>>> What to look at this Week End - 27th & 28th of June 2015

Weekly Performance
Dow -0.38% S&P -0.40% Nasdaq -0.70% Ibovespa +0.50% Nikkei +2.64% Hang Seng-0.36% Shanghai -12.38% EuroStoxx+4.79% FTSE +0.64% CAC +5.06% Dax+4.10% Ibex +3.91% FTSE +4.85% AEX+4% )MX +2.93% SMI +1.58%
Another week passed without resolution of the Greek situation, which continues to be the central drama in global markets. Bond markets remained remarkably calm despite the standoff with Athens, and Friday's session saw US Treasury and German Bund sellers push yields back up towards recent highs. Generally positive US economic data along with Fed commentary supported the notion the FOMC will be able to move on rates later this year. The US Dollar index gained more than 1.5% on the week while the EUR/USD finished just above the 1.1143 50-day moving average for the first time in nearly one month. US equities moved lower after last week's gains, while European stocks were very choppy on the continuing game of Greece headline roulette. The Shanghai Composite lost another 10.5% this week, putting it about 19% off its most recent high. For the week, the DJIA lost 0.4%, the S&P500 dropped 0.4% and the Nasdaq fell 0.7%.

Macro :
- Varoufakis Says Greek Govt Weighs Steps to Maintain Stability
- Greece Scenarios and Impact on Euro, Rates, Stocks: UBS
- Capital Controls Loom as Greece Rebuffs Program Extension Plan
- China Cuts Rates, Reserve Ratios for Some Banks
- Greek IMF Default Would Force EFSF Move on EU130.9 Bln: Official
- Varoufakis Says Merkel ‘Holds the Key’ to Greece’s Future: Bild
- Global M&A May Reach Record, Goldman Sachs’s Gnodde Tells Fas

Keep an eye on :
- AC FP : China’s Jin Jiang Holds 2% Stake in France’s Accor, JDD Reports
- AIR FP : SpaceX Rocket Explodes Minutes Into Space Station Mission --> +ve for Airbus
- AIRBNB IPO : Airbnb Raises $1.5b, Valuing Company at $25.5b: WSJ
- BAYN GY : Bayer Fungicide May Have Hurt Grapes, Neue Zuercher Zeitung Says
- BBVA SM : BBVA Said to Weigh Sale of Debt, Real Estate Portfolios: WSJ
- DBK GY : Deutsche Bank Says BaFin Report Confirms Its Findings
- DBK GY : Deutsche Bahn Plans Revamp, Admin Cuts, Welt Am Sonntag Says
- DLG IM : De Longhi May Seize M&A Opportunities, Sole Reports
- 7KT GY : *FOSUN MAY BUY AS MUCH AS 20% IN KTG AGRAR, HANDELSBLATT SAYS
- LHA GY : Lufthansa Pulls Long-Haul Planes From Dusseldorf: Handelsblatt
- SKY LN : Sky, Liberty Said to Weigh Bidding for F1 Stake: Sunday Times
- STL NO : Statoil Signs $5b Multicurrency Revolving Credit Line
- VOD LN : Vodafone Says It Remains Committed to Business in Greece

(Makor) Tech View European Indices Euro Stoxx, Cac, Dax, Ibex & FTSEMIB


Tech View European Indices Euro Stoxx, Cac, Dax, Ibex & FTSEMIB

                Euro Stoxx 50 Index – remians negative below 3,691

 

·         The Index is correcting the October 2014 – April 2015 bull cycle and it still remains unclear the shape or the dip of this correction. While above 3,374 it is still possible to see a move into a new cycle high as the correct wave structure from the 2015 high does look like a typical A, B, C correction.  

·         Watch the 3,374 low, if we do get a break below this level a move towards 3,312, 3,189 & 3,036 would take place (50%, 61.8% & 76.4% Fibonacci retrace levels)

·         On the upside, watch 3,691 which is the recent lower high, while below it the Index maintains the path of lower highs and lower lows and remains within the boundaries of the bear channel.

·         The Elliot wave count highlighted on the chart isn’t a trade decision maker and is pointed out differently on each research paper to highlight the various of possibilities in terms of wave structure.  

