Finance

Morning Market Roundup: Greeks Withdraw $1B Before Vote, U.S. Retail Down, Italy Catches the Contagion Bug

Here’s what’s important in the business world this morning:

Greece: With a make-or-break election scheduled for this Sunday, Greeks have withdrawn over $1 billion from banks and are stocking up on food.

“Bankers said up to 800 million euros ($1 billion) were leaving major banks daily and retailers said some of the money was being used to buy pasta and canned goods, as fears of returning to the drachma were fanned by rumors that a radical leftist leader may win the election,” CNBC reports.

The pro-bailout party New Democracy party is currently tied in a race with the left-leaning group Syriza party, which aims to cancel Greece’s bailout package.

The coming election could very well decide whether Greece remains in the euro, is forced out, or withdraws.

U.S. Retail: U.S. retail sales declined in April and May, pulled down by declines in gas prices. But even after excluding volatile gas sales, consumers barely increased their spending.

The Commerce Department said Wednesday that retail sales dipped 0.2 percent in May. That followed a revised 0.2 percent decline April. The back-to-back declines were the first in two years.

The weakness reflected a 2.2 percent decrease in gasoline station sales. Still, excluding gas station sales, retail spending rose just 0.1 percent in May. And it dropped 0.1 percent in April. That left retail spending roughly flat outside of gas sales for the two months, a sign that slower job growth and paltry wage increases may be leading consumers to pull back on spending.

Total retail sales fell in April to $404.6 billion. That‘s slightly below March’s record level of $406.2 billion and 21.6 percent higher than the recession low hit in March 2009.

Italy: Italian Premier Mario Monti saw nearly seven months of confidence-building by his government wiped out by Wednesday, when a debt auction showed the country’s borrowing rates were back near levels last seen in December.

A sale of 12-month bonds, a warm-up for Thursday’s weightier long-term debt auction, demonstrated the speed with which market jitters spread from Spain following Madrid’s weekend concession that its banks need a bailout.

Italy paid an interest rate of 3.972 percent – up from 2.34 percent in a similar auction last month – to borrow (EURO)6.5 billion ($8.12 billion) in 12-month money from bond markets. Though demand was strong, the high rate suggests investors worry Italy may need a rescue of its own if Spain takes one.

“Contagion is back with a vengeance, and Italy is bearing the brunt of the fallout from Spain’s request for external assistance,” sovereign debt expert Nicholas Spiro said. Markets, he noted, are no longer differentiating fiscally-stronger Italy from Spain, “which is a sign that panic has set in.”

France: France’s finance minister has unveiled a plan to cap the pay of top executives at state-owned companies at (EURO) 450,000 ($562,140).

The pay cap was part of President Francois Hollande’s campaign pledge to reign in corporate excesses, which he blames in part for the financial crisis.

The move affects only a fraction of French executives, but includes such well-known state-run companies as the SNCF railways, La Poste postal service, and EDF electric company.

Finance Minister Pierre Moscovici said at a press conference Wednesday the cap will be instituted across all state-owned companies by the end of the year.

JPMorgan: Jamie Dimon, chief executive of the largest U.S. bank, will be asked Wednesday to explain how JPMorgan Chase lost more than $2 billion on risky trades and whether its executives failed to properly manage those risks.

Exactly what kinds of trades were made by the investment operations in London where the losses originated? Did JPMorgan have adequate controls in place to prevent such losses? How much did Dimon know?

Dimon will be pressed to provide a clearer picture of all those issues when he testifies to the Senate Banking Committee. He plans to tell the panel that JPMorgan has taken steps to prevent such losses from occurring again, according to his prepared testimony issued by the bank.

The Associated Press contributed to this story.

Comments (23)

  • theorybattledotcom
    Posted on June 13, 2012 at 6:00pm

    if you have a theory on what is behind all this, put it on http://www.theorybattle.com so the topic can have some traction and resolution.

