MoreLiver's Daily: June 2012

Saturday, June 30

30th Jun - Late Friday regulars

Here are the late regular links from Friday. Next up the weekly posts, stay tuned.

29th Jun - EU Open: Limited Right Steps

Initial reaction to the limited risk-sharing and dropping of ESM seniority positive. Some commentators (FT included) remain skeptical, though. I will write more about this this weekend.

28th Jun - US Close: 1st Day Over

Did anyone notice anything out of the summit, except the cancelled press meeting with Merkel? Nothing to say after the first day, eh? Writers have been busy with the US Supreme Court decision on health care and the Barclays Bank's manipulation of LIBOR rates. Especially the latter is "old news" - everyone kind of knew already that LIBOR rates have become useless during the financial crisis.

I'll punch in the missing entries later. Good summit resolution! (nothing comes out of it)

27th Jun - US Open

Summit coming closer, but the goals are moving farther. Excellent articles here, but do see last night’s US Close: Best Content Since... as well.

Seriously, see last night’s US Close: Best Content Since..., as it had links to the best content I’ve seen in weeks.

26th Jun - US Close: Best Content Since...

Plenty of articles on the EU summit... It does not look good – so perhaps the chance of a positive surprise is there? My views: PIIGS yields to go higher, stocks lower, but the important levels are close by and the chance of a policy response either from Germany or the central banks is there. So just a little bit more in this direction, please, and then initiate risk-on trades.

Rangish-bearish day, for more see today’s earlier EU Open: Conservation is just conversation and last night’s US Close: Everything, Squared. I will probably push out a special "summit watch" post tomorrow. Stay above the surface.

Not much to report, only couple of articles since yesterday. See my last night’s US Close: Everything, Squared for article links. Understand the EU summit, and understand what makes the FED move. The rest is just…well, conversation.

Credit guest post by Macronomics highlights the "prisoner's dilemma" in Europe: even though a closer union might be the least costly option for the nation states, will they all choose it?

25th Jun - US Close: Everything, Squared

So, risk-off and "Bad being priced in", as discussed earlier. After a quick drop, S&P bounces off its recent range's bottom, but the Spanish bond yields have also bounced up from the recent rising channel bottom.It looks like the risk aversion has more room to go, but I have no strong feelings now and markets are probably waiting for the eurocrat's roadmap, and then the market reaction to the map, and then the possibility of further central bank action. Everything at play, everything depending on everything.

Spain finally made the official request for help. Otherwise, all eyes are on the EU summit, and listening to what the leaders (=Merkel) have to say before the event. Also, given the big slowdown the US unemployment figures are of interest, as another QE depends on bad data. Markets looking softer, but at the moment just catching up to "bad macro & no QE".

The morning links plus some links to articles that were published on Sunday (The BIS came out with their annual report, and as they are the Capo di tutti capi it is interesting to check at least summaries behind their thinking. Also, at the end are links to couple of sell-side research articles.

24th Jun - Weekender: Off-Topic

Alan Turing is the focus of this week's off-topic linkfest.

Sections in this week’s Trading & Markets-post: Switzerland, Central Banking, China, Banks, Regulation, Risk Markets, Strategy, The Dark Side and Other.

23rd Jun - Weekender: Euro Crisis

Here is the weekend's huge linkfest to eurocrisis. Summits, the ECB, NCBs, worried economists, trade-offs, cloak & dagger, smoke & mirrors - it's all here. It will be a very interesting market week. ECB's easier collateral requirements were opposed by the Bundesbank, and the roadmap to a closer union is still "under construction". Germany's constitutional court said it will take more time decide what the ESM really is. Some new money for "growth" was promised.

This is an inside joke. Always prepared!

Here are the week in review and next week previewed-links.

22nd Jun - US Close

I just couldn't stay away, could I... Here are the US close, EU open and US open regular links.

The blog is on holiday today.

Thursday, June 21

21st Jun - US Open

See last night’s US Close: Mini-Twist and today's earlier EU Open for more article links.

See last night’s US Close: Mini-Twist for more article links, I also just updated the FED Watch with “after”-links.

20th Jun - US Close: Mini-Twist

Bernanke just extended the twist. My view: 1) saving ammo for the coming euroshow 2) with limited ammo a threat is more credible than the action 3) understands deleveraging is a slow process. See my long post Announcement Games... from last night and today’s earlier US Open - Waiting for 'The Beard' for more articles and my comments. The FED Watch has been updated with “after”-comments.

