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Thursday, September 27

27th Sep - US Close: Alzheimer's Ahoy!

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
Markets – Between The Hedges
The Closer – alphaville / FT
Roundup – A View From My Screens 
Tomorrow’s Tape: Let’s See How Incomes and Spending LookWSJ
US Summary: Stocks Ramp, PMs Ramp More, Oil Ramps Most – ZH

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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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 motivatedSober 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 hazardThe Economist
If the euro zone is to survive, Germany too must keep its promises to reform

The end of the euro’s Indian summerThe Economist
After a few sunny weeks, a political and economic storm is battering the euro zone once again

Quo Vadis Europe? A Euro crisis presentationNordea (pdf)

Hollande to be tested as he unveils France's toughest Budget for 30 yearsThe Telegraph
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's betrayal of SpainThe Telegraph
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 ContritionZH 

Spain must leave the euroThe Telegraph
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 is turning into the new Greece, and Mariano Rajoy has himself to blameThe Telegraph
Spain has taken another confident stride to becoming the next Greece, a status long predicted for the country in some quarters.

The rage in SpainThe Economist
With protests and a secessionist threat, Spain’s problems are growing. Better a bail-out now than later

Spain unveils emergency BudgetThe Telegraph
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 UnsaidZH
BNP’s comments

'Perception Is Reality' As Mystical Rally 'Shows' Spanish Budget A 'Success'ZH
first market reactions

Behind the headline, Spanish deposits editionalphaville / 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 fromalphaville / 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.

Beware of easy money – unintended side effects loomNordea
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 GoodsBNY Mellon
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 lowerSober Look

G10 Weekly: To reiterate, QE will become futileNordea
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 40Danske Bank (pdf)

Erolla €urosta Suomi joutuu Venäjän valtapiiriin – kommenttejasuvituuli

Kuin veljet veräjästä! Eduskunta painoi villaisella urheilukerhon kavallusasianJyrki Virolainen

Poliittinen teatteri förevisarHenri Myllyniemi / US Puheenvuoro

Urpilaisella valtit kourassaHenri Myllyniemi / US Puheenvuoro

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If it ain’t broke, don’t fix it. If it is broken, Fixit.MoreLiver