20th Sep Early - Beijing has a fit as EU not fit

Summary: S&P downgraded Italy, Greece’s prime minister plans for a referendum on should the country stay or leave the euro. Chinese state bank has stopped dealing in FX forwards and swaps with several European banks, incl. SocGen, BNP, UBS.

Tuesday Watch – Between The Hedges

London headlines – beyondbrics / FT

FX vols 20^th Sep 07:00 GMT

Vols, Risk Reversals & Pin Risk – tradingfloor.com

EURO CRISIS

** Greece Says Aid Talks 'Productive' – WSJ

What happens to the CDS’s on Greek debt

Get Ready for the next act in the Debt Crisis: Starring Greece, directed by the Markets.. the audience? Everybody… - Wired and Ready

S&P Cuts Italy Rating on Weak Growth Outlook – BB

S&P downgrades Italy – alphaville / FT

S&P Downgrades Italy; Euro, Futures Tumble – ZH

FOMC

Policy is as easy as it can get: only inflation (taxing money in the bank) and slow debt deflation are left.

Fed: Out of Powder – Surly Trader

Too easy monetary policy risks an eventual loss of policy control

Fed is Measuring U.S. Economic Health by the Wrong Number – II

Flexible inflation targeting should not be the only target

Rethinking central banking – voxeu.org

OTHER

No WTO membership – Chinese bank closes trading lines, talk USD is safer than EUR, reviews recent M&A deal

** China Pulls The Rug From Under Europe, Halts French Bank Transactions, Makes Good On Trade War Ultimatum – ZH

Annual meeting next weekend. Preview of the event – “recovery” seems to be the big topic, instead of solvency, default, deficit, bad euro system, banks.

Weak Global Economy Tops Agenda at IMF-World Bank Gathering – iMFdirect

Expands on SocGen’s latest paper on price volatility and drawdowns in both

Why Everyone Hates Equities And Loves Bonds – ZH

DIVERSION

Nine Ways to Break All The Rules! – The Altucher Confidential