Plenty of quality reads, interesting studies. If you haven't done it already, you might want to register for Financial Times' Alphaville Long Room - plenty of sell-side research is posted there. My idea for the day: in case Spain or any other part of the European crisis gets out of hands (Netherlands and France downgrade rumors would be good triggers as well), I guess there will be more speculative and safe haven flows to Switzerland. The central bank of S. has defended the 1.20-level for some time now, with some very shrewd ways (like selling volatility and thus destroying CHF call option holders).
The implied vols are low, and the upside for the exchange rate seems reasonably small (1.2060 is probably the highest we will see in coming months). A 1.20 EUR put/CHF call for 3 months could be bought for around
You can get update notifications by following MoreLiver on Twitter or Facebook. Contact me with any questions or suggestions!
Quote of the Day:
Spanish auctions were a big “success”. That was the story. It wasn’t surprising at all since everyone knew how closely the auction was being scrutinized. What they forgot to manipulate is the post auction trading. Spanish CDS is back over 500, up from 490 earlier in the session. The Spanish 10 year bond, traded as tight 5.75% this morning, but is back over 5.9% and rising. So much for a “successful” auction. – TF Market Advisors
News And Market Re-Cap – RanSquawk / Zero Hedge
Frontrunning: April 19 – Zero Hedge
The Lunch Wrap – alphaville / FT
EM New York headlines – beyondbrics / FT
Morning MarketBeat – MarketBeat / WSJ
Morning Take-Out – DealBook / NYT
Daily Press Summary – Open Europe
Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
FX Options Analytics – Saxo Bank
 |
| Euro crisis as explained by IMF |
EURO CRISIS
Fitch doubts Dutch AAA as property slump reaches 'coma' – The Telegraph
Fitch Ratings has issued the clearest warning to date that Holland faces losing its AAA rating if it fails to deliver austerity cuts or lets political conflict intrude on economic management.
Eurozone credit contagion, in 8 easy steps – alphaville / FT
As well as warning that eastern Europe has the most exposure to a eurozone credit freeze, the IMF has given us a handy, visual guide to eurozone contagion
As well as warning that eastern Europe has the most exposure to a eurozone credit freeze, the IMF has given us a handy, visual guide to eurozone contagion
BizDaily: Economics and the French presidency (17min) – BBC (mp3)
Why isn't the dire state of the French economy a bigger issue in the presidential campaign? Justin Rowlatt asks Shahin Vallee, a French citizen and visiting fellow at the European think tank Bruegel. Plus, Annette Heuser from the Bertlesmann Foundation calls for the establishment of a new not-for-profit ratings agency to focus on grading sovereign debt. And the BBC’s Dan Damon visits Sarajevo to look at how the Bosnian economy is continuing to try to recover from the country’s devastating civil war.
To Thrive, Euro Countries Must Cut Welfare State – BB
Fredrik Erixon: The big divide in Europe won’t be between North and South or left and right. It will be between countries that diligently manage the transition away from the universal welfare state that has come to define the European social model, and countries that will be forced by events to change the hard way.
Fredrik Erixon: The big divide in Europe won’t be between North and South or left and right. It will be between countries that diligently manage the transition away from the universal welfare state that has come to define the European social model, and countries that will be forced by events to change the hard way.
A Look at Credit Default Swaps and Their Impact on the European Debt Crisis – The Big Picture
Two-page report
Morgan Stanley’s Redeker Sees Weaker Euro – BB (mp3)
EURO CRISIS: ECB
Escalation in Euro Rift: Bundesbank Gets Sued – Testosterone Pit
“Target 2” and its predecessor “Target” used to be a mundane part of the European System of Central Banks (ESCB). Something technical people didn’t pay attention to… Now, the credits extended to the central banks of Greece, Ireland, Portugal, Spain, and Italy exceed €800 billion ($1.05 trillion), of which €635 billion is owed the German Bundesbank
LTRO, bond purchases or both, which is it to be? – Macro Matters
I mean come on, who can justify 22.8% unemployment in a developed economy such as that of Spain? If fiscal transfers are not the answer, then monetary policy surely is. Just a thought.
Eurosystem Oversight Report 2011 – ECB (pdf)
Press release – ECB
EURO CRISIS: SPAIN
A couple fights and the neighbors hear every word. To outsiders, it sounds like the relationship is in shambles and on the verge of collapse. Insiders know that the couple have a long history together are deeply committed to the marriage. That's the story of the eurozone.
Spain’s ever-growing, non-performing loans – alphaville / FT
From the Bank of Spain on Wednesday. Ratio now 8.16%
From the Bank of Spain on Wednesday. Ratio now 8.16%
Spanish banks – enough of this madness! – Saxo Bank
Spanish Auction #Fail As 10Y Borrowing Cost Highest In 5 Months – ZH
Wall Street's Response To Spanish And French Auctions, IBEX Slides – ZH
OTHER
This correlated world – alphaville / FT
HSBC has a big study out ‘on risk on, risk off’. Two heat maps from it: the first is a typical correlation matrix across a range of assets in the world before Lehman collapsed. The second is post-Lehman.
Global Scenarios: Global recovery moving east – Danske Bank (pdf)
Global recovery on track despite bumps in the road. China to deliver the good news in coming quarters. US recovery back at cruising speed. The euro area leaves recession but growth remains weak. Fed and ECB on hold while China eases further. Main risk is a renewed escalation of the euro crisis
Visualizing the Bear – MarketSci
I’m loving these stats on S&P 500 declines since 1928
The China-driven commodities super-cycle debate: Nomura edition – Also Sprach Analyst