SPX and EURUSD both visited very near their probable bottom targets and turned up - but now they have reached the channel top. My gut feeling is a bull day for Friday - that would mean a breakout from the channel to the upside. My reasoning: markets were expecting bad news - and got them and rallied afterwards. After the tomorrow's bad news (The audit results of the Spanish banks are published) markets will probably rally again. I would try to buy weakness ahead of the news, but volatility might be hell. There might not be posts on Friday due to...
...too much news to cover and I am also writing in Finnish. If you think you have too much free time, may I suggest getting a person with Alzheimer's, another with bipolar disorder and a regular teenager inside your circle of influence. Wild ride guaranteed, figures sold separately, batteries not included. May contain small parts.
Previously on MoreLiver’s
Roundups and Commentary
News – Between
The Hedges
Markets – Between
The Hedges
Recap – Global
Macro Trading
The Closer
– alphaville / FT
US Summary:
Stocks Ramp, PMs Ramp More, Oil Ramps Most – ZH
Reference
Debt
crisis: live – The
Telegraph
The Euro
Crisis Blog – WSJ
FX Options
Analytics – Saxo
Bank
European
10yr Yields and Spreads – MTS indices
EUROPE
Stage Three for the Euro Crisis? – Project
Syndicate
The first two components of the euro crisis – a
banking crisis that resulted from excessive leverage in both the public and
private sectors, followed by a sharp fall in confidence in eurozone governments
– have been addressed successfully, or at least partly so. But that leaves the
third, longest-term, and most dangerous factor underlying the crisis: the
structural imbalance between the eurozone’s north and south.
European Commission's irrational fear of
sovereign CDS markets is politically motivated – Sober
Look
Txhe CDS markets often act as a "canary in
a coal mine", pointing to a specific credit weakness. CDS spreads provide
transparency, particularly when transparency is not readily available from
other less liquid markets. And many EU politicians and bureaucrats hate
transparency because it puts their governments' poor practices on display.
The other moral hazard – The Economist
If the euro zone is to survive, Germany too must keep its promises to reform
The end of the euro’s Indian summer – The Economist
After a few sunny weeks, a political and
economic storm is battering the euro zone once again
Quo Vadis Europe? A Euro crisis presentation – Nordea
(pdf)
President Francois Hollande faces a double test
of confidence - by his electorate and the bondmarkets - as he unveils the
toughest and most ambitious French Budget in three decades on Friday.
EUROPE: SPAIN
He bit the bullet and agreed to the highly
intrusive terms of a €100bn eurozone rescue for the Spanish banking system on a
specific understanding: that the ESM bail-out fund would ultimately take over
the burden by recapitalising Spain’s banks directly. This
deal has been breached.
Ambrose Evans-Pritchard's Contrition – ZH
Ambrose Evans-Pritchard's Contrition – ZH
Mario Draghi's promise to do “whatever it
takes” to save the euro never did look like inducing any more than a temporary
lull in the storm; still less did the German Constitutional Court’s thumbs up
to the European bail-out fund and the trouncing that eurosceptic parties
received in the Dutch election.
Spain has taken another confident stride to
becoming the next Greece, a status long predicted for the country in some
quarters.
With protests and a secessionist threat, Spain’s problems are
growing. Better a bail-out now than later
Spain unveiled €20bn of extra cuts in an emergency budget that aimed to
shore-up market confidence in Madrid while stemming the
escalating regional rebellions.
What Spain Just Announced, And
What Was Left Unsaid
– ZH
BNP’s comments
'Perception Is Reality' As Mystical Rally
'Shows' Spanish Budget A 'Success' – ZH
first
market reactions
Behind the headline, Spanish deposits edition – alphaville
/ FT
The figure for August, released on Thursday
morning, revealed that a further €17bn had headed out the door. While this
so-called deposit flight is being reported as putting pressure on the Spanish
government, the data behind it isn’t quite as concerning as one would imagine.
Where Spanish deposit numbers come from – alphaville
/ FT
We think a lot of the scary headlines aren’t
justified, including the ones from August, when the press last engaged in this
ritual.
USA
Beware of easy money – unintended side effects
loom – Nordea
Concerns about unintended consequences of the
Fed’s ultra-easy policy, such as inflation or new asset bubbles, are clearly
dismissed at the current juncture by most FOMC members. Time will tell, but I
believe the Fed is underestimating the risk of inflation and consequently that
it will be forced to tighten policy earlier than currently indicated. If not,
inflation will rise.
US durable goods orders plunged -13.2% m/m in
August from a revised 3.3% m/m in July, on consensus expectations of -5.0%.
Worse than expected economic data sent Citi
economic surprise index sharply lower – Sober
Look
OTHER
G10 Weekly: To reiterate, QE will become futile – Nordea
You could argue that things are different this
time, and I assure you we will take the other side of that bet. But let us go
back to the notion of positive market reaction. Is this a sure thing? We doubt
so and we have positioned ourselves accordingly. To us then, we estimate that
the market will be drawn back in line with the underlying macro.
EMEA Weekly, Week 40 – Danske
Bank (pdf)
IN FINNISH
Erolla €urosta Suomi
joutuu Venäjän valtapiiriin – kommentteja – suvituuli
Kuin veljet
veräjästä! Eduskunta painoi villaisella urheilukerhon kavallusasian – Jyrki Virolainen
Poliittinen teatteri
förevisar – Henri
Myllyniemi / US Puheenvuoro
Urpilaisella valtit
kourassa – Henri
Myllyniemi / US Puheenvuoro
If it
ain’t broke, don’t fix it. If it is broken, Fixit. – MoreLiver