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Tuesday, October 4

4th Oct Early - Is Noyer high?

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


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 blogFT
Source: Fintag 
Bloomberg, CNBC etc. television on the web: Livestation

EURO CRISIS
How to rescue the euro: Ten commandmentsvoxeu.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”

Core Europe Sitting Pretty in their PIIGS Drawn ChariotNew Economic Perspectives
Marshall Auerback and Warren Mosler: Despite public protestations, EZ elders seem to understand that ECB must write the check.

Euro ScienceThe New Yorker
Magazine article, short and to the point, good read, no new points

Eurozone chiefs: Greece can wait till Novembereuobserver.com

BANKS
The subprime continentFree 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 MatrixZH

Dexia, Belgium's Largest Lender About to Become First Casualty of Greek Default; Emergency Meeting to Split Bank Now in ProgressMish’s

Dexia’s Midnight RunnersMarketBeat / WSJ

I'm Pete And I'm Long. It's Been 36 Days Since I Was Long ZH
Curve Flattening In Credit - Never A Good SignZH
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 SwapsDealBook / NYT
Introducing more transparency to swap markets

FINANCIAL CRISIS
A US recession indicatoralphaville / FT
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 FranceZH
Full text of the GS research note

An unsettling trifecta for market contagionMohamed El-Erian / Reuters
The system is sending signals, not noise: uncertain and deteriorating global outlook, astonishingly inept policy-making.

The SNB's risky moveBruce Krasting
Swiss central bank might not be able to resist future safe haven flows.

CHINA
China Real Estate: Some Anecdotes As Told By Deutsche BankAlso Sprach Analyst
They expect 10% price drop in six months, would be 30% but the government will step in.

China: Economy on the Edge of a Nervous BreakdownEconoMonitor
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.

China’s Worsening Credit CrunchPragmatic Capitalism
“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.”

China Will Retaliate if US Imposes SanctionsEconoMonitor
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 LoseNew Deal 2.0

Actions Become Beliefs, Participation and Class Bias in #OWS DebatesRortybomb

‘IWS’: On 10/10, NYSE Shall be Erased from the InternetZH

‘OWS’ gains institutional cheerleadersWP

How OWS could succeedWP

Second Wave of Protests Unleashed: Targets the Federal ReserveWashington’s Blog

‘You’re creating a vision of the sort of society you want to have in miniature.’WP

Occupy Boston: Day OneWashington’s Blog

Nobel Prize Winning Economist Supports ProtestsWashington’s Blog

In Case You Haven’t Noticed, the Protesters are WinningThe Reformed Broker
In other words, markets are also saying ‘F**k Old School Wall Street’

DIVERSION
Linkfest For The Smartest People On The WebSimoleon Sense
Weekly link fest – must be good, as it has a link to me!

Apple Is the Luxury Mall of Media, Amazon Its Wal-MartThe Big Picture

Barclays Cuts Business Class, Car Service, Late Night SnacksDealbreaker