 

Strategy: No position recommended, Step aside for now

 

 

 

                Cac40 Index – remians negative below 5,193

 

·         The Index shares a very similar setup as the Euro Stoxx 50 Index. While above 4,712 it is still possible to see a move into a new cycle high as the correct wave structure from the 2015 high does look like a typical A, B, C correction.  

·         A break below 4,712 would argue for a retest of the 200dma at 4,639 and a break below it would be clearly negative and argue for a deeper retracement towards 4,536, 4,360 and possibly 4,141 (50%, 61.8% and 76.4% fibonacci retrace levels)

·         On the upside, watch 5,193 which is the recent lower high, while below it the Index miantains the path of lower lows and lower highs and remains withing the boundaries of the short term bear channel

 

Strategy: No position recommended, step aside for now

 

                Dax30 Index- remains negative below 11,920

 

·         The Index remians negative below the 11,500-1,635 area – this area represents the breakdown level of the longer term rising channel and th top of the shorter term declining chanel

·         In the short term, the index ains the path of lower lows and lower highs and also below the 55dma (10,572). In order to suggest a low is in place will need to take out 11,920

·         On the downside, the 38.2% fibonacci retrace at 10,847 held 3 times but if we do get a move below it a test of the 200dma (10,569) is likely to take place and a break below it would target the 50% retrace at 10,371, the 61.8% retrace at 9,895 and worse case scenario the 76.4% retrace at 8,354

 

 

                Ibex35 Index – remians negative below 11,595

 

·         The outlook is pretty mixed as the longer term setup favors a move to 12,500 (bullish traingle target) BUT in the shorter term the Index is trading in a declining channel and maintains the path of lower lows and lower highs which is a typical behaivior for a down trend

·         In order to maintain the medium term setup the Index need to hold above 10,680, this level represents the traingle breakout level and should therefore provide support, a sustain move below this level would negate the traingle pattern and it’s target

·         Looking ahead it will be necessary to see a move above 11,595 to negate the path of lower lows and lower highs and such a move (if and when occures) would also suggest a breakout from the short term declining channel which is bullish

 

Strategy: No position recommended, step aside for now

 

 

                FTSEMIB Index – remians negative below 23,880

 

·         The outlook is pretty mixed as the longer term setup favors a move higher but the shorter terms setup is slightly bearish below 23,880 – this level is the recent lower high and like other Indices while below this level the Index maintains the path of lower lows and lower highs and therefore risks a move lower.

·         On a longer term perspective, the Index remians positive above 21,855-22,590 – this area represents the highs from June 2014 and the recent cyle low and while above it a move higher is still possible.

·         A break back below 22,590 would argue for a re-test of 21,855 and a break below the latter would argue for a test of the 200dma at 21,214. A break below the 200dma would be clearly negative in be a sign of worry

 

Strategy: No posiiton recommended, Step aside for now

 

 

>>> BAML conf call on Greece

BAML conf call in Greece
I tuned in to this afternoon's call on Greece. Here is a quick summary of what was discussed and in between there is also my personal view on one two things.

The referendum will be about a "yes" or "no" on creditor porposals, although these will disappear from the table officially by Tue night, as the current programme runs out.

If "no" Greek gov believes their positions strengthens. However, the Greek President has said, he will resign, should Greeks vote no. And per constitution this would trigger new parliamentary elections.

If "yes" Greek gov might be forced to resign, as is hard to see them signing a deal they don't believe in.

On why it all fell apart, while it looked sort of positive over the last two weeks, two reasons were mentioned:
1) IMF was unhappy that most Greek measures put fwd were rating to tax hikes.
2) Greek proposal was conditional on debt relief, while creditors wanted to discuss this in Sep as part of negotiation of a 3rd MoU.

BAML see a "no" vote increasing tail risk for mkts, while a "yes" vote increases political risk (gov resignation etc).

Major problem is that once Greece is in default to the IMF (1.6bn to repay on 30th June and Lagarde already said she won't allow a 30 day grace period to Greece before she reports non payment to the IMF board), the ESM can call in all their loans (abt 130bn). This would the put GGB's officially into sov default.

From the ECB's viewpoint there are two ways of capital controls (mind you we do not know yet if banks open tom mrng or not, an official statement is expected later tdy).
1) Cyprus style "mild" controls, that come with a cap on withdrawals, surveillance of intl payments, while pensions and gov workers get paid.
2) Hard capital controls, whereby banks shut down completely, paralysis and tough social consequences, Argentina style.

