Content-wise, this is among my best posts. I live for moments like these. This is what makes this the ultimate chess, combat sport or poker game. For more see today’s earlier EU Open: Conservation is just conversation and US Open: Expected expectations. Keep the gammas long.
Joke of the Day: Spain has reached it budget deficit target of 3.5% of GDP. The problem is, Spain did it in 5 months, not 12 – Mish’s
News – Between The Hedges
Markets – Between The Hedges
Recap – Global Macro Trading
The Closer – alphaville / FT
Market Commentary – A View From My Screens
Morning Briefing Asia – BNY Mellon
Tyler’s European Summary – ZH
Peripheral Sovereign Yields Spike On Spain 'Junk' Rumors
Tyler's US Summary – ZH
Equities Rise On Low Volume Tide As Broad Risk Assets Tread Water
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
Divergence in the Euro-Zone: Famous, Obscure and Predictable Facts – Place du Luxembourg
As it stands, the Euro-Zone temporarily benefits the core at the detriment of the periphery. However, as the dominos fall one after another our interdependeces should come home to bite the hubris of Germany and the chauvinism of the French that are threatening European peace and prosperity.
Groupthink on Carry, Subordination, and Secondary Market Yields – TF Market Advisors
If Buffett wouldn’t do it, why should the governments. That should be the motto, and I’m not even a fan of Buffett, but he did extract good value for himself, with lots of protections, when he stepped in. The same thought process needs to go on now in Europe.
EURO CRISIS: BANKING UNION
Banking Disunion – Project Syndicate
The naive belief that integrated European regulation and supervision would follow financial integration has proven to be false. There are now only two options: integrate ahead of markets – that is, give the ECB supervisory powers for systemically important and cross-border institutions, unify prudential rules, and create an RA with money from the ESM – or permit the current disintegration process to continue and await the euro’s relatively quick demise.
Eurozone's banking union will not be credible; FDIC-type fund seems out of reach – Sober Look
With analysis by Barclays
Cecchetti Says European Banks Need Realistic Accounting – BB (mp3)
Rabobank’s Jane Foley Sees Further Risk for Euro – BB (mp3)
EURO CRISIS: ECB
Why Not To Expect SMP or LTRO from ECB Next Week – Marc to Market
LTRO funds still remain, more would only increase doomloop. SMP opposed by the ECB and Germans, and any purchases should be done through EFSF or ESM instead.
ECB’s balance sheet expands, indicates fair value EURUSD around 1.16 – ZH
Italy's Unelected PM Mario Monti: "Eurobonds, Or I Resign" – ZH
The EU Summit Scenario Matrix – ZH
Morgan Stanley’s scenarios and text
The Rube Goldberg solution – Free exchange / The Economist
And in the meantime, of course, euro-area governments must remain committed enough to firefighting to prevent a chaotic collapse of the single currency while the mechanics of further integration play out. And progress must also occur quickly enough to ensure that sustained crisis and deepening recession don't push citizens of member states to decide the whole mess isn't worth it.
Another European Summit, Another Beggars At The Feast Spectacle? – The Daily Capitalist
There is absolutely nothing that even suggests that Europe’s leaders are even close to agreeing on something with regards to a rational plan to address the Eurozone’s systemic problems... The only thing Europe has managed to accomplish this far is to extend its monetary union’s survival through a series of circular debt-piling rescue schemes.
Things To Ignore – The Daily Capitalist
The EC’s bureaucrats are wetting their pants over the renewed talk of a greater fiscal union between EU member states. This is the moment they have dreamed of. Instead of being useless functionaries (as seen by most EU citizens), they could have more importance by having control on a supranational basis over member states. Sorry but that isn’t going to happen soon and if it did, the member states would be making a colossal error by giving up that much sovereignty.
EU Roadmap to Fiscal, Bank Union Runs Into German Rebuff – BB
A solution to the euro debt crisis: Back from the future – voxeu.org
The next meeting of the European Council takes place on 28 and 29 June amid growing fear and uncertainty over the Eurozone’s future. This column proposes a solution to the crisis – one that is bold and challenging, and that cannot wait.
Italy's Monti says pre-prepared EU declarations unacceptable – Reuters
...would not rubber stamp conclusions for this week's EU summit that is supposed to map out the future of the euro but would fight for concrete measures to help growth and contain market turmoil. (Also Mish’s)
CFR’s Mallaby `Not Optimistic’ on European Summit – BB (mp3)
Deutsche Bank: "The Next Recession Should Start By The End Of August" – ZH
Gluskin Sheff’s Rosenberg Sees Growing Recession Risk – BB (mp3)
Standard Chartered’s Semmens Sees Weak Jobs Report – BB (mp3)
Housing markets: Primed again – Free exchange / The Economist
Fist signs that US markets are stabilizing, which would be a good thing – unless the Fed starts to tighten too soon.
Of housing booms and busts – alphaville / FT
Deutsche Bank’s very good charts. Norway looks terribly overvalued, but many other “good” countries look extended as well.
The Worldwide QE Quagmire – Testosterone Pit
Certain central bankers are now coming out of the closet admitting that their favorite shenanigans—ultralow interest rates and printing money with utter abandon—can’t solve the very problems they were designed to solve
The twilight of the central banker – Free exchange / The Economist
If the world is lucky, central bankers will discount the recommendations of the BIS, will instead engage in a bit of self-examination, and will go back to figuring out how best to use their tools to shepherd demand toward potential. If the world is unlucky, central bankers will embrace the BIS' excuse-making and opt instead to place unnecessary pressure on politicians that are already facing plenty of it.
Systemic Banking Crises Database – The Big Picture
Select charts from a recent IMF paper
S&P 500 Q2 Earnings Growth Estimates Tank – Bespoke
Nice look – materials, energy and financials look especially bad.
Summary of Hedge Fund Bearish China Thesis – market folly
Views from Kynikos, Corriente, Pivot, Eclectica, Greenlight & more
As goes the eurozone, so goes the cosmos – The World / FT
WTO’s head announces he is leaving, because “the difficulties we are observing in the EU mirror the troubles of the multilateral system”
Houston, we have an overcapacity problem – alphaville / FT
86 pages of pure unadulterated oil porn focused on why we are not, contrary to popular belief, running out of oil.