Greece Forced to Borrow Public Funds to Pay its Bills; European Bailout Talks Drag On

This is the nightmare that keeps repeating. No one is talking about this yet. But, come summer, if a deal isn’t hammered out yet, this is going to become an issue for markets and the EU.

Because of differences of opinion, the Greeks, and the other people in Europe footing their bills, bailout talks have been delayed for months. The IMF and the EU want more draconian cuts to provide them with a 3.5% surplus. The Greeks are having an issue complying. Therein lies the issue.

The government has used between roughly nine billion euros ($10 billion) and 10 billion through repurchase agreements since last year, most of which has been rolled over, officials said.
“The situation is not pleasant but not as dramatic as last year,” said one government official, who declined to be named. “But the more time passes without concluding the review, we could find ourselves with our backs against the wall.”

“The cash earned an annual 3.7 percent on average in the second half of last year and the return during the first half of 2016 is similar, better than what the entities would have been earning from commercial banks,” a second official said.
No one at the finance ministry was immediately available to comment.

A third bailout deal of up to 86 billion euros was agreed last summer but a review of compliance with the terms of the agreement was expected to be completed late last year and Athens is still scrambling to conclude those requirements.
Greece needs the funds, more than 5 billion euros, to repay European Central Bank and IMF loans due in June and July.

Talks between Athens, European Union institutions and the International Monetary Fund (IMF) have been snagged by disagreements over whether Greece’s cutbacks are enough to reach a primary surplus target of 3.5 percent by 2018.

“It has been a bumpy road since mid April but Greece can make it and not go bust until the end of May or early June by also using pension funds cash reserves and piling up state arrears if needed,” a senior government official told Reuters.

Don’t worry. If the Greeks keep this up, the EU will simply appoint a new leader to rule Greece, one who will obey their demands without terms.

I’ve never heard anyone stand up for women’s rights in these Middle East countries. I’d rather be a camel than a woman in these places.

The young Prince Mohammed has declared that the community isn’t convinced women should be permitted, by law, to drive in Saudi Arabia.

But don’t worry, positive changes are coming soon.

Allowing women to drive is “not a religious issue as much as it is an issue that relates to the community itself that either accepts it or refuses it,” said the 30-year-old prince, who has amassed unprecedented powers since his father, King Salman, ascended to the throne. “The community is not convinced about women driving” and sees negative consequences if it’s allowed, the prince said on Monday after outlining a plan to reduce the kingdom’s reliance on oil.

The prince had signaled his support for more freedom for women during an interview this month, saying “we believe women have rights in Islam that they’ve yet to obtain.” But when asked about the driving ban by a reporter on Monday, he said reform couldn’t be rushed. “Changes could happen in the future and we always hope they will be positive changes,” he said.

Our good friends the Saudis. A good rule of thumb, at least in my experience, is to judge others by the company he keeps. If we were to hold America to the same scrutiny, what does it say about us?

It looks like the company is on track and will continue to deleverage its  balance sheet through asset sales. This is the quintessential commodity play, with large copper and oil interests, even gold. Back in the dark days of February, it looked as though the stock was heading to the ash heap of time. Now it’s looking more and more like a huge winner in the making, as investors sashay in and out of commodity stocks with genteel decorum.

Reports Q1 (Mar) loss of $0.16 per share, excluding $3.19/share in charges, in-line with the Capital IQ Consensus of ($0.16); revenues fell 15.1% year/year to $3.53 bln vs the $3.52 bln Capital IQ Consensus.

Consolidated sales totaled 1.1 billion pounds of copper, 201 thousand ounces of gold, 17 million pounds of molybdenum and 12.1 million barrels of oil equivalents (MMBOE) for first-quarter 2016, compared with 960 million pounds of copper, 263 thousand ounces of gold, 23 million pounds of molybdenum and 12.5 MMBOE for first-quarter 2015.

Consolidated sales for the year 2016 (adjusted for the anticipated closing of the Morenci transaction in second-quarter 2016) are expected to approximate 5.0 billion pounds of copper, 1.85 million ounces of gold, 71 million pounds of molybdenum and 54.4 MMBOE, including 1.15 billion pounds of copper, 195 thousand ounces of gold, 19 million pounds of molybdenum and 13.5 MMBOE for second-quarter 2016. Average realized prices were $2.17 per pound for copper, $1,227 per ounce for gold and $29.06 per barrel for oil for first-quarter 2016.

