Asia markets' Grexit bloodbath: Latest on stocks, FX, commodities

[brooklynite]

Source: CNBC

The shock results from Greece's referendum on Sunday sent markets into a tailspin during Asian trade on Monday, with U.S. crude suffering the biggest declines.

Athens has denied that the 'no' vote could lead to an exit from the euro zone, but experts remain unconvinced.

The increased probability of a 'Grexit' has moved above 50 percent for the first time and that could see a risk-off mood prevail, according to ING.

Wolfgang Piccoli, managing director at Teneo Intelligence, told CNBC in Athens that the likelihood of a Grexit stood at 75 percent, from 15 percent previously. "We're running short of time. We have bank flows, capital controls, the Prime Minister stronger than ever who will go to Brussels asking for more concessions....meanwhile, the other side thinks he has zero credibility, even less now that he won the referendum."

Read more: http://www.cnbc.com/id/102810558

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Nikkei down 2.55%

Hang Seng down 3.18%

[geek tragedy]

1. Great time to buy equities. Greece has an economy 1/8 the size of Italy.

The contagion risk has largely been contained. This is classic market nerves.

[Aerows]

2. I feel like people

are watching that scene in Jurassic Park where the water is trembling, a T-Rex is coming, and they are all sweating in the car.

Except, the only thing that is making the water tremble is that somebody restarted the car, and it went on driving.

I love the bugaboos people create.

[roamer65]

4. You sound like Schulz or Barroso...lol.

The euro is a death match between countries who want fiscal austerity (Germany, Austria, Finland) and those who desperately need liquidity (France, Greece, Italy and Spain.)

Too bad those two don't realize the truth.

This crisis is just warming up.

[jonno99]

5. The US has more debt (as a percentage) than Greece. Our "advantage" is

that we can print more currency - Greece can't...

[Travis_0004]

7. Greece has about twice as much debt as the US

Public debt as a percent of GDP is the figure I used.

[geek tragedy]

11. Also, a very high percentage of our debt is an accounting gimmick--intragovernmental

holdings.

[Travis_0004]

22. Its not really an accounting gimmick

That debt is owed to somebody. The vast majority of intergovernmental debt is the social security trust fund, and medicare trust fund. This is money that me and you have paid in, and expect to receive one day. Defaulting on it would mean they would be unable to pay social security and medicare.

[geek tragedy]

24. But it's debt the government owes itself

[Travis_0004]

25. They owe it to me an you, and every american.

[leveymg]

27. That intra-gov't lending means the US public debt is actually twice what is officially listed.

We are actually as fragile as any of the other over-leveraged economies of the West. Our middle-class consumer economy is a bubble based on false expectations of another bailout -- Krugman calls it Pangloss Value -- and it is highly exposed to contagion effects from both the Eurozone and China. The US financial system still hasn't fully recovered from '08, or '00 for that matter. Japan never recovered from its own collapse twenty-five years ago.

[jonno99]

21. I stand corrected - thanks (still way too much though - imho). nt

[geek tragedy]

9. That's not correct. US's debt/GDP ratio is 71%. Greece's is 180%.

Also, Greece owes almost all of its money to foreign investors while holding no one else's.

[jonno99]

20. I stand corrected - thanks (still way too much though - imho). nt

[Adrahil]

23. The real key is the cost of debt maintenance.

Right now, U.S. debt is fairly cheap to maintain, with bond yields REALLY low. RIGHT NOW, we essentially replacing older, higher cost debt with debt that is essentially free, or even a profit maker with the yields below inflation. The Greeks don't have that.

[Yo_Mama]

30. You are so wrong it's awesome. Where did you read this???

The US has about the same level of debt to GDP as France (100%). France, may I point out, does not have its own currency, but no one is charging them 14% interest for money. In fact, 10 year French government bonds are currently yielding about 1.25% (125 bps), while the US is yielding 2.29%.

Greece has over 175% debt to GDP. While Greece had debt to GDP ratios of about 100% in the 2000s, no one was charging them much either. It was when creditors found out that the original numbers were wrong and debt suddenly jumped up that panic hit.

Japan, now, has 230% debt to GDP. But Japan has traditionally had a positive current account balance, which has a lot more to do with their economy than their ability to inflate the yen. In other words, trade and foreign investment bring Japan a great deal of extra money, so their society has been able to support higher debt levels.

Greece doesn't have much in the way of trade going for it.

There's a whole lot of variables that come into play in government interest rates, and having your own currency hasn't saved most countries who've experienced hyperinflation.

[MannyGoldstein]

8. One bad apple

Like Bear Stearns.

[geek tragedy]

10. Markets freak out when there is uncertainty.

Greece could have wreaked huge havoc in 2010.

