rather than pick out individual stocks to trade, it can often be worthwhile to trade the indices themselves, especially in times of high volatility.

for those so inclined, i attach below charts for FTSE and FTSE 250, though one might equally be tempted to trade Dow or S&P, which is significantly broader in its coverage, or even NASDAQ

for ease of reading, i have attached 1 year and 3 month charts in each instance

5,700 +/- ?...Yep no problem at all, I guessed 5749 for this month.. so it must be true

greece...............

Published: Tuesday, 10 Jan 2012 | 10:52 AM ET Text Size By: Michelle Caruso-Cabrera

As negotiators arrive back in Athens today, Greece enters a pivotal period in which it must finish a crucial renegotiation of its more than $200 billion of debt.

Thus far, the plan is to offer bondholders 15 cents in new cash and 35 cents in new debt for every 100 cents of Greek debt they hold. According to several people familiar with the situation, the maturity on the new debt is likely to be 30 years, but the interest rate is yet to be decided and is the most contentious part of the deal.


The cut to the net present value (NPV) of the debt, a metric that is important to banks and bond investors, will be greater than 50 percent. The NPV of a bond is determined by a number of factors, including maturity, interest rate, and the bondholder’s belief in Greece’s future ability to actually pay it back.

The new bonds are expected to be under U.K. legal jurisdiction rather than Greek jurisdiction. Bondholders prefer U.K. jurisdiction because it prevents Greece from retroactively changing the terms of the debt. (The Greek Parliament can’t change U.K. laws). Also expected to be part of the offer, a structure that puts the new bonds on par with the European Financial Stability Fund .

Greece has a principal repayment of more than $14 billion due in mid-March and it doesn't have the money. In fact, the country remains cash-flow negative each week. The debt negotiation must get done in order to first reduce the size of that payment in March, and second to get the next tranche of bailout money from their European partners.

If those things don’t fall into place, a default is highly likely. The only other remedy would be a last-minute emergency injection of cash. Where could that come from? Perhaps other European countries, but that would be a tremendous political hurdle to climb.




Michelle Caruso-Cabrera
CNBC Senior International Correspondent
Working backwards from the mid-March date, the debt renegotiation needs to get done by the end of January simply for logistical reasons; making sure the offer reaches bondholders and they have in turn enough time to tender their bonds. That is, if they plan to. Many do not.

Although European leaders Angela Merkel of Germany and Nicolas Sarkozy of France have demanded this deal be “voluntary” (i.e. that it doesn’t generate a credit event triggering credit-default swaps ), there is still a risk that is exactly what will happen. Short-term bondholders, especially if they have bought credit default swaps (CDS) or other types of insurance, have no incentive to hand in their bonds. Greece must pay them 100 cents on the dollar, and if Greece doesn’t pay, its insurance pays off. Investors are made whole either way.

One way to force bondholders to tender their existing debt is to impose a “collective action clause” retroactively. That means Greece could simply change the terms of the old debt, and decide that if a certain percentage of bondholders, say 75 percent to 90 percent, agree to tender, then the deal is imposed on every bondholder.



However, this, too, would trigger a credit event because changing the terms of a bond is understood to be a triggering event under the terms of CDS contracts. European leaders are concerned a credit event could trigger a Lehman-like contagion in the euro zone.

Yet another option is for Greece to change its laws at the parliamentary level, rather than changing the terms of the old debt. Passing that law in and of itself is not a credit-triggering event. But what remains uncertain to market participants is this: If enough bondholders still don’t tender their bonds, and then Greece imposes the Collective Action Clause, is that a CDS triggering event? That will be decided by a committee from the International Swaps and Derivatives Association, and some market participants say it is impossible to predict what a committee will do, especially when there is so much political pressure from European leaders to avoid it.

disaster if this happens - cameron must tell them to shove the transaction tax - it has already been tried and failed very badly!!!

German CDU sees transaction tax with or without allies, UK


German Chancellor Angela Merkel's party will push for a financial transaction tax in Europe even though opponents of the levy include her junior coalition partners, a senior lawmaker from her Christian Democrats (CDU) said on Tuesday.

