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.
The 6am Cut
London – alphaville
/ FT
Press
digests by Reuters: FT, WSJ, NYT
Debt
crisis: live – The
Telegraph
The Euro
Crisis Blog – WSJ
FX Options
Analytics – Saxo
Bank
European
10yr Yields and Spreads – MTS indices
Danske
Daily – DanskeBank
(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.
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 Briefing – BNY
Mellon
The crisis in Spain may well prove more
significant than the drama playing out in Greece.
EURO CRISIS
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?
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 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).
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 Zombies – ZH
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
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
OTHER
Top 5 delusional ideas China bulls have – ASA
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.
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 Intensifying – The
Short Side of the Long
Market
views for most asset classes. Might have some interesting points.
Previously
on MoreLiver’s: