World economy talk

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Report of Saudi oil pipeline explosion

Brent futures went above $128 (now $126)

UPDATE: Saudi Oil Officials Deny Reports About Oil-Pipeline Attack - WSJ.com

DUBAI (Dow Jones)--Reports about an explosion that hit a main oil pipeline in Saudi Arabia's oil-rich Eastern Province are untrue, senior Saudi officials said late Thursday.

"The reports are completely untrue. They originated from Facebook and Twitter, and the pipeline is still up and running," one official told Dow Jones Newswires.

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re the Greece NO CREDIT EVENT

StreetIQ.com - The Leader in Financial and Business Podcasts

ISDA: Suckers Wanted

Here is a question for the crowd: Exactly how brain damaged, foolish and stupid must a trader be to ever buy one of these embarrassingly laughable instruments called derivatives?

The claim that Greece has not defaulted — despite refusing to make good on their obligations in full or on time — is utterly laughable.

In order to get paid on a default, you need a committee to evaluate whether or not failing to make payments is a — WTF?!? — default? Even more ridiculous, the committee is composed of biased, interested parties with positions in the aforementioned securities?

ISDA: After this shitshow, why on earth would anyone EVER want to own an asset class that requires you to determine payout? Indeed, why should ANYONE ever buy a derivative again?

hehe

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remind ko lang uli Greece has NOT yet received money from bailout 2.0

this week is the bond swap (private sector bondholders swap their bonds for new bonds at more than 50% loss)

Greece has to get this bond swap overwith to receive the bailout

they are looking for 90% participation (good luck)

[uls]

risk off factors tonight

China lowers its growth target this year

China targets slower growth for first time in 8 years - latimes.com

Speaking to about 3,000 delegates at the annual meeting of the National People’s Congress in Beijing Monday, Premier Wen Jiabao said China would cut its growth target for the first time in eight years from 8% to 7.5% to make the country’s economy more “sustainable and efficient.”

bad eurozone PMI (purchasing managers index)

Euro zone's PMI back in doldrums - The Irish Times - Mon, Mar 05, 2012

Markit's Euro zone Composite PMI, which gauges the activity of manufacturing and services companies, slipped to 49.3 in February, revised down from a preliminary reading of 49.7 and below January's reading of 50.4.

A reading below 50 denotes a contraction in activity, meaning Europe's private sector has been stuck in a modest decline for five of the last six months.

Greece -- concern not enough bondholders will participate in the bond swap

[Monseratto]

DOW suffers it's first big 200 point drop for the year.

Greece is still in everyone's mind.

NYMEX Crude



GOLD

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some private sector bondholders will not participate

Greece will invoke CACs if participation is not high enough

for the bond swap to go thru there has to be 66% participation. lower than 66% there will be no bond swap

Greece is expecting 75%-80% participation (good luck)

[uls]

China lowered its growth target the other day

a few days ago India reported slower growth

India's GDP Growth Slows to 6.1% - WSJ.com

NEW DELHI—The Indian economy grew at its slowest pace in more than two years at the end of 2011 as high inflation and the euro-zone debt crisis weighed on the economy, but an anticipated recovery to start this year may keep the Indian central bank from lowering interest rates just yet.

Gross domestic product rose 6.1% year-to-year in the October-December period. The fiscal third-quarter figure was modestly lower than the 6.9% increase in the quarter ended September, as manufacturing and mining output remained weak, the government said Wednesday.

then Brazil

Brazil's Economic Growth Falters - WSJ.com

RIO DE JANEIRO—Brazil's economy narrowly escaped recession in the fourth quarter of 2011 as consumer spending offset moribund manufacturing, the latest big emerging market economy to signal an economic slowdown.

Brazil's gross domestic product grew 0.34% in the fourth quarter from the third notching an annualized rate of 1.36%. The economy actually shrank 0.1% in the third quarter. Brazil's sluggish growth came after China on Monday said it lowered its economic growth target to 7.5% for this year, down from an 8% target in each of the last seven years. India's economy grew 6.1% in the fourth quarter, its slowest rate in two years, the government said last month.

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then Australia

Australia's Economy Slows Sharply - WSJ.com

SYDNEY—Australia's economy slowed sharply in the final quarter of last year as a soaring currency and Europe's financial crisis put the brakes on output, pressuring Prime Minister Julia Gillard and the central bank.

Australia's gross domestic product rose 0.4% in the fourth quarter from the previous three months and rose 2.3% from the year-earlier period, the Australian Bureau of Statistics said Wednesday. Most economists had expected GDP to rise 0.8% on a quarterly basis and 2.4% from a year earlier.

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Greece Moves Closer to Swap - WSJ.com

Greece moved a step closer to completing its debt restructuring when a raft of bondholders pledged to participate in the swap, likely enabling the troubled nation to force the deal through.

As of late Wednesday, about 52% of the €206 billion ($270.9 billion) in bonds up for restructuring had been pledged.

66% minimum

expecting 75%

[Monseratto]

Greece gets 85.8 percent private bondholders participation...

Oil and Gold head north...

(Reuters) - Greece averted on Friday the immediate risk of an uncontrolled default, winning strong acceptance from its private creditors for a bond swap deal which will ease its massive public debt and clear the way for a new international bailout.

The finance ministry said creditors had tendered 85.8 percent of the 177 billion euros in bonds regulated under Greek law. That rate would reach 95.7 percent of all Greek debt with the use of "collective action clauses" to enforce the deal on creditors who refused to take part voluntarily.

The result should clear the way for the European Union and International Monetary Fund to release a 130 billion euro ($172 billion) bailout package agreed with Greece last month.

[Ry_Tower]

Greece gets 85.8 percent private bondholders participation...

Oil and Gold head north...

Guess they don't want to give up just yet.