See my long post Announcement Games... from last night for articles and my comments. The FED Watch and Calendar have been updated.

19th Jun - US Close: Announcement Games...

Another huge post for a headline-driven day. We had the G20 meeting, where Barroso is showing all the classic signs of denial and panic: Like the European mess would be the fault of the Americans. He is not speaking to the European electorate. His bullshit will not work on heads of states. Still no admission from anyone that the euro is flawed.

Collection of what I've linked to previously, plus several new ones at the bottom of the post.

G20 seems utterly useless - yes, new money pledges to IMF, but a lot of it from countries like Spain, Italy, and even Cyprus. Barroso blames Americans for the Europe's problems, and U.K.'s prime minister welcomes rich French ahead of possible marginal tax rate hikes in France. I have been saying it all along and I am saying it again... these people cannot solve the mess we're in.

G20 has provided nothing concrete. The Calendar has been updated. Looking at it makes me think there will probably be no comprehensive solutions or suggestions for now, as the ESM is still waiting for German approval – both from ~~the constitutional court and~~ the parliament. FOMC meeting will be running from Tuesday to Wednesday, and probably that is what is keeping the stock markets levitating, against the bad news elsewhere. The 22-Jun “Big Four” (Germany, France, Italy, Spain) crisis meeting is the next important event, and I would look for any subtle changes in leader’s rhetoric after the event. For Greece, see the updated Greece Election Results

18th Jun - US Close: S&P and Spain

Even though S&P and Spain both start with the same letters, today's markets were strange. Another US session rally, after rejecting a support line earlier. Technically S&P looks like it is "breaking up", perhaps anticipating a policy response from the FED. We are in "annoucement game"-regime (=range trading), both currency- and credit markets are in a risk-off-mood, but technically stock market looks like it is going to go higher. Mixed feelings...

The next big issue will be the Spanish bond auctions and the FED meeting. I will update the Calendar later today, and think of something interesting to say. For Greece, see the updated Greece Election Results

Only the regular links now. If you are just back from the weekend, check my weekend postings:

First impressions: not much will change. EDIT (Updated this, initial reaction bullish, but comments are realizing this is just more muddle-through, and Spain continues to deteriorate, so initial bullishness has eased. It is now down to the G20 and the central banks.

Links to research notes from banks. Some of these might be removed, so save what you want. I am not hosting these documents, just linking to them. Also see the Weekly Support.

17th Jun - Weekender: Off-Topic

At least the mob did not get Henry Hill killed.

Not that many gems this week, but some useful ideas

I have avoided the obvious temptation to linkfest and follow the Greek election. I believe it does not matter who runs the country. They are broke, and they are unable to pay their debts now and in the future. The only thing a "pro-austerity, pro-EU" government could do is to allow more pretending to take place. And boy, will they all pretend soon that Greece is recovering...

Credit markets are signaling that the probability of some sort of debt mutualization has increased in the past couple of weeks. Alternatively, it is a sign that the end-game is starting. Either way, Germany ends up paying. France is a complete joke. Come on - lowering the retirement age to 60 years? I had high hopes on Hollande - that he would be a closet rationalist. In reality he seems to be just another somewhat crazy left-winger. I am very, very pessimistic on the Europe's outcome. Perhaps the ECB will print, and perhaps this can go on for a year or so... but what about the economy, what about the unemployed, the discontented? Is saving the euro and avoiding bank failures so important? Do they really want to have revolutions in Europe?

Here are the week in review and next week previewed-links.

Another intriguing guest post on credit markets by Macronomics.

15th Jun - Best of The Week

15th Jun - US Close

I am posting a bit early and will update this later. Have a great weekend and go home square.

14th Jun - US Close: Where's McGyver when you need him?

Now this was an interesting day. Only one day to go before the weekend. Today we saw the Spanish bond yields reaching the dreaded 7% and an emergency meeting (very hush hush) by senior Spanish rulers. Reuters released a poll showing that half of bank economists outside Europe believe someone will leave the club in the next twelve months. To round up the day, we saw a classic "announcement game" tactic - a rumor from "G20-sources" that central banks are ready for coordinated intervention, should the need arise.

Spanish 10-year bonds trading above 7%, an euro-era all-time high. Italy also ‘at play’. Greece is almost a side-show at the moment. Will the ECB ‘blink’ and start monetizing PIIGS debt? Or at least, would Germany be so kind and leave the euro? I pushed the post out earlier as usual, and will update this later.

13th Jun - US Close: More bailouts!

