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Wednesday, August 1

1st Aug - US Close: Fed failed

FED did nothing, and while expectations were lowered before the event, EURUSD dropped moderately ahead of tomorrow's ECB meeting. For full coverage, see my continuously updated specials ECB WATCH and FED WATCH.

Previously on MoreLiver’s:
Wed: US Open

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Markets – Between The Hedges
The Closer – alphaville / FT
Tyler’s European Summary – ZH
Tyler’s US Summary – ZH
  Red Knight Plunges And Financials Flounder As Fed Is Flummoxed

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

EUROPE (see also my Special)
Evidence on Clogged Transmission Channel of Monetary Policy in the Euro AreaEconoMonitor
If the ECB means business on improving the monetary transmission channel, they’ll need to attack the price of corporate loans in the Periphery markets.

All roads lead to easing...unfortunatelySaxo Bank
We have to remember a few key rules for these markets: There are no "real markets" left… All major macro changes comes from policy mistakes

Mario Draghi’s Guns of AugustProject Syndicate
If these three steps – an ECB bond-buying program to hold down sovereign interest rates, concrete progress on establishing a real economic union, and realistic revision of current adjustment programs – could be achieved as a package, the resources that the ECB would need to use for its bond purchases would drop, because credibility would be restored.

Above the noise: Bundesbank has been tough before, will it again?Saxo Bank
Despite being backed into a corner, the Bundesbank turned down Europe in order not to deviate from their course of monetary policy. With German policy makers holding the keys to the Euro and their historically hard stance against loose monetary policy, we are in for some very interesting years. The battle between ECB and the Bundesbank is far from over and it could be prolonged.

Nothing’s gonna stop the ECB nowalphaville / FT
David Mackie over at JP Morgan has been looking at the ECB’s options this week. What he concludes is that further ECB balance sheet expansion may now be inevitable, and much of the expansion will take place via the ECB funding the ESM, by buying its debt directly.

USA: FED (see also my Special)
First Policy Disappointment of the WeekTim Duy’s Fed Watch
As for September, it is data dependent.  But we need to see some substantially weaker data.  The last six months seems to have proved beyond a shadow of a doubt that the bar to more QE is much higher than could be inferred from the public comments of dovish policymakers.

Citi Sounds A Warning: "The Misread Of The Fed May Also Worry Investors That They Have Misread Draghi"ZH

FOMC: Goldman's TakeZH
some form of monetary easing at the September 12-13 FOMC meeting is the current baseline.

Flash Comment: US - ISM bottoming – Danske Bank (pdf)
U.S. manufacturing shrinks for second month – MacroScope / Reuters
Dismal Manufacturing Numbers Worldwide; US ISM in Contraction Second Month; Why Another Round of QE is Pointless – Mish’s

DB: Excesses of the “housing boom” have been largely eliminatedSober Look

Global PMI Update: 10 Of 11 European Countries In ContractionZH

New data on manufacturing conditions across much of the world are out today, and the figures are just brutal. Things look particularly grim for the euro area,

The Mess That is EuropePragCap
Today was the big global PMI data dump and one thing continues to stand out here – Europe is a total disaster. 

Market Breadth Sending WarningsThe Short Side of The Long
Equity market breadth spells more problems ahead...

Amid a devastating drought, does it still make sense to use corn for fuel?Wonkblog / WP

The Risks Posed by Food PricesThe Source / WSJ