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Monday, June 25

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.

Earlier on MoreLiver’s Daily:
Weekender: Off-Topic: Alan Turing’s 100th birthday
Weekender: Trading & Markets: one’s profit is other’s mistake
Weekender: Euro Crisis: everything ’at play’
Weekender: Weekly Support: weekly reviews and previews, just updated!

Markets – Between The Hedges
The Closer – alphaville / FT
Market Commentary – A View From My Screens
Tyler’s European Summary – ZH
  European Bloodbath As Merkel Won't Go Dutch
Tyler's US Summary – ZH
  Stocks Slump But Commodities Jump Despite USD Pump
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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Imagining the Unthinkable The Disastrous Consequences Of A € CrashSpiegel
As the debt crisis worsens in Spain and Italy, financial experts are warning of the catastrophic consequences of a crash of the euro: the destruction of trillions in assets and record high unemployment levels, even in Germany. (Google translation!)

Three Views of the Run on Peripheral EuropeMarketBeat / WSJ
Another pick from the must-read BIS annua report.

History lesson: the break-up of monetary unionsASA
What makes monetary union survives? Politics, so it seems, that is not all about economics.  Also, you might be surprised to learn that it isn’t the weakest countries that ultimately break the monetary union, rather, the stronger countries.

BIS’s Cecchetti Says Central Banks Cannot Do it AllBB (mp3)

Political union is transfer unionFistful of Euros
Here is the problem: political union is transfer union, or it is not political union, and anyway, if it is not transfer union it is no solution. Transfer union is unacceptable. Therefore, political union is unacceptable

How to design a banking union that will save the eurozonebruegel
As soon as the possibility arisis to mutualise future losses, states will have an incentive to conceal problems. Here, clarity should prevail.

No more integration without more representationeuobserver
Despite the many calls in recent months for another great leap forward in European integration, remarkably little attention is being paid to the EU’s growing democratic deficit.

Soros: How to End the Euro CrisisPragCap
Europe needs to eliminate the solvency crisis at the sovereign level.  You do this by creating some sort of fiscal entity that essentially guarantees all sovereign debts.  Something like a Treasury/Fed relationship in the USA where you eliminate the odds of a sovereign default by turning a currency user into a currency issuer.

What Is Next in Europe?PIIE
What should be expected from EU leaders on June 28–29? 1) For Greece, a Political Deal 2) For Europe, a Growth Compact 3) For European Banks, Steps Toward Union 4) For the European Union, a Fiscal Union Agenda

What to expect when you’re expectingBNP Paribas (pdf)
Research report dated 25-Jun

An Agenda for Europe’s Weary MagiciansProject Syndicate
Most importantly, the leaders should break the political deadlock. Germany does not want closer financial solidarity if not accompanied by political integration. France wants financial solidarity without closer political integration. Both camps have stuck to their positions for at least a quarter-century. It is time to bridge the gap between them.

Don’t Expect Much From EU Summit – UBS’s WeberMarketBeat / WSJ
The whole thing Europe is struggling with is: what will be the amount of sovereignty that will be passed on to the European level in the long-term and what is the short-term solution?

No one can agree on how to fix Europe (in one crazy Venn diagram)Wonkblog / WP

ING’s Van Vliet `Not Optimistic’ About Europe SummitBB (mp3)

The Spanish Bailout, the Eurocrisis & the myth of SeniorityRe-Define
If the EU wants to rescue Spain, the trick is not to remove seniority from the ESM but 1) to remove all uncertainties around the future of the Eurozone 2) make conditionality more growth friendly 3) channel the bailout directly to needy banks without going through the sovereign. (Felix Salmon / Reuters also comments the article)

The Conclusion Of Another Greek TragedyMark Grant / ZH
Cans may get kicked down the road but each road, every road, eventually comes to an end and I think we are barely inches now from the end of this road for Greece.

Market awaits EU heads of state meetingKiron Sarkar / The Big Picture
Nice short roundup: Australia, Germany, Euro crisis, Egypt

Five years onButtonwood / The Economist
BIS: “Central banks need to recognise and communicate the limits of monetary policy, making clear that it cannot substitute for those policy measures that can address the root cause of financial fragility and economic weakness.” In short, central banks are buying us time. Let's not waste it.

The cruelest month of the cruelest yearFree exchange / The Economist
Banking crises usually start in September – and also around election years.

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