Europe/Middle East

  • The slippery slope steepens.

    Investor Focus Remains on Europe

    The markets remain off-kilter.  The dollar has recouped a little of the ground lost yesterday.   Reports in a Greek paper that Tsipras may be reconsidering Juncker's proposal may prevent a deeper pullback in the euro, which found a bid near $1.1135 after approaching $1.1280 in yesterday's spectacular reversal. Over the next two days, there are an estimated 3.3 bln euro options struck at $1.12 that are set to expire. 

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  • The initial reaction to Greece's plight was dramatic.

    Where Does Greece Go From Here?

    The markets initially responded dramatically to the weekend new of the Greek referendum, capital controls and an extended bank holiday.  The markets quickly stabilized and have recovered a bit in the European morning.  The Swiss National Bank confirmed intervention to limit the franc rise.   

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  • Greece's Prime Minister Tsipras stands his ground.

    The Week Begins, as Most do these Days, with Greece

    The inexperienced Greek government lost its nerve.  The brink was less than a week away, and it blinked.  It changed tactics at last possible minute.  It took a reckless political gamble.

    There was still no agreement of course, but Prime Minister Tsipras was standing his ground. The differences between what Greece had offered and what the official creditors demanded was about two bln euros a year.  The last debate was turning on how much savings should be achieved by tax increases and how much by spending cuts. 

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  • The prospect of a Grexit looms large for Greeks.

    The Warning Signs of Greece’s Economic Health

    The Greece crisis has lasted for more than five years and now the meeting with its creditors seems to be lasting for days. The country needs new bailouts in order to pay back its earlier debts. This week Greece might be reaching a decisive point: to stay in the Euro or exit. A look at its banking system highlights the troubled economy of Greece.

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  • Greece's economic situation continues to deteriorate.

    Greece's Fate Rolls into the Weekend

    The global capital markets remain subdued for the most part despite the fact that paralysis in Europe is bringing Greece to the very brink. There will be no agreement today, and the finance ministers will meet again tomorrow in what Merkel and Hollande have called a "decisive meeting."  The implicit threat is that if no agreement is reached, officials will begin preparing for a Greek default. 

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  • All eyes are on Greece today and likely the rest of the week.

    Rarely Does a Singular Focus (Greece) Dominate the Markets

    Reports that Greek officials sent the wrong document to European officials have been denied.  Today's Euro group meeting, and even more importantly, the emergency heads of state meeting is the only focus today.  Initial indications from an aide to Juncker and EU's Moscovici are supporting that progress will be achieved today. 

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  • Greece's rope is very short.

    Greco Deposit Flight Continues amid Capital Control and Grexit Speculation

    The US dollar is trimming its weekly loss against the most of the major currencies, while extending its gains against the two currencies that it has appreciated against this week, namely the New Zealand dollar and the Norwegian krone. Both countries have cut rates in past fortnight and have signaled investors should expect an additional cut in rates.

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  • A compromise may emerge out of venomous comments and trust erosion.

    Trudging Along to a Compromise Over Greece's Financial Situation

    Through the venomous comments and erosion of trust, the broad framework of what couple proves to be a workable compromise over Greece's financial crisis may be emerging.  This is not to suggest that the Eurozone finance ministers meeting will reach any important decision.

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  • Presdient Erdogan's damaged public image has been largely self-inflicted.

    Turkish President Erdoğan Faces Uncertain Future

    Turkish President Recep Tayyip Erdoğan received a rapturous reception in his early days in power, but a series of political errors has sullied his public image and undermined his power.

    Since his Justice and Development Party (AKP) attained power in 2002, Recep Tayyip Erdoğan has dominated Turkish politics. However, discontent about his erratic leadership is intensifying. There is a widespread perception that power has gone to his head and his political decisions are now more about aggrandizing his ego than doing the best for Turkey.

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  • Greece is clearly not the only EU issue keeping people awake.

    The EU "AG" (After Greece)

    Critics of the Greek government repeatedly claim that its radicalism prevents a resolution to the crisis.  Yet the EC has indicated that the difference between the creditors’ proposal and Syriza's plans amounts to 2 bln euro a year in government revenue.  This does not seem so radical.

    Consider Ukraine's threat of a unilateral moratorium on its debt servicing unless its creditors accept a 40% haircut.  The Ukrainian position enjoys support from the IMF, though Greece does not.

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