Joke of the Month: Speaking in Copenhagen after an EU ministerial meeting, Spanish Economy Minister Luis de Guindos said the measures would be implemented as soon as possible, adding that any suggestions that Madrid needed emergency international funds was "absurd".
News – Between The Hedges
Markets – Between The Hedges
Recap – Global Macro Trading (on holiday)
The Closer – alphaville / FT
Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
FX Options Analytics – Saxo Bank
EURO CRISIS: GENERAL
A Divorce Settlement for the Eurozone – EconoMonitor
Roubini & Das: The eurozone still lacks essential features of monetary unions that have stood the test of time; and planned reforms may exacerbate latent fiscal, banking and external imbalances, leaving it less, rather than more, resilient to regional shocks. Splitting up may be hard to do, but it can be better than sticking to a bad marriage
The Hazard of Second Best – Project Syndicate
Mohamed A. El-Erian: In pivoting from internal to externally-financed firewalls, Europe is pushing a political agenda that is not yet warranted by economic and financial realities.
EURO CRISIS: ECONOMY
Eurozone manufacturing looking glum – alphaville / FT
Eurozone manufacturers suffered a miserable March, with a renewed downturn in production wiping out marginal gains seen in the first two months of the year.
While peripheral euro-zone economies are contracting, it will be very difficult to hit deficit targets. If the result of disappointing fiscal performance is pressure for greater austerity, the squeeze on growth around the euro zone will intensify. Strikingly, the ECB continues to sit on its hands despite the seeming surety that the euro zone was in recession in the first quarter and will start the second in the same place.
The German government has long argued that strict fiscal discipline is the only way out of the euro crisis. Now, German Finance Minister Wolfgang Schäuble has come up with a new idea for keeping countries on the path of virtue. He wants independent panels of academics to keep a close eye on states' budgets
EURO CRISIS: PIIGS
Italian Banks Underwater On LTRO2 After Just One Month – ZH
Even accounting for the month of carry earned on the position, the Mark-to-Market on any short-dated (less-than-three-year maturity) Italian government bond purchased with LTRO funds is now a drag on Italian bank balance sheets. Spain, of course, is even worse.
Italian Banks Underwater On LTRO2 After Just One Month – ZH
Even accounting for the month of carry earned on the position, the Mark-to-Market on any short-dated (less-than-three-year maturity) Italian government bond purchased with LTRO funds is now a drag on Italian bank balance sheets. Spain, of course, is even worse.
This points towards kicking the can down the road as long as possible and thus the Eastern European outcome where the IMF/EU simply rolls liabilities. However, just as was the case with Greece, Portugal is likely to find it impossible to lower its debt level without a lump sum reduction in its debt level through restructuring
EURO CRISIS: ECB / LTRO / SMP / TARGET2
On 29 March, EU finance ministers claimed to have come up with the right numbers with which to shield the eurozone from a new crisis. But it is a sleight-of-hand accounting that could crumble at the first sign of trouble.
Collective action clauses shall be included, as of 1 January 2013, in all new euro area government securities, with maturity above one year, in a way which ensures that their legal impact is identical.
The debate would only be relevant in the event of "an explosion of the Eurozone", which Mersch said was not on the cards.
Letter from the ECB President to MEP Giegold on LTROs – ECB (pdf)
ASSET CLASS VIEWS
Credit Suisse shifted to a more negative 'underweight' stance to European equities… a positive view on domestic German equities and the broad DAX index (and USD earners) while notably negative on France and Spain in general (with Spain expected to underperform Italy).
Copper underperforming US equities may signal EMG slowdown expectations – Sober Look
OTHER
Global: Business Cycle Monitor – Danske Bank (pdf)
Global leading indicators stayed muted in March, as the euro area and parts of Asia particular failed to see improvements, resulting in a minor fall in global PMI. However, data out of the US regained lost ground, indicating that the weakening might be only temporary. The OECD’s leading indicator also points to a further rise in Global PMI in coming months.