Here are
the US close regulars and article links. In Europe, there are no plans, backstops, support or trust. Everyone knows the other guy's numbers are not to be trusted. Everyone is trying to offload costs to someone and no-one is picking up the responsibility or the losses. Shareholder of a bankrupt bank? "I am systemic!" Spain's politicians almost half as corrupted as the ones in Greece? It was the Le-man!. They are not going to get anything done.
For my own
recent commentary, see how Spain
looks easier, how
to play announcement games, and when
Spain requests the bailout. If you happen to speak Finnish, check my other today's article on Spain.
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 European Summary – ZH
Equities
underperform as credit roundtrips ending miserable May for Europe
Tyler’s US Summary – ZH
Market
fails to zucker in gullible traders with end of day stop hunt
Debt
crisis: live – The
Telegraph
The Euro
Crisis Blog – WSJ
FX Options
Analytics – Saxo
Bank
European
10yr Yields and Spreads – MTS indices
Despite clear evidence that its austerity
policies are driving struggling members into ever deeper economic agony, the EC
presented its annual economic report on May 30 seeking to defend a strategy
that is bankrupt.
Concrete Example of Potential Compromise in EMU – Marc
to Market
I have characterized my understanding of the
euro zone investment climate as three no's:
No ECB backstop for sovereigns.
No joint bond. No euro zone
break-up. That implies a prolonged
period of slow growth. It risks chronic
political instability.
Even the gods can’t get their heads around this
crisis – The
Times / presseurop
Europe's economic woes have forced us to try to understand the secret Olympian
world of global finance. But now that we pay more attention to bond yields and
stability mechanisms, isn't it clear that the experts up on their lofty peaks
don't know what's going on either?
Push Comes to Shove – Tim
Duy’s Fed Watch
Europe doesn't have a 5 to 10 year horizon.
I am thinking they have something closer to a 5 to 10 week horizon to
get their act together. Something big is
going to happen in Europe this summer, and I think the odds of a tail-end outcome are increasing,
at both ends of the tail. Either Europe pulls together sooner than the
German timeline, or finally blows apart.
ECB’s Draghi Calls for Centralized Banking
Control – TIME
Currently, most powers to regulate banks have
been left with national authorities, who have been seen as protective of their
domestic financial services industries.
The TARGET2 Balances of National Central Banks
(NCBs) – Alea
The residual risk that may emerge despite risk
management features is, as a rule, shared among the euro area NCBs according to
their share in the ECB’s capital.
The Monster Has Awakened – Mark Grant / ZH
The game has changed. It will no longer be push
and shove and muddle through but convictions and ideology that are in stark
opposition so that surprises and inflamed statements will become the order of
the day and not the exception. If it is to be either Germany for the Germans or Germany for the citizens of Athens, make no mistake in
your thinking
The case for a European banking union – Bruegel
The previously integrated financial market that
underpins the common currency and contributes to ensuring homogeneous
transmission of monetary policy impulses has started to fragment along national
borders… correlation between banking and sovereign solvency crises… banking
union would help on both fronts and therefore contribute to making the monetary
union more resilient.
All of which says to me that Grexit is
inevitable, sooner or later. These two countries have pretty much nothing in
common, bar their current currency. And now the tensions caused by that common
currency are surfacing in particularly ugly ways.
EURO CRISIS: SPAIN
Spanish CDS Over 600bps Sends S&P Under
1300 – ZH
Spain is facing the gravest danger since the end of the Franco dictatorship
as the country is frozen out of global capital markets and slides towards an
epic showdown with Europe.
To hispabono or not to hispabono – alphaville
/ FT
A possible way for sovereigns to avoid strict
limits on the eurozone bonds they can issue might be to force issuance lower
down the political structure to the regions, actually…
Spain March Foreign Investment Shrinks Amid Capital Outflow – BB
net 66.2 billion euros ($81.8 billion) leaving the country in March, with outflows of foreign portfolio investment increasing tenfold as the economy contracted.
net 66.2 billion euros ($81.8 billion) leaving the country in March, with outflows of foreign portfolio investment increasing tenfold as the economy contracted.
Capital Flight Intensifies to Record Levels in Spain; Outflows Make
Spanish Banks Increasingly Reliant on ELA Funding – Mish’s
Capital flight has intensified to record levels
in Spain but interestingly leveled off in Greece. Capital flight from Greece is expected to resume
when next reported given statements by the Greek president. The original source
of this information appears to be Credit Suisse AG.
EURO CRISIS: GREECE
Redenomination Risk: Is the Genie Out of the
Bottle? – Marc
to Market
The problem with suggesting that Greece can leave EMU is that
creates a new risk that only complicates effort to address the crisis. This the
risk of redenomination…How then can there be meaningful EU wide deposit
insurance?
CHINA
Beneath the headlines of 8 percent growth, China's economy is grinding
to a halt. It's time to worry.
The Myth Of Chinese Growth – Chartporn
China’s growth is not due to exports – it
is because of investments.
Conclusion: China won’t be rescuing
anyone (apart from itself perhaps) anytime soon.
Goldman Slashes Treasury Yield Forecasts – ZH
Plus their
reasonings – good read. Shorter version on WSJ
OTHER
Wall Street Food Chain – Bill
Gross / PIMCO
Soaring debt/GDP ratios in previously sacrosanct AAA
countries have made low cost funding increasingly a function of central banks
as opposed to private market investors. Both the lower quality and lower yields
of such previously sacrosanct debt represent a potential breaking point in our
now 40-year-old global monetary system.
The Global Industrial Sector: Have Profit
Margins Peaked? – PIMCO
Factors driving profit margin expansion in
the industrial sector include globalization, EM capital expenditures, a focus
on profitability and global labour arbitrage. Potential headwinds include a
slowdown in global growth drivers, rising labour rates and global deleveraging.
United States banks received a regulatory memo earlier this year asking them to make
clearer their public disclosures about their exposure to Europe’s troubled countries. Not all the
banks bothered to comply fully, however. And this could backfire on them if
financial conditions in Europe deteriorate further.
Risk-Off Correlations - When Opposites attract – Macronomics
Looking at the recent sell-off in broad asset
classes with the spill-off from the ongoing European crisis, we thought it
would be interesting to look into asset correlation movements during
"Risk-Off" periods such as today.
franc cap is contributing to both foreign and
domestic distortions and all the speculation of the size of the SNB's intervention, distracts from the
fact that its economy appears strong enough to cope with a stronger franc and
its cap is slowing if not preventing the larger adjustment process.
EMEA Weekly, Week 23 – Danske
Bank (pdf)
Draghi urges EZ politicians to act – Kiron
Sarkar / The Big Picture
Market
overview
HSBC’s Wells Says Central Banks Being
Politicized – BB (mp3)
Levitt Says Bankers' Role at Fed Should Be
Curtailed – BB (mp3)