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Monday, May 7

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.

Markets – Between The Hedges
The Closer – alphaville / FT
After the Storm – A View From My Screens (new!)

Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
Tracking Europe’s Debt Crisis – NYT
FX Options Analytics – Saxo Bank

Kotok: My Initial Take on EuropeThe 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 workingWonkblog / 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 AusterityProject 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 ServedMark 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 BriefingBNY 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 HollandeProject Syndicate
Martin Schulz sounds like an eurocrat. “EU budget is pro-growth” and so on…

Europe’s Misguided Search for GrowthProject 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.

François Hollande Must Quickly Hit His StrideSpiegel
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 RelationshipSpiegel
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.

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)

Dangers of National UnityKrugman / 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 DealTF Market Advisors

Europe Wasn’t Destroyed in a DayTF 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

European elections: The Greece questionFree 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 EMUMarc 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 StreetMish’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 ElectionsForbes

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

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

A Market Full Of Sound And Fury Signifying UnchZH
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" awaySober 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.