European central bankers have spent the past five years working to contain the fallout from a Grexit. Their priority was containing Greece's problems, not solving them.

At some point, investors will realize the sky isn't falling.

[Turbineguy]

19. Derivatives

kite that debt into the trillions. Wall street needs all our retirements.

[delrem]

12. You should tell Bernie about that.

About how he can make fat personal profits from the Greek economic crisis, and not have to produce anything more than proof that he's made the right transfers of his investment capital.

Yes, geek tragedy, when I read your posts I think "democratic socialist to the bone!".

[geek tragedy]

13. The discussion is about equities markets.

Equities markets involve three types of decision:

Buy
Sell
Hold

Sorry if people discussing the subject matter of a thread gives you the vapors. I was not aware one had to not only take a vow of poverty, but also refrain from talking about making money in order to support him.

Thanks for filling the role of self-appointed Pharisee.

[delrem]

14. Huh? I was approving of your democratic socialism, geek tragedy!

Didn't you read my post?

[geek tragedy]

15. I in turn applaud your placing a higher priority on stroking your

own ego above trying to help Bernie win.

Because, you know, fuck it-most people are just not good enough to vote for Bernie. The impure should be purged and told they should vote for Hillary.

That won't help Bernie accomplish anything, but that's not the priority--self-gratification is.

[delrem]

16. You say that your thinking doesn't help Bernie??

How is that?

[riderinthestorm]

33. So what are your recommendations for exploiting the Greek demise?

since there's a silver (cough) lining here for investment wizards

[geek tragedy]

34. I personally do not trade stocks.

But it seems that taking advantage of people dumping stocks out of panic is generally a solid approach.

[tomm2thumbs]

3. Have read it will likely keep mortgage rates low into next year

and possibly up to the election in 2016 -- for those hunting for homes or in the process

___

link to WaPo article

[bluestateguy]

6. Let the markets have their temper tantrum

and lower oil prices can only mean a few cents cheaper gas

[muriel_volestrangler]

17. Though, oddly, European markets haven't gone down so much

Japan's Nikkei index fell more than 2%, while Paris' Cac 40 and Frankfurt's Dax dropped 1.4% and 1.6% respectively, a more muted reaction than forecast.

In London, the FTSE 100 slipped 0.9%.

http://www.bbc.co.uk/news/business-33405583

[Sunlei]

18. "U.S. crude suffering the biggest declines". To me this is good news, I'm happy with the extra cash!

Savings at the gas pump this past year or so added up to a very significant amount of money.

[modrepub]

26. Unless

you hold significant amount of bonds from any of the big giants in the oil industry. Most of these companies are highly leveraged because it takes an enormous amount of capital to extract, refine and transport energy commodities. With oil prices falling these companies liabilities climb higher as a percentage of their outstanding stock value, which is falling due to drops in the value of their reserve assets. If any of these companies cannot maintain their cash flow then they (and those of us that hold their bonds and dividend paying stocks) are in deep trouble. Their only recourse in a cash flow pinch would be to borrow more money (unlikely if they have no assets to borrow against) or find a buyer who has deeper pockets. It's surprising how little this is talked about, but I'm a firm believer in "black swans" (as described by Nassim Nicholas Taleb)

[leveymg]

28. The Saudis have $900B in reserves. They'll take a larger stake in their JVs at cutthroat prices.

Along with China, the Saudis will end up owning most of the world's non-state owned petroleum reserves.

[Sunlei]

29. Its a risk to invest in things like oil or gold and always expect the profits continue forever more

Corps and investors, had a good run and made trillions!

[Yo_Mama]

31. Much of this has little to do with Greece. No one's saying "China", because that's the elephant

in the damned room. China's ongoing equity meltdown is shaking people.

The impending Grexit is shaking things up, but US crude fell partly on sentiment but more on rising output and now a rising rig count being reported. With the Euro not being that favored, hedging the dollar in crude doesn't work very well for anyone. But the Euro/USD is roughly stable - what's moving WTI are production that was reported at 9,600,000 last week (when US production was predicted to peak at 9,200,000), plus news that US rigs were now rising:
http://economictimes.indiatimes.com/markets/commodities/oil-prices-drop-on-rising-us-rig-count-china-stock-market-probe/articleshow/47919592.cms

So it's a losing trade.

If China is in trouble, and it most certainly is, then hopes for a large rise in demand must dim, and that means that increases in US oil production will bring crude prices down.

Also, it should be obvious that if US producers are able to continue raising production with prices below $65, their production costs have fallen significantly, and it is estimated that a lot of these producers can now make decent money at $45-50.

[Art_from_Ark]

32. Meh

The Nikkei has already regained most of what it lost yesterday.