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Tuesday, May 29

29th May - EU Open: Dullness ahead?

Some article links plus the usual morning regulars. Even though it seems it's "all about Spain", don't forget the Irish referendum on Thursday. At least the open did not hurt European bond markets much more. As the US is back from holidays, this is supposedly an interesting day. I disagree - given the charts and the newsflow calendar, I am expecting a day or two of not much happening - just very nervous markets on low volume and low conviction to either side.
News roundup – The Trader
Emerging London Headlines – beyondbrics / FT
The 6am Cut London – alphaville / FT
Press digests by Reuters: FT, WSJ, NYT

Debt crisis: live – The Telegraph
The Euro Crisis Blog – WSJ
Tracking Europe’s Debt Crisis – NYT
FX Options Analytics – Saxo Bank
European 10yr Yields and Spreads – MTS indices

Danske DailyDanskeBank (pdf)
US markets were closed yesterday but most Asian equity markets gained on the back of speculation that China will ease fiscal policy in order to stimulate growth and despite the problems in the Spanish banking sector. The euro remains under pressure against major currencies on the back of the events in Spain.

Market Preview: German CPI awaited Saxo Bank
European markets are expected to open marginally higher Tuesday. Focus would be on Spain today, with the Spanish bond yields rising after the announcement of bailout plans for major banks, including Bankia.

Morning BriefingBNY Mellon
The crisis in Spain may well prove more significant than the drama playing out in Greece.

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Capital Controls Coming to Greece and SwitzerlandBruce Krasting
There is a very strong possibility that exchange controls are established in both the strongest and the weakest countries in Europe in less than a fortnight. If those two extremes establish capital barriers, the other countries of Europe will be forced to take similar actions in a matter of months. Who will blink first?

Greece needs to go to the brinkHugo Dixon / Reuters
Only then will the people back a government that can pursue the tough programme needed to turn the country around. To get to that point, bailout cash for both the government and the banks probably has to be turned off.

The market to Spain: recapitalize the banks or face funding problemsSober Look
The 5-year CDS is now implying 44% probability of default in the next 5 years, assuming a 50 cent on the euro recovery (the probability drops for the same spread if the expected recovery is lower).

What views can you hold about Spain?Marginal Revolution
Is Spain in a normal recession or in a downward spiral? If in spiral, is the problem a) political economy b) fundamental credit contraction and aggregate demand or c) both plus multiple equilibria?: The real euro pessimists are the multiple equilibria people. Germany and Austria also have multiple equilibria, but those equilibria are not so far apart.  For Greece the multiple equilibria are extreme — “Balkans nation,” or “European nation”? 

Spain Runs Out Of Money To Feed The ZombiesZH
In the meantime, the Fed's domestic partner, the Bank of Spain is doing all it can to avoid the realization that zombies walk among us

Top 5 delusional ideas China bulls haveASA
China will become first world country, China printing RMB is fine, China will spend their way to prosperity, China can surely stimulate its way out of any downturn, foreign exchange reserve means that China is rich.

Eurozone Recession IntensifyingThe Short Side of the Long
Market views for most asset classes. Might have some interesting points.

Previously on MoreLiver’s:

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