Italy is definitely getting more attention now…meanwhile, Cyprus is about to request a bailout, and Greece is again running out of money. It will be a fun summer. For the latest on "Bailando", see the updated Spanish Bailout: The Collection.

The all-seeing eye is turning to Italy. That will be ‘it’, as if Spain was not enough…I am not sure if the ECB will step in, or would that even help at all, as ECB’s credibility is basically Bundesbank’s credibility. Any hints that Germany has had enough would remove the ECB’s temporary reign (10+ years). For the latest on "Bailando", see the updated Spanish Bailout: The Collection.

Greece exit = Grexit
Spain exit = Spexit
Spain bailout = Spailout, Bailando
Finland exit = Fixit

Italy exit = ???
Italy bailout = ???

I will be away from the keyboard most of the day, but "I'll be back" - have a good day.

12th Jun - US Close: Epic Summit-Summer

Plenty of stuff, swissie is getting some attention, and the coming elections in Greece are starting to become a focal point. The G20 and the Eurogroup meetings are the key events, but before that next week's FOMC meeting is a possible market mover. Finland's parliament votes on the ESM treaty on Thursday and the motion is debated on Wednesday. Expect the 'Yes' to win. For the latest on "Bailando", see the updated Spanish Bailout: The Collection.

Not nice at all. Italy moving to the firing line and everyone is waiting for something to happen - and the only player left in town is Germany. What do they want, an union or a breakup? For Spain, see the updated Spanish Bailout: The Collection. The missing links will be updated later.

11th Jun - US Close: Epic Bail

The evening regulars are here, plus some minor articles - seems everyone has been busy writing about the bailout, because of its apparent impotence in calming the crisis. Subordination, not enough, eyes on Italy, eventual CDS trigger, the ESM as a failure even before it has started, Finland’s demands for collateral and not providing funds to bad banks… the bailout is just so full of holes at the moment. I expect negative mood for the rest of the week, but keep an eye on ECB and possible real plans to address the above issues. For the bailout articles, see Spanish Bailout: The Collection

The markets are not liking the Spanish bailout announcement at all. After the initial 'buy risk', issues like subordination, Italy, Ireland and most importantly, where the bailout money comes from (hint: more debt) are questioned. For my coverage of the bailout, see the continuously updated Spanish Bailout: The Collection.
Woo-hoo, I am 40 years old today. It has not been quick - and definitely not painless.

A collection of Spanish bailout articles, new ones added to the bottom of the post. This post will be updated continuously.

The morning links, please check the previous posts listed below for my full coverage of the Spanish bailout. Today I’m forty. I guess this makes me even more unemployable :D

10th Jun - Weekender: Off-Topics

Krugman is a sci-fi fan, Feynman, Bill Murray, return to the moon....it's all here!

Russian ponzi, why you fail when the stakes go up, new stuff to predict the stocks, it's all here!

For more on Spain, see my earlier Weekender: Euro Crisis

Commentary on Spain's bailout news seems to think that even though the chosen figure of 100bn was to high side of the initial estimates, it will not be adequate and is more a "first step". Also, the other missing elements and the next flashpoints are looming large.

9th Jun - Credit Guest: Eastern Promises

Another credit guest post by Macronomics. Happy bailouts!

Here are the week in review and next week previewed-links. As usual, I will update this during the weekend. Weekender-posts coming, stay tuned, don’t go away, be nice to the elderly.

The better articles from the ending week's posts.

8th Jun - US Close

Looks like the official bailout request from Spain is coming this weekend. The 20bn has recently increased to 40bn. Those who can count and understand what is needed, put the final mark around 400bn. Good luck to the European project, and happy ‘summiteering’. As it is Friday, let me present you with a cheesy bailout song:

My comments and plenty of article links in yesterday’s US Close: Nothing Is Something?

7th Jun - US Close: Nothing Is Something?

ECB did almost nothing. FED only said it could do something, maybe. Merkel said that she will definitely do something, surely, but all the pieces she is referring to are already there. The only clear positive measure was the interest rate cut from China and initial talk that the Spanish banks will be recapped. Also, Spanish auction that was the main talk beforehand went well, according to a lousy newspaper, and ok according to analysts. The blogs thought it went badly, and Sober Look suggests the Spanish auction was directly funded by the ECB. So these are the news that the market has rallied on?

