided to lengthen the maturity of future EFSF loans to Greece to the maximum
extent possible from the current 7.5 years to a minimum of 15 years and up to 30 years with a
grace period of 10 years. In this context, we will ensure adequate post programme monitoring.
We will provide EFSF loans at lending rates equivalent to those of the Balance of Payments
facility (currently approx. 3.5%), close to, without going below, the EFSF funding cost. We
also decided to extend substantially the maturities of the existing Greek facility. This will be
accompanied by a mechanism which ensures appropriate incentives to implement the
programme.

4. We call for a comprehensive strategy for growth and investment in Greece. We welcome the
Commission’s decision to create a Task Force which will work with the Greek authorities to
target the structural funds on competitiveness and growth, job creation and training. We will
mobilise EU funds and institutions such as the EIB towards this goal and relaunch the Greek
economy. Member States and the Commission will immediately mobilize all resources
necessary in order to provide exceptional technical assistance to help Greece implement its
reforms. The Commission will report on progress in this respect in October.

5. The financial sector has indicated its willingness to support Greece on a voluntary basis
through a menu of options further strengthening overall sustainability. The net contribution of
the private sector is estimated at 37 billion euro.(1) Credit enhancement will be provided to
underpin the quality of collateral so as to allow its continued use for access to Eurosystem
liquidity operations by Greek banks. We will provide adequate resources to recapitalise Greek
banks if needed.

(1) Taking into account the cost of credit enhancement for the period 2011-2014. In addition, a
debt buy back programme will contribute to 12.6 billion euro, bringing the total to 50 billion
euro. For the period 2011-2019, the total net contribution of the private sector involvement is
estimated at 106 billion euro.

Private sector involvement:

6. As far as our general approach to private sector involvement in the euro area is concerned, we
would like to make it clear that Greece requires an exceptional and unique solution.

7. All other euro countries solemnly reaffirm their inflexible determination to honour fully their
own individual sovereign signature and all their commitments to sustainable fiscal conditions
and structural reforms. The euro area Heads of State or Government fully support this
determination as the credibility of all their sovereign signatures is a decisive element for
ensuring financial stability in the euro area as a whole.

Stabilization tools:

8. To improve the effectiveness of the EFSF and of the ESM and address contagion, we agree to
increase their flexibility linked to appropriate conditionality, allowing them to:

- act on the basis of a precautionary programme;
- finance recapitalisation of financial institutions through loans to governments including
in non programme countries ;
- intervene in the secondary markets on the basis of an ECB analysis recognizing the
existence of exceptional financial market circumstances and risks to financial stability
and on the basis of a decision by mutual agreement of the EFSF/ESM Member States,
to avoid contagion.

We will initiate the necessary procedures for the implementation of these decisions as soon as
possible.

9. Where appropriate, a collateral arrangement will be put in place so as to cover the risk arising
to euro area Member States from their guarantees to the EFSF.

Fiscal consolidation and growth in the euro area:

10. We are determined to continue to provide support to countries under programmes until they
have regained market access, provided they successfully implement those programmes. We
welcome Ireland and Portugal's resolve to strictly implement their programmes and reiterate
our strong commitment to the success of these programmes. The EFSF lending rates and
maturities we agreed upon for Greece will be applied also for Portugal and Ireland. In this
context, we note Ireland's willingness to participate constructively in the discussions on the
Common Consolidated Corporate Tax Base draft directive (CCCTB) and in the structured
discussions on tax policy issues in the framework of the Euro+ Pact framework.

11. All euro area Member States will adhere strictly to the agreed fiscal targets, improve
competitiveness and address macro-economic imbalances. Public deficits in all countries
except those under a programme will be brought below 3% by 2013 at the latest. In this
context, we welcome the budgetary package recently presented by the Italian government
which will enable it to bring the deficit below 3% in 2012 and to achieve balance budget in
2014. We also welcome the ambitious reforms undertaken by Spain in the fiscal, financial and
structural area. As a follow up to the results of bank stress tests, Member States will provide
backstops to banks as appropriate.

12. We will implement the recommendations adopted in June for reforms that will enhance our
growth. We invite the Commission and the EIB to enhance the synergies between loan
programmes and EU funds in all countries under EU/IMF assistance. We support all efforts to
improve their capacity to absorb EU funds in order to stimulate growth and employment,
including through a temporary increase in co-financing rates.

Economic governance:

13. We call for the rapid finalization of the legislative package on the strengthening of the
Stability and Growth Pact and the new macro economic surveillance. Euro area members will
fully support the Polish Presidency in order to reach agreement with the European Parliament
on voting rules in the preventive arm of the Pact.

14. We commit to introduce by the end of 2012 national fiscal frameworks as foreseen in the
fiscal frameworks directive.

15. We agree that reliance on external credit ratings in the EU regulatory framework should be
reduced, taking into account the Commission's recent proposals in that direction, and we look
forward to the Commission proposals on credit ratings agencies.

16. We invite the President of the European Council, in close consultation with the President of
the Commission and the President of the Eurogroup, to make concrete proposals by October
on how to improve working methods and enhance crisis management in the euro area..

[Monseratto]

This will be accompanied by a mechanism which ensures appropriate incentives to implement the
programme.

That should be really enticing to lock your investment for 30 years with below market interest. Wonder what kind of idiot would bite into that... I'd declare default and grab the insurance instead.

[uls]

but it's not up to the bondholder to decide when there's a credit event (which triggers credit default swap payout)

it's determined by the ISDA

[uls]

euphoria fades





--

explosion in Oslo, Norway

--

House speaker Boehner says no debt limit deal yet with Obama

[br733]

Media is hyping the US debt ceiling issue.

The US government had raised its debt ceiling numerous times in the past and had not defaulted on its obligations.

The debt ceiling will be raised at the last minute with the White House and Congress all proclaiming victory and avoiding a doomsday scenario.

[uls]

wti spot and futures

CLY00 (Cash) 99.56s
CLU11 (Sep '11) 99.87s
CLV11 (Oct '11) 100.20s
CLX11 (Nov '11) 100.58s
CLZ11 (Dec '11) 100.94s

brent spot and futures

CBY00 (Cash) 117.89s
CBU11 (Sep '11) 118.67
CBV11 (Oct '11) 118.54
CBX11 (Nov '11) 118.62
CBZ11 (Dec '11) 118.68

[uls]

[tidus1203]

Now the risk of breacing the debt ceiling and theoretical default is getting closer...

[br733]

I know there are complex issues involved (spending cuts, tax increase) but to make a long story short, this is just a game of political posturing and showmanship.

The ceiling will be raised.

Both parties are playing this issue for their own benefit in anticipation of 2012. Politicians are doing this at the expense of the financial market.

Problems have to be exaggerated and amplified so that the corresponding resolution will be seen as a major accomplishment an breakthrough. Sad, but that is the reality of politics.