Heightened Greek Rhetoric; Oil Spikes on Iran, Israel Duel

Bikram Pandey
15 Feb, 2012
New York City

Markets in U.S. and Europe traded lower after euro zone ministers delayed the decision on Greek bailout. The European Central Bank is prepared to distribute its profit on Greek bonds to facilitate debt swap. Iran and Israel are locked in deadly embrace that holds hostage oil prices.

[R]4:00 PM New York – Markets in U.S. and Europe traded lower after euro zone ministers delayed the decision on Greek bailout. The European Central Bank is prepared to distribute its profit on Greek bonds to facilitate debt swap. Iran and Israel are locked in deadly embrace that holds hostage oil prices.[/R]

With each passing day, talks of Greek default acquire greater significance and new set of worries.

European leaders traded another round of threats and worries as new demands and conditions from creditors nations put Greece closer to giving up. Euro zone finance ministers postponed the decision to February 20 after a teleconference but cited “substantial progress.”

Greek negotiations and market tumult may last longer than expected as ministers debated the prospect of releasing less than €30 billion, just enough, to cover next interest payment and other expenses and disburse €100 billion after the general election that could take place as early as April.

What ails finance ministers is the apparent lack of commitment and lack of trust in Antonis Samaras, the head of the New Democracy Party. The comments from presumed front runner for the next election have shaken the faith in Greek politicians after he said, “policy modifications might be required to guarantee the full program’s implementations.”

Despite his party’s commitment to implement reforms in a letter written to the International Monetary Fund, the European Central Bank and the European Commission, creditor nations are far from convinced.

The tensions also rose after Greek finance minister Evangelos Venizelos said some nations in Europe no longer want Greece to be part of the monetary union after critical comments from the leaders of Holland, Finland and Germany.

Venizelos said, there are some people in Greece and abroad that are playing with fire. Some have matches, others have torches. But the risk is equally great.”

It is now increasingly certain that Greece may not get the entire loan package before March 20, when the next interest payment is due and Greece may need more than €130 billion in new loans as the process drags on and economy takes longer to recover.

However, European leaders appear to be convinced that the euro zone is stronger today than two years ago when Greek default talks gathered momentum.

In New York, U.S indexes traded sideways after industrial production was unchanged, factory production increased 0.7% and mining and utility output declined in January. Regional survey of New York indicated expanding manufacturing.

In corporate news, Comcast fourth quarter net increased 26% to $1.29 billion. Deere & Co. first quarter net increased 4% to $533 million. Kellogg agreed to acquire Pringles business of P&G for $2.7 billion. MetLife fourth quarter net surged to $1.13 billion. Heineken said 2011 earnings declined and revenues increased 3.6% before acquisitions.

European markets traded sideways as Greek bailout decision got delayed one more time. European leaders urged China to participate in the euro zone bailout funds along with Russia and other oil rich nations. However, China appears to be less interested and has demanded guarantees and returns on investments.

Stocks in Tokyo closed higher for the second row in a row following the expanded asset purchase program by the Bank of Japan. The yen dropped to a 16-week low and export sensitive companies traded higher. Tokio Marine soared 6% after it retained its annual net income outlook, unlike other property and casualty insurer Ms&Ad Holdings.

Australian stocks edged higher after a flood of earnings. The largest Australian bank Commonwealth Bank reported earnings rise of 7% and retail mall developer Westfield Group said annual net soared 44% from a year ago. Fortescue Metals said first half net more than doubled.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond decreased to 1.91% and 30-year bond unchanged at 3.07%.

The U.S. dollar traded up 0.4% to $1.307 to one euro and edged up against the Japanese yen at 78.21.

Oil traded higher after tensions rose in the Middle East and Iran denied reports that it has cut off oil supplies to European nations. Talks acquired a greater significance after Israel and Iran are embraced in heightened covert and targeted killings that has already killed at least four Iranian nuclear scientists.

Today, Israel blamed Iran for the attack on its diplomats in India and Georgia but offered no proof. Three years ago, Israel also killed Hamas activist in Dubai hotel after it stole passports of several UK citizens and assumed identities to carry out a murder in a broad daylight.

Immediate delivery futures of Texas crude oil rose 79 cents to $101.53 a barrel and futures of natural gas fell 0.10 cents to $2.43 per mbtu and gasoline price increased 1.05 cents to 299.30 cents a gallon.

In metals trading, copper decreased 0.60 cents to $3.82 per pound, gold increased $9.70 to $1,727.40 per ounce and silver increased 3 cents to $33.38.