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Tuesday, May 1

1st May: Juncker's Mayday

Euro Group’s Juncker announced his resignation, and probably not because he wants to take time off to attend the Mayday techno rave’s after parties. I believe the real reason for the resignation is his disgust at the ongoing planning to recapitalize the Spanish banks. 

As with any recapitalizations, the bill will always be left to the ones not only willing, but also able to pick it up. In this case it means mostly Germany and few other countries, and the probable vehicle will be the ESM – but first the Euro Group must decide how to circumvent the ESM’s rules. I do see the funny side of this: Italian taxpayers bailing out Spanish bankers.

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Daily US Opening News And Market Re-Cap: May 1 – RanSquawk / ZH
Frontrunning: May 1 – ZH
Overnight Sentiment: Closed – Bank of America / ZH
The Lunch Wrap – alphaville / FT
EM New York headlines – beyondbrics / FT
Morning MarketBeat: Defense Returns – MarketBeat / WSJ
Morning Take-Out – DealBook / NYT
AM Dear Dairy: Waiting for US ISM – Macro and Cheese
May Day Surprises, Dollar Mixed – Marc to Market
. . .  – Kiron Sarkar / The Big Picture
Daily Press Summary – Open Europe
  Greek Socialist leader suggests euro exit should not be ruled out
Morning Preview CollectionBetween The Hedges

Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
Tracking Europe’s Debt Crisis – NYT
FX Options Analytics – Saxo Bank
Marshalling growth in EuropeOpen Europe
The latest in a long line of 'pro-growth' proposals for the eurozone looks to be the creation of a new ‘Marshall Plan’ to provide funding for investment projects in Europe. The plan, according to El Pais, is to attract €200bn in investment from the private sector to fund projects geared towards creating growth particularly in infrastructure, green energy and high technology.

Germany’s Neighborhood WatchProject Syndicate
Mohamed A. El-Erian: First, Germany must play an even larger role in conducting and coordinating the eurozone’s policy responses… Second, the eurozone, led by a Germany that is working closely with France, needs to clarify decisively what it intends to look like in the medium term.

Austerity Backlash: What Merkel's Isolation Means For the Euro CrisisSpiegel
Angela Merkel's euro crisis strategy is unpopular and she has lost a number of allies. Worse yet, French presidential candidate François Hollande has pledged a change of course from the strict austerity measures she supports. But in the end, the Paris-Berlin alliance will likely survive and austerity will continue, albeit with a few growth initiatives thrown in.

Juncker backs German finance minister for eurozone posteuobserver
Juncker: Germany must not suggest it pays for euro zoneReuters
Juncker Says Ceding Euro Job Due to Franco-German InterferenceBB

A glimmer of hope for the austerity wasteland of South Europe? The Telegraph
Mario Draghi's liquidity blitz is beginning to feed through into the EMU money supply. At last. This is the best news in months for Europe. As you can see from the charts below (from the ECB's new data), real M1 deposits are rising briskly again in the core.

The ECB lending to periphery governments via "backdoor SMP"Sober Look
back in March some financial engineering took place that would make even an experienced Wall Street structurer jealous. The goal was to achieve a "backdoor SMP" in spite of the ECB's policy to put the SMP on hold. Let's take Italy as an example. Here are the steps used to achieve this financing:

Strategic Briefing: The Macro Pain In SpainThe Capital Spectator
Summaries and links to recent articles

No alternative to austerityFT
Spanish unemployment is nearing 25 per cent. The suicide rate is climbing in Greece. Britain is in a double-dip recession. Amid all this pain, the cry is growing louder. Austerity policies in Europe are dangerous. Someone has to stop this madness.

The Market Calls BS on Spain’s Efforts to Cover Its Toxic Banking DebtGains & Pains & Capital
The few facts that we do know are: Total Spanish banking loans are equal to 170% of Spanish GDP. Troubled loans at Spanish Banks just hit an 18-year high. Spanish Banks are drawing a record €316.3 billion from the ECB (up from €169.2 billion in February). The share prices of Spanish banks that were merged with cajas have broken to new lows.

Why We Should Worry about Spain’s Economic PainTIME
There are no easy solutions. The point, though, is that
Europe needs to tailor its crisis-busting methods to the real situation on the ground, rather than blindly insist on a cookie-cutter approach across the zone. If that doesn’t happen, I’ll probably have to write about a Spain in crisis in another two years.

Tuesday Never ComesPIMCO
Bill Gross: The current acceleration of credit via central bank policies will likely produce a positive rate of real economic growth this year for most developed countries, but the structural distortions brought about by zero bound interest rates will limit that growth and induce serious risks in future years. 

China’s manufacturing PMI shows slight expansion in April 2012Also Sprach Analyst