    Report Post »  
  • Cavallo
    Posted on June 13, 2012 at 11:22am

    Does it bother anyone that a company in the private sector is being summoned (hat in hand) to answer questions about a business decision to a central committee of politicians? Does it concern pending regulation or legislation? Was anything done that was illegal? If not, it should make you slightly uneasy how authoritarian our government has become.

    Report Post » Cavallo  
  • lukerw
    Posted on June 13, 2012 at 10:43am

    You can fool… some of the people all the time… and all the people some of the time… but you cannot fool all the people all the time!

    Report Post » lukerw  
  • LeadNotFollow
    Posted on June 13, 2012 at 10:36am

    …
    A vote for a third party candidate is the same as a vote for Obama.
    We must unite behind one candidate, Republican nominee Mitt Romney, in order to remove Obama from power.

    If Obama gets four more years, the U.S. will become a Dictatorship run country. America will fall. We will be no more. We will become a third world country.

    I’m all for a one term limit for all elected officials.
    Do you realize how happy and positive American citizens would be right now? The economy would be bouncing back at a break neck speed, if everyone knew for a fact that Obama would be gone in November (actually January).

    Report Post »  
    • Mutiny
      Posted on June 13, 2012 at 12:20pm

      If Romney sticks with his plans of not cutting current spending levels, not ending the endless wars, continues to support freedom stripping bills, ignores the FED, and keeps us in the UN, hell will freeze over before I vote for him.

      Say NO to Obama/Romney 2012!!!

      Report Post » Mutiny  
  • discus02
    Posted on June 13, 2012 at 10:33am

    Blame the Republicans all you want but Obama has run up a 5 Trillion Debt in 3+ years on what. We are worse off now then when he came into office. Some hole in Chicago is looking for an as-.

    Report Post »  
  • MikeinIdaho
    Posted on June 13, 2012 at 10:32am

    We’ve all been warned, over and over again by Glenn and others!
    Hope you all stocked up on all essentials because something wicked, this way comes!

    Report Post » MikeinIdaho  
  • confederacyofdunces
    Posted on June 13, 2012 at 10:25am

    We need to stop bailing out other countries directly with aid or through the IMF /world bank. Another Qualitative easing, Bullsh1t.

    Report Post »  
  • Teabunny
    Posted on June 13, 2012 at 10:11am

    Romney can’t win. the Republicans have disqualified him!

    The Republicans disqualified Romney, before this started! Tell me, does the RNC KNOW the rules? why invalidate the candidate?

    RNC’s Rule 11 States that Mitt Romney Must Be Disqualified
    RonPaulForums
    http://weeklyintercept.blogspot.com/2012/05/rncs-rule-11-states-that-mitt-romney.html#.T7ABoGBeQaw.twitter

    the screen shot from HIS own site admits that the RNC was helping him! see it for yourself! He’s done for!

    Report Post » Teabunny  
    • Unix
      Posted on June 13, 2012 at 10:36am

      Good grief, take some smelling salts Truth Team member! You’re an Obot and we know it, take a hike!

      Report Post » Unix  
  • cloudsofwar
    Posted on June 13, 2012 at 10:08am

    the question is, when the euro collaspes will it lead to WAR? how much of OUR MONEY is Obama sending to Spain? Obama the Wrong Prez at the Wrong time. why would anybody vote for a democrat after seeing what they’ve been doing to us?

    Report Post »  
    • Exrepublisheep
      Posted on June 13, 2012 at 10:21am

      Because we saw what the republicans did to us. 4,300 dead Americans in Iraq. That’s why.

      Report Post » Exrepublisheep  
    • Unix
      Posted on June 13, 2012 at 10:39am

      Ugh, the sheep speaks, so it must be true!? This is Obama’s economy now sweetheart, and he can not run on his record of failure, so he must defame and bash whoever he can, Bush, GOP, Romney…and you just fall right in line. I hear there are Obot Truth Teams, go join them, and spread more lies! No one from Afghanistan plotted to take down the Twin Towers, it was a figment of your imagination…wake up to reality will ya?!

