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Tuesday, August 9

9th Aug Early – carnage continues, Euro situation a question mark

Summary: Stocks closed down in U.S. (S&P 500 biblically -6.66%) and Asia continues falling in sympathy. FX picture unchanged, commodity currencies getting hammered as growth outlook got worse. FOMC coming up, and the Fed must and will do something, if only talk.

Views: Seems I was wrong on the possible U.S. surprise bounce up until the FOMC. Maybe today a relief rally? Keep the Brazil short. The intraday action on EURUSD is somewhat against my previous bearish view: the market seems more comfortable testing the upside, not the downside. Keeping out of the market for now.

“..the only way forward is for the ECB to guarantee the entire stock of Eurozone debt and for Eurozone members to adopt effective, national fiscal institutions”
They still don’t get it – Wyplosz via

Letter from Absolute Return Partners: Very good euro crisis commentary
Why the U.S. of AA Matters – Pragmatic Capitalism

“meeting of the ECB board have become heated”, “(ECB) is engaging in extend and pretend”

Chart of Fed and ECB balance sheets
A Study in Central Banks – Infectious Greed

Links to roundups of Monday’s rout.
Monday extra: carnage recap – Abnormal Returns

Some interesting points, e.g. ..they will figure a way around (Dodd-Frank) and TARP BAC.
What A Day! – The Daily Capitalist

Apparently all AAA-rated sovereigns have higher CDS price than U.S. That is the market’s opinion on the U.S. credit-worthiness.
Sovereign CDS Close for 8/8/11 – Stone Street Advisors

John Mauldin’s latest letter
Breakfast with Dave – Pragmatic Capitalism

“weight and speed mean emerging markets drive global growth, commodity prices and inflation.”
Why the tail wags the dog – The Economist

Emerging market resilience – Didier, Hevia & Schmukler via


London Riots graph – Thomson Reuters

The Business of Austerity – The New Yorker