7th May - Monday Mon Dieux

Here is the huge link fest after the first day of trading after the elections. After Monday’s bank holiday in UK, Tuesday will set the tone for the next couple of weeks. I believe this week will be bullish – technically, all the markets have bounced from support levels, and valuation-wise, end of austerity and "pro-growth" sound good. But there is no room to lower rates, except in Europe (and even then only in a true emergency), and there will probably not be further QE or LTRO. So medium-term bull (this week, maybe couple of weeks), followed by another sell-off, perhaps in time for the May 15 bond payment that Greece has to make?

 

For even more links to read, see today's earlier posts US open and European open, and remember to follow ‘MoreLiver’ on Twitter or Facebook.

News – Between The Hedges

Markets – Between The Hedges

Recap – Global Macro Trading

The Closer – alphaville / FT

After the Storm – A View From My Screens (new!)

TV: Bloomberg, CNBC, BBC

Debt crisis: live – The Telegraph

Europe Crisis Tracker – WSJ

Tracking Europe’s Debt Crisis – NYT

FX Options Analytics – Saxo Bank

EURO CRISIS: GENERAL

Kotok: My Initial Take on Europe – The Big Picture

Austerity loses all the way around. Low deficit countries will become even stronger. More pressure for the ECB to print. UK is unknown, FED is motionless. Initial reaction to news negative, followed by a realization that easing is coming. Monetary easing is the only future: bullish.

Why is austerity so unpopular in Europe? Because it’s not working – Wonkblog / WP
Germany is the most powerful country in the euro zone, and many of Germany’s key policymakers are still very much in favor of austerity as the main solution to the euro zone’s woes. But with voters now in revolt, it’s unclear how long Europe will be able to stay the course.

After Austerity – Project Syndicate

Joseph E. Stiglitz: Firewalls won’t work, if kerosene is simultaneously thrown on the fire, as Europe seems committed to doing: there is no example of a large economy – and Europe is the world’s largest – recovering as a result of austerity.

Status Quo Catastrophe Is Served – Mark Grant / ZH

The recession and the anger directed at Germany are rousing the spirits once thought dead; France for the French, the Netherlands for the Dutch, Greece for the Greeks and soon we may find the same dreaded tale in Germany as Nationalism rings in the death knell for European unity and for the political parties that flaunted it.

Morning Briefing – BNY Mellon

The results from the German, French and Greek elections this weekend reflect a growing backlash across Europe against fiscal austerity measures implemented in the wake of the recent financial crisis. 

Europe’s Opportunity in Hollande – Project Syndicate

Martin Schulz sounds like an eurocrat. “EU budget is pro-growth” and so on…

Europe’s Misguided Search for Growth – Project Syndicate

Daniel Gros: The real bargain should not be austerity plus a Marshall Plan for the south, but rather continued austerity plus labor-market reforms in the south, combined with more infrastructure investment in Germany and other AAA-rated countries like the Netherlands.

EURO CRISIS: FRANCE

François Hollande Must Quickly Hit His Stride – Spiegel

On the night of his victory, France's new president seemed exhausted and overwhelmed by the size of his task. François Hollande has little time to master the transition from candidate to president. He faces important tests at home and abroad, including finding a way to get along with Angela Merkel

Savings vs. Stimulus: Pragmatism Likely in Merkel-Hollande Relationship – Spiegel

With the election of François Hollande as French president, Nicolas Sarkozy is history -- as is the Merkozy duo in Berlin and Paris. German-French relations will have to be realigned. Given that the election has come in the midst of the euro crisis, Hollande and German Chancellor Angela Merkel will need to learn to get along quickly.

The World from Berlin: 'Hollande Could Be a Better Partner than Sarkozy' – Spiegel

Chancellor Merkel's fear that Socialist candidate François Hollande might win the French election came true on Sunday. While their differing politics have some warning of difficult French-German relations to come, German editorialists argue Monday that the pragmatic politicians will make it work.

Podcasts

Brzeski Says European Elections Brought `Uncertainty' – BB (mp3)

Credit Suisse’s Soss Says Europe Has Austerity Fatigue – BB (mp3)

Wyplosz Sees `Explosion of Resistance to Austerity' – BB (mp3)

Callow Says European Sentiment Was Against Incumbents – BB (mp3)

Invesco’s Greenwood Says Markets to Discipline Hollande – BB (mp3)

Menuet Says Franco-German Relations Growing Tense – BB (mp3)

EURO CRISIS: GREECE

Dangers of National Unity – Krugman / NYT

And since all the respectable people are inside the political tent, backing and being identified with failed policies, that means a big vote for extremists right and left. And yes, the echoes of the 1930s are very strong.

New Greek Govt Looks at Old Govt’s Debt Deal – TF Market Advisors

Europe Wasn’t Destroyed in a Day – TF Market Advisors

What day will historians choose to pick as the day that the Euro died?...The day that Greek Private Sector Involvement was finished and new bonds traded at 20% of par

Greece: Next Steps – ZH
A key event over the next two weeks, during a time when Greece will most likely not have an active government in place is the May 15th maturity of €430 million in international-law bonds whose holders have not agreed to the terms of the PSI and thus demand full payment... of money that Greece does not have…An actual default on these could lead us right back to the “disorderly” default scenario that so many people were afraid of.

‘Loosening’ the memorandum – alphaville / FT
You can see how renegotiating the bailout would have come up at some point, as we reached 2015 without (in all likelihood) consistent primary surpluses from Greece.

European elections: The Greece question – Free exchange / The Economist

It's quite possible that the ECB will prove unwilling to accommodate a weaker commitment to short-term austerity…The irony, of course, is that it is the ECB's failure to aggressively ease in the face of continent-wide budget cuts that allowed those cuts to translate into a painful recession, which in turn fueled an austerity backlash.

Greece's Future Remains within EMU – Marc to Market

Spain and Italy's challenges would not be diminished one iota by the exodus of Greece, for example. The slipper slope knows no obvious end as by a range of macro-economic considerations, France has more in common with the periphery than with the core.

No Deal: SYRIZA and Greece's Democratic Left Party Refuse to Join Bailout Alliance; Icing on the Cake: PASOK Will Not Join a Slim Majority; Solidarity is One-Way Street – Mish’s

Check out the arrogance of EU SpokesClown Amadeu Altafaj-Tardio who said "We think Greece must remain a member of the euro ... but everybody must carry their responsibility here. Solidarity is a two-way street." That is one hell of a statement given the Troika installed puppet government just went up in flames, and give the fact this is not in Greece's best interest at all, but rather in the interest of French and German banks.

*Takeaways From European Elections – Forbes

EURO CRISIS: SPAIN

Up To €210 Billion Funding Shortfall For Spanish, Italian Banks In 2012 – ZH

http://www.zerohedge.com/news/and-back-euro-math-%E2%82%AC210-billion-funding-shortfall-spanish-italian-banks-2012

Spain to Present New Bank Clean-up Measures – TIME
Spain’s prime minister said Monday the government will likely present this week new measures to help banks

OTHER

A Market Full Of Sound And Fury Signifying Unch – ZH
Tyler’s usual after US close wrap-up of market movements.

China's corporate earnings growth declines, banks highly profitable as bad assets are "hidden" away – Sober Look

It is clear that this profitability in the banking sector is completely artificial, as bad loans have been "hidden" away. And that in turn raises questions about the profitability growth for the overall domestic equity markets in China as well as the rising risks in the "hidden" banking system.