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| CHF is much stronger than JPY. |
Views: My views unchanged and have been right, so no apologies required. Read my previous views. To add: markets are already beginning to discount QE3, and the stock market “rally” has not been convincing at all. Keep selling strength, but start to take profits in dips to new lows. JPY/USD now at 79.80, near the bottom of the trading range we had seen in early Summer. Sell at the market. Stop at 81. Cover half around 78. On CHF/JPY - the chart clearly shows that CHF is much stronger. As CHF is bought more to escape the euro situation, while JPY is used to escape the dollar, I believe my previous view on coming EUR/USD weakness is correct.
EURO CRISIS
Classifies the eurocountries in six buckets, based on the markets’ view. It’s not just PIIGS anymore. Major groups are: bailout countries, core countries and countries at risk (Spain and Italy).
The widening European sovereign debt crisis – Credit Writedowns
Everyone’s on holidays and a EFSF 2.0 would be seen earliest September-October. Trichet is the only one at the office.
Trichet, you’re our only hope [updated] – alphaville FT
Sprott Asset Management’s view is that euroland banks are very vulnerable to deposit runs, and such runs have a true probability. Hard assets, esp. gold&silver are seeing benefiting from this.
The Real Banking Crisis-Sprott – The Trader
“EFSF too small to have an impact on Italy and Spain…actually a very large entity, and would have more debt than almost any corporation and more than most governments.”
EFSF - Too Small? Too Big? Or Just Wrong? – Zero Hedge
Could There Really Be A Recession Risk In Germany? – A Fistful of Euros
A bit late, but still a good article on the flawed stress tests. Consider this an ok primer.
Satyajit Das: Still Stressed After All These Tests! – Naked Capitalism
“It's gobsmacking. Germans are coming dangerously close to literally fiddling while Rome burns.”
Implosion of Europe may disturb August vacations – Free Exchange / The Economist
Infection is out, the current measures came too late
The single currency's medical chart – Charlemagne / The Economist
FINANCIAL CRISIS
Three former senior Federal Reserve officials say the US central bank should consider a new round of monetary easing efforts, the WSJ reports. US equities rallied on the news.
QE has no real transmission effect to positively impact the real economy. QE has only helped to increase margin debt, stabilize stock markets, increase inflation, weaken the dollar and make commodities rally.
QE3 – Another Monetary Event? – Pragmatic Capitalism
QE3: Is the Big Ship Sailing Into View? – MarketBeat / WSJ
Some trade / value store suggestions that have not been mentioned in every other place
Distribution graph of what S&P long-term credit ratings the S&P 500-corporations have. Majority of the companies have speculative or slightly better rating.
Triple AAA Companies? Not So Much . . . – The Big Picture
FOREX
Global Currency Wars Enter New Stage; Brazil Calls Off Truce, South Korea Reviews "All Possibilities", Philippines Threatens "Prudential Limits" – Mish’s Global Economic Trend Analysis
Japan Intervenes, Yen Plunges; What's Next? – Mish’s Global Economic Trend Analysis
BoJ’s intervention will fail, just like all the previous attempts
Hungary’s Swiss franc woes, local government edition – beyondbrics FT
OPERATORS
Nasty view on BoA’s attempt to get rid of any responsibility: “moral hazard is opportunity”
DouCHe BaNK oF AMeRiKa – Zero Hedge
Royal Bank of Scotland plans to shed as many as 2,000 employees from its investment banking arm as it completes the integration of ABN Amro, the disastrous Dutch acquisition that pushed RBS to the brink of collapse. John Hourican / FT
DIVERSION
Article on McAfee’s recent report
Cyber-security shriek – Babbage / The Economist
Drunken Ben Bernanke Tells Everyone At Neighborhood Bar How Screwed U.S. Economy Really Is – The Onion
Getting Bin Laden - What happened that night in Abbottabad – The New Yorker