Morning Report: Greferendum No 7/6/15

Stocks are down after Greece voted down further austerity. Bonds and MBS are up.

The jobs report last Thursday was okay for the most part. The labor force participation rate hit a new low, however.

The ISM Non-Manufacturing Index came in a little light, but was generally strong. Business Activity accelerated, however that was offset by weakening employment growth. Employment activity in the services sector has been decelerating for months.

The week after the jobs report is usually pretty data-light and this week is no exception. The highlight will be the FOMC minutes on Wednesday.

The immediate fallout of the crisis should be bond (and MBS) bullish. US stocks are down in sympathy with global markets, but there should be almost no exposure here. The ECB will probably take additional measures to boost markets via QE, so that should be stock and bond bullish here.

On to the next crisis, which is the bursting of the Chinese stock and real estate bubbles. China’s government is pulling out all the stops trying to support stock prices (the invisible hand meets the iron fist). In many ways it it reminiscent of the Japanese government in the 1990s, where they tried to artificially support markets through “price keeping operations.” Of course these measures inevitably prevent necessary adjustments from occurring, which is why Japan has stayed in economic stagnation for over a generation.

The Chinese situation has more potential to affect US markets than Greece. Chinese money is behind a lot of the price appreciation in the cities, especially at the high end. Whether it stays or goes will be dependent on what the Chinese government wants.

31 Responses

  1. “Greferendum”–clever!

    Am I wrong in thinking that China is going to be much more problematic than either Japan was or Greece is? IIRC, before Japan imploded there was much wrining of hands over Japanese ownership of property in the US.

    Oh–frist!

    Like

    • Welcome back, Brent. We struggled without you.

      Brent, I worry mainly that when GR loses its credit in the West it will become ripe for Putin shenanigans.

      My hope is that the very affluent Greek heritage biz folks in the USA and Canada will somehow take a hand in shaping GR’s future outside the EU.

      Like

  2. I’m surprised at how many people are surprised by the Greek “no” vote.

    Like

  3. Fantastic. what could go wrong.

    People were surprised?

    Like

  4. http://www.washingtonpost.com/blogs/worldviews/wp/2015/07/06/the-terrible-sexist-tweet-that-shows-how-far-womens-soccer-still-has-to-go/

    Turns out suggesting soccer-playing women are mothers, daughters, or have partners is sexist. Man, that’s gonna get complicated when it comes to custody trials. “I’m not a mother! That girl is not a daughter! We’re womyn!”

    Like

  5. it’s amazing how interesting soccer can be with goals

    Like

    • nova:

      it’s amazing how interesting soccer can be with goals

      It was a great match, wasn’t it? Loved the Beckhamesque 60 yard goal.

      Like

  6. the one thing about it, is that i haven’t watched enough to know “how” to watch soccer. i know what to look for in a hockey game or a live football game. and i started getting it

    that third goal — defender popped it up and the attacker went high — reminded me a off a defensemen who was no idea where the puck is.

    but i very much enjoyed the game.

    Like

  7. Kevin: it wasn’t the words, it was the condescending tone. As if those were the only other possible roles for those soccer players. But you knew that.

    Like

  8. it’s amazing how interesting soccer can be with goals

    Especially when the first one was, what? Three minutes into play?

    Like

  9. i think that twitter exists so that people who live to take offense have every opportunity to do so.

    Like

  10. Do any of the legal experts here disagree with Ace’s assessment of motivations of the presiding judge here? If he’s incorrect, what would be a reasonable understanding of his motivation?

    http://acecomments.mu.nu/?post=357706

    Like

    • McWing:

      If he’s incorrect, what would be a reasonable understanding of his motivation?

      This is why I said earlier that, if this is what the people of Oregon want, Oregon is the land of the insane.

      Like

  11. i’m not lawyer, but looks like prior restraint to me. but fascist gotta fascist.

    Like

  12. I was hoping the interpretations of the judge’s motivation were just hyperbolic. Still hoping in fact.

    Like

  13. i think that twitter exists so that people who live to take offense have every opportunity to do so.

    I rolled my eyes at the wording. But twitter is just plain idiotic in general, AFAIC.

    Like

  14. And they’re fugly too!

    Like

    • The left continues to proudly display its ignorance of economics.

      http://thinkprogress.org/sports/2015/07/06/3677105/fifa-will-pay-us-womens-championship-team-4-times-less-mens-teams-lost-first-round/

      BTW, if it is “gender discrimination” to hold women’s matches on artificial turf, isn’t it even worse gender discrimination to hold “women’s” matches at all?

      Like

      • Milton Friedman, prophet (from 1997):

        The drive for the Euro has been motivated by politics not economics. The aim has been to link Germany and France so closely as to make a future European war impossible, and to set the stage for a federal United States of Europe. I believe that adoption of the Euro would have the opposite effect. It would exacerbate political tensions by converting divergent shocks that could have been readily accommodated by exchange rate changes into divisive political issues. Political unity can pave the way for monetary unity. Monetary unity imposed under unfavorable conditions will prove a barrier to the achievement of political unity.

        Like

  15. @Michigoose: “Kevin: it wasn’t the words, it was the condescending tone. As if those were the only other possible roles for those soccer players. But you knew that.”

