http://www.zerohedge.com/news/2013-01-10/ecb-keeps-rates-unchanged

ECB Keeps Rates Unchanged

Submitted by Tyler Durden on 01/10/2013 07:48 -0500

No change from the ECB as expected, and despite a hint by Draghi last time that the governing council may cut rates, it did not. The boredom continues until 8:30 am Eastern when Draghi takes the podium and resumes his rendition of Greenspan.

From the ECB

At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.75%, 1.50% and 0.00% respectively.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today.

and.....

http://www.zerohedge.com/news/2013-01-10/greek-unemployment-soars-new-record-566-15-24-year-olds-without-job

Greek Unemployment Soars To New Record, 56.6% Of 15-24 Year Olds Without Job

Submitted by Tyler Durden on 01/10/2013 08:01 -0500

Judging by ongoing momentum moves in various European stock and bond market indicators, one could be left with the impression that something in the continent is actually improving. And while hope of improvement is certainly be high, the reality is vastly different as confirmed by the just released Greek unemployment data, which saw the broad unemployment rate soar to a fresh record high of 26.8% in October (24.1% males, 30.4% females - that's nearly one in three), up from a pre-revision 26.0% in September, and up from 19.7% a year ago, the youth (15-24 age group) unemployment rising again to a new all time high of 56.6% (up from 56.4%), and the ratio of those employed (3.68MM) to unemployed (1.34MM) plunging to a record low 2.75x. At this rate it may well hit 1.00x quite soon. But even sooner, perhaps in a few months, the total number of inactive workers (3.34MM) will surpass all those who are working. In short, the Greek collapse is just getting worse and worse.

From the report:

Unemployment rate in October 2012 was 26.8% compared to 19.7% in October 2011 and 26.2% in September 2012.1 The number of employed amounted to 3,680,894 persons. ?he number of unemployed amounted to 1,345,715 while the number of inactive to 3,344,478. The corresponding figures for October 2007 to 2012 are presented in Table 1.

The number of employed decreased by 309,335 persons compared with October 2011 (a 7.8% rate of decrease) and by 16,015 persons compared with September 2012 (a 0.4% rate of decrease).

Unemployed increased by 368,102 persons (a 37.7% rate of increase) compared with October 2011 and by 36,219 persons compared with September 2012 (a 2.8% rate of increase).

Inactive persons –that is, persons that neither worked neither looked for a job– decreased by 23,828 persons (a 0.7% rate of decrease) compared with October 2011 and by 7,478 persons compared with September 2012 (a 0.2% rate of decrease).

and....

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_10/01/2013_477705

Greek unemployment rises to 26.8 pct in October [update]

Greece's unemployment rate rose to 26.8 percent in October 2012, the country's statistics agency said on Thursday.

The jobless rate was 19.7 percent in October 2011 and 26.2 percent in September 2012, the Hellenic Statistical Authority (ELSTAT) said in a statement.

The number of unemployed increased by 368,102 persons (a 37.7 percent rate of increase) compared with October 2011 and by 36,219 persons compared with September 2012 (a 2.8 percent rate of increase), ELSTAT said. Τhe number of unemployed amounted to 1,345,715 while the number of inactive to 3,344,478 people.

Data showed youth unemployment stood at 56.6 percent in October 2012 compared to 46.7 percent in 2011 and 34.7 percent in 2010.

Figures showed the unemployment rate among women was 30.4 percent, compared with 23.1 percent in October 2011. The rate for Greeks aged 15 to 24 was 56.6 percent, up from 46.7 percent a year earlier.

The highest regional jobless rate was in Attica, which includes the capital Athens and is the country’s largest region in terms of population, at 28.3 percent, the statistical service said.

The lowest rate was on Aegean Sea islands, including the popular holiday destinations of Mykonos and Santorini, at 16.9 percent.

Meanwhile, a report by the IOBE research center Thursday said that Greek unemployment is expected to reach 27.3 percent in 2013

[Combined reports]

and.....

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_10/01/2013_477683

Cyprus seeks solidarity, not special treatment on bailout

Cyprus branded itself on Thursday a victim of Greek debt restructuring and said it anticipated solidarity from its EU partners as it struggles to clinch an international bailout.
Last June, the island became the fourth eurozone state to apply for a financial rescue from the European Union and the International Monetary Fund after its banks suffered huge losses on the EU-approved writedown on Greece's debt.
Aid talks for Cyprus have been complicated by concerns over debt sustainability because of the size of the potential bailout bill. It could reach 17 billion euros, virtually equivalent to the island's national output.
German Chancellor Angela Merkel said on Wednesday she expected the bailout talks to take time, and said there could be no «special conditions» for Cyprus.
She was due in Cyprus on Friday for a meeting of the European People's Party (EPP) - a grouping of centre-right European parties - but was not due to have contacts with the Cypriot government.
"We never asked for special treatment,» said Stefanos Stefanou, the Cypriot government's spokesman.
"What we are asking for is an expression of solidarity - which is a basic EU principle - towards a country which is the victim of a European decision to restructure Greek debt."
The island's outgoing government, facing a national election on February 17, is resisting lenders' demands to privatize state assets. It is trying to mitigate assessments of the needs of the banking sector to make the eventual debt load manageable.
In October 2011, EU leaders agreed to impose a valuation discount - or haircut - on Greek sovereign debt holdings.
That decision, which was supported by Cyprus's president, saw the island's banks book losses equivalent to about 20 percent of its entire economic output.
The island, shut out of financial markets for the past 18 months, has been forced to rely on short-term high-yield loans from domestic institutions to meet monthly payments.

Recently it borrowed from the state-controlled electricity authority and its telecoms company. Under a draft accord with lenders, these assets could potentially be privatized to ensure Cyprus will be able to pay back any financial aid.
Cyprus says these are strategic assets necessary for national security. [Reuters]

http://www.zerohedge.com/news/2013-01-10/bored-markets-looks-ecb-announcement-some-excitement

Bored Markets Looks To ECB Announcement For Some Excitement

Submitted by Tyler Durden on 01/10/2013 07:12 -0500

The main macro event today will be the interest rate announcement by the ECB due out at 7:45 am (with the Bank of England reporting earlier on its rate and QE plan, both of which remained unchanged as expected, which will remain the case until Carney comes on board) which is expected to be a continuation of the policy, with no rate cut despite some clamoring by pundits that Draghi should cut rates even more. Overnight, we got Chinese December trade (better than expected) and loan (slightly worse than expected) data, coming in precisely as a country which has a new communist politburo leadership implied they would. Of particular note was that the US has now replaced the EU as the largest Chinese export market: what happens when the euro weakens even further? But at least the net benefit to European GDP as a result of declining imports will, paradoxically, help. Elsewhere, Spain auctioned off more than than the expected €4-5 billion in its first 2013 auctions of 2015, 2018 and 2026 bonds, sending the 10 year SPGB yield to under 5%, or the lowest since 2010, a process driven by expectations of a Spanish bailout. Thus the incredible odyssey of Schrodinger Spain continues, whose interest rates are improving on hopes it is insolvent. Fundamentally, things got better nowhere, with Greek unemployment rising to 26.8% in October from 26.0% previously, while bad loans in Italy soared by 16.7% Y/Y to €121.8 billion, while loans to businesses dropped at the fastest pace ever. And so the scramble to offset the trade and economic collapse of Europe using central bank tools continues.

Looking at today’s calendar, the main focus will be on the ECB meeting which will be followed by Draghi’s press conference at 8:30 am. Consensus expectations are for no changes in policy from either central banks. Draghi's press conference will make for interesting viewing following his statement last month that rate cuts were "discussed". On the data front, French IP and CPI for November are scheduled. In the US, weekly jobless claims and wholesale inventories will be the main highlights; The Fed’s Esther George and James Bullard will be speaking at separate events today. The US will also reopen its 30 year, $300 million of which were prebought by the Fed yesterday.

More from Deutsche Bank

Markets continued to edge up yesterday, helped by the upbeat global outlook from Alcoa the night before. This morning the latest trade numbers from China are likely to provide further short-term fuel for markets. The largest surprise was on the exports side, which increased 14.1%yoy in December (vs 5% expected) and is the highest yoy increase since May 2012 before the 3Q12 slowdown. In the detail, exports to the US rose 8.5% in 2012 while shipments to the EU fell 6.2%. Notably, the US has now replaced the EU as the largest Chinese export market. In terms of products, motor vehicle exports were amongst the best performers, rising 20% in 2012. Imports also surprised to the upside, rising 6%yoy (vs 3.5% expected) and the trade surplus widened to $31.6bn (vs $20bn expected and $19.6bn the previous month). Imports from the US gained 8.8% while those from the EU rose only 0.4%. A spokesperson for the China's Customs department said that while it was hard to quantify the loss in trade from the island dispute with Japan, exports show signs of “warming up” in Q1.

The overnight market reaction to the data has been positive with most major equity indices moving firmly into positive territory following China’s trade numbers. Gains are being paced by the Hang Seng (+0.9%), Nikkei (0.75%) and Shanghai Composite (+0.55%) with financials and resources stocks outperforming. The Australian dollar is trading 0.34% firmer against the USD after rallying 40 ticks post-trade numbers. On the fixed income side, 10yr USTs have sold off 2bp in Asian trading while the benchmark Australian IG index is 1bp tighter as we type.

Outside of the trade data, China also released its latest bank lending numbers which made for slightly less impressive reading. New loans of RMB454bn were made in December vs RMB550bn expected and RMB523bn in November. Over in Japan, the JPY is poised to close weaker for the second consecutive day against the USD following a report in the Asahi that the BoJ is weighing further easing at its next meeting, echoing a similar report from Reuters yesterday. The Asahi added that BoJ officials are considering buying assets on an “unlimited basis”. With the focus on Japanese markets, including the Nikkei which has risen 23% since snap elections were called by PM Abe in November, the WSJ reminded its readers that there have been a number of false dawns in the past two decades. This includes the 34% rally in the Nikkei in 1990, 50% rally in 1992, 55% in 1995, 62% in 1998 and 140% from 2003 to 2007. Nevertheless even if this latest policy change doesn't amount to much, markets could still go considerable higher before being disappointed.

Recapping yesterday’s price action, the S&P500 (+0.27%) started the US earnings season on a positive note, managing to halt a two-day slide as markets took comfort from Alcoa’s relatively upbeat 2013 guidance. Interestingly though, Alcoa itself finished the day down 0.22%. 10yr UST rallied 1.5bp on the day to close at 1.853%, despite a small 2bp selloff following weaker demand for the treasury's 0yr note auction. The VIX (+1.4%) made a new post-financial crisis low at the open of 13.22 yesterday, which was the lowest level since January 6th 2007.

Over in the US, reports suggest that President Obama is set to formally nominate White House Chief of Staff Jack Lew as his next Treasury secretary today. Lew previously served as Obama's budget director and a senior State Department official. He also was budget director during the Clinton administration and has been negotiating bipartisan compromises over taxes and spending since the 1980s, when he was a top aide to then-House Speaker Thomas O'Neill Jr. Lew will replace Tim Geithner who will likely step down by the end of the month. (Washington Post).

Staying on the political theme, the FT wrote that support for Merkel’s conservative Christian Democrat bloc is at a “record high” just nine months out from the next election, at the expense of both Merkel’s political opponents and allies. Latest opinion polls indicate that the CDU/CSU enjoys 42% support, which is 17ppt clear of the Social Democratic party (25%) and FDP (just 2%).

In other interesting headlines, US oil production exceeded 7m barrels per day for the first time in 20 years according to data from the US Energy department. The US met 83% of its energy needs in the first nine months of 2012, which is on pace to be highest annual rate since 1991 (Bloomberg).

Before we preview the usual day ahead, we wanted to highlight that the UK National Statistician will today announce her decision on whether there should be changes in how the Retail Price Index is calculated. This series is used to calculate coupons on UK linkers. DB’s Markus Heider thinks that the National Statistician will choose to stop using the “Carli formula” for price items that use it. This would effectively reduce the RPI’s premium to CPI to a minimum, with resulting downside risk to GBP breakeven markets which have not fully priced in the potential change. Is this another form of financial repression?

Catharsis Ours

Thursday, January 10, 2013