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collective action clauses are triggered to force participation above 90%

the ISDA now has to determine if a credit event has occurred

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2012 03 09

http://www.isda.org/dc/view.asp?issuenum=2012030901

Issue Number 2012030901

Reference Entity Hellenic Republic

Question Has a Restructuring Credit Event occurred with respect to Hellenic Republic?

Current Status Request Accepted by DC Pending DC Consent

[Monseratto]

Greece Deal Triggers $3B in Default Swaps: ISDA

Athens confirmed it would enforce the deal, activating collective action clauses (CACs) on the bonds regulated under Greek law. It will not be so easy to force holders of the minority of bonds governed by foreign laws to come to the table.

The decision to use CACs triggered payouts on the credit default swap (CDS) insurance that some investors hold on the bonds, the International Swaps and Derivatives Association said on Friday.

The "credit event" ruling means a maximum of $3.16 billion of net outstanding Greek credit default swap contracts could be paid out, though the actual amount is likely to be lower because bondholders are not losing all of their original investment.

A committee of credit-default swaps traders will expedite an auction to settle about $3 billion of contracts tied to Greece after the nation took steps to force investors to participate in the biggest sovereign-debt restructuring in history.

Traders will hold the auction March 19 to “maximize” the number of bonds that can be used to set payout amounts, the New York-based International Swaps and Derivatives Association said on the committee’s website yesterday. Auctions, which set a recovery value on the underlying bonds, typically are held about a month after credit events are triggered.

Markets were little changed after the announcement.

Moody's declares Greece in default...

WASHINGTON - Moody's declared Greece in default on its debt Friday after Athens carved out a deal with private creditors for a bond exchange that will write off 107 billion euros ($140 billion) of its debt.

Moody's pointed out that even as 85.8 percent of the holders of Greek-law bonds had signed onto the deal, the exercise of collective action clauses that Athens is applying to its bonds will force the remaining bondholders to participate.

Overall the cost to bondholders, based on the net present value of the debt, will be at least 70 percent of the investment, Moody's said.

"According to Moody's definitions, this exchange represents a 'distressed exchange,' and therefore a debt default," the US-based rating firm said.

For one, "The exchange amounts to a diminished financial obligation relative to the original obligation."

Secondly, it "has the effect of allowing Greece to avoid payment default in the future."

However, it added, at the beginning of March "Moody's had said that the risk of a default, even after the debt exchange has been completed, remains high."

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like i said -- wait after the bond swap

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http://www.isda.org/dc/docs/EMEA_Det...t_09032012.pdf

EMEA DC Statement
March 9, 2012

In light of today’s EMEA Determinations Committee (the EMEA DC) unanimous decision in respect of the
potential Credit Event question relating to The Hellenic Republic (DC Issue 2012030901), the EMEA DC
has agreed to publish the following statement:

The EMEA DC resolved that a Restructuring Credit Event has occurred under Section 4.7 of the ISDA
2003 Credit Derivatives Definitions (as amended by the July 2009 Supplement) (the 2003 Definitions)
following the exercise by The Hellenic Republic of collective action clauses to amend the terms of Greek
law governed bonds issued by The Hellenic Republic (the Affected Bonds) such that the right of all
holders of the Affected Bonds to receive payments has been reduced.

The EMEA DC has resolved to hold an auction with respect to the settlement of standard credit default
swaps for which The Hellenic Republic is the reference entity. To maximise the range of obligations that
market participants may deliver in settlement of any such credit default swaps, the EMEA DC has agreed
to run an expedited auction process such that the auction itself will take place on March 19, 2012. In
light of this expedited auction process, market participants should submit any obligations that they
would like to include on the list of deliverable obligations to ISDA as soon as possible.

[safeorigin]

In case it was missed

Obama just signed HR 347

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net exporter now net importer

https://mninews.deutsche-boerse.com/...xport-weakness

SATURDAY, MARCH 10, 2012 - 02:06
China Trade Deficit Widest Since 1989 On Export Weakness


BEIJING (MNI) - China's monthly trade deficit in February ballooned to its widest since 1989 as a weak global economy weighed on exports and as imports surged following the New Year holiday.

Exports rose 18.4% y/y to $114.47 billion in February, the General Administration of Customs said Saturday, lower than the median 32.0% rise forecast by economists, according to a Market News International survey. Imports surged 39.6% y/y to $145.95 billion last month, outpacing the forecast 30.0%, resulting in a $31.48 billion monthly trade deficit.

That was far higher than the $10 billion deficit forecast by economists and is the biggest since December 1989's $66 billion gap. The February deficit brought the trade balance so far this year to a $4.24 billion deficit.

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if i was China and i wanna reduce US dollar holdings (coz the US is devaluing the USD) what would i do?

i wouldnt buy so much US govt bonds with the dollars i earn

http://online.wsj.com/article/SB1000...068655760.html

BEIJING—Fresh data suggest China is moderating its appetite for investing in U.S. securities, a trend that could mean lower flows of cheap capital from Beijing and a possible rise in borrowing costs across the American economy.

An analysis of U.S. Treasury data suggests China, with $3.2 trillion in foreign-exchange reserves, has begun to rapidly diversify its currencies portfolio.

so what am i gonna do with the dollars?

ummm... buy real goods. like commodities. LIKE OIL

Import surge sends China trade to decade-deep deficit | Reuters

China imported a record 5.95 million barrels of crude oil per day in February, up 18.5 percent on year ago levels, while copper and iron ore imports were also strong.

China February crude oil imports at record high - The Economic Times

China February crude oil imports at record high

BEIJING: China imported a record 5.95 million barrels per day of crude oil in February, 18.5 percent higher than a year earlier, data from China's General Administration of Customs showed on Saturday.

still wondering why oil price is high?

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US 10 yr yield