However, the ECB has NO say in the matter. The Greek gov has to take this decision. Risk is Greek gov goes for the tougher one and blames the ECB.

The ELA amount has been put on freeze, it remains at the same lvl at least until Tuesday night.

The Eurogroup's view point that the proposals to Greece are not fully valid any more should be taken with a pinch of salt. The Eurogroup will surely not ignore a "yes" vote by the Greek people. However, implementation of the consequences of a "yes" vote will hardly be done by the current Greek gov. BAML see in this case transitional measures and more money drip feeding.
On a "no" vote we go into uncharted territory. The Eurogroup sees a "Grexit" as a potential choice of the Greek side.

The ECB is seen as now having the finger on the trigger for more QE. Not only because of Greece but now especially because of current developments. After all rates are already higher than when QE began.

Should peripheral yields rise substantially from here the ECB will likely openly announce that they are doing more QE. Should spreads widen too much the ECB might tweak QE more towards the most under pressure mkts, while doing less Bunds for example.

As far as mkt reactions are concerned, equities are expected lower but BAML see a buying opportunity, especially as they see the ECB doing more QE. Furthermore, they see it as a buying opportunity as the mkt has cleaned up a bit on positioning.

On EUR not much was said by BAML. I expect it lower, personally, possibly testing 1.0880 tom, as mkts will look at tail risk first.

Asked abt a potential intervention lvl with respect to yields BAML had no real answer apart from the fact that they expect absolute yields to matter more than spreads to Bunds.

Last thing, polls on the referendum (there are not many out yet), so far show 57% yes. This is in line with my personal opinion that all public servants who formerly voted Pasok and this time opportunistically voted Syriza, will vote for their salaries to be paid in EUR (even if it's less EUR one more time) rather than than taking a shot in the dark.

(BFW) Greece Shuts Banks to Avert Collapse After ECB Freezes Support

BN 06/28 16:54 Greece Shuts Banks to Avert Collapse After ECB Freezes Support
Greece Shuts Banks to Avert Collapse After ECB Freezes Support
2015-06-28 17:00:16.306 GMT


By Paul Tugwell
(Bloomberg) -- Greece ordered its banks shut Monday to
avert a financial collapse after the European Central Bank froze
emergency loans to the nation’s lenders.

* Piraeus Bank SA Chief Executive Officer Anthimos Thomopoulos
spoke to reporters after meeting the government’s financial-
stability panel in Athens on Sunday.
* Story link here

For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

--With assistance from Elena Gergen-Constantine in Athens and
Emma Charlton and Mehul Srivastava in London.

To contact the reporter on this story:
Paul Tugwell in Athens at +30-210-74-19-073 or
ptugwell1@bloomberg.net
To contact the editors responsible for this story:
Madeleine Lim at +1-212-617-2296 or
mlim131@bloomberg.net

FT : Can Greece still avoid Grexit?

Can Greece still avoid Grexit?

When eurozone finance ministers emerged from a meeting without their Greek counterpart, Yanis Varoufakis, on Saturday night, they reminded everyone that Greece remained inside the EU’s common currency.
“It is clear: Greece remains a member of the eurozone,” said Wolfgang Schäuble, the German finance minister. “Moreover, Greece remains a part of Europe.”
On Sunday, instead of cutting off emergency loans keeping Greek banks alive, the European Central Bank capped them at €89bn. This means the banks can no longer pay depositors who want to withdraw their money — but critically it means they do not go bust.
A bank holiday will now likely be needed, but if the Greek government can find a way out of the current mess, the banks could still reopen with euros in their accounts. If the ECB were to cut off emergency loans entirely then a collapsed banking system would need to be reopened with a new currency — and Grexit would likely occur.
“If you look at the last week, each day has had its surprise,” Pierre Moscovici, the European Commission’s economic chief, said in an interview on why he remains hopeful a deal can still be struck.
But things would have to change quickly in Athens once the country’s bailout expires Tuesday, according to eurozone officials. They said the nature of the Greek stand-off fundamentally changes starting July 1.
“After June 30, we move into a new phase of negotiations,” said one senior official.
The most immediate hurdle facing Athens is a €1.5bn loan repayment it owes the International Monetary Fund on Tuesday. Without bailout funds, it is likely to default. But in practical terms, an IMF default may not really mean much when it comes to staying in the euro.
Credit rating agencies have already said they will not consider non-payment to the IMF a proper default, since they only care about debts owed to private creditors.
While eurozone bailout loan agreements allow Greece’s EU lenders to trigger cross-default clauses if the IMF is not paid — an issue that was discussed at Saturday’s eurogroup meeting — it appears unlikely national governments will move in that direction. The ECB decision on Sunday signals that they are also willing to let the IMF “arrears” pass unremarked.
That could mean Greece goes into next Sunday’s referendum with banks closed, but without the need to start printing new money. Alexis Tsipras, the Greek prime minister, has said a “yes” vote in the plebiscite — even though he is actively campaigning for a “no” — would lead his government to agree to creditors’ demands.
But that would still present Athens with two challenges. First, Jeroen Dijsselbloem, the Dutch finance minister who chairs the eurogroup, said Mr Tsipras’ denunciation of the creditors’ plan makes it unlikely eurozone governments will trust the current Greek administration to implement it.
“If a ‘yes’, who are we trusting, who are we working with to then implement that programme?” Mr Dijsselbloem asked.
This weekend, for the first time, Mr Varoufakis hinted his government was prepared to reshuffle cabinet posts or even coalition members if that was required to win back trust.