"It will happen," Michael Meister, the conservatives' deputy leader in parliament, said a day after Merkel acknowledged resistance in her coalition to the "Tobin tax" plan being pushed aggressively by French President Nicolas Sarkozy.

Merkel favours such a tax with or without support from all 27 members of the EU. Among the 10 EU countries outside the euro zone, Britain and Sweden are against the tax, fearing it would harm their financial sectors. This concern is shared by some euro zone countries that also rely on financial services, such as Ireland.

But Merkel was more cautious than Sarkozy on the timing, saying after the two major EU leaders met on Monday that finance ministers would finish a report by March at the latest. She acknowledged disagreement in her government, where the Free Democrats (FDP) object to such a tax being introduced unless it is adopted in all EU states.

"I doubt the FDP's opposition will last for ever," Meister told Reuters, rejecting the argument of the FDP that it was a matter of economic principle or "Ordnungspolitik" reflecting its commitment to lower taxes.

"If that was the case, the FDP could not back an EU-wide financial transaction tax either," said Meister, who stressed that discussions within the coalition had to be kept "friendly".

That was not how the media depicted it: "Merkel Ignores FDP's Qualms," read the front page of the Sueddeutsche Zeitung.

The FDP, whose support has shrunk from a record 14.6 percent in 2009's election to 2 percent in recent polls, faces constant challenges to government policy on Europe from a small band of eurosceptics, who would be further inflamed by such a move.

"I insist that such a tax must apply to all EU countries, not just euro members," said FDP leader Philipp Roesler, economy minister in Merkel's cabinet.

However an FDP leader from Schleswig-Holstein, Wolfgang Kubicki, broke ranks to speak out in favour of introducing the tax at euro zone level, saying this could make it easier for Britain and others to one day adopt it.

Kubicki, facing a May state election that could deal another blow to the FDP, told one paper any business Germany might lose via a new tax would be unwelcome "speculative" deals anyway.

With the Financial Times Deutschland voicing concerns in German business circles about a euro zone "go-it-alone" approach to the tax, under the headline "Merkel turns London into a Tax Haven", Meister tried to play down the geographical definitions.

He said the plan set out so far by the European Commission was to levy transactions between financial firms where one or both are based in the EU.

"The decisive factor is that the tax will not depend on the location of the transaction but where the individuals have their tax domicile," he said. "So if the tax is introduced in Europe, it will be irrelevant if the financial transaction is carried out in New York, London or Frankfurt."

British Prime Minister David Cameron said on Sunday France was welcome to adopt a financial transaction tax on its own, but that he opposed such a tax across Europe and could only agree if it were accepted globally. Britain has joined the United States and China in blocking such a tax at G20 level.

Meister urged London to see the tax not as an end in itself but rather as a contribution to more market stability.

"A solution involving Britain would be more advantageous," said Meister. (Writing by Stephen Brown; Editing by Ruth Pitchford)

stick to th imf - lol
end of euro easily in sight.....

Hedge funds are taking on the powerful International Monetary Fund over its plan to slash Greece's towering debt burden as time runs out on the talks that could sway the future of Europe's single currency.

The funds have built up such a powerful positions in Greek bonds that they could derail Europe's tactic of getting banks and other bondholders to share the burden of reducing the country's debt on a voluntary basis.

Bondholders need to give up some 100 billion euros ($130 billion) of their investment in the planned bond swap, drawn up in October, but many hedge funds plan to stay out of it.

They either prefer letting the country go under, which would trigger the credit insurance they have bought, or hope to get paid out in full if enough others sign up. That puts them in direct conflict with the IMF, which wants to force Greece's cost of financing down to an affordable level.

"The play is purely 'they'll be forced to pay me'. Greece will want to avoid a wider default. so if it managed to restructure 80 percent of the deal and pay the rest that's still better," said Gabriel Sterne at securities firm Exotix.

