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Monday, August 27

27th Aug - EU Open

Good morning and good luck. With the lack of calendar events (data or otherwise) ahead of the Jackson Hole symposium, followed by the all-important European mid-September events, this week could be range-driven and even minor commentary could be interpreted by the markets as a hint of policy. Thus, I think we might see some nervous but quiet trading and oversized reactions to minor comments - throwing away the news feeds and just looking at the charts is advised.

I've been busy during the weekend: here's what you might have missed:

News roundup – Between The Hedges
The 6am Cut London – alphaville / FT
Emerging Markets Headlines – beyondbrics / FT

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

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Asia Today: Currencies steady; Must we now wait for Jackson Hole?Saxo Bank
Hardly any weekend news to disturb the Asian open today. There was some disappointment over China not announcing any additional easing measures, with last week’s weak flash manufacturing PMI from HSBC increasing the expectancy/urgency of such a move.

Market Preview – Saxo Bank

Danske DailyDanske Bank (pdf)
Asian markets were mixed overnight * No major news out during the weekend – focus turns to Bernanke’s Friday speech * EUR/USD trades around 1.25. Brent oil remains above USD116 per barrel * Swedish retail sales and German IFO are the main data releases today

Morning Briefing (EU/US):– BNY Mellon

AamukatsausNordea (pdf)
Keskuspankeilta vihjeitä lisäelvytyksestä, muttei vielä uusia toimia * Merkeliltä ei lisäaikaa Kreikalle * Korkojen turvasatamavirrat vahvistuivat Kreikka-spekuloinnin säikäytettyä sijoittajat

AamukatsausTapiola (pdf)
Viikon tärkein makroluku, Saksan talouden kehitystä kuvaava IFO -indeksi, julkaistaan aamupäivällä. Viikonloppuna pidetään keskuspankkiirien puheita Jackson Hole seminaarissa. Markkinan suunta: 
FED:n Bernanken kirje kiritti osakemarkkinan nousuun viime viikon päätteeksi. Merkel, Hollande ja Samaras eivät yllättäneet  viikonlopun aikana uusilla linjanvedoilla. Merkel kommentoi EVM:n olevan välttämätön ja kommentoi EKP:llä olevan mandaatin tehdä PIIGS-maiden velkakirjojen ostoja puolustaakseen euroa. IFO-indeksi, viikon tärkein makroluku, julki heti aamupäivästä. Osakefutuurit nyt marginaalisesti miinuksella Merkelin kommenteista huolimatta.


Bundesbank's Weidmann Warns: Debt Monetization Is An Addictive DrugZH
Bundesbank President Jens Weidmann has strongly criticized of the plans of the European Central Bank to launch a new program to purchase government bonds. “Such a policy is for me too reminiscent of public funding via printing”

The Up-To-The-Minute Guide For Understanding EuropeMark Grant / ZH
Funny, if it weren’t true. Dictionary of sorts.

With Vacation Over, Europe Is Back To Square Minus One: Merkel Backs Weidmann, Demands Federalist StateZH
"I think it is good that Jens Weidmann warns the politicians again and again," Merkel said. "I support Jens Weidmann, and believe it is a good thing that he, as the head of the German Bundesbank, has much influence in the ECB."

Summer moved onNordea
I have a feeling that Bernanke’s speech will be more important for USDJPY – come there a “no QE3″, alongside better US reports this week, USDJPY will get a lift.  In general, this Friday will be the beginning of the key events waiting for us in the weeks to come, among others ECB meeting (September 6), German court ruling (September 12), FOMC meeting (September 13).  So let the summer finish and the autumn fun begin.  Stay tuned!

Which Asset Classes Are Most Vulnerable To 'Policy' Disappointment?ZH
Deutche Bank’s interesting data tables. Equities are the most exposed class.

China’s choice of future economic policy is a complicated oneASA
We have noted for quite a long time that the massive stimulus after the 2008 financial crisis has been widely regarded as a big mistake by commentators and economists within China, and we believe that some inside the government’s decision making body share that view.

A healthy correction?Humble Student
Last Monday, I wrote that I was getting bullish but equities looked a tad overbought and I was waiting for a corrective pullback. As the markets appear to have begun to pull back last week, my intermediate term view remains bullish as signs of a global cyclical turnaround are everywhere.

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