      Report Post » Unix  
    • yougottabekidding
      Posted on June 13, 2012 at 10:46am

      What election
      Hussein has already signed executive orders so he can
      Declare martial law. When that is done there will be no elections
      They don’t even need a reason but the biggest one is they are
      being exposed.

      Report Post »  
    • idaho1
      Posted on June 13, 2012 at 11:36am

      More like, how much of China’s money that Obama borrowed that is being sent to Spain and we will then pay interest on.

      Report Post »  
    • Mutiny
      Posted on June 13, 2012 at 12:30pm

      @unix

      You do know that Bin Laden came on CBS in 1998 and declared war on the United States. During that interview he said our occupation of Saudi Arabia was the reason for his declaration. 15 of 19 hijackers on 911 were Saudis.

      We cannot continue these wars. We are bankrupt. Starting new wars against nations that poses zero threat to us is just insane. Iran, Syria, Libya, Yemen, Iraq, Pakistan and Afghanistan when will it end. We we blow up a building sometimes kids die. What happens in Pakistan when that kid dies, what does his father become? He becomes one of the one shooting at us. What do you want to do exterminate all of the Muslims?

      If we pull back and close 80% of our foreign bases, allow countries like Germany, South Korea, and Japan to start paying for their own defense we can save our country. If we continue to be the police men of the the world we will be bankrupt and wont be around for those countries our Israel when they actually need help.

      Report Post » Mutiny  
  • Snowleopard {gallery of cat folks}
    Posted on June 13, 2012 at 10:08am

    End game is at hand, now its a matter of when and not if; unless God himself decides for it to be otherwise. All that we can do now is get ready in what time is left, and ride out the storm.

    Report Post » Snowleopard {gallery of cat folks}  
    • Unix
      Posted on June 13, 2012 at 10:44am

      God has already spoken in Revelations and elsewhere about what is to come, is that time now? I don’t know. Do prepare, but this will not just be a storm, it will be a conflagration. We may not survive it, who knows, but do prepare as best you can, I implore you! This whole house of cards could come down very quickly. Gov’ts have been kicking this can down the road, and the dead end approaches…whether it is default and depression, or stagflation is anyone’s guess…either way it will not be pretty!

      Report Post » Unix  
  • RLTW
    Posted on June 13, 2012 at 10:02am

    Wait till June/July spending comes out; I see nothing on the horizon that makes me believe things will get better anytime soon.

    I lost my job 2weeks ago, and without question I can blame Barry

    Report Post »  
  • LadyLibertykicksASS
    Posted on June 13, 2012 at 9:57am

    And They All Come Tumbling DOWN…!!!

    Report Post »  
  • GeorgeWashingtonslept here
    Posted on June 13, 2012 at 9:54am

    Hmmmm, looks like all hell is getting ready to break loose…………hunker down people.

    Report Post »  
  • progressiveslayer
    Posted on June 13, 2012 at 9:48am

    We’re all connected financially and Greece is the first domino and when they default,well you know the rest.

    Report Post » progressiveslayer  
    • objectivetruth
      Posted on June 13, 2012 at 10:12am

      Yeah that is the problem.We are too connected.International commerce used to be the second player.The domestic agenda was first.We were much more solvent then.I’m not just talking of the US but the entire world.International commerce came from excess domestic production or quantifiable needs that only the other country could produce.When you are domestically strong you are in a better position on the international stage.Now if we can only make everyone see that, prosperity won’t be forever lost.It would help as well if we accurately target the problems.Most of the time it starts within the country itself.Sorry the list of problems faced within is several pages long It wouldn’t fit even if I briefed it to a readers digest condensed version.Suffice to say every country in the world is in somewhat the same position.

      Report Post »  

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