Market Talk

I gotta get a raise.

Forgive the bad play on words. Sometimes I can’t help myself.

The more I read and think about this China yuan thing, the more convinced I become that the PBOC’s decision had little if anything to do with events in the outside world. Sure, if the Chinese leadership can make their trading partners think that they’re actually listening, and responding to, the fulminations of the Chuck Schumers of the world, then great. If they can trip up the speculators, and hold off the hot money, then great. But there are things going on in China that are more important than what Chuck Schumer thinks.

The People’s Bank set the yuan a little higher today, but in trading it fell a little lower. It was all within the prescribed band of 0.5% on either side of the yuan, and it’s a warning shot to speculators that “flexible” does not mean a one-way bet that they can easily play. Still, while the People’s Bank may have an ax to grind with speculators, that wasn’t their main target.

Our colleagues over at the China Real Time Report blog have done a superb job of following the develops within China’s labor force. The problems are disparate; workers striking for higher wages, a spate of suicides at one specific factory, a series of apparently mentally insane people killing schoolchildren. But they all point to the same general area: rising inequality among the populace.

On that last, “recent rhetoric in China’s state-run media suggests the government is publicly signing onto the view that rising social imbalances along with insufficient treatment for the mentally ill contributed to a recent spate of attacks on schoolchildren,” Brian Spegele wrote. Before, the government treated the killings as random acts that could be stopped with better security. Then, there are the labor shortages.

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Honestly, this is too complicated for me to follow.

Unless you’re in a Greek union, or you own a German bank, you’d be best off just letting the Greek drama play itself out. This thing is changing almost hourly, and you’re liable to end up like a character in one of Aeschylus’ plays trying to keep up. And none of them came to particularly happy ends.

Yesterday, everything was peachy. Resolution seemed at hand. Today, not so much.

A Greek official told Dow Jones today that the country may have to hit up the IMF for “support,” as it appears unlikely their European brethren would offer anything more concrete than the valueless words they’ve been offering these past weeks. So European stocks tumbled, the euro fell, and things looked grim. Again.

Mind you, the Greeks haven’t asked anybody for money.

Then, this morning, this report comes out that some EU members, like Finland and Italy, could back an IMF-led bailout of Greece. That was followed by another report that Germany was backing a joint EU-IMF bailout (a report that also stressed that the Greeks aren’t asking for money.)

Those were followed by yet another report that Germany now thinks if Greece need a bailout, the IMF should handle it (this report also pointed out that the IMF said it hasn’t been asked for money by Greece.)

This was followed by, you guessed it, yet another report. Now Greek PM George Papandreou (we’re getting good at spelling that name) stressed that Greece doesn’t want money from anybody, not the EU, not the IMF, not Bono or any assemblage of famous musicians. “We want to do it ourselves,” he said.

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Bears got in a couple good jabs yesterday, so the matter today is about how bulls respond. US dollar is slightly weaker, which works in bulls’ favor, but there’s little indication coming from stock futures of any early direction.

Tone was weaker in Asia overnight following the US selloff, and European markets are mixed to higher. Much of the morning focus is likely on Bernanke’s testimony on the Hill, which begins at 10 a.m. Also at 10,  January new home sales due.

US dollar index down slightly at 80.73. S&P futures up 1.50, DJ futures up 18. Ten-year lower, yield at 3.70%.

Meanwhile, the national strike in Greece has basically shut the nation down, and is even seeing sporadic violence. Police and youths are fighting in central Athens, with a small group of the latter tossing Molotov cocktails. The strike is also, curiously enough, “rattling” the Greek bond market, the Journal reports, and may even “complicate” efforts to launch an offer of 10-year notes planned for this week.

What’s curious about that is that this strike was known about since at least last week. If they’re going to blame the strike for delaying the bond offering, well, that’s not a good sign.

The rage of Achilles

Sing to me, muse, of the rage of Peleus’ sons.

As the Greeks plan to test the market with a high-stakes bond sale, the situation on the ground, as the Army boys say, continues to roil. Customs agents and taxi drivers continue to strike, and everybody’s all riled up about accounting shenanigans.

But at least some of the strikers — farmers and tax officials — have abandoned the blockades, and polls continue to show a majority of people approve of the “austerity measures.”

Now, I knew I couldn’t be the only one who picked up on the “Titanic” comment by the Greek finance minister, and how dangerously inappropriate it was. Apparently, some of the Greeks also noticed it.

“The real economy is being seriously harmed by dangerous and irresponsible statements, such as that made by the finance minister regarding the…Titanic!” the leader of the New Democracy opposition party, Antonis Samaras, said. That comment came in the middle of a cattle call’s worth of attacks on just about everybody and everything.

Samaras ripped the prime minister for trying to break up the “internal front,” suggested a fact-finding commission might wreck the country’s image to outsiders and destroy the ruling party, and said the government’s plan would only further harm the economy.

It was kind of like an average evening with Mark Levin.

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