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Thursday, July 12

12th Jul - US Open: Spain's comeback

Very nice articles on the Spanish bank bailout - it seems problems are far from over, and sorting out the mess will almost inevitably lead to a host of new trouble. There are signs that Japan and China will both continue easing their monetary policies, while nothing much is coming out of Europe now. My guess is the pressure on Spain will keep coming back, and markets remain in risk aversion-mode.

Both the EURUSD and S&P index are sitting near or at support levels and do seem to be okay buys - but where's the bounce, or what could be the catalyst for the bounce? The longer the market sits at the support levels, the more probable it will be that those levels will be broken and we will see a worsening picture. Still in a buy on dips, keep stops close and take profits early-mood.



News & Recap – RanSquawk / ZH
Frontrunning – ZH
Overnight Summary – BofA / ZH
The Lunch Wrap – FT
EM New York headlines – FT
Today’s front pages – presseurop
Daily press summary – Open Europe

Morning MarketBeat: Stocks Hover in Technical Danger Zone – WSJ
Broker Note Briefing – WSJ
Morning Take-Out – NYT
Euro Drifts Lower, Yen Higher; Aussie Spanked – Marc to Market
– TF Market Advisors
AM Dear Dairy: Steadyish – Macro and Cheese

Pre-market Commentary – Marketwatch
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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EURO CRISIS
Capital flight in the Euro area: from bad to worse bruegel
The sudden stops are concentrated in three waves (figure 1): the global financial crisis in 2008/09; spring 2010 in correspondence to the Greek Programme and summer 2011. Updated figures show that the latest wave of sudden stops is still ongoing, with the reversal of capital flows affecting especially Italy and Spain.

BizDaily: A new northern euro? BBC (mp3)
We look at going it alone. Why Germany can't pay, won't pay, and needs - according to the former President of the Federal Association of German Industries, Professor Hans-Olef Henkel - to go its own way.

Of baby steps and EBA bank recaps alphaville / FT
the general and very realistic uncertainty in European banking, which is exacerbated by the aggregate nature of this report. We have no new insight and fears about what may lie-beneath still linger.

Statement by the EC, ECB, and IMF on the Review Mission to Ireland ECB
EU keen to see budget fraudsters in jail euobserver
Time for EU to shed light on Big Corporate euobserver
The euro bailout fund: A democratic 'black box'? euobserver

EURO CRISIS: ECB
Monthly Bulletin, July 2012 ECB (pdf)

Statistics Pocket Book Statistics Pocket Book, July 2012 ECB (pdf)

Another ECB muddle alphaville / FT
Apparent hopes that the ECB’s decision to reduce the rate paid on funds in its deposit facility from 0.25 per cent to zero will magically move money from hoarding banks to the real economy feel premature.

Full Frontal Of ECB's ZIRP: Record €484 Billion Drop In Overnight Deposits ZH

EURO CRISIS: SPAIN
The Good and Bad of Spain's Bank Bailout! re-define
The memorandum fails to understand or acknowledge the link between the macroeconomic policies being pursued by Spain, for example on cutting its fiscal deficit, and the stability of the financial sector. In fact, many of the new austerity measures adopted by Spain will undermine the objectives of its bank bailout program. It also fails on take note of the social and political realities. Crucially, it makes no reference whatsoever to the direct injection of equity by the European crisis funds, now or in the future.

Is Spain Going the Way of Greece? naked capitalism
The logical path, and the one the Troika is pushing, would be to wipe out equity and haircut sub debt and if need be, the next senior layer of bondholders. But depositors were pressured into buying preference shares and subordinated debt. Reuters reported that62% of bank subordinated debt investors are depositors at the same institution.

CHINA
China Monetary Statistics for June 2012 ASA

China recorded money outflow while foreign reserve fell ASA

China lending jumps ahead of GDP data beyondbrics / FT

China as a post-capital economy alphaville / FT

OTHER
EMEA Weekly, Week 29 Danske Bank (pdf)

Japan - BoJ expands QE only cautiously Danske Bank (pdf)
we expect the BoJ to expand the target for its asset purchases by at least JPY10trn before end-2012. Following a resilient H1 12, growth is poised to slow and we believe  the  BoJ will have to revise its inflation forecast lower in H2 12

Swiss 2 Year: -0.52% ZH

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