Spain and, less importantly, Greece are dominating the headlines. Italy is also getting some mentions, but very limited as of now. Time to go long Spain & short Italy?
What you missed during the weekend:
Weekender: Trading & Markets (trading, economics, regulation...)
Weekender: Euro Crisis (that never ends, until it’s over)
Weekender: Weekly Support (weekly reviews and previews,
updated!)
Weekender: Best of The Week (from past week’s posts)
News &
Recap – RanSquawk / ZH
Frontrunning
– ZH
Overnight
Summary – BofA / ZH
The Lunch
Wrap – FT
Emerging
N.Y. headlines – FT
Today’s
front pages – presseurop
Daily press
summary – Open
Europe
Spanish
crisis reaches critical stage as borrowing costs top 7.5%; Up to six Spanish
regions set to request financial aid from Spanish state
Morning
MarketBeat: Dow Theory Suggests More Trouble Ahead – WSJ
Broker Note
Briefing – WSJ
Morning
Take-Out – NYT
– Marc to
Market
AM Dear
Dairy: Bear Prowl – 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
FX Options
Analytics – Saxo
Bank
European
10yr Yields and Spreads – MTS indices
EURO CRISIS
UBS: Clients have asked if this might
trigger a GDP forecast upgrade for the common currency area. The short answer is no;
the currency has depreciated on fear and risk aversion – and economic growth
tends to suffer rather than flourish in that environment.
Russian/Euro Credit Crisis Analog – NJB
Deflator
the second half of a timeline on the
Russian/Asian Credit Crisis of the late-90s that I amended with what I think
are the analogous happenings of the Euro Crisis.
EURO CRISIS: SPAIN
 |
| Spain's maturing debt. Need money. |
GDP of $1 trillion for all of Spain, with 140 billion
euros of regional government debt or 13% of GDP.
things are
still not too painful - Spain’s average funding cost is still 4.1
per cent, at an average maturity of 6.4 years — but it is getting awfully ugly
awfully quick.
The claims are self-serving spin by Europe’s incompetent policy elite. Once again,
they are blaming the victim for the consequences of their own scorched-earth
monetary, fiscal, and regulatory policies.
Credit default swaps also want in on the “Spain’s [insert financial
instrument] reach record highs” headlines.
It’s hard to foresee how this ends, but if the
powers that be are balking at another €10 billion to €50 billion for Greece, they will not pony
up the hundreds of billions that many analysts see as necessary for Spain. The Eurocrats are
running out of runway, and there’s no sign of a Plan B. If we didn’t all have a
stake in the outcome, this would make for great theater.
EURO CRISIS: GREECE
Officials from the troika of international
lenders are back in Athens on Tuesday amid renewed talk in Germany of a Greek euro exit.
German Vice Chancellor "Very
Skeptical" Greece Can Be Rescued, Euro Exit has "Lost its Terror"; Will Defeat
Be Snatched From the Jaws of Victory Once Again? – Mish’s
In the short-term Greece is likely doomed
either way. In the long-term Greece has a chance once it
rids itself of the shackles of the euro. Hyperinflation may be Greece's destiny, but if so,
I see no point in delaying it.
CHINA
although there are ways for China to further
enhance productivity that could promote growth, China is facing serious
demographic challenges “that are not generally as yet appreciated, apparently
even by Beijing’s leadership”, and we have to be prepared for a China which, in
the next 2 decades, will grow at a much slower rate than what is generally
expected.
USA
Investors betting on QE3 may find themselves in
a crowded trade – Sober
Look
Leveraged investors such as hedge funds are
piling into longer term treasuries and other rate product in anticipation of
QE3. The speculative long positions are near records.
John Williams Gets It – Tim
Duy’s Fed Watch
Williams again telegraphs his belief that the
Fed should engage in additional quantitative easing, and makes a big step in
calling for an open-ended program. It is
not, however, clear the Bernanke has come to the same conclusion. It's really Bernanke, not the Fed hawks, that
has been the impediment to further easing.
OTHER
On FX – Bruce Krasting
Swiss
franc, Fed, Eurocrats’ response to Spain
Divergence Does Not Bode Well for Stocks &
Credit – BondSquawk
…the recent run in the S&P 500 could appear
corrective in a much larger intermediate downward trend. If this is indeed the
case, this recent divergence between stocks and bond yields could be
short-lived and a re-pricing of risk assets may be on the horizon.
Dollar Opens New Week on Firm Note – Marc
to Market
1) more
regions are going to follow Valencia's request for government aid 2) IMF has concluded that Greece will be unable to bring its debt
down to 120% of GDP by 2020 and therefore will not commit fresh funds 3) Chinese officials
seem quite somber about the world's second largest economy
Weekly Market Comment: Extraordinary Strains – Hussman Funds
Investors often have the impression that the
market simply collapses once a bull market peak is set, but this isn’t typical.
What is typical is exactly the sort of exhaustion pattern we’ve observed since
April.
Grant Williams’ Things that make you go hmmm – via The
Trader, (full pdf)