Google Analytics

Wednesday, May 30

30th May - US Open: Implied Breakup?

Here are the regular links for the US open and a big article pile to chew on. See previous two US Close: Beatings Will Continue Until ... and EU Open: Spainout coming... for more and some thoughts of mine. I know I am not surrounded by intelligent, market-savvy professionals, and this might be obvious to my readers, but it is an interesting point that the German bonds include a currency option that pays out in case the eurozone breaks up. So it is not only the run to safety and deflation that is driving the bond yields ever lower.

Follow ‘MoreLiver’ on Twitter or Facebook.  

Daily US Opening – RanSquawk / ZH
Frontrunning – ZH
The Lunch Wrap – FT
EM New York headlines – FT
Overnight Summary – Bank of America / ZH
Today’s Front Pages – presseurop
Daily Press Summary – Open Europe
  Spanish government denies asking ECB to take part in Bankia recapitalisation plan; El PaĆ­s: European Commission will demand relaxation of Spain’s deficit targets

Morning MarketBeat: Stock Rally On Repeat – WSJ
Broker Note Briefing – WSJ
Morning Take-Out – NYT
AM Dear Dairy: Back to Earth – Macro and Cheese
US Open: One Driver: European Crisis  – Marc to Market
The T Report: National Acronym Day in EuropeTF Market Advisors

Pre-market Commentary – Marketwatch
Pre-Market Trading – CNNMoney          
Pre-Market – NASDAQ
US Equity Preview – Bloomberg
Earnings & Events – The Street
MarketCurrents – Seeking Alpha

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
Follow ‘MoreLiver’ on Twitter or Facebook.  
EC Says It Is Willing To Envisage Direct ESM Bank RecapitalizationsZH
Far less than meets the eye: as a reminder, this is the EU... not the ECB... and not Germany.

EU calls for banking union, direct recapitalization of banksReuters
The euro zone should move to a banking union and consider directly recapitalizing banks from its permanent bailout fund, the European Commission said on Wednesday in annual economic recommendations that shone a critical light on Spain.

Euro Bonds With Strings Are Europe’s Best Way Forward View / BB
Forget full fiscal union. This crisis has already stretched European solidarity, such as it was, to the breaking point… In the medium term, Europe needs to drop its blithe commitment to “ever closer union” and adopt a more discriminating approach. It needs as much union as required to make the single currency viable, and no more.

It’s Groundhog Day for saving the euro zoneOpinion / Reuters
But remember: That movie ended. And every day wasn't the same. Bill Murray made incremental changes – painful ones – until he figured his way out. That’s what the euro zone is doing right now.

The hard challenges for Europe, an overly soft continentOpinion / Reuters
“Europeans” need enough solidarity to forgive the mistake that was the careless creation of the euro, avert our minds from the undemocratic capture of centralized power that a concerted response to the crisis requires, and keep taking a medicine that politicians we hardly know would administer. That is a very, very tall order, but it is the order of the day.

Ireland Research: How to trade a ‘Yes’Danske Bank (pdf)
The referendum is crucial, as it determines a crossroads for Ireland. Securing a ‘Yes’ to the treaty is,  in our view,  essential for stability and further economic recovery. A ‘No’ would lead to a very uncertain financial outlook with potentially significant economic ramifications.

The riddle of German self-interest By Martin WolfSteve Collins / Twitlonger
How, I wonder, do Germany’s policy makers imagine they will halt the eurozone’s doom loop? I have two hypotheses. The first is that they believe they will not. They expect that life for some of the vulnerable economies will become so miserable that they will leave voluntarily… second hypothesis is that the Germans really think these policies could work.

BizDaily: Germany and the EurozoneBBC (mp3)
Where the euro went wrong - a frank assessment from one leading German policy adviser, Joachim Bitterlich, who was there at the currency's birth. Plus we hear both sides of the debate about patents. We speak to Paul Ryan, the boss of one of the companies blamed for fuelling the patent wars, Acacia Research; and to David Martin of M-Cam, who says "patent trolls" who buy up patents in order to launch legal actions are holding back innovation.

France, Italy and Spain at centre of EU budgetary surveillanceeuobserver
The EU commission will on Wednesday (30 May) publish reports and binding recommendations on each member state's economy, as part of its increased budgetary surveillance powers.

Press release ECB Publishes its Convergence Report 2012ECB
assesses the progress made by eight EU members in fulfilling their obligations regarding the achievement of EMU. (Full pdf)

ECB's Refusal To Play Ball Means Spain Has To Foot A €350 Billion Bailout Bill AloneZH
J.P. Morgan: the sort of burden sharing that the Spanish government wants is not on offer. It could be argued that the government is delaying asking for EFSF/ESM help in the hope that the rest of the region will change its stance. Certainly a Greek exit would likely catalyse the kinds of changes that the Spanish government wants. But, it is not clear that
Greece will exit anytime soon. Spain probably doesn’t have the luxury of waiting.

Spain’s long climb to the liquidity hospital [updated]alphaville / FT
J.P. Morgan: bailout package (EFSF recaps banks) to be negotiated, possibly
SMP used to suppress yields during that time.

Spain, Bankia and the credibility problemalphaville / FT
If the potential costs to Spain of a euro exit are piling up, wouldn’t that make it less likely to exit — and therefore increase its credibility in the eyes of investors? Not really, says Pettis.

Spanish regional profligacy sits as a worrying lesson for the eurozoneOpen Europe
If Spain faces difficulties in achieving more fiscal centralisation in its own country, due to political constraints, how much more difficult will it be for the single currency to achieve similar centralisation at the level of all 17 Eurozone members – considering its own number of different parliamentary and economic models, government structures, and cultural preferences? Just a thought.

Time to get real?MacroScope / Reuters
For the next couple of month things aren't too acute but the country faces hefty refunding humps in August and October which could prove difficult. It will want borrowing costs to be significantly lower by then which will require measures to foster investor confidence.

All eyes turn to SpainMacro Business
The problems of Spain’s economy all stem from the fact that the government sector is attempting ( or being forced ) to implement an austerity program at a time when the private sector is in deep retrenchment. Given the economic and political circumstances the country finds itself in it may have no choice, but that won’t change the outcome.

Why Spain Is Officially Europe's Biggest CrisisThe Atlantic
Spain is up next in As The Euro Crisis Turns after it admitted that it can't afford to bail out its banks.

ECB Says Spain Hasn’t Consulted It on Bank Recapitalization PlanBB

Greek exit from the Eurozone: Neither inevitable nor
Avinash Persaud: Should Greece leave the Eurozone? This column argues that aggressive restructuring of Greek debt within the Eurozone, rather than departure, is the best option.

Richard Koo’s prescription for Greece (and Germany)alphaville / FT
But eurozone bonds (aka eurobonds) are not the solution, he says. Firstly,
Greece needs to address its mutual distrust problem with Germany, and persuade the Germans that it will get serious about this tax collection thing.

Follow ‘MoreLiver’ on Twitter or Facebook.