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Tsipras Resigns

Embattled Greek Prime Minister Alexis Tsipras Steps Calls Snap Elections

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After receiving the blessing of European Parliaments for a third bailout and repaying the ECB with recently released funds, beleaguered Greek Prime Minister Alexis Tsipras has submitted his resignation to the President, paving the way for September snap elections.

New Greek Elections Coming

Dissent within the Syriza party has reached a fever pitch as lawmakers within the party question the leadership after a new bailout deal was reached with creditors.  Alexis Tsipras has been battling mutiny within his own party as his unpopular move to negotiate a new bailout package went against campaign promises.  While he remains the most popular politician in Greece, Tsipras’ move to call elections might see the level of confidence from the electorate diminished even though he has managed to navigate through the turmoil and secure a new lifeline for the ailing economy.  With creditors paid and reform measures implemented along with recent state asset sales, Greece is poised to begin implementing further policies aimed at growing the economy now that banks will shortly be recapitalized.  Although more stable for now, things could change with the upcoming election.  The Euro continues to surge higher, showing one of its best rallies in months.

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Chinese Manufacturing Tumbles

Mirroring the recent weakness in stock benchmarks with the Shanghai Composite taking out a critical level, manufacturing figures continue to crumble, evidenced by the preliminary Caixin Manufacturing PMI released overnight.  The PMI fell to 47.1, the weakest level in years as policymakers are forced to juggle multiple problems in the economy.  Meanwhile, the Yuan revaluation continues, with the Yuan strengthening overnight just as regional stock benchmarks including the Hong Kong Hang Seng move into bear market territory after retreating over 20% from the most recent highs.  Despite the moves to ease liquidity conditions, the sheer amount the Central Bank is spending to prop up markets and improve transmission mechanisms is very expensive with measures estimated to cost 350 billion Yuan this week alone.  Further stimulus measures will be difficult to implement considering the problems emerging in inflation and the weakening fundamental backdrop.

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Existing Home Sales Hit Multi-Year Highs

In a surprising beat of expectations, existing home sales climbed to the highest level since 2007 although the number proved somewhat dubious after confirmation that it was seasonally adjusted to reflect conditions.  Nevertheless, markets were largely unimpressed even after the Philadelphia Federal Reserve Manufacturing Index showed an uptick that smashed expectations, growing from 5.7 to 8.3.  Weakness in the US dollar and stocks continued to be the main drivers of weakness as gold and US treasuries were bid higher on the flight to quality instead of yield.  The softness in Chinese equities has also extended to US futures markets with commodities continuing to give up ground while US equity futures also slide on the perception of more turmoil and volatility in the pipeline.  The Nasdaq Composite lost -2.82% during the cash session and continues to dive following the losses experienced during the Asian session.

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Copper Equidistant Channel Technical Pattern

Prices of base metals continue to retreat, especially in light of the latest Manufacturing PMI data released from China which was further evidence of the rout underway in the real economy.  Slowing global trade combined with a weak outlook for exports and industrial production continue to weigh on commodities, most notably copper.  Even though positive American housing numbers would be a strong catalyst for upside in copper prices, China’s economy is overshadowing gains in other regions.  Copper is currently trending lower in an equidistant channel formation exhibiting a strongly bearish bias.  Ideal positions taken at the upper channel line should target the lower channel line for an exit.  Fighting the near-term downtrend with long positions sees shrinking potential reward and expanded potential risks.

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