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Wednesday, August 3

3rd Aug EARLY - more of the same

Summary: More of the same.

Italy-Germany 10-yr bond yield spread up again today.
Views: Market view unchanged. The rapport between the EU leaders is getting more aggressive and less constructive. I expect little chance for a lasting political solution after the holidays, with yields up everywhere and bailouts starting to number like Police Academy-movies.
  At times like these it is good to take a breather and think of what we are missing. Iran’s nuclear program and inaction by U.S. could push Israel for a bombing run, and it is currently not discounted by markets. I would be careful with shorting oil. Be careful with CHF – the über-gnome of Zürich, Swiss National Bank, is getting more aggressive.

Joke of the Day: "We have to react to the German egoism." – Romano Prodi commenting on Deutsche Bank’s sales of Italian govvies. Prodi is ex-PM of Italy and ex-President of European Commission. How about his responsibility in this mess?


EURO CRISIS
Comparison charts of bond yields across countries – clear decoupling last Spring, with ‘core’  moving down and ‘distressed’ moving up.
The euro area bond crisis in charts – News’n’Economics

‘Emergency meet’ in Italy

Very good article. “The three-month euribor/OIS spread, the fear gauge of credit markets, reached the highest level in two years today, jumping 7 basis points to 40 in wild trading.”

Very good roundup of the current German view on the situation


FINANCIAL CRISIS
Summary of the views of PIMCO’s head on the U.S. fiscal mess.

U.S. housing crisis is far from over


U.S. STOCK MARKET
Summary of the Artemis vol report I’ve previously linked to.


“Nothing good ever happens after 2 A.M.” and that is why the author is out of the stock market
Leaving the Party Early – The Reformed Broker

Crestmont’s research points to a bear market
Converging On The Horizon – Advisor Perspectives


EMERGING
Where exactly would they park their foreign reserves? Yurrup? Brics? They are trying to protect their present and future investments, but are not going to pull away their money.



OPERATORS
“If everyone hates the credit rating agencies, why won't anyone enforce the Dodd-Frank provision to dethrone them?”
Moody's Junkies – Slate


Good trade from BoA! By forgiving some loans that will never be paid back, they would receive the “get-out-of-jail”-card



DIVERSION
 “Nothing good ever happens after 2 A.M.” and that is why the author is out of the stock market
Leaving the Party Early – The Reformed Broker