Market Update: February 6, 2017

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  • Stocks tick lower to begin quiet week. The S&P 500 is modestly lower in early trading, kicking off a week with little upcoming in the way of economic data and policy; earnings will likely take center stage. The S&P logged a 0.7% gain on Friday following the monthly jobs report, though stocks ended last week little changed despite a barrage of bellwether earnings reports. The S&P climbed 0.1% on the week on the back of a 2.4% gain in the healthcare sector. Asian indexes closed mostly higher overnight; the Hang Seng (+1.0%) outperformed the broader region despite a weak Caixin Services PMI report. European stocks are mostly lower in afternoon trading; Italy’s MIB (-1.6%) leads the way lower while the STOXX Europe 600 is down 0.4%. Finally, the yield on the 10-year Treasury note is down to 2.44%, WTI crude oil ($53.65/barrel) is lower by 0.3%, and COMEX gold ($1228/oz.) is rising 0.6%.

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  • Earnings pace picked up over the past week. S&P 500 estimates for the fourth quarter jumped 1.2% over the past week and are now tracking to an 8% year-over-year increase, 1.8% above initial estimates on January 1, 2017 (Thomson Reuters estimates). The latest improvement was driven largely by the energy sector, which had gotten off to a difficult start and now may produce its first earnings gain in more than two years. Financials and technology, the fastest earnings growers for the quarter, also saw earnings tick up over the past week. Guidance has been relatively good as 2017 S&P 500 estimates have fallen just 0.7% during earnings season, better than average (they typically drop 2-3%) and a positive sign, although only about 55% of S&P 500 companies have reported thus far. This week is another busy one for earnings with 89 S&P 500 companies slated to report.

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  •  Weekly gains again. After a 0.7% jump on Friday, the S&P 500 managed to squeak out a 0.1% gain for the week – the first back-to-back weekly win since Thanksgiving. The S&P 500 just missed out on a new all-time closing high Friday, but it did set a new weekly all-time high. Continuing a recent trend, equity prices gapped at the open, then did very little the rest of the day. In fact, the S&P 500 has now gone 34 consecutive days without a 1% daily range – tying the all-time record from 1995. It has now been 79 consecutive days without a 1% close lower for the S&P 500, the longest stretch in more than 20 years.
  • China continues its post-holiday bad news drip. More Caixin (mid-sized and smaller companies) data were released overnight. Composite PMI (both services and manufacturing) were down as manufacturing disappointed last week, while services fell this week to 53.1 from 53.4 in the prior month. However, the numbers still suggest expansion in the economy, just at a slower pace. This is the eleventh consecutive month of expansion. Asian markets (save Australia) had a positive session overnight and the Chinese yuan strengthened slightly.
  • European data shows continued expansion. European data released this morning show economic expansion, though not all numbers were rosy. German factory orders grew at 5.2% for the month, much better than expected. Retail PMIs also showed expansion (above 50) for most, but these numbers were weaker than expected in Germany and region wide. Of the major countries in Europe, Italy remains the weak link, with retail PMI below 50 since the end of 2015 and weaker than expected this month. Markets are weaker across the board this morning in Europe.
  • Quiet week ahead. Last week (January 30-February 3) was an unusually busy one for economic data and policy. This week (February 6-10) is not. While China will begin to report its January 2017 data set, there are few if any potentially market moving data reports on tap in the U.S., Europe, or Japan. There are a handful of Fed speakers, ECB president Mario Draghi will deliver a speech, and central banks in emerging markets will be busy as Mexico is expected to raise rates and India is expected to cut. The U.K. parliament will continue to debate and then vote this week on whether to trigger Article 50 and officially start the process of leaving the EU.
  • NAFTA. This week we’ll take a look at the politics behind NAFTA-the North American Free Trade Agreement-and its impact on U.S. trade, employment, and wages-as the Trump Administration continues to make changes to U.S. trade policy.
  • A technical look at things. Long-term technicals continue to look very promising, with multiple U.S. equity indexes breaking out to new all-time highs. This type of market breadth bodes well for a possible continuation of the equity bull market. One potential worry is seasonality, as the month of February is historically weak. Digging in more, in the calendar year following a presidential election, February is the worst month on average. One other near-term worry is overall market sentiment is rather optimistic. From a contrarian point of view, this could be a potential warning sign.

