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Monday, September 12

12th Sep Early - CEE, it wasn't that bad!


Hungarian forint against euro
Summary: Greek situation not improving, French banks to be downgraded by Moody’s, bank bailouts and nationalizations coming, ECB paralyzed. On the FX side, the sell-off in Euro is the biggest headline, but you might want to check what the CEE currencies are doing – they have weakened dramatically even against the Euro. The Scandic strength is overhyped by media, as considerable part of their revenues are dollar-based.
Polish zloty against euro
Views: Risk reversals in EURUSD (25-delta) are at historically extreme levels (on Friday 1m ATM 15%, RR -3.45, 3m ATM 15%, RR -3.8). I’ll try to post concrete ideas later.

Quote of the day: It’s not the end of the world. It’s just the end of 1) Americans without at least some college, 2) non-oil-producing Arab countries, 3) the PIIGS, 4) Turkey and 5) French banks. It’s not exactly winner-take-all. But is it is Devil take the hindmost. – David Goldman on Asia Times

Quote of the day 2: HSBC's David Bloom: "Gold Is The Only Safe Haven Asset That Will Not Do QE, Put In Capital Controls Or Complain" – Zero Hedge

Includes a good overview of the German papers. BTH’s news roundup is the best on the web, but terrible to read. You could use Google Reader or copypaste.
** Monday Watch – Between The Hedges

EURO CRISIS
Must-read, full text and charts of the research note.

Greece will fail, but can the contagion be stopped?


Another great text from Evans-Pritchard: “Perhaps a global coalition of the G20, IMF, China, and the oil powers will combine to rescue Euroland, as some now hope. But how would that bridge the gap between EMU’s North and South? It solves nothing.”

Link to a interesting pdf pointing out the aging in periphery and how Germany’s “miracle” is mostly exporting to them: “Global integration is far more important than European integration for future economic growth. Europe will go out not with a bang, but a whimper. And we will wonder what all the fuss had been about.”
** Skidding the GreeceAsia Times

With link to scribd. “Keystone cops of Eurozone” Report also includes topics outside EZ.



ECB choices: 1) cut rates before Draghi, leaving no room to cut, 2) leave rates unchanged and risk being seen as a lame duck as the Euro debt crisis escalates, 3) agree to be removed early so Draghi can announce “his” first interest rate cut?

That the offering is going well is a sign of weakness, not strength (21% haircut on the swapped bonds, realistic estimates otherwise 50-90%).


Roundup from Sunday, nothing new

FINANCIAL CRISIS
Just the document, analysis  more on this later
Independent Commission on Banking — the report - alphaville

EMERGING
Jokes the popularity of Angry Birds is because of higher pork prices

Goldman Sachs research note on China     

Arab Spring might not be such a wonderful thing people believed.

OTHER
Includes link to full paper on scribd.

DIVERSION

The naming of hedge funds – Bronte Capital

Explores the triggers required to ignite the radical loser - whether amok killer, murderer or terrorist - and make him explode.
The radical loser – signandsight.com