Today
plenty on the QE, fully priced in and probably that’s why markets tanked. In the old days you bought the rumor and sold the news. Apparently nowadays you have to buy on nothing and sell on rumor. Or perhaps today's market action was just a risk-off move ahead of the big events. Dutch elections, ESM vote and the ECB plan
were other topics. EDIT: by the way, I noticed this is MoreLiver's 1008th post. Wow...
Previously on MoreLiver’s:
8.9. Weekender: Weekly Support (last week’s review, next one
previewed)
7.9. Guest: On Mario's Shock and Awe (excellent)
Roundups and Commentary
News – Between
The Hedges
Markets – Between
The Hedges
Recap – Global
Macro Trading
The Closer
– alphaville / FT
Roundup – A
View From My Screens
Roundup – Kiron
Sarkar / The Big Picture
European
Summary: Leaking – ZH
US Summary:
Market Realizes It Has Already Priced In QE – ZH
Tomorrow’s Tape – MarketBeat / WSJ
Tomorrow’s Tape – MarketBeat / WSJ
It’s
Not Apple Day, or FOMC Day, or German Court Day
Reference
Debt
crisis: live – The
Telegraph
The Euro
Crisis Blog – WSJ
FX Options
Analytics – Saxo
Bank
European
10yr Yields and Spreads – MTS indices
EUROPE
View roundup on German constitutional court – ZH
It is difficult to imagine that German
Constitutional Court would rule that the ECB's OMT violates the German
constitution…decide whether to grant an injection delaying the formal
establishment of the ESM and the fiscal compact, while they decide the legality
of it at a future date.
Actual Constitutional Case Against OST and ESM;
Why Bond Buying Undermines Democracy; Is Draghi Above The Law? – Mish’s
German domino theory and book-cooking – alphaville
/ FT
One, that Merkel wants to avoid a Grexit for
the time being and two, that the upcoming Troika report might be massaged to
make that a reality.
The idea that the consequences of sterilisation
aren’t always straightforward is well worth making and has obvious resonance in
Europe right now.
How Draghi opened the door to hyperinflation
and denied the Fed an exit strategy – A
View From The Trenches
The ECB Thumbs Its Nose At The Law – Fibs
and Waves
Merkel Changes Her Mind on Grexit Risks – Spiegel
Angela Merkel has made a surprising U-turn in
her policy on Greece. The German chancellor now wants to stop Athens from leaving the euro
zone at all costs -- even if it means massaging the figures in the upcoming
troika report. For the German leader, it is essential to avoid the consequences
of a Grexit before national elections next year. (also Wonkblog
/ WP)
…unlikely to radically change the immediate
political dynamics of the eurozone crisis in the short-term. The country is
likely to continue to oppose more bailout cash for Greece or any topping up of
the eurozone’s bailout funds and remain a steadfast supporter of austerity in
the struggling eurozone economies. In the medium to long term, however…
Since the collapse of the Dutch government last
April due to the withdrawal of support by the euro-sceptic Freedom Party (PVV),
there have been growing fears that the Netherlands would not support any more rescue packages to troubled Euro-zone
countries. These fears only escalated, as the Socialist Party (SP), critical
towards further Euro-zone integration and bailout packages, gained in the
polls.
EUROPE: IRELAND
strong ownership and steadfast implementation
of the program, particularly financial sector reform and fiscal consolidation.
The economy has resumed modest growth, but downside risks remain high, and
substantial and difficult further policy efforts are needed to promote a
sustained economic recovery. (full pdf)
Breaking a sovereign-bank loop – alphaville
/ FT
forecasting the path for Irish debt to GDP if a deal is reached with the ECB
to reschedule those promissory notes, and if direct ESM equity replaced bank
recaps under the bailout.
USA: FED
QE3: What Everybody That Matters On Wall
Street Expects – MarketBeat
/ WSJ
Roundup of bank views (GS, DB, B, MS, JPM)
Roundup of bank views (GS, DB, B, MS, JPM)
The QE3 parameters will likely entail a
six-month program of at least $500 billion, primarily focused on buying
Treasurys, UBS predicts, while also anticipating the Fed will extend its ultra-low
rate guidance into 2015.
Credit Suisse: The Fed in election season – ZH
More often than not the policy move inside of
the two-month window prior to the election has been an extension of the prior
regime.
Goldman On The Fed: Perception Over Substance – ZH
We are pretty sure that any new program would be primarily focused on agency MBS purchases. These should have a somewhat bigger per-dollar effect on private-sector demand and are probably less controversial with the public than Treasury purchases. They can be framed as help for homebuyers to achieve the American Dream, which sounds better than help for the government to run large budget deficits.
We are pretty sure that any new program would be primarily focused on agency MBS purchases. These should have a somewhat bigger per-dollar effect on private-sector demand and are probably less controversial with the public than Treasury purchases. They can be framed as help for homebuyers to achieve the American Dream, which sounds better than help for the government to run large budget deficits.
On Sub-Zero and Decoupling – Bruce Krasting
Bernanke has to do something this week. Most
pundits are suggesting it will be more LSAPs (QE). I have trouble with this
scenario. To be of any benefit, a new QE would have to be for $600Bn. If QE3
were to be only a paltry $200Bn, it would be received very poorly. I don’t see
Ben shooting off a pop-gun this week. He would be better off doing nothing,
than something that will fall flat. I think he knows that.
QE3 will spark risk-taking and push oil and
gold higher – Nordea
We now see it as likely that the Fed will
launch a third round of QE3… If the Fed does not ease policy this week, we
expect to see risk sentiment take another beating and oil and gold prices can
fall markedly in the short term.
ASIA
Roundup of
views on the “1trn stimulus”.
Arrest in December of a Canadian citizen, Huang
Kun, in Beijing. Huang had helped compile a report into a Vancouver-based company
called Silvercorp
How technology is killing the Asian growth
miracle – alphaville
/ FT
George Magnus of UBS has a 29-pager out on Monday
questioning if the Asian miracle may finally be over (full report here,
registration required)
China has never been as stable as it looks, yet it is not easy either to have
a truly catastrophic political crisis either.
Extend-and-Pretend continues – now in the phase
of Maximum Intervention but it’s the wrong medicine at the wrong time…We are in
the fifth wave of all major macro benchmarks: the stock market (high), yields
(low), economics (low), intervention (high), hope (high) and politics (low).
This will lead into an ABC correction phase for valuation.
UBS: PMIs and Global Equities – ZH
Given the recent rally, in addition to
underlying macro weakness, policy action - and effective action at that – has
become increasingly important for investors. Without it this recent rally could
end up looking more like a false start than a head start.