MonitoringWeek_header

Monday

  • Harker (Hawk)
  • ECB’s Draghi speaks in Brussels

Wednesday

  • UK: House of Commons to Vote on Article 50
  • India: Reserve Bank of India Meeting (Rate Cut Expected)

Thursday

  • Mexico: Central Bank Meeting (Rate Hike Expected)
  • China: Money Supply and New Loan Growth (Jan)
  • China: Imports and Exports (Jan)

Saturday

  • Fischer (Dove)

 

 

 

 

 

 

 

 

 

Important Disclosures: Past performance is no guarantee of future results. The economic forecasts set forth in the presentation may not develop as predicted. The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. A money market investment is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money markets have traditionally sought to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund. Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks. Treasury Inflation-Protected Securities (TIPS) are subject to interest rate risk and opportunity risk. If interest rates rise, the value of your bond on the secondary market will likely fall. In periods of no or low inflation, other investments, including other Treasury bonds, may perform better. Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk. Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies. Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments. Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate. Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards. High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally should be part of the diversified portfolio of sophisticated investors. Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply. Investing in real estate/REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained. Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged. Technical Analysis is a methodology for evaluating securities based on statistics generated by market activity, such as past prices, volume and momentum, and is not intended to be used as the sole mechanism for trading decisions. Technical analysts do not attempt to measure a security’s intrinsic value, but instead use charts and other tools to identify patterns and trends. Technical analysis carries inherent risk, chief amongst which is that past performance is not indicative of future results. Technical Analysis should be used in conjunction with Fundamental Analysis within the decision making process and shall include but not be limited to the following considerations: investment thesis, suitability, expected time horizon, and operational factors, such as trading costs are examples. This research material has been prepared by LPL Financial LLC.

 

Market Update: November 21, 2016

© Provided by CNBC

MarketUpdate_header

  • Stocks higher to begin holiday-shortened week. Equity markets are modestly positive this morning after gaining for the second week in a row; though the S&P 500, Dow, and Nasdaq each fell 0.2% on Friday. The healthcare sector (-1.1%) underperformed, led lower by biotech, while no other sector moved by more than 0.5%. Overseas, both the Nikkei and the Shanghai Composite advanced 0.8% overnight, while European markets are ticking higher in afternoon trading. Elsewhere, last week’s strength in crude oil ($47.65/barrel) has carried over as the commodity is up another 2.8% ahead of next week’s official OPEC meeting in Vienna, COMEX gold ($1214/oz.) is up 0.4%, and the yield on the 10-year Treasury is a couple of basis points lower after finishing the week at 2.34%, its highest close in over a year.

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  • Final earnings push to the finish line. With just a couple dozen S&P 500 companies left to report Q3 2016 results, Thomson-tracked earnings for the index are tracking to a 4.2% year-over-year gain, representing a 5% upside surprise. Excluding the energy sector’s earnings declines, earnings on pace for a solid 7.5% year-over-year gain. As impressive as the Q3 upside has been, the minimal 0.8% drop in estimates since October 1 for the next four quarters, including a small increase over the past week, has been particularly noteworthy and we think bodes well for the next two or three quarters.

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  • Another weekly gain for the S&P 500. The S&P 500 gained 0.8% for the week last week, but what is more worthwhile is it did this after gaining more than 3% the week before. Incredibly, this is now 10 consecutive times that the week after a 3% gain was green. Leading the way again were small caps and mid caps, as both the Russell 2000 and S&P 400 Midcap indexes closed at new all-time highs on Friday. The Russell 2000 is now up 11 consecutive days for the longest winning streak since 12 in a row back in 2003.
  • Holiday shopping preview. Although the market’s attention has been squarely on the election for the past several weeks, we should not forget how important this time of year is for the U.S. economy. Consumers are in good shape, with low financial obligations, steady job and wage gains, and high consumer sentiment measures. This, along with retailers’ back-to-school shopping increases and the solid stock market performance in 2016, suggest the National Retail Federation’s 3.6% forecast for year-over-year holiday sales growth may be doable. We do not necessarily expect these sales gains to translate into outperformance for the consumer sectors, but we do not expect them to spook markets.
  • Housing, manufacturing, and the consumer in focus this week as investors await the OPEC meeting. While a high-level OPEC meeting is set for Monday and Tuesday this week, the official OPEC meeting in Vienna isn’t until November 30. Until then, investors will digest Black Friday sales figures, which have become much less important in recent years, along with data on home sales, durable goods orders, and the Markit Purchasing Managers’ Index (PMI) for manufacturing. The Federal Reserve Bank (Fed) will release the minutes of its November 1-2, 2016 meeting this week as well. Other than the key German IFO data for November, it’s a fairly quiet week for international events and data, aside from a speech by European Central Bank (ECB)President Mario Draghi early in the week.
  • Welcome to Thanksgiving week. Historically the week of Thanksgiving has had a slight bullish bias, as do most trading days around major holidays. Over the past 20 years, the average return during the week of Thanksgiving for the S&P 500 has been 0.8%, positive 65% of the time (13 out of 20). Looking at the day-by-day performance, Monday has the best average return, up 0.5%, although Wednesday has been higher more often, 70% of the time. Surprisingly, the best Thanksgiving week over that timespan was 2008, when all four days were green and the S&P gained 12.0%. The worst? All four days in 2011 were red and the index fell 4.7%.

MonitoringWeek_header

Monday

  • OPEC Meeting in Vienna
  • ECB’s Draghi Speaks in Strasbourg

Tuesday

  • OPEC Meeting in Vienna

Wednesday

  • Durable Goods Orders and Shipments (Oct)
  • Markit Mfg. PMI (Nov)
  • FOMC Minutes
  • Eurozone: Markit Mfg. PMI (Nov)
  • Japan: Nikkei Mfg. PMI (Nov)

Thursday

  • Germany: Ifo

Friday

  • Advance Report on Goods Trade Balance (Oct)

 

 

 

 

Important Disclosures: Past performance is no guarantee of future results. The economic forecasts set forth in the presentation may not develop as predicted. The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. A money market investment is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money markets have traditionally sought to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund. Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks. Treasury Inflation-Protected Securities (TIPS) are subject to interest rate risk and opportunity risk. If interest rates rise, the value of your bond on the secondary market will likely fall. In periods of no or low inflation, other investments, including other Treasury bonds, may perform better. Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk. Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies. Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments. Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate. Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards. High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally should be part of the diversified portfolio of sophisticated investors. Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply. Investing in real estate/REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained. Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged. Technical Analysis is a methodology for evaluating securities based on statistics generated by market activity, such as past prices, volume and momentum, and is not intended to be used as the sole mechanism for trading decisions. Technical analysts do not attempt to measure a security’s intrinsic value, but instead use charts and other tools to identify patterns and trends. Technical analysis carries inherent risk, chief amongst which is that past performance is not indicative of future results. Technical Analysis should be used in conjunction with Fundamental Analysis within the decision making process and shall include but not be limited to the following considerations: investment thesis, suitability, expected time horizon, and operational factors, such as trading costs are examples. This research material has been prepared by LPL Financial LLC.

Market Update: November 14, 2016

© Provided by CNBC

MarketUpdate_header

  • Stocks near flat as bond yields continue to rise. U.S. markets are little changed in early trading, though the bond market continues to make waves as the yield on the 10-year Note (2.25%) is up another 10 basis points from Friday’s close. Last week saw the S&P 500 post its largest weekly gain in more than two years (+3.8%) with the heavily-weighted financial sector leading the way, up 11.4%; rate-sensitive utilities, consumer staples, telecom, and real estate all closed lower on the week. Asian markets were mixed overnight; Japan’s Nikkei (+1.7%) climbed following a better than expected Q3 gross domestic product (GDP) release, while the Hang Seng lost 1.4%. European markets are mostly higher in the afternoon session, though they have pulled back from earlier levels alongside a drop in oil, which is down 1.2% to $42.90/barrel as supply concerns weigh on the price. Finally, COMEX gold ($1211/oz.) continues to sell off and the dollar index (+1.0%) has carried over last week’s momentum, approaching two-year highs.

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  • Earnings recession ending with a bang. Corporate America is delivering a strong end to earnings recession, with the S&P 500 tracking to a 4.1% year-over-year earnings increase (approximately 7.4% excluding the energy sector). The 71% beat rate has led to a roughly 5% upside surprise to prior (October 1, 2016) estimates. S&P 500 earnings estimates for the next four quarters, which dipped just 0.1% over the past week, have continued to hold up well during earnings season, losing slightly more than 1%. Look for more from us on earnings in the upcoming weeks in our Corporate Beige Book and Outlook 2017.