Without a deal, the IMF, the European Union and the European Central Bank -- the so-called troika of official lenders -- will not pay out a second bail-out package Greece needs to survive.

EU Economic and Monetary Affairs Commissioner Olli Rehn said on Tuesday that negotiators were "about to finalize shortly". But time is running out.

Without the money, the country is likely to default around March 20, when a 14.5 billion euro bond falls due. A deal needs to come well before that, because the paperwork alone takes at least six weeks.

On Monday German Chancellor Angela Merkel and French President Nicolas Sarkozy, the euro zone's two leading powers, insisted private-sector bondholders must share in reducing Greece's debt burden.

But the hedge funds are resisting, unlike European banks holding Greek bonds, who have been pressured to agree by politicians.

There are other barriers too.

Banks represented by the Institute of International Finance (IIF) agreed last year to write off the notional value of their Greek bondholdings by 50 percent, a deal designed to reduce Greece's debt ratio to 120 percent of its Gross Domestic Product by 2020.

But they have been unable to agree on the fine print of the refinancing - the coupon, maturity and the credit guarantees. These will determine the bonds' Net Present Value (NPV), and thereby the actual hit the banks need to take.

DANGEROUS GAME

There are 206 billion euros of Greek government bonds in private sector hands -- banks, institutional investors, and hedge funds -- and it is likely that hedge funds have been building up their positions in the past months.

They have been snapping up chunks of Greece's next big maturing bond, the March 20, for around 40 cents on the euro. Yields on the bond began to rise sharply in September and it was priced at 41-45.5 cents in the euro on Tuesday.

The bet is that other creditors will sign up to a voluntary deal, and that Greece will pay out in full the hedge funds who do not to avoid a default and trigger pay-out of Credit Default Swaps, a form of credit protection.

"Time is on your side, since investors, until now, have received full repayment on Greek debt obligations," said Kristian Flyvholm at asset manager Jyske Invest.

Sterne, whose firm Exotix specializes in illiquid bond investing and counts hedge funds among its clients, said the bet had already worked for some funds. Greece paid out smaller issues maturing in December and January.

But it is a dangerous strategy.

Europe is increasingly likely to force investors to take a cut on their Greek bondholdings if they do not voluntarily sign up to the deal, Reuters reported in November.

Also, Greece could change its laws, which for the largest part do not contain the so-called Collective Action Clauses (CAC) that force dissenting minorities into line when new conditions are imposed on outstanding bonds.

It is unclear how large hedge fund holdings of Greek debt are. About 20 to 25 percent of Greece's creditors were unidentified, and half of these could be hedge funds, one source close to the creditors told Reuters.

Whatever the scale of the hedge fund threat, the proportion of creditors seen likely to sign up for their haircut has slipped. The hopes are now 60 percent can be convinced by the end of the month, the same source said, far less than the 90 percent take-up the IIF was targeting in June.

At that low a level, it is unclear whether the troika of international lenders will consider the uptake big enough to warrant a pay-out of the second bail-out package.

IIF Managing Director Charles Dallara is due in Athens later this week for troika negotiations, and technical staff from the IMF are expected in the Greek capital from January 16.

IMF'S DOUBTS

The IMF itself seemed to throw doubt on the debt swap in an internal memo cited by German magazine Der Spiegel on Saturday.

According to the report, the IMF believes Greece will still be sinking under the burden of its debts even after a deal is struck, and that further measures may need to be taken if the country is to avoid default. Markets fear this could lead to reopening the October agreement.

In a leaked paper in October, the IMF already acknowledged that its the assumptions may need to be reassessed. That would mean lower interest rate payments by Greece, and an even more bitter hit for the banks.

The NPV loss for creditors could be near 65-70 percent and the coupon around 4.5 percent, bankers have indicated. Reuters reported in November Greece wanted a 75 percent NPV cut, a far higher number than the low 60s the banks had in mind.

($1 = 0.7851 euros)

sorry meant - stick it to the imf!!!!

good to see the uk is now regarded as a safe haven and effectively being paid to look after money :-))) (germany also!)

