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Wednesday, August 15

15th Aug - US Close: Still Waiting...

Articles on Europe are getting nastier. September deadlines and showdown is approaching. Will we see another muddle-through attempt in this Mexican stand-off?

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Previously on MoreLiver's:
Wed: US Open
Wed: EU Open (morning briefings)
Tue: US Close (plenty of articles+pics)

Markets – Between The Hedges
The Closer – alphaville / FT
Market Commentary – A View From My Screens
Tyler’s US Summary – ZH

TV: Bloomberg, BBC
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

Early Retirement for the Eurozone?Project Syndicate
Nouriel Roubini: Germany and the ECB are now relying on the hope that large-scale liquidity will buy time to allow the adjustments needed to restore growth and debt sustainability in the eurozone periphery. But, if a eurozone breakup can only be postponed, delaying the inevitable would merely make the endgame worse – much worse.

Germany, Not Greece, Should Leave the Eurozonereason
The toxic commitment to the eurozone that seems to have possessed most of Europe is having a disastrous effect on not only the economies of Europe, but also on the notion of moral responsibility. Were Germany to exit the Euro there would be some hope for Europe’s economy, but perhaps more important, a German exit would stop other countries assuming bailouts are as good as guaranteed.

When will the euro collapse? It’s already deadMarketWatch
In reality, whether it is a few months or a decade away does not make as much difference as you might suppose. Why not? Because in most of the ways that actually matter, the euro is already dead.

Unlocked handcuffs Fistful of Euros
If there’s a rough trend in the data, it’s for small and mostly non-Eurozone countries to issue under English law, perhaps in search of the credibility or good signal of such a framework.  But for the rest of them, its sovereign debt and we’re not even supposed to discuss default and they’ve pinky-promised that they’ll pay it back. But legally, they could rewrite the terms in the morning.

Searching for common ground on a European banking unionalphaville / FT
With the EC set to outline its proposals for a European banking union in less than a month’s time, leaked documents detailing the initial discussions indicate differences of opinion remain as wide as ever.

Finland Lags Behind Nordic NeighborsWSJ
Finland is an economic power among countries that use the euro, but compared with its Scandinavian neighbors it is slipping. The dichotomy is putting stress on citizens and politicians here.

Denmark's foreign reserves still risingSober Look
Yield curve below three years negative, reserves show safe haven moves continuing

Spot The Looming CrisisZH
Debt situation in EU similar to US, but in Europe banks have lot more deposits, and there is less shadow banking, making the banks vulnerable to runs.

US Industrial Production – BNY Mellon
Another July Upside Surprise: Industrial Production – The Capital Spectator
US industrial production +0.6% in July, capacity utilisation up to 79.3%f– ASA
US consumer price index was flat for July – ASA
Key Measures show slowing inflation in July – Calculated Risk
Chart: Inflation? Where? [Update] – ASA

About that “Housing Recovery”PragCap
I don’t know what the technical definition of a “recovery” is in economics, but this is not a “recovery”.  It might be a “stabilization”, but let’s not go all crazy abusing the english language here.  I was a housing bear for years and years and I am infinitely more optimistic about the state of US housing here.  But let’s be honest here.  This is no “housing recovery”.

Data Dump Tim Duy’s Fed Watch
A macrolook: I want to argue that the failure of the economy to accelerate and below-target inflation, combined with more negative than positive warning signals, argue for additional Fed easing in September.  That, however, has been the case for months, and during that period Bernanke has not moved the Fed to that easing…On net, I think the outcome of the September FOMC meeting remains a toss-up.

No grain, no pain alphaville / FT
A couple of charts from Barclays economists showing the relative contribution of food to headline and core CPI

More good news. Now what?alphaville / FT
We’re less sure that this means QE is unlikely. The possibility remains that Europe will again flare up once vacation is over, and the risks from the fiscal cliff are unchanged. With inflation seemingly having rolled over in recent months with the decline in commodity prices, the argument can be easily made that the Fed is currently undershooting its inflation target while (as is all too plain) continuing to also dramatically miss on the unemployment side of its mandate.

Killing The 'Stocks Are Cheap' Myth Once And For AllZH
Plenty of good valuation charts from BoaML.

On GDP vs Equity Returns, Bill Gross Is In Fact Right... With A TwistZH
Morgan Stanley: over the long run theoretical total returns can exceed GDP so long as investors don’t actually try to capture those returns. But if ever investors try to achieve such GDP-plus total returns, it will be impossible for returns to stay above GDP growth.

FX Forecast Update Aug (34 slides)Danske Bank (pdf)

Emerging Markets Briefer Aug (19 pages)Danske Bank (pdf)

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