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  • What a week. Last week was historic on many levels. Among the highlights: the S&P 500 gained 3.8% for its best week since October 2014, the Dow gained 5.4% for its best week since December 2011, bonds were hit very hard as the 10-year yield spiked 21% (the most ever, using reliable data going back 50 years), the CBOE Volatility Index (VIX) had its third-largest weekly drop ever (down 37%), biotech had its best week in seven years, small caps gained more than 10%, microcaps did even better by adding 12%, and financials tacked on 11% – their best week since May 2009. We are not surprised that stocks recovered from the initial post-election selloff; but rather how swiftly. There were several factors behind the sharp turnaround, including the certainty of the outcome, optimism regarding a peaceful transition, anticipation of market-friendly policies, and negative investor sentiment heading into the election.
  • Post-election standouts include financials, healthcare and industrials. The outlooks for financials, healthcare, and industrials appear to have brightened meaningfully and energy and small caps may get a boost. The near-term may continue to be volatile for emerging markets, though we maintain our positive intermediate-to-long-term view on that asset class amid attractive valuations, earnings stabilization, and expected moderation of Trump’s views on foreign trade. Look for more on potential election impacts in our Outlook 2017, due out later this month.
  • Japanese GDP upside surprise. Japanese Q3 economic growth was much higher than expected, increasing 2.2% on an annualized basis, compared to expectations of a 0.8% increase. Trade was the surprising variable, with exports higher and imports lower than expected. While this is good news for the economy overall, data from key sectors like business and consumer spending were largely consistent with expectations. That data, combined with measures of inflation also released, suggest that internal Japanese demand remains relatively weak, despite the better GDP headline.
  • Chinese economic data was slightly weaker than expected, and flat over previous releases. China released industrial production and retail sales overnight. Industrial production grew at 6.1% year over year, slightly less than the 6.2% increase expected. Consumer spending increased 10% year over year, a good gain on an absolute basis, but still below the 10.7% expected. Overall, the data from China continue to show stabilization in the economy, but there is much work to do as the government attempts to guide the economy from an industrial and export orientation toward a more consumer-oriented consumer economy.
  • Key data on inflation, housing, manufacturing, and the consumer along with Fed Chair Yellen in the week ahead. Late last week, Federal Reserve Bank (Fed) Chair Janet Yellen added a last minute appearance before the Joint Economic Committee of Congress for November 17, and that appearance is the key to this week’s calendar. Data on inflation, housing, manufacturing, and consumer spending will also draw plenty of attention. In addition to Yellen, there are more than a dozen other Fed speakers on the docket this week, presumably preparing markets for a December rate hike. Overseas, key data on GDP (Japan) and industrial production and retail sales (China) were released over the weekend, while later in the week a key speech from European Central Bank (ECB) President Draghi and data on GDP (Eurozone), ZEW (Germany) and CPI (UK) are on tap.

MonitoringWeek_header

Monday

  • Kaplan (Hawk)
  • Lacker (Hawk)

Tuesday

  • Retail Sales (Oct)
  • Empire State Manufacturing Report (Nov)
  • Fischer (Hawk)
  • Germany: ZEW (Nov)
  • Eurozone: GDP (Q3)

Wednesday

  • NAHB Housing Market Index (Nov)
  • Bullard (Hawk)

Thursday

  • Housing Starts and Building Permits (Oct)
  • Yellen (Dove)
  • Mexico: Central Bank Meeting (Rate hike expected)
  • China: Property Prices (Oct)

Friday

  • Leading Indicators (Oct)
  • George (Hawk)
  • ECB’s Draghio speaks in Frankfurt
  • APEC Leaders Summit in Peru

 

 

 

 

Important Disclosures: Past performance is no guarantee of future results. The economic forecasts set forth in the presentation may not develop as predicted. The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. A money market investment is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money markets have traditionally sought to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund. Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks. Treasury Inflation-Protected Securities (TIPS) are subject to interest rate risk and opportunity risk. If interest rates rise, the value of your bond on the secondary market will likely fall. In periods of no or low inflation, other investments, including other Treasury bonds, may perform better. Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk. Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies. Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments. Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate. Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards. High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally should be part of the diversified portfolio of sophisticated investors. Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply. Investing in real estate/REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained. Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged. Technical Analysis is a methodology for evaluating securities based on statistics generated by market activity, such as past prices, volume and momentum, and is not intended to be used as the sole mechanism for trading decisions. Technical analysts do not attempt to measure a security’s intrinsic value, but instead use charts and other tools to identify patterns and trends. Technical analysis carries inherent risk, chief amongst which is that past performance is not indicative of future results. Technical Analysis should be used in conjunction with Fundamental Analysis within the decision making process and shall include but not be limited to the following considerations: investment thesis, suitability, expected time horizon, and operational factors, such as trading costs are examples. This research material has been prepared by LPL Financial LLC.

