Good morning
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The headlines:
- The 18th Party Congress approaches its conclusion.
Link: well-executed.
The Central Committee has been selected , ahead of tomorrow’s announcement of the Politburo, and then eventually, the Politburo Standing Committee (this BBC article does a much better job of explaining the progress in a diagram).
While nothing has been said officially, everyone *knows* that Xi Jinping and Li Keqiang will be taking over as Party Leader and Deputy Party Leader respectively.
I guess we’ll find out tomorrow.
- Greece raises short-term finance.
Link: no default this week…
Greece has €5 billion that falls due on Friday. As the EU finance ministers drag their feet about the next bailout tranche, Greece has been holding auctions for new treasury bills.
Yesterday’s auction of 30 and 90 day treasury bills raised €4.06 billion at interest rates of 3.95% and 4.2% respectively*. Under Greek debt office rules, Greek banks are “allowed” to purchase an additional 30% of the value of the auction two days after the auction has taken place. And as 30% of €4.06 billion is €1.21 billion, the total finance “raised” will be €5.27 billion.
Of course, the ECB is no longer accepting Greek treasury bills as appropriate collateral for its bank loans. But a special exception has been made for Greek banks – who can use the t-bills as collateral against loans from the Greek Central Bank (at higher rates of interest), which in turn has access to ECB funds/loans through the ECB’s Emergency Liquid Assistance Program.
Which answers the question: “who in their right mind would buy Greek treasury bills?”
*For the record, I think that those interest rates are the yields to maturity, not the annual effective rates. If Greek bonds have interest rates of ±30%, it doesn’t make sense that the t-bills should be costing only ±4%. But for the record, the 30 day yield sounds like an annual effective rate of 60%!! If that is the case – hells bells. I must be missing something.
- Home Depot shares rally.
Link: ?
A picture:
There’s been a “rally of retailers” in the US. Which is surprising – if the real estate market is still in a bit of a slump… Of course, the other reaction is to declare, as many experts are declaring: “if Home Depot is doing better, it must mean that the real estate market is recovering”.
Which might well be the case – pessimism cannot last forever. If we look at the S&P/Case-Schiller Home Prices Index, there does seem to be some 2012 improvement:
So it’s possible that this gradual improvement in the housing market could have caused the sudden rally in retailer shares in the last week or so, as shown by Home Depot’s better-than-expected profits.
It’s either that, or the US must have suffered from some natural disaster in the last few weeks that would require a lot of people in a lot of states to repair their homes after mass flooding and stuff. Something really big, like a giant mother of a storm.
Oh wait.
That’s all for now.
Have a good day.