US unemployment claims 399k v consensus 373k previous 375k

Prelim UoM Consumer Sentiment 74 v consensus 71.2 previous 69.9

Looks like S&P will be downgrading some Eurozone countries imminently - http://uk.reuters.com/article/2012/01/13/uk-eurozone-sp-idUKTRE80C11V20120113

Cheers Jon - I wondered what was going on!

No probs :) Looks grim today but can hardly be unexpected.

Apparently France and Austria have just been downgraded by one notch each (to AA+).

Plenty of shares uncrossed well above the last trades.

Very true Skinny especially BARC, LLOY and RBS,...........I'm pleased to say :>))))
Have a good weekend.

There goes that double click again!

.

france / austria - about time been waiting for a few weeks for that now - kicked off a while back s&p

fitch what do they know lol

PARIS—Fitch Ratings doesn't see France as a country in crisis and won't downgrade it from triple-A so long as its debt isn't pushed up sharply by shocks related to the euro-zone debt crisis, the head of global sovereign ratings at the firm said Thursday.

"France is not a crisis country," David Riley said at a conference in Paris, one of several Fitch is conducting this week in European cities.

France's rating is in sharp focus at present, after Standard & Poor's Ratings Services put the country—along with the bulk of the euro zone—on review for a downgrade on Dec 5. The ratings agency said at the time that it would make a decision as soon as possible after a European Union December summit in Brussels and said it could lower France's rating by as much as two notches, a warning that has left investors on tenterhooks for weeks now. Moody's Investors Service is expected to announce soon the results of its monitoring of the stable outlook on France's triple-A rating.

Mr. Riley said France will keep its triple-A rating—Fitch recently lowered the country's outlook to negative—if its debt stabilizes around 90% of gross domestic product and then begins declining in the time around 2013 to 2014. That is the rating agency's baseline scenario.

However, France wouldn't be in line with triple-A status if its liabilities to the euro-zone bailout are all called on, there is low growth and the government has to provide some support to the financial sector.

Fitch will wait to see the economic data this year and the policies of the next government that emerges from elections in the Spring, Mr. Riley said. And for the moment, it doesn't expect the government to intervene to prop up French banks.

"We don't expect the government to need to provide direct or capital support to banks, but if there is an intensification of the crisis there are exposures that do pose a source of risk," Mr. Riley said.

The analyst also repeated his call for the European Central Bank to step up its involvement in resolving the crisis, especially as Italy has been caught in the market's spotlights.

"Italy also needs a credible financial firewall and ultimately that requires a much more active, explicit action from the ECB," he said. "We believe ECB can expand operations without threatening its inflation target."

I went to a squash game, which probably didn't do my heart any good, came home to find the following in my e-mail inbox, which just about stopped my heart!!!

"NEW YORK

US stocks showed heavy losses in late morning trade, investors fretting over report of potential credit downgrades of several Eurozone countries by Standard & Poor"s. This offset better-than-expected consumer sentiment data.

Approaching the close in London, the Dow Jones Industrial Average was down 900 points at 12,381, the S&P500 dipped 9 points at 1,286 and Nasdaq lost 17 points at 2,707."

900 points!!!!!! You have got to be kidding?!!!

hc yep dont know where they got the 900 from - maybe whoever wrote that should go to spec savers! as should the captain of this iti cruise ship lol!! http://www.bbc.co.uk/news/world-europe-16558910 gunnels under - i knew a captain of a ship once - he was captain of the 'eads!!! LOL

iti cruise ship amusingly is in fact following the iti economy - on the rocks and sinking, on its side first though then....... down to davy jones locker!!

however i did not read the link to the iti ship first - wish i did - this is not funny at all

3 have died ignore post 7742 please - this is serious didnt realise people had passed away - that is tragic

Whilst tragic, it was inevitable. Ironically, the fact the sinking was probably caused by hitting rocks meant proximity to the coast and rescue services. Sooner or later there will be a cruise ship disaster which will result in the death of hundreds.