    That I didn’t know, because there was nothing explicit or implicit that suggests those were the only roles for those soccer players; all that had to be manufactured by the reader (or listener) by definition. Of course, the problem with the written word is that there is no inflection, so it’s easy to “hear” the words in a tone that is not there. Reversing the wording so it applies to males, I would have no trouble with that being said about me after a successful sports game or, heck, finishing a big project at work. I would feel a mild glow of pleasure.

    Given the presence of the politically correct “partner”, the idea that there was an intentional tone to the message is a matter of clear misinterpretation. Not willful, per se, as I think the misinterpretation is a genuine misunderstanding, but I think it is a misinterpretation.

    There is a problem, I think, when we begin to hear descriptions of people as “mothers” or “daughters” and make that the equivalent of someone saying they are ready to return to their lives as “housewives, maids, secretaries, and strippers”. There is no derogatory tone in the tweet and any condescension the reader encounters upon reading it is manufactured on the part of the reader.

    That being said, this is not a new phenomenon, and any PR flak worthy of the title knows that someone will be offended by almost anything you say, and it’s best not to be as bland and generic as possible and, when in doubt, say nothing. Or, in other words, make your job easier. The correct response to any victory would be “Congrats to the Team That Won and Also the Team that Didn’t Win As Much But is still AWESOME!” Or some variation thereof. Or, easier still, repeat a fact : “The score was 10-7!” or something.

    Like

    • KW:

      “The score was 10-7!” or something.

      Sounds like a microaggression against the losers team that scored fewer goals.

      Like

  16. @ScottC: “BTW, if it is “gender discrimination” to hold women’s matches on artificial turf, isn’t it even worse gender discrimination to hold “women’s” matches at all?”

    Teams based around gender is clearly discriminatory and exclusionary. There are clear reasons why sports based on brute force are gender specific (unless you find a female football player of similar physical dimensions and strength as your average NFL quarterback) but sports that are simply about speed and skill . . . not sure why there are such things as women’s tennis and why volleyball and soccer teams aren’t multi gender now.

    Like

  17. @ScottC: “Monetary unity imposed under unfavorable conditions will prove a barrier to the achievement of political unity.”

    Some things are obvious in retrospect. This was obvious well before it happened, and Friedman was not the only person predicting it.

    Without political unity, but with a desire for shared currency, every country should have kept their own currency and added an additional shared currency (let’s call them European Credits). These could have been kept completely electronic and could have been used for trading and import/export and credit card purchases and the payment of government bureaucrats. And could be exchanged at any time for local currency at present exchange rates. And Greece could have still devalued their currency if they had to.

    Like

    • KW:

      Some things are obvious in retrospect. This was obvious well before it happened…

      Totally agree.

      Without political unity, but with a desire for shared currency, every country should have kept their own currency and added an additional shared currency (let’s call them European Credits). These could have been kept completely electronic and could have been used for trading and import/export and credit card purchases and the payment of government bureaucrats. And could be exchanged at any time for local currency at present exchange rates. And Greece could have still devalued their currency if they had to.

      What you described is exactly what was in place prior to the creation of the Euro. There was a currency unit called the ECU (European Currency Unit) that traded independently of local currencies, although member countries were required to maintain an FX peg within a certain band. The introduction of the Euro along with the elimination of the ECU was supposed to be the next stage.

      BTW, the problems inherent in the ECU peg (what was called the Exchange Rate Mechanism, or ERM) became apparent in the early ’90s when George Soros basically broke the Bank of England by continuously shorting the pound, forcing the BoE to buy GBP in order to defend the peg. Eventually the BoE gave up, and the UK had to pull out of the ERM, resulting in a huge drop in the value of the GBP. The BoE lost a ton, while Soros made a killing (and then became the left-wing socialist loon that we know him as today.)

      Like

      • A subsidiary issue that could have been foreseen is that without a federal governmental union a failed state would eventually have to be shed. This is in distinction to a federal union that perpetually spends twice as much money in MS than it takes from MS because we all know MS is a poor state, but we don’t kick it out for being a POS, b/c it is one of us. MS is our premiere POS. Try convincing a German that Greece is “one if us”.

        Like

        • Mark:

          A subsidiary issue that could have been foreseen is that without a federal governmental union a failed state would eventually have to be shed.

          Absolutely.

          Like

  18. @ScottC: “Sounds like a microaggression against the losers team that scored fewer goals.”

    Damn it. Forgot about microaggression. Better just to say something about how we should all worry about climate change and ignore the false and emotionally-destructive sports competitions still shamefully going on in the world altogether. 😉

    Maybe they could say: “Everybody did a great job playing!”

    Like

  19. @Michigoose: “But twitter is just plain idiotic in general, AFAIC.”

    I agree. I don’t tweet and I don’t follow anybody. Some people are addicted, though. I don’t get it, but I’m becoming an old fogey so maybe that’s why.

    Like

  20. Easy solution, repeal the 16th Amendment.

    Like

    • McWing;

      Easy solution, repeal the 16th Amendment.

      Not sure that would solve it. I am sure that Kennedy and the fearsome foursome could easily mine the remaining words of the constitution to uncover the power to continue to tax incomes even without the 16th amendment. At the very least the all encompassing commerce clause would fit the bill. If not spending money qualifies as interstate commerce, as it now does, then it is a no brainer to say that earning money qualifies.

      Like

Be kind, show respect, and all will be right with the world.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: