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| Source: dshort.com |
Joke of the Day: “Swiss National Bank’s peg to the euro reflects optimism in the common currency” – Central Bank of France’s governor Noyer speaking in Tokyo The Source / WSJ
Quote of the Day: “The question of whether the monetary union will stick together, or break up, or just kick out Greece, is still with us. And there’s always the possibility that Greece will pull a “You can’t fire me, I quit,” leaving the other 16 members to fight among themselves over their banks’ exposure to iffy sovereign debt.” – MarketBeat / WSJ
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Source: US Quant Strat / BofA ML 9/2011 |
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Today's Headlines (from Monday) – Between The Hedges
Tuesday Watch (from Monday evening) – Between The Hedges
News That Matter – The Trader
FX options: Vols, Risk Reversals & Pin Risk – tradingfloor
Debt crisis: live – The Telegraph
Eurozone crisis: live blog – FT
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| Source: Fintag |
EURO CRISIS
How to rescue the euro: Ten commandments – voxeu.org
Hans-Werner Sinn, one of the most respected and listened Germans
Schaeuble Claims German EFSF Contribution Has Maxed Out at 211 Billion Euros; Why Should Anyone Believe Him? – Mish’s
List of German FinMin’s previous lies suggests he is just playing bad cop to PIIGS – or “If perchance he is telling the truth it is by accident. What "accident" might that be? Simple. Greece defaults before Schaeuble commits more German funds”
Marshall Auerback and Warren Mosler: Despite public protestations, EZ elders seem to understand that ECB must write the check.
Euro Science – The New Yorker
Magazine article, short and to the point, good read, no new points
BANKS
The subprime continent – Free exchange / The Economist
Dexia is an accident that has already happened, MS more unexpected and thus more worrisome.
With Dexia Done, Here Is Who Is Next: A Visual Euro Bank Liquidity Vs Funding Exposure Matrix – ZH
Dexia, Belgium's Largest Lender About to Become First Casualty of Greek Default; Emergency Meeting to Split Bank Now in Progress – Mish’s
I'm Pete And I'm Long. It's Been 36 Days Since I Was Long – ZH
Curve Flattening In Credit - Never A Good Sign – ZH
Peter Tchir: Morgan Stanley more likely tied to principal investments in China, than exposure to European banks. People being told to get out of MS risk and reduce notionals, paying 600 bps to buy 1 year protection, because all they can lose is 6%. They know that if they pay 530 to buy 5 year CDS, that they could lose 25% of the notional if it all goes back to normal. So inverted yield curves are not that bad omen.
Wall Street Goes to Sefcon II on Swaps – DealBook / NYT
Introducing more transparency to swap markets
FINANCIAL CRISIS
BofA Merrill Lynch Global Research slides on adjusted yield curves (Fed’s zero interest rate policy makes it impossible to have a traditional inverted curve). The adjusted curve is flat and recessionary.
Goldman Raises US Recession Odds To 40%; Sees More Fed Easing, Expects Recession In Germany And France – ZH
Full text of the GS research note
An unsettling trifecta for market contagion – Mohamed El-Erian / Reuters
The system is sending signals, not noise: uncertain and deteriorating global outlook, astonishingly inept policy-making.
Swiss central bank might not be able to resist future safe haven flows.
CHINA
They expect 10% price drop in six months, would be 30% but the government will step in.
In the U.S. and Europe, ratio of existing homes to new homes sold in normal times is 13 to 1. In China, it’s more like 1:1, or 2:1. China’s bank regulators say they are intentionally trying to squeeze developers to force a correction. The thing is, they may get more than they bargained for.
“The gap between the bill discount rate and the interbank rate has widened to 5.7 percentage points, the highest level since the data was made available. China’s credit market is becoming more fragmented.”
If US goes forward, it would undermine the Communist Party’s authority domestically, so they have to retaliate in kind, perhaps even escalate.
OCCUPY WALL STREET
The Young Are on the Streets Because They Have the Most to Lose – New Deal 2.0
Actions Become Beliefs, Participation and Class Bias in #OWS Debates – Rortybomb
‘IWS’: On 10/10, NYSE Shall be Erased from the Internet – ZH
‘OWS’ gains institutional cheerleaders – WP
How OWS could succeed – WP
Second Wave of Protests Unleashed: Targets the Federal Reserve – Washington’s Blog
‘You’re creating a vision of the sort of society you want to have in miniature.’ – WP
Nobel Prize Winning Economist Supports Protests – Washington’s Blog
In Case You Haven’t Noticed, the Protesters are Winning – The Reformed Broker
In other words, markets are also saying ‘F**k Old School Wall Street’
DIVERSION
Linkfest For The Smartest People On The Web – Simoleon Sense
Weekly link fest – must be good, as it has a link to me!
Apple Is the Luxury Mall of Media, Amazon Its Wal-Mart – The Big Picture
Barclays Cuts Business Class, Car Service, Late Night Snacks – Dealbreaker