Predictable Stuff: Market Soars on Vague Talk of a 'Greek Letter'

     If you've watched the dance of Greece and the Troika for 5 years today seems familiar. The equity market is going through the roof that 'Tsipras has come off the ledge'-though again, it's totally vague what this letter says and what he's offered.

    http://www.cnbc.com/id/102798379

    This letter reportedly shows Tsipras is willing to concede ground in talks-which as far as I can tell he's always been willing to do-it's the big shots in the EU and IMF who aren't willing to concede anything. So the markets are off to the races.

     For those who argue that Greece leaving will hurt Greece but not the EU-the markets are not acting that way. Now based just on using past history as a guide, what will happen today or tomorrow or at some time in the near future: the EU will declare the concessions don't go far enough and Tsipras will throw up his hands and then the markets will sell off again.

    Right now I can't get into the market but if I were this morning. I'd be all set to buy S&P puts after the market soars at the open.

    There is a school of thought that the real goal of the Troika here-the ECB, the EC, ,and the IMF-is not to get a deal but as Tsipras says kill hope that there can be any loosening of the fiscal screws that is austerity.

    If this is true as seems plausible, then the goal is not a deal but to break Tsipras. If so then ultimately the Troika will reject this offer as they've rejected previous offers in the last few weeks.

    Indeed, looking deeper at what some hotshots are saying, this isn't going to move the needle either.

    "Carsten Brzeski, chief economist at ING-DiBa, with some comments to CNBC on that letter which suggests Greece is backing down to its creditors.

I increasingly have troubles reading Mr. Tsipras.In my view, this letter is another tactical move to stay ahead of the euro zone in the ongoing blame game, rather than a serious change of mind. But maybe I am wrong.

In my view, the euro zone will not move anymore ahead of the referendum. Even if an agreement would be possible, so much trust has been destroyed that it is hard to see that the euro zone would believe Tsipras this time around. What if he signs an agreement? The euro zone would not have any evidence that this time is different and that the reforms will really be implemented.Therefore, I guess that the euro zone will wait for the verdict of the Greek people to see whether any new reform plan really has full support.

      http://www.cnbc.com/id/102798379

      This is the tone you hear from Very Serious People everywhere-like Scott Sumner

      http://www.themoneyillusion.com/?p=29822

      http://www.themoneyillusion.com/?p=29815

      There's nothing specific about most of this criticism it's just vague talk of 'How can the Troika be expected to take them seriously?! The very idea.'

      So all the signs point to this being another false flag. 

      "Jonathan Loynes, Chief European Economist at Capital Economics, has just sent out a new research note.

We think it unlikely that Greece’s creditors will agree to its request for a new two-year bailout and an explicit commitment to debt restructuring, even with Mr Tsipras’ new concessions. If nothing else, such a deal would require a whole new memorandum of understanding and approval from the German parliament. And discussions over the precise form and extent of debt restructuring will take considerable time.

      "Even if they do sign up to such a deal, we have seen how previous bailouts and minor debt restructurings have done nothing to make Greece’s debts more sustainable. That, after all, was supposedly why the Greek government has consistently pledged not to enter new bailouts but to secure instead a major debt write-down. In short, we will continue to watch with interest how events unfold. But for now, we do not share the markets’ apparent optimism that an end to the crisis is near."

     Yet the market is acting as if this is the smoking gun needed. But going by both repeated history for the last 5 years and what the honchos and folks in the know are saying now points to the opposite conclusion. So the equity indexes offer a great shorting opportunity. 

     UPDATE: Merkel has already said there will be no deal before the referendum. 

     It seems maybe some of the optimism is that Tsipras wrote the letter at all. Predictably the pundits are hoping it's a sign of weakness.

     http://www.cnbc.com/id/102798379

     So if anything maybe this weakened his position. However, I don't think so, My guess is he's just making a point to the Greek people about the futility of trying to negotiate. Again, the big hope of the Troika is that this ends up crushing Tsipras. 

    They want to go back to the PASOK party where the leaders sold out the Greek people in order to pay wealthy foreign bondholders again and again. 

     Here is step 2 in the dance. Step 1 was Tsipras' ofer. Step 2 is the VSP worry that his concessions don't go far enough. Note that we never hear any details. 

   http://www.cnbc.com/id/102801387