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Wednesday, September 19

19th Sep - US Close

For full coverage of the two most important developments, see ECB Watch and Fed Extra.

Previously on MoreLiver’s:

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

Tomorrow’s Tape – WSJ
Morning Briefing (Asia) – BNY Mellon
BoJ increases its asset purchase programme – Kiron Sarkar / The Big Picture
Tyler's US Summary – ZH
  Bonds Up, Stocks Up (Just)

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

The euro’s paradoxalphaville / FT
if the single currency gets stronger, then the eurozone’s economic recovery gets harder — and thus the measures that are taken, ostensibly, to shore the euro up run the risk of doing it damage by undermining its longer-term existence.

Deposit Flight From Europe Banks Eroding Common CurrencyBB

First the Governance, Then the GuaranteesEconoMonitor
As long as supervisory power effectively remains in the hands of national supervisors, as in the governance structure currently proposed by the commission, risk-sharing through European deposit guarantee schemes or resolution funds is a dangerous and naive dream.

Why Spain Will Seek Help—and Why the ECB Retains Its LeveragePIIE
First, recall that the ECB was more than willing in November 2011 to cut Prime Minister Silvio Berlusconi of Italy loose and deny him securities market program (SMP) support because of insufficient progress on reforms. Its action set a precedent for even large euro area member state governments. Second, unlike the case of Lehman Brothers and other systemic banks, large industrial countries do not go bankrupt overnight. Rather they run the risk of sliding into it over time.

Mariano Rajoy waiting for markets to force his hand Sober Look
Clearly a number of political reasons are causing Rajoy to delay asking for ECB's assistance. Applying now however would give Spain time to negotiate the bailout conditions versus having to do it under duress. Sadly, critical decisions in the Eurozone seem to be made only under duress. And given the economic and fiscal trajectory of Spain, it is just a matter of time before market conditions will force Rajoy's hand.

Westerwelle's Future of Europe report - worth getting excited over?Open Europe
Group of eleven European foreign ministers released its final report and conclusions, the broad thrust of which is that, to emerge from the crisis, Europe needs more economic and political integration.

The Five Key Differences Between The ECB's OMT And The Fed's QEternityZH
Morgan Stanley: Fed’s program already running, different instruments, ECB sterilized, conditionality, ECB violating its mandate.

US: approaching the fiscal cliffDanske Bank (pdf)

Seasons of the BernankeEconoMonitor
This is the third summer in a row that we have watched commodity specific sectors make a mid-summer bet that a Central Bank somewhere would intervene to attempt a “jump start” to the world economy.

Could QE3 Cause the Fed to Go Broke?EconoMonitor

Don’t call it a target: Fed buys wiggle room with qualitative goalsMacroScope / Reuters

No PretenseThe Big Picture
Since 2007 our analysis has suggested the likelihood of economic outcomes that most have considered unlikely: significant and ongoing monetary inflation, policy-administered currency devaluation, substantial global price inflation, and an eventual change in how the forty year old global monetary system is structured.

The Fed’s Best Rationale for QE3BB

Hawks Are MarginalizedTim Duy’s Fed Watch
Fed hawks are largely marginalized.  Their views have not and will not have a significant impact on policy making.  They will only appear to have an impact on policy if the data signals that a policy shift is needed.  Given the current set of policymakers on the Fed, the hawks will only have a voice if Bernanke is replaced with one of their own.  And that is when it would get interesting, as I am not sure that the moderates would follow a hawkish Chairman.

EM Bond Snapshot - Sep 2012Danske Bank (pdf)

BoJ expands QE in slightly aggressive easing moveDanske Bank (pdf)

Commodity encumbrance and Joseph’s storage playalphaville / FT
Financialised commodity inventory and the impact it has had on the supply and demand picture, by taking inventory off-market and off-balance sheet.

A Crude Message about the Market? – dshort
Oil price and S&P 500 have pretty much moved hand in hand.