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Tuesday, August 7

7th Aug - US Close: Banging Lines

Another strong day in the markets. My original idea for the week was to have minor strength first, followed by a sell-off. I am not changing my view from that, so if not short, at least try to get long at lower prices. If you look carefully enough, the EURUSD and S&P seem to "occasionally correlate" - and the EURUSD is also sitting below resistance levels. Meanwhile, Spanish 10y bond is back to recent highs, so all the risk markets are basically up against major resistances. Rest of the week negative, is my guess.

Couple of interesting articles: I didn't know that Bundesbank did QE in 1975. Makes its opposition today even weirder. Or actually it proves my hunch, that the Germans are really not interested in sound monetary policy for Europe - they are interested in sound monetary policy for Germany. And that's why this "thing of ours" will fail.

Previously on MoreLiver’s:
Exit Special (collection of euro breakup/exit research)
Special: ECB WATCH (follows the latest ”plan”)

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Markets – Between The Hedges
The Closer – alphaville / FT
Market Commentary – A View From My Screens
Tyler’s European Summary – ZH
  Italy And Spain 'Steady' At Pre-Draghi Sell-Off Levels As Front-End Softens
Tyler’s European Summary II – ZH
  European Stocks End Green; Sovereigns And Credit Not So Much
Tyler’s US Summary – ZH
  Oil And Treasuries Lead Stocks Higher As Credit Lags And Volume Remains Flaccid

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

Ironisch Bundesbank lessons alphaville / FT
In 1975 the German central bank was buying government bonds because of low growth. So why does the Bundesbank oppose it now?                   

Goldman Sachs: Focus: Europe’s ‘red line’ZH
Segmentation of the Euro interbank market is significant

To what degree is the ECB flying blind?alphaville / FT
Effective monitoring means having good data. The data the European Central Bank currently have is arguably not enough for even the macro-prudential supervision they’d like to do, let alone the more specific kind — a troubling thought if it is to build out a regulatory capacity.

Eurogeddon: The first two and a half years of the euro crisisThomson Reuters
A new e-book from Reuters Breakingviews edited by Hugo Dixon. Find out which countries were fit for the single monetary policy, if it might be better to abandon the single currency, whether the euro zone can solve its troubles. Also full pdf

How Long for Low Rates?Project Syndicate
Kenneth Rogoff: Ultra-low interest rates may persist for some time. Certainly Japan’s rates have remained stable at an extraordinarily low level for a considerable period, at times falling further even as it seemed that they could only rise. But today’s low interest-rate dynamic is not an entirely stable one. It could unwind remarkably quickly.

The US HY bond market looks overheatedSober Look

Political economics: The Fed on the ballotFree exchange / The Economist
To avoid allegations of bias or politicisation, the Fed should stay its hand. Mr Romney, however, has now associated himself with inaction, such that a failure to intervene is now "doing what Romney advocates". This now makes intervention the apolitical default. And therefore more likely.

American idle: five reasons we hate the stock market The Reformed Broker
What is Driving Investors? Hint: Many ThingsThe Big Picture
Lots of folks are wondering where the retail investor has gone. There is some instructive “thinking out loud” as to what is going on: Why there is such light volume, why has financial television ratings plummeted, why has America fallen out of love with equities.