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Wednesday, May 30

30th May - US Close: Announcement Games XIV

No fiscal union, no ECB loan to Spain, no ESM funding to banks – so I guess muddling through. Next stops in the show – ECB cuts rates by 0.25% - no more, even though 0.5% would be the right thing to do, so of course it will not be done. I guess they are trying to push forward all the heavy lifting to the G20-meeting in mid-June. There will be plenty of announcements coming - the 'announcement game' is a cheap way to  mess with the markets and stop anyone from taking too aggressive positions against the eurodream. 

Outside the two main events (ECB and G20) trade the news - go against impressive-sounding headlines. We've already got the Chinese about to ease some more, then the ECB loan to Spain, then the economic union, deposit guarantee... They cannot use IMF anymore, as they basically used that card already. Any ideas what to expect? And now to the regular links and select articles.

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Markets – Between The Hedges
The Closer – alphaville / FT
Market Commentary – A View from My Screens
Commodity Commentary – Commodity Trader
Tyler’s European Summary – ZH
  European Bloodbath Continues
Tyler’s US Summary – ZH
  Gold Rips And Stocks Dip As Risk Assets Recouple To Reality

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

Addressing Europe’s risksFelix Salmon / Reuters
EU should move towards a full economic union with a banking union, integrated financial supervision and single deposit guarantee scheme? I have a funny feeling that this is exactly what’s going to happen, but that implementation is going to be carefully timed so that it happens after Grexit, and not before. First you wait for Lehman Brothers to go bankrupt, then you give investment banks full access to the Fed discount window.

Germany Shoots Down European Union "Envisagings" Of Bureaucrat UtopiaZH
The German government on Wednesday reaffirmed its opposition to allowing ESM to directly lend to troubled banks in the Eurozone.

Creditors and Bureaucrats Push BackMarc to Market
The financial crisis has called into question political and economic orthodoxies… the creditor nations, led by Germany, are preparing a response…the essence of the German proposals seem to be scaling up the strategy employed when the Berlin Wall fell

Barclays on Europe-Wide Deposit Guarantee SchemeZH
Quick guide from Barclays: the euro-wide plan would rely on commitments, not upfront payments. Also, redenomination risk is not addressed.

Bracing for a Euro Crash and Creating A Housing BubbleTestosterone Pit
Switzerland, a speck of land with 7.9 million people surrounded by Eurozone turmoil, has been bracing itself, according to the President of the Swiss National Bank and long-time euro-skeptic Thomas Jordan, for the collapse of the euro.

Moody's Cuts Nine Danish Financial Institutions: Luxor Thesis In PlayZH

Spain Sees €31 Billion Deposit Outflow In AprilZH
Charts by Goldman Sachs.

FAQ: Why is Spain now in crisis? And can it be fixed?Wonkblog / WP

An Argentine Guide to the Greek CrisisProject Syndicate
How large will the devaluation of the neo-drachma be? In Argentina, the number of pesos needed to buy one dollar rose by more than 300%. Greece posted a current-account deficit of nearly 10% of GDP in 2011, despite the domestic depression. The real devaluation necessary to restore external balance will be enormous, perhaps larger than that in Argentina.

The Good, Bad, And Ugly Of Emerging MarketsZH
UBS ranks the emerging markets based on risk.

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