Either the market is very wrong, or this is very bullish. As the other instruments (credit, commodities) have not participated in the stock rally, I think it is the stock market that has been getting the message wrong and we could be in for another wild roller coaster Friday. One week to go before Greece's elections. Mind the announcement games - for every day there has been an European rumor of salvation that has not led anywhere. They will try to manage the markets until the big EU meetings. But by then they will have to have something concrete, or everything will be down to Draghi.

All eyes on Bernanke and then it will be end of the week. The plans to recap the Spanish banks and hopes for QE are still driving the markets, but I believe the short-term “good news” are now in prices, and expect good old-fashioned position-squaring ahead of the weekend. only one week to go for the Greek elections, bt the way. For the FED, see my recently updated ECB & FED Previews. My last night’s post was also nice.

Credit guest post by the literary genius of Macronomics.

6th Jun - US Close: ECB Stood Still

ECB did nothing. Hopes are on Bernanke’s address tomorrow. Heavy rumors that Germany is setting up a bailout of the Spanish banks, but this could also be announcement games. I stick to my original view (risk-on during the early part of the week, risk-off towards the weekend)

I’m again off on errands so I will update this post later. I expect no (or little) action from ECB and stick to my original view that the risk-on shall soon reverse for the rest of the week.

Just a quick collection from previous posts to help you in guessing what will come out of the ECB's meeting and Bernanke's address tomorrow.

See last night's long post for pretty pictures and good articles. This morning post is a torso and I'll add the missing pieces later.

5th Jun - US Close: Expected Sameness

USD basis swap near crisis lows ZH

Help request from Spain, but nothing official yet. Wednesday's ECB meeting, and to a much lesser extent the Thursday's speech by Bernanke are key events. I will post a collection of briefings for the ECB meeting tomorrow morning.

Looks more likely that Spain is about to come out of the closet with the official bailout request.

Just a quickie for now.

4th Jun - US Close: Squared Announcements

The evening links. A dull day, waiting for Wednesday’s ECB meeting and Thursday’s address from Bernanke. Eurocrats are playing announcement games – today we had two: Merkel’s and Barroso’s evening statement was announced during the European hours. Nothing came out of that. Then they announced that the finance ministers will hold a teleconference on Tuesday. Nothing will come out of that either. They are trying to stress you out. Don’t let them.

I’m off to hospital to see someone special, meanwhile enjoy these reads.

What I expect this week:

Here are the morning briefs – another Monday holiday, this time in UK. I hope the other Europeans would not hurt themselves trying to catch a falling knife meanwhile.

3rd Jun - Weekender: Sell-Side Research

Links to research notes from banks. Some of these might be removed, so save what you want. I am not hosting these documents, just linking to them. Also see last weekend’s Sell-Side Research and the current Weekly Support.

Definitely entertainment-only.

This week’s selection of markets- and trading-oriented articles. Next post the Off-topics

This week’s selection of readings on the economy and some research papers. Markets- and Off-topic-posts coming up next.

Weekend readings on Europe, more to come later in the evening.

The best of the past week, from my previous posts.Weekender specials coming up later today.

2nd Jun - Credit Guest: River of "No Returns"

A guest post by the always enjoyable Macronomics:

Here are the week in review and next week previewed-links. As usual, I will update this during the weekend. Weekender-posts coming, stay tuned, don’t go away, batteries not included and figures sold separately. Some assembly required.

Follow ‘MoreLiver’ on Twitter or Facebook.

1st Jun - US Close: Running Away

Huge moves in JPY/USD

Quite a bearish day to end the week – no surprise that Friday became a risk-off day, given the uncertainties with Spain and Greece. JPY and gold were today’s ‘anomalies’, as both are seen as safe havens. Bloomberg introduced symbol codes for the Greek drachma and while this is only prudent preparation in case of a Grexit, of course there is plenty of talk that “somebody knows something”. If someone knows something, I don’t think they would go tell that to Bloomberg’s system analysts first. I believe a banking license to ESM is the most probable solution that will come out of this, but this requires Germany’s approval first.

Another US open, with bad payrolls numbers. 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 recent article on Spain.

Here are the morning briefings and select article links. The Chinese data continues to underperform, so at least we can discount the rumors that the hermit kingdom will save Europe. More probable would be that the ESM saves China. US Payrolls coming up today, but the European crisis and the looming weekend with the possibility of surprise announcements are more important now than macro data. What surprises could there be during the weekend? Some relatively hard announcement could come out on how the eurocrats will save Spain this time, so the range of possible surprises is more on the positive side. Nevertheless, my gut feeling is that markets will go risk-off towards the day’s close.

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