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Tuesday, June 12

12th Jun - US Open: Last Dominoes

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.

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Daily US Opening – RanSquawk / ZH
Frontrunning – ZH
The Lunch Wrap – FT
EM New York headlines – FT
Overnight Summary – Bank of America / ZH
Today’s front pages – presseurop
Daily Press Summary – Open Europe

Morning MarketBeat: Bailout Euphoria Didn’t Last Long – WSJ
Broker Note Briefing – WSJ
Morning Take-Out – NYT
AM Dear Dairy: Turnaround Tuesday – Macro and Cheese
Market Summary: Euro Pressure Subsides for the Moment – Marc to Market
The T Report – TF Market Advisors

Pre-market Commentary – Marketwatch
What does Germany want?
Pre-Market Trading – CNNMoney          
Pre-Market – NASDAQ
US Equity Preview – Bloomberg
Earnings & Events – The Street
MarketCurrents – Seeking Alpha

Debt crisis: live – The Telegraph
The Euro Crisis Blog – WSJ
Tracking Europe’s Debt Crisis – NYT
FX Options Analytics – Saxo Bank
European 10yr Yields and Spreads – MTS indices

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Credit Suisse Explains "The Real Issue", And Why There Is Two Months Tops Until France Is In The Bulls Eye ZH
Given the market’s adaptive learning behaviour, we suspect that this finesse might last two. The eventual denouement should be flagged by symptoms of the failure of  the credit of EFSF/ESM and/or France.

Why ItalyMarc to Market
That leaves Italy as the last of southern debtor countries to be standing on its own in the face of the end of a global credit cycle.  Italy's problem is not a deficit.  It is likely to be near 4% this year.  It is also the only debtor to be running a primary budget (excluding debt servicing costs) surplus. The challenge stems from the accumulation of prior deficits.

Worry for Italy Quickly Replaces Relief for SpainNYT
The main fear is that Italy cannot grow its way out of a recession fast enough to pay a mountainous national debt. Other concerns include the fact that Italy, with the third-largest euro zone economy after those of Germany and France, will have to shoulder a large portion of the bailout bill even as it grapples with its own sharp economic downturn.

Now they’ve shut Italy off from the markets…alphaville / FT

German sovereign CDS widening is a troubling signSober Look
To an economist this raises all sorts of questions such as what is the "risk-free rate" for the euro. And how can German paper be viewed as risk-free when German sovereign CDS is wider than Verizon, IBM, Pfizer, Microsoft, etc. CDS? What this tells us is that investors are becoming concerned about Germany's growing liabilities associated with the Eurozone.

Finnish economy: worst is still ahead Danske Bank (pdf)

The bailout of Spain’s banks shows the heart of our problemFabius Maximus
The US and Europe have not recovered from the 2008-09 crash in part because we applied first aid, but squandered the time those measures bought for us (at great cost).  An essential aspect of post-crash reforms is fixing our financial systems.  The bailout of Spain’s banks — expensive for Spain’s people, easy money for the banks — illustrates the problem. 

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