“If the people give us a clear instruction to sign up on the institutions’ proposals, we shall do whatever it takes to do so — even if it means a reconfigured government,” he told the eurogroup on Saturday.
Some within Mr Tsipras’ Syriza party have even suggested the government would resign if it lost Sunday’s vote. That could clear the way for a technocratic government akin to the one that government amid Greece’s last debt crisis in 2011.
Eurozone officials said even a non-Syriza government could face difficulties. Due to the bailout expiration on Tuesday, any post-referendum government will need to request a completely new programme. Under the treaty governing bailouts this would require the approval of all eurozone governments. In Germany’s case, that would require a Bundestag vote.
The new government would have to negotiate an entirely new rescue package — although officials acknowledge the current offer could serve as the basis for a fresh bailout.
All this would likely need to be completed by July 20, when Greece owes the ECB €3.5bn for a bond repayment. Defaulting on the ECB would almost certainly end all hopes of securing a new bailout and avoiding Grexit.
“Despite the referendum, there remain multiple pathways to a deal,” said Mujtaba Rahman, head of European analysis at the Eurasia Group risk consultancy. “It’s only in the run up to a potential ECB default that preventing Grexit becomes incredibly difficult.”

(Makor) Weekly reveiw and some charts to start the week - Greece, Dax, Eur/Usd


Weekly reveiw and some charts to start the week - Greece, Dax, Eur/Usd, S&P 500 

Dax30 Index – two possibilities

 

Scenario 1: The bullish option supported by Elliot wave theory which argues for one more wave 5 higher before moving lower, this possibility exist while above 10,093 (wave 4 should not overlap wave 1)

 

Scenario 2 – The bearish option which suggest that The Index has already broken lower, the move higher last week was a re-test of the breakdown level and therefore the Index should continue lower for a minimum test of 10,847 which is the 38.2% retrace of the entire move higher. A break below 10,847 would target: 200dma at 10,569 and Fibonacci retrace which are 10,371, 9,895 and possibly 9,306.

 

EUR/USD: really isn’t clear at this stage, various of possibilities with the boundaries being 1.0458 Vs 1.1467-82. If you want to play the European Market probably better focus on Stock Indices. The Moving average setup and longer term oversold conditions don’t support a move lower. Also, there seems to be a consensus that the CCY pair will gap down on the start of the week but recent correlation: (Lower equities Vs Higher EUR/USD) does suggest otherwise, I would not chase a move lower.

 

 

S&P 500 Index – a break below 2067-2072 would target 2025, medium term bearish below 2134-38 with a 1,885 and possibly 1730 target. Please see last week paper for

 

 

 

Hope this helps ….Barry

WSJ : Judge Explains Reasons for Blocking Sysco-US Foods Merger

Judge Explains Reasons for Blocking Sysco-US Foods Merger

Ruling showed U.S. District Judge Amit Mehta sided decisively with FTC

During nearly two weeks of court proceedings last month, the legal battle between U.S. antitrust enforcers and would-be merger partners Sysco Corp. and US Foods Inc. appeared to be a close call. Turns out it wasn’t.

