A couple of fast moving factoids from the news. Greece had a reopen of their stock market on Monday. While some of the stocks have held up, banks (no surprise) were hard hit. A 60% “haircut” in 3 days…
Greek Stocks End Lower on Third Day of Bourse Reopening
By Philip Chrysopoulos –
Aug 5, 2015
After the third day of reopening of the Athens Stock Exchange, bank shares took another dramatic dive reaching a cumulative 63.81 percent loss.
The banking index lost 27 percent at closing on Wednesday, dragging all Greek stocks down. The market value of the four systemic banks — National Bank of Greece, Eurobank, Piraeus and Alpha — fell below 5 billion euros.
Eurobank shares dropped to 5 cents after losing 26.76 percent. Piraeus Bank lost 29.59 percent and Alpha 29.56 percent. National Bank shrank 24.29 percent.
Banks’ cumulative losses since the reopening of the local bourse on Monday reached 63.81 percent, diving to a new historic low of 238.40 points.
The Athens Exchange (ATHEX) general index closed at 643.22 points, shedding 2.53 percent from Tuesday’s 659.94 points. The large-cap FTSE 25 index declined 2.86 percent to end up at 188.88 points.
In total 39 stocks enjoyed growth, 56 suffered losses and 16 remained unchanged. Turnover amounted to 81 million euros, up from Tuesday’s 63.7 million.
“Ouch” doesn’t quite cover it… But frankly, I’d not own any bank in the EU, nor put any money in one of them. (Not sure the USA banks are any better, being now an arm of the US Government for all practical purposes).
Meanwhile, China is down 30% in a month. Well, that’s gotta hurt…
Easy to see where the government forbid selling and stepped in with car loads of cash… yet at best it has been a temporary stop to the drop.
Oil, coal, natural gas, metals, and more all down hard over the year (so not much demand happening, meaning production is dropping / dropped).
This is DBC Deutsche Bank Commodity index vs GSC Goldman’s (that has heavier energy weighting) vs S&P 500 and several other commodity ETFs. KOL is coal, UNG is US Nat. Gas, USO is US Oil, JJC is copper while JJN is nickle, GLD is gold and SLV is silver.
Essentially all of them dropping hard. (To some extent due to dollar strength, but the divergence of JJN a year back and the spread from gold to oil now shows much of it is not.)
There just isn’t a lot of demand for “stuff” right now. Not good.
Wondering about Europe and Brazil? Here’s your chart… While Italy (EWI and the main ticker) bounced up last year (on this 2 year chart) it’s been downhill since. EWQ is France. EWG Germany, EWU Britain. EWA Australia and EEM Emerging Markets while EWJ is Japan. EWZ, Brazil, continues to drop like a rock under their newer stronger more Socialist government… as Socialism always does…
As we said earlier, the US markets were looking very toppy, and since that (yes, somewhat tepid…) “top call” have been lackluster to down. You can see on the chart above that SPY is essentially flat for the last 6 months.
All leading to the question: What’s next?
In “tips”, Larry Ledwick pointed to this interesting article:
The Fed had as a stated goal to get housing prices back up again. That is WHY they have had all the gusher of money into the banks. The problem, of course, is in deciding just what is the ideal price for houses and trying to stop the hurricane of money into paper assets and mortgages at just the right time and with no rebound / collapse… Never been done before, but hey, there’s always a first time.
The hubris of “The folks in charge” is astounding, and the degree to which they believe they have control when they at best have influence is boggling. Yet they are sure they can control the hurricane and ride the wind…
Instead, housing prices are going up for the same reason that college tuitions are: because the government facilitates lending people money at concessionary rates to purchase them. The Fed has, despite the occasional sobering gander in the direction of reality, been keeping the cheap-money sluices pretty much wide open. The federal regulators have loosened their grip over Fannie Mae and Freddie Mac’s lending activities, and, according to a Fed report released Monday, banks are once again loosening up their lending standards.
This ended badly the last time. It’ll end badly this time, too.