Consolidated unit net cash costs averaged $1.38 per pound of copper for mining operations and $15.85 per barrel of oil equivalents (BOE) for oil and gas operations for first-quarter 2016. Consolidated unit net cash costs for the year 2016 are expected to average $1.05 per pound of copper for mining operations and $15 per BOE for oil and gas operations.

Capital expenditures for oil and gas operations for the year 2016 are estimated to total $1.5 billion, excluding $0.8 billion in idle rig costs (which reduce operating cash flows). ~90 percent of the 2016 capital budget is expected to be directed to the GOM.

Operating cash flows for the year 2016 are expected to ~$4.8 bln, up from $3.4 bln (including $0.8 billion in working capital sources and changes in other tax payments). Capital expenditures are expected to ~$3.3 bln for FY16, down from $3.4 bln, consisting of $1.8 billion for mining operations (including $1.4 billion for major projects) and $1.5 billion for oil and gas operations.

FCX continues to advance discussions for the sale of certain interests in its mining and oil and gas assets to accelerate its debt reduction initiatives. While the process did not identify a buyer for the entire oil and gas business, a number of parties have interest in select assets, and FCX continues to engage in discussions with parties interested in potential asset or joint venture transactions. In the interim, FCX is taking immediate steps to reduce oil and gas costs further.

The stock is little changed in pre-market trading.

We’re getting multiple downgrades this morning after the FDA voted down SRPT’s muscular dystrophy drug, despite massive outpouring of support by trial patients and their families.

Sarepta Therapeutics, Inc. (SRPT), a developer of innovative RNA-based therapeutics, today announced that the U.S. Food and Drug Administration’s (FDA) Peripheral and Central Nervous System Advisory Committee (PCNSC) met to review the new drug application (NDA) for eteplirsen as a treatment for Duchenne muscular dystrophy amenable to exon 51 skipping. The advisory committee voted 6-7 against the finding of substantial evidence from adequate and well controlled studies that show that eteplirsen induces production of dystrophin to a level that is reasonably likely to predict clinical benefit (FDA Question #2). The advisory committee voted 3 – 7, with three abstentions, against finding substantial evidence based on the clinical results of the single historically controlled study (Study 201/202) that eteplirsen is effective for treatment of DMD (FDA Question #7).

“We would like to thank the hundreds of patients and families who participated in the discussion today, underscoring the critical unmet need of people living with Duchenne.” said Edward Kaye, M.D., Sarepta’s interim chief executive officer and chief medical officer. “We appreciated the opportunity to present our data to the advisory committee panel and will continue to work with FDA as they complete their review of the eteplirsen NDA. Today more than ever, we remain committed to our mission of bringing a treatment to the Duchenne community.”

Shares are getting destroyed in the pre-market.

This is fucking madness. China has a massive NPL (non-performing loans) problem, which amounts to $195 billion. The government has a mandatory 150% coverage ratio for these bad loans, which is extremely important to ensure the economy doesn’t blow up into ten thousand pieces of fortune cookie. Being that NPLs have soared by nearly 50% since last year, nothing could be more important to the health of the Chinese economy than to make sure its banks are well capitalized.

Right?

WRONG.

The banks have lobbyists over there too. They’ve managed to convince party bosses that lowering the coverage ratio to 120% is the best solution, aka a bailout.

What could go wrong?

Just remember, China has bottomed, Europe is picking up steam, Oil has bottomed.

This was one of the more powerful Cramer rants in quite some time. He discussed the driving force of this market, which is brutal and heartless job cuts.

It is the defined job of any CEO to manage expenses. Part of that job entails cutting the workforce in order to protect shareholder value. I understand some of you Bernie Sanders fuckheads believe GE is supposed to provide useless jobs for the benefit of lazy Americans. If that were the case, our corporate world would resemble our government controlled agencies and cities.

Would you like that?

No, of course not.

But if so many industries are culling their workforces, from tech to oil, where the hell are the new jobs coming from? Based on information provided by the Bureau of Labor Statistics, most of the new jobs are coming from retail trade (Walmart, Target etc), Construction and Healthcare (quasi-government financed workers).

Here are the statistics.

Based on the data above, there have been job losses across the mining, oil & gas and manufacturing sectors, year over year. However, the oil and gas losses only amount to a mere 12%. Tomfoolery!

Most of the gains were found in bars and restaurants, as people shove stuffed shells into their fat faces and washed them down with craft swill.  Leisure and hospitality enjoyed big gains, as well as eduation and healthcare, construction, retail trade and finance.

The finance jobs will be gone soon, as every investment bank that I know is slashing expenses by firing people.