U.S. District Judge Amit Mehta in Washington issued a preliminary injunction on Tuesday blocking the planned merger of the nation’s two largest distributors of food and related supplies to restaurants and other foodservice establishments. On Friday evening, he released a public version of his opinion, revealing he sided decisively with the Federal Trade Commission, which had sued to block the deal.

Judge Mehta’s 128-page ruling said the Sysco-US Foods tie-up, announced in December 2013, was the type of large combination that lawmakers were concerned about long ago when they gave the government the power to halt mergers.

“The proposed merger of the country’s first and second largest broadline foodservice distributors is likely to cause the type of industry concentration that Congress sought to curb at the outset before it harmed competition,” the judge wrote.

Judge Mehta said the would-be merger was of considerable national importance, citing statistics showing Americans now spend more money a month in restaurants and bars than in grocery stores.

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The judge sided with the FTC on the crucial point in the case: how to define the food distribution market for the purposes of deciding whether the merger could harm competition and lead to higher prices for consumers.

He agreed with the FTC that there was a separate market for distributors like Sysco and US Foods that offered comprehensive products and services to restaurants and other businesses. He rejected arguments from the companies that their size and power should be considered against the backdrop of the entire $231 billion foodservice distribution industry, which includes thousands of competing regional, local and specialty food distributors.

When viewed from that perspective, Sysco and US Foods had only about a quarter of the market, the companies argued.

The judge said smaller distributors may compete with Sysco and US Foods in some circumstances, but they didn’t have the capabilities to serve customers in the same full-service manner with a broad range of product offerings.

Judge Mehta said large national customers rely particularly heavily on the top food distributors. Food service management companies like Sodexo and Aramark and hospitality companies like the Hilton and Interstate hotel chains do a significant amount of their purchases through Sysco and US Foods, he said.

The judge said the FTC’s claim that the merger would harm local markets in many cities wasn’t as strong as its arguments about the merger’s effect on the national market. Nevertheless, the judge said the FTC’s case was good enough to prevail on that issue, too.

Sysco and US Foods also fell short in their arguments that their proposed sale of assets to the No. 3 distributor, Performance Food Group Inc., would boost the smaller firm enough for it to replace any competition being eliminated by the merger.

The judge said Performance’s five-year business plan “shows that post-merger PFG will not be nearly as competitive as [US Foods] is today.”

Judge Mehta rejected another key argument by the companies, related to the cost-savings the merger would create. Sysco and US Foods said their combination would produce $500 million or more in annual efficiencies, savings that could be passed along to customers through better prices and service. The judge suggested a significant chunk of those cost-savings could be achieved independent of the deal.

The judge made statements during last month’s court proceedings that indicated he believed there were some flaws with the economic data and analysis compiled by the FTC in support of its case. Judge Mehta reiterated that sentiment in his written opinion, but said the agency’s analysis still better reflected real-world business conditions than the economic analysis offered by the companies in rebuttal.

Sysco and US Foods haven’t yet said whether they plan to terminate their merger or try to continue to litigate to save it. That announcement could come any day. A US Foods executive testified during last month’s proceedings that his company planned to walk away from the deal if Judge Mehta ruled against the merger.

Sysco expressed disappointment with the ruling after the judge issued the injunction Tuesday. A company spokesman declined further comment on Saturday. US Foods and the FTC couldn’t immediately be reached.

(BFW) Greek Cabinet to Meet at 8pm to Discuss Banks, ERT TV Says

BFW 06/28 15:44 *GREEK CABINET TO MEET AT 8PM TO DISCUSS BANKS, ERT TV SAYS
Greek Cabinet to Meet at 8pm to Discuss Banks, ERT TV Says
2015-06-28 15:47:18.259 GMT


By Paul Tugwell
(Bloomberg) -- Meeting of Greek cabinet to be held at 8pm
local time to discuss issues concerning stability of Greece’s
banking system, state-run ERT TV reports, without ciitng anyone.

* NOTE: Earlier, Greece Races to Avert Black Monday as Banks
Run Low on Cash Link


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To contact the reporter on this story:
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ptugwell1@bloomberg.net

To contact the editor responsible for this story:
Nikos Chrysoloras at +30-210-7419022 or
nchrysoloras@bloomberg.net