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Monday, September 17

17th Sep - US Close: Realization

Source: BCA Research
Spanish yields quietly moving up, after Madrid is seen backtracking on austerity and not calling for the bailout. Expect imminent supporting statements should the yields rise more. Tonight's post has plenty of material - most notably on the QE3. Commentary on Europe is turning negative: the ECB's conditional backstop is not seen to be enough without a good banking union - whatever that means. Also, QE glory is giving ground to the fiscal cliff in US and China.

For full coverage of the ECB’s decision see my ECB Watch-post (continuously updated). For QE3, see Fed Extra.

Previously on MoreLiver’s:

Roundups and Commentary
Markets – Between The Hedges
The Closer – alphaville / FT

Tomorrow’s Tape – WSJ
Morning Briefing (Asia) – BNY Mellon
Tyler’s European Summary – ZH
  Europe Opens Week In the Red
Tyler’s US Summary – ZH

  Trannies Tumble Even As Oil Stumbles

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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The Next Barroso…Brussels blog / FT
a list of early contenders from each of the major political families.

QE would be right for Europe, tooWolfgang Münchau / FT
The biggest danger for the eurozone right now is a rapidly deteriorating economy

Normalizing ItalyPaulo Subacchi / Project Syndicate
Italy’s political exceptionalism – its chronic inability to marshal coherent governments backed by stable parliamentary majorities – is weakening Europe and threatening the eurozone’s survival. More than electoral reform is needed: Italy requires comprehensive institutional renewal.

Europe's Balance of Payments: What Capital Flight?Marc to Market
The weakness of the euro area economies has slowed imports and several countries, including some in the periphery, have seen a pick up in exports…the financial account showed a net inflow of 18 bln euros of combined portfolio and direct investment.

‘Is Europe’s Financial Crisis Over?Gene Frieda / Project Syndicate
With the ECB taking on the characteristics of a lender of last resort, the eurozone's acute crisis is over for now. But the existential challenge – political agreement on the key elements of banking and fiscal union – is only just beginning, and, unless it is met, the eurozone’s financial disintegration will eventually resume.

Battle Between Germany and France Over Spain Bailout Application; Numerous EU Ministers At Odds Over Banking UnionMish’s

Do the Germans and French still believe in Europe?Open Europe

Spanish bond yields are moving up:
Europhoria Officially Over: Spanish 10Y Breaks 6% The Wrong WayZH
Come on Mr Rajoy, make that call… – alphaville / FT

Eurozone Survival Calendarpinterest
nice automated overview

A Swissie counterfactualalphaville / FT
Somewhere in an alternate universe, where Switzerland’s central bank never introduced an exchange rate target for the euro… the Swiss franc is trading at parity with the euro, say HSBC.

Discussion of 2011 Review of ConditionalityIMF
2011 Review of Conditionality - Overview PaperIMF
Why did I include these? Conditionality will be the key to Spanish aid (of course it will end up like Greece, with constant games of chicken, but at least in the beginning this is the playbook).
Goldman On The Fiscal Cliff: Worse Before It Gets Better ZH

Getting Off the Zero BoundTim Duy’s Fed Watch
I am thinking it would be very bad to be still at the zero bound when that recession hits.

A few more QE3 thoughtsFree exchange / The Economist

QE Extreme - When the Fed really put its neck on the lineSaxo Bank

What are the limitations of the Fed’s power? Fabius Maximus
They are independent only so long as they retain the confidence of a majority in Congress. The Fed’s leadership has to worry about institutional legitimacy of the Fed should they adopt radical new policies that earn the enmity of one of the two major parties.  That’s the ultimate limitation on their actions.

Diminishing market reactions to unconventional monetary policyASA

What's More Important - Growth Or Policy?ZH
Morgan Stanley: while monetary policy can provide a temporary boost to valuations, in fact over medium-term horizons, it is in fact growth that dominates the drivers of equity performance.

Central bank nostalgia and an equilibriumalphaville / FT
JP Morgan: It is excess rather than gross money supply that generates upward pressure on asset prices or prices of goods and services in the economy.

For China and Japan: The Perfect Distraction?The Diplomat

China’s credit-to-GDP ratio explodingASA

Central banks’ balance sheet expansionASA

Price earnings ratios on paradeAbnormal Returns
FX Forecast Update: The euro downtrend has come to an endDanske Bank (pdf)

Emerging Markets Briefer - September 2012Danske Bank (pdf)

Corporate Bonds, ETF’s, and Feedback LoopsTF Market Advisors

The ETF transmission mechanismalphaville / FT
At a time when traditional dealers are being squeezed by growing regulatory burdens — think Basel, TRACE and the Volcker rule — the incentive to hold market inventory is diminishing.

Ei ole ollut eurojäsenyys hyväksi edes Saksalletyhmyri

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