Greece’s Banks Are on the Brink as ECB Mulls Next Move

© REUTERS/Yannis Behrakis "No" supporters wave Greek national flags on the main Constitution (Syntagma) square in Athens, Greece July 5, 2015.
© REUTERS/Yannis Behrakis

After Sunday’s landslide “no” result in Greece, the survival of the country’s banks — closed for the past week and with a daily ATM withdrawal limit of €60 per customer — hangs in the balance as the European Central Bank considers its next move.

The ECB’s governing council was due to meet Monday in Frankfurt, Germany, to discuss whether to continue propping up the Mediterranean country’s struggling lenders after Greeks voted 61.3% to 38.7% to reject the terms of a European Union-led bailout to replace the one that expired on June 30.

With the prospect of a Greek exit from the eurozone now very real, that puts the already fragile banking system in even more of a capital crunch, observers warned.

“Bad blood, closed banks and no more bailout,” tweeted ING-DiBa Economist Carsten Brzeski, while Berenberg Bank Chief Economist Holger Schmieding blogged that the absence of an immediate bailout deal makes it “very hard” for the ECB to authorize continuing emergency support for Greek lenders.

The Greek banks most at risk are the country’s largest: National Bank of Greece, Piraeus Bank, Alpha Bank and Eurobank Ergasias. They account for more than 90% of Greek banking assets.

All four had their long- and short-term issuer default ratings, along with their viability ratings, downgraded last week by Fitch Ratings, which warned that they would have defaulted had capital controls not been imposed at the start of the week.

However, shares in the banks rose sharply on Monday, with Alpha Bank closing up almost 13%.

As for how to plug the capital holes, Credit Suisse Group analysts Neville Hill and William Porter suggested three possible courses in a Monday research note: bankruptcy; a recapitalization from the European stability mechanism that would put Greek banks under EU ownership; or, in the case of a ‘Grexit,’ or Greek exit from the eurozone, capitalization by the Bank of Greece. The latter would entail converting all euro contracts into a new currency, meaning that a Greek banking system as such would cease to exist.

For now, the ECB is staying mum on whether to lift its €88.6 billion ($97.7 billion) ceiling on emergency liquidity assistance for Greek lenders, two weeks before another crucial deadline when Greece has to repay €3.5 billion to the ECB.

“Regarding Greece, we currently have no communication planned for today,” an ECB representative said.

Besides the ECB meeting, Sunday’s referendum outcome left politicians scrambling to prevent a major Greek financial meltdown and unprecedented eurozone exit.

EU Council President Donald Tusk spoke by phone earlier in the day with ECB President Mario Draghi and Eurogroup chief Jeroen Djisselbloem, while German Chancellor Angela Merkel and French President François Hollande are due to compare notes over dinner in Paris. Euro-area finance ministers will gather in Brussels on Tuesday afternoon, followed by an evening summit of EU leaders likely to drag on for most of the night.

In a short statement Monday, Djisselbloem called the referendum outcome “very regrettable for the future of Greece,” warning that difficult measures and reforms are inevitable for the economy to recover.

As politicians and monetary policy makers try to figure out what happens next and await a revised bailout proposal from Greek Prime Minister Alexis Tsipras, observers weighed in on the consequences of a Grexit.

“A Greek exit from the common currency would be a financial, economic, social and potentially also political catastrophe for Greece, aggravated by the chaotic way a new currency would have to be introduced,” analysts at the Brussels-based European Policy Centre wrote on Monday.

They added: “Greece would be cut off from international financial markets, with disastrous repercussions for Greek banks and companies, while capital flight and emigration would become endemic … The political system might well be undermined, with potential dire consequences for stability and democracy in Greece, which is already under strain because of the deep split in society.”

Written by Renee Cordes of The Street

(Source: MSN)