Summary: ECB and BoE both left the rates unchanged, EUR trading weaker across the board. Trichet’s press conference was interesting, as he became quite animated at times. There was hope that he would our could have done something, just like the latest heroes of markets, the Swiss National Bank. Unfortunately, not everyone can be like SNB. At least Trichet managed to do some finger pointing to the right direction - political leaders of the largest countries. Interesting links today: Dalio, currency war debate and harsher rhetoric towards Greece.
Views: Given the headlines and statements it is obvious that everyone wants to have the Greeks thrown out of the euro, but it will be very hard to backstop Greece's exit: markets would decide to expect similar result for Portugal and maybe even Spain and Italy. Given this, eurocrats have to look and sound like they are trying their utmost with Greece, make demands that are impossible to meet and then have the moral high ground where they can easily kick the Greeks out, instead of the ever-present proverbial can.
I tweeted earlier: "EURUSD long ATM 1.3995, stop 1.3960, automatic tp on half at 1.4050", so that clearly went to the stop loss (1.3995-1.4055= 40 pips).
EURO CRISIS
Greek backsliding sparks euro exit talk – Reuters
Angela Merkel and Mark Rutte have called for a radical change to the treaty
A Line In The Sand – BNY Mellon
All Told, a Bad Week for Greece – The Source WSJ
Video + text transcript where he “loses it”.
Watch Jean Claude Trichet's On Air Meltdown – Zero Hedge
FINANCIAL CRISIS
Big enough spending program to lift economies to growth track could also trigger a collapse in confidence in bonds – something that the Western system could not survive from
A Tail Event to End All Tail Events – The Source WSJ
Acting together is more effective than acting alone
Time for Policy Makers to Pick Up the Phone – The Source WSJ
“Twist”, lowering interest rates on excess reserves, clearer language on policy goals
FED considering 3 options for next round of easing – Business Insider
In Disputed Fannie and Freddie Mortgage Deals Evidence of 'Robo-Signing' – The Curious Capitalist / TIME
“The great outrage isn’t that a federal agency is suing some of these too-big-to-fail banks for damages. It’s that we ever bailed them out at all.”
CURRENCY WARS
"Currency war" as international QE – The Economist
The Swiss: trouble is, many other economies are in a similar boat
Unleashing the Dogs of Currency War – The Source WSJ
The power of credible commitment and rational expectations – what Fed should learn
Following the Swiss lead - Econbrowser
Comment to the above
Jedi monetary policy – Free exchange / The Economist
OTHER
A brief history of S&P 500 beta – Portfolio Probe
PIMCO’s Neel Kashkari: While testing is not everything, it is definitely better than nothing
Teaching to the Test – advisorperspectives.com
Liquidity Risk Premium Dominant in Hedge Fund Returns? – CXO Advisory Group
Chinese yuan to be convertible with euro by 2015 – euobserver.com
DIVERSION
“If God had only had a committee of business writers”
God’s 11 principles – Emanuel Derman / Reuters
neoclassical, behavioral, computational, econophysicists
Dystopic finance – Emanuel Derman / Reuters
Jupiter-Bound Spacecraft Sees Earth and Moon from Afar – Scientific American