Here is the massive article linkfest and the US close regulars. Key issue for European markets is that ECB has denied the Spanish Central Bank from loaning the funds for banks' recapitalization from the ECB. I wrote earlier on a domestic forum that my set date for an official bailout request is next Tuesday, as I guessed the ECB's decision.
Markets will kick the Spanish bonds and during the weekend there will be some pathetic telephone calls across Europe, followed by some pathetic statements. Market will not buy any of that bullshit, and yields will continue creeping higher on Monday. If it is not the next Tuesday, it will be the following Tuesday - in that scenario the markets will wait until the ECB's meeting, and if something absolutely fabulous is not flowing from Draghi, the beatings shall commence.
News – Between
The Hedges
Markets – Between
The Hedges
Recap – Global
Macro Trading
The Closer
– alphaville
/ FT
Market
Commentary – A
View from My Screens
Commodity
Commentary – Commodity
Trader
Tyler’s US Summary – ZH
Debt
Divergence Dominates Dull Day Even As FaceBerg Sinks Deeper
Debt
crisis: live – The
Telegraph
The Euro
Crisis Blog – WSJ
FX Options
Analytics – Saxo
Bank
European
10yr Yields and Spreads – MTS indices
EURO CRISIS: GENERAL
Europe's Stress Scenarios And What Goldman Sees As Priced In – ZH
Goldman Sachs: Muddle through, fast Grexit, managed Grexit. First is most likely, markets have priced in the third
Goldman Sachs: Muddle through, fast Grexit, managed Grexit. First is most likely, markets have priced in the third
J.P. Morgan’s
funny comic and short text.
Europeans Ambivalent to the Euro, Survey Finds – TIME
The debt crisis that has ravaged Europe for the best part of three years has exposed a dislike of the single currency but little desire to abandon it.
The debt crisis that has ravaged Europe for the best part of three years has exposed a dislike of the single currency but little desire to abandon it.
*Despite Its Troubles, the Euro Area Is Making
Progress – PIIE
Bankia’s Failure: A Manageable Problem? - Germany ’s Politics: A Step Toward One Form of Euro Bonds? - The European
Council: Heading to More Integration?
Given the US and (almost
explicitly given its dominance) Germany are more currency issuer than user, default risk is not the main driver
of the CDS spread but currency devaluation (some might call it inflation) is
much more of a factor.
Ten-year Bund yields below 1%? Wouldn’t faze
Nomura – alphaville
/ FT
Nomura: Were the market to price-in an imminent
break-up of the EUR, in our view Bund yields could go negative out to 5yrs,
while for the 10yr sector we would expect yields to move far below 1%. Given
the value of the embedded FX option in the Bund, we think it is not impossible
that yields will approach the cycle low in 10yr JGB yields in 2003 of 44bp…
Risks of ECB Rate Cut Next Week: Underestimated – Marc
to Market
The ECB will provide new staff forecasts at
next week's meeting and the direction of the revised growth estimates is likely
to be lower. With the drop in commodity prices in general and energy in
particular, the staff may lower their inflation forecasts as well.
The Reality of the Situation – Hussman
I expect that the Euro will fracture well
beyond a Greek exit. Ultimately, the result might be a "strong Euro"
that reflects the union of Europe's most fiscally responsible countries, or we
might instead see a "weak Euro" that follows the departure of Germany
from the currency union and leaves peripheral members free to inflate.
EURO CRISIS: BANKS
The lies of the EBA about how safe our banks
are – Golem
XIV
There was no transparency. There was no
honesty. No integrity. No honour. What we have is an aristocracy who lie and
connive together to shower us with the shit of their wastrel lives.
The spike in ratings downgrades is driven by
banks – Sober
Look
The other rating agencies have also been active
in downgrading financials - particularly last year. At this rate it is only a
matter of time before many banking institutions will lose their investment
grade standing. It will be interesting to see how the high yield and the
crossover markets handle this inflow of new names.
EURO CRISIS: EURO BONDS
Eurobonds: il conto, la cuenta, l'addition, die
Rechnung – Buttonwood’s
/ The Economist
What would stop the free rider problem of
countries issuing tons of debt at the new low interest rate? Indeed, would the
guaranteed bonds have prior creditor status (like the IMF always claims for
itself) if the country defaults? If this is the chosen option, lots of detailed
negotiation will be needed.
Still, even if eurobonds, on their own, can’t
bring Europe back to full health, many analysts think they’ll have to be a major
part of the treatment course. And Germany may not be able to oppose the idea forever.
Eurobond or bust – MacroScope
/ Reuters
Hans-Werner Sinn head of Germany’s Ifo economic institute summed up the sentiment. He told Reuters that
common bonds were the “logical consequence” of the TARGET2 system, but
described this as “an inevitable force that pulls Europe into what I would call a disaster”.
Southern Europe’s debtor states must pledge their gold reserves and national treasure
as collateral under a €2.3 trillion stabilisation plan gaining momentum in Germany.
Additional
comments by ZH
EURO CRISIS: SPAIN
ECB Calls Spain's Bluff... Or Does
It? – ZH
FT: A Spanish plan to recapitalise Bankia, the troubled lender, by indirectly tapping the ECB for cash, was bluntly rejected as unacceptable by the ECB, European officials said.
FT: A Spanish plan to recapitalise Bankia, the troubled lender, by indirectly tapping the ECB for cash, was bluntly rejected as unacceptable by the ECB, European officials said.
The banks and the regions. Separately either
could force Madrid into the arms of the Troika. However, Prime Minister Rajoy appears to
have staked his political credibility on not seeking international assistance.
This hubris will prove his nemesis, and this is an area in which postponement
will likely produce a larger bill, when the piper calls and rest assured the
piper will call.
When “extend and pretend” becomes “delay and
pray” – mathbabe
Unfortunately, it would be tough for Spain to repeat that act-
it depended on the fact that Iceland has control over its economic choices, but Spain is part of the
Eurozone and as such is embedded in a huge network of agreements and debts and
currency with the other Eurozone nations. In some sense, Spain is being forced into
the zombie bank situation by a lack of options.
Assurances from the head of government cannot
amount to much: victim of a severe banking crisis, Madrid will soon be forced
to seek help in the EU. Like Ireland, it will then be placed on a drip-feed – and under guardianship
…or what
businesses Bankia has outside Spain.
Stamenkovic Says Spanish Bond Yields Likely to
Rise – BB (mp3)
EURO CRISIS: GREECE
Such behavior is quite similar to the way
suppliers and customers treat a company that is about to file. This is all at
the time when Greek banks are unable to step in to deal with this isolation.
The fiscal economics of a Greek exit – voxeu.org
Daniel Gros:
If Greece leaves the Eurozone,
many expect that it that will be forced to default. This column argues that
need not be the case.
Mitsubishi’s Brown Sees Greek `Orderly Exit'
From EMU – BB (mp3)
OTHER
We have speculated that the SNB will double or triple the Forex
reserves before it gives in and the floor will break. At the current speed of
13 bln per week, this will result in 676 bln. CHF per year, i.e. they will have
tripled money supply and currency reserves in one year.
Interim Yield Forecast Update – Danske
Bank (pdf)
Euro crisis to drive rates lower over the
summer
Historic moment for the IMF – Economist’s
Forum / FT
The IMF is set to officially change its view on
the regulation of cross-border finance.
Preliminary work released by the IMF exhibits diligent research and deep
soul searching, but falls short of being a comprehensive view on how and when
to regulate capital flows. There is
still time for the IMF to further sharpen its view.
HSBC’s Evans Says Stock Market `Looks Cheap’ – BB (mp3)