2nd Aug LATE - more of the same

Summary: more bad macro news, everything down, euro situation getting worse. My guess that markets are wary of 76-level in JPY/USD because of previous intervention at that level was confirmed by Citi’s research. CHF’s rally has failed to pause against my previous view.

View: Unchanged – read previous posts. More weakness (and lots of it) in equity markets and euro end game in full swing. Bearish EURUSD, Brazil’s equity markets falling off the cliff. Given the pause in JPY safe haven buying, CHFJPY might be an interesting pair to trade this week. FOMC meet coming in Aug 9^th, and Helicopter-Bernanke has to get back in action. See the picture

 

Joke of The Day: "Translation of EU statements: We are scared completely s***less by these events. If we were not scared s***less, there would be no need to comment at all.” – Michael Shedlock

EURO CRISIS

Italy, Spain 10-Year Bond Spreads Reach Euro-Era Record on Growth Concern – BB

Euro-Zone Debt Woes Get Messier – MarketBeat / WSJ

Italy Calls "Financial Stability Meeting"; Spain PM Delays Vacation to "Closely Watch Economic Indicators"; EU says "No Rescue Plans for Italy, Spain" – Mish’s Global Economic Trend Analysis

“Odds are good, however, that once again the prevailing system will break down. And the end of the euro zone in its current form won't be pleasant at all, in the short term anyway.”

That 30s feeling – The Economist

Italy is the single point of failure. Including its auctions – alphaville FT

Remember Europe? It Remembers You. You Should Call It Sometime. – MarketBeat / WSJ

Charts of 5-year CDS’s. France rising nastily, not to mention the PIIGS

European Default Risk Spikes – Bespoke Investment Group

Tables of sovereign CDS wideners and highest default probabilities

Spain, Italy, Belgium Yields Now Under Attack – EconoMonitor

FINANCIAL CRISIS

“..there is no quick escape without a scheme to transfer wealth from creditors to debtors, either through defaults, financial repression, or inflation.”

The Second Great Contraction – Rogoff / Project Syndicate

So, as promised, talk about the QE3 increases

Goldman Hoists ‘Recession’ Warning; QE3 Boosters Twitch Excitedly – MarketBeat / WSJ

JP Morgan: "Fiscal Policy Will Cut Our 2.7% 2012 GDP Forecast To Sub 1%" – Zero Hedge

Roundup of views of if and when S&P lowers U.S. rating, and what happens after

What *will* you do, S&P? – alphaville FT

Canada’s housing now at a comparable level to the U.S. bubble top

US vs Canada vs Australia vs UK Realty Bubble – The Big Picture

“Bond traders think this deal stinks for the economy and what they see is an anemic economy.  It’s that simple.”

What in the world is the bond market saying? – Pragmatic Capitalism

EMERGING

Down 20% from the beginning of the year. Table with the size of previous bear and bull runs.

Brazil's Bovespa Enters Bear Market Territory – Bespoke Investment Group

OPERATORS

Revolving Door at S.E.C. Is Hurdle to Crisis Cleanup – Dealbook / NYT

NYSE Euronext Profit Hit by Broad Trading Slump – Advanced Trading

Exchanges Face a Stark Choice: World Domination or Isolation – Advanced Trading

At Goldman, You're Fired Gently - FINS

DIVERSION

Why We Deregulated the Banks – NYT

Equity Risk Premium Book Learning – CXO Advisory Group

A copula to link correlation skew to systemic risk.

Wall Street’s next top model – alphaville FT