Everything else is easily explained by the dichotomy of classes which persists in this country, the have’s and the have nots. We are here to serve the aristocracy, provide them with leisure, build their castles, and beg their pardons at Disney World–while fetching their shoes at retail outlets.

The impressive jobs data is nothing less than a total farce, an illusion that is being used for propaganda purposes to sell the lie that the economy is great and everyone is working. People are working two, three jobs in order to meet monthly expenditures, hardly a sign of an economy on the cusp of breaking out.

Going forward, I’d find it incredible to believe those oil and gas jobs weren’t going to worsen, as well as deleterious drops in the financial and retail trade sectors.

During tonight’s mad money show, J. Cramer continued his bullish pageantry, discussing the virtues of this market–pertaining to a bottoming out in China, european markets getting a head of steam and the undeniable bottoming of crude oil.

I was especially taken by his ‘oil has bottomed’ thesis, pointing to the Schlumberger call, which spelled out an undeniable doom that persists in the market. They declared it to be in a ‘full cash crisis mode’ with production levels bound to decrease, as companies inevitably drop off like flies. My contention with this argument as being bullish for crude is the ramifications that will plague the market when these companies go bust. Plus, desperate people do desperate things. The dry bulk industry was supposed to bottom years ago. But it never did, because of the chicanery taking place by zombie tanker companies fucking with the spot market to attain cash flow.

I’d argue that the impending doom of an industry doesn’t make it investable BEFORE the doom hits. It’s better to wait for the carnage to hit, then pick up the pieces.

Apparently, the core thesis of many television market evangelists is that the 5 week stint of weakness that menaced the market in early 2016 was nothing more than a blip and that everything is good now, so you might as well buy it all up.

I’ll take the other side of this trade all day long.

Trump has destroyed the burgeoning Kasich presidential bid, by laying waste to his egregious table manners. How funny is this?

I can’t wait for him to mock Putin’s hunting etiquette.

The Kasich presidential candidacy has ended. God bless Donald J. Trump for enlightening the American people about the virtues of table etiquette.

This managing director, dubbed Stephen Gallagher, is straight up fodder in the investment banking world. He doesn’t really know what to say, in order to warrant his appearance. Therefore, he says something slightly ominous in order to draw the interest from the cocaine addled producers at CNBC.

Ahead of the Fed, the sages at Societe Generale are maybe expecting slightly more hawkish commentary, more than what the market is forecasting.

If pressed with what to say about the Fed on a CNBC teevee interview, I might suggest they “batten down the hatches because all holy hell is about to bust loose, centaurs and dragons will soon inhabit the earth, laying waste to catamite filled teevee networks, such as the one televising this interview right now.”

Rex Energy is holding a gun to the head of bondholders. The negotiations are going like this: convert the debt into equity or we’ll declare bankruptcy and you’ll be lucky to get 20 cents on the dollar.”

Now if they can renegotiate all of their debt into equity, that would give them a fighting chance to survive, providing crude prices could rebound. This could be a terrific turn around stock to get long, again contingent upon crude cooperating.

One minor thing to note: all of these extra shares can be extremely dilutive. I need to read the terms and see the strike prices. Nevertheless, the newly adorned stock holders are hoping to hit pay dirt with this exchange; otherwise, they’d never agree to the terms.

Via briefing.com

Co announces that it has closed two privately negotiated exchange transactions with certain holders of the company’s securities, including the 8.875% Senior Notes due 2020, the 6.250% Senior Notes due 2022, the Series A 6.00% Convertible Perpetual Preferred Stock, and the 1.00%/8.00% Senior Secured Second Lien Notes due 2020, in which those holders agreed to exchange their existing securities for shares of the company’s common stock

Rex Energy executed a privately negotiated exchange pursuant to which the holder exchanged $26.9 mln in aggregate principal amount of the 2020 Notes and 2022 Notes and waive all accrued and unpaid interest for approximately 5.2 mln shares of common stock. With this transaction, the company’s interest savings in 2016 and 2017 will be $1.8 mln and $2.1 mln, respectively. Total interest expense savings from the exchange will be approximately $11.6 mln

The company executed a second privately negotiated exchange with a different holder pursuant to which the holder agreed to exchange $13.8 mln in face value of the Preferred Stock and waive all accrued and unpaid dividends, and to exchange $2.2 mln in aggregate principal amount of the Second Lien Notes and waive all accrued and unpaid interest, for an combined total of approximately 1.9 mln shares of common stock. With this transaction, the company will save approximately $0.8 mln in dividend payments per year

Sex with REX comes to mind (no homo).