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Monday, April 30

30th Apr - Morning Briefings: Eve of Mayday

Here are the regular morning briefings and somewhat unusually for me some article links as well. Today and tomorrow are big holidays in my country, and I am off to see some friends – not sure if there will be US open & close posts today.


During the weekend I posted the following:
29th Apr - Weekender: Off-Topic – not related to finance or markets
29th Apr - Weekender: Trading & Research  - views, quant stuff, people, education
29th Apr - Weekly Support  - weekly reviews and previews
28th Apr - Best of The Week  best from my last week’s posts


You can get update notifications by following ‘MoreLiver’ on Twitter or Facebook. Contact me with any questions or suggestions.

News roundup – Between The Hedges
News roundup – The Trader
Emerging London Headlines – beyondbrics / FT
The 6am Cut London – alphaville / FT
Press digests by Reuters: FT, WSJ, NYT

Danske DailyDanske Bank (pdf)
Positive sentiment in equity markets despite  lower-than-expected US
GDP data and the negative events in Spain last week.   However, bond yields in safe-haven markets (primarily the US and Germany) continue to drift lower. Furthermore, the yen is strengthening against both the dollar and the euro. Moodys is warning the Netherlands, while  supporting the Spanish government  in a weekly credit comment this morning ahead of Spanish GDP data today.

Morning Briefing: Currency Pain?BNYMellon
...the crisis is probably too far down the road, and instead, we see the presumption of renewed profligacy (given the unleashing of fiscal restraints, albeit flawed restraints) keeping Euro-area bonds firmly under pressure.

Market Preview: US Consumer Spending on tapSaxo Bank
European markets are likely to open marginally higher Monday ahead of the French short-term bill auction due today. Moreover, market speculation of further monetary stimulus from the US Fed following weak US GDP data has boosted investor sentiment.

Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
Tracking Europe’s Debt Crisis – NYT
FX Options Analytics – Saxo Bank
 
EURO CRISIS: GENERAL
Eurozone retail sales weakest since 2008 - French Retail PMI at record lowsSober Look
Mario Draghi's "signs of stabilization" statement is coming back to haunt the central bank. Another rate cut from the ECB, though largely symbolic in nature, is coming shortly.

Europe's "Dead Bank Walking" List And An ETA Until The Next Contagion PeakZH
We see a significant possibility of the need for further ECB intervention in coming weeks and months to provide extra funds the financial system and sovereign in Spain, while the debate over banking reconstruction takes place… The market is unlikely in our view to provide the authorities the time to deliver solutions without further official support.

“A Trillion Here, A Trillion There...” – Why 90% Of The European Bank Sector’s Market Cap Is Vaporware*ZH
UBS: The QIS states that the June 2011 shortfall of common equity to a 7% common equity tier 1 ratio for major banks globally was €486 billion. We can estimate from this that the shortfall to a 10% common equity tier 1 is €1.02 trillion. Some years hence and before the mitigation that banks will undertake aggressively, but nevertheless, a trillion is a striking numbers

The European Debt Crisis ReduxEconoMonitor
Beyond the German favoured remedy of asphyxiating austerity to either cure or kill the patient, Europe is rapidly running out of ideas and time to deal with the issues. As the real economy stalls and debt problems continue, the most likely policy actions may come from the ECB – an interest rate cut to near zero and further liquidity support, perhaps even full-scale quantitative easing. Bailout funds may be channelled to recapitalise Spanish banks, as a means of helping Spain without resort to a full-blown bailout package. It is doubtful whether any of these steps will work.

A Berlin Consensus?Project Syndicate
Andrew Sheng: We cannot postpone the pain of adjustment forever by printing money. Sustainability can be achieved only when the haves become willing to sacrifice for the have-nots.

EURO CRISIS: PIIGS
Spain's Latest Bad-Bank, Non-Bank, Shell-Game Proposal; Can One-Winged Pigs Fly?Mish’s
If banks have sufficient loan-loss reserves then why don't they simply take the losses now? If they can raise capital now, then why don't they? If they cannot raise capital now, how will will they be able to do so in the process of moving the assets to a non-bank bank?

The Secrets of the Spanish Banking System That 99% of Analysts Fail to GraspGains Pains & Capital
On that note, I fully believe the EU in its current form is in its final chapters. Whether it’s through Spain imploding or Germany ultimately pulling out of the Euro, we’ve now reached the point of no return: the problems facing the EU (Spain and Italy) are too large to be bailed out. There simply aren’t any funds or entities large enough to handle these issues.

Spain is the New GreeceNew Economic Perspectives
So far, Brussels has not let facts get in the way of a good neo-liberal theory, but it’s getting increasingly hard to ignore this emerging horror show.

Don't Forget PortugalZH
Morgan Stanley sees a second bail-out by September with a bail-in to follow

In Portugal the problem is the lack of supply of credit, not the demandSober Look
It is likely that many households and businesses, keenly aware of the lack of available credit, are simply not seeking new funding now, which translates into what looks like declining demand. But at least when it comes to credit conditions in Portugal, the problem is the lack of supply, not the demand.

OTHER
The business of universities is … education? Excellence? Job placement?Emmanuel Derman / Reuters
Every day I seem to come across new articles or incidents concerning universities that indicate the increasing strength of the tidal forces pulling at them and their denizens

Two views of financial innovationFelix Salmon / Reuters
Frontline concentrates on international finance’s discontents, most of whom are convinced that no matter how assiduous financial-market regulation, the big banks will always find a way to extract enormous rents for themselves. The WEF, by contrast, is convinced that financial innovation is nearly always a good thing

Credit default swaps: Useful, misleading, dangerous?voxeu.org
Richard Portes: Once upon a time, credit default swaps were a form of insurance held by investors who also owned the underlying asset. But this column argues that the market has now become overwhelmed by ‘naked CDSs’ that allow speculators to make bets on the future of corporates and sovereigns – bets that can be wildly destabilising. This column calls for a ban on naked CDSs.

20-Year Real Return vs 10-Year P/E RatioCan Turtles Fly