Wow, I
thought it would be a dull day – but while the markets are closed, the commentators
are still apparently working. Plenty on the ECB and Spain, with Bulgaria announcing that they are not interested
in joining the eurozone.
Previously
on MoreLiver’s:
Roundups & Commentary
Roundup – A
View From My Screens
The T
Report: Tepper, QE, and “Priced In” – TF
Market Advisors
Reference
Debt
crisis: live – The
Telegraph
The Euro
Crisis Blog – WSJ
FX Options
Analytics – Saxo
Bank
European
10yr Yields and Spreads – MTS indices
EUROPE
European Safe Havens Bid As Big Three
Questions Remain – ZH
SocGen
answers: How will the ECB address seniority? When will Spain request assistance? Is the German
Constitutional court ruling only preliminary?
"The momentum has shifted in our thinking
and among the public…Right now, I don't see any benefits of entering the euro
zone, only costs," Mr. Djankov said. "The public rightly wants to
know who would we have to bailout when we join? It's too risky for us and it's
also not certain what the rules are and what are they likely to be in one year
or two."
(audio) BizDaily: Euro crisis back to work – BBC
(mp3)
The ugly reality of the eurozone crisis comes
back into focus after the long summer holiday in europe. What are next milestones in the
story of the crisis? Plus how business cultures differ between northern and
southern africa. And why some company logos just don't have that recognition factor.
EUROPE: ECB
Carpe Diem, Quam Minimum Credula Postero – ZH
The outcomes prayed for are a demand for money
and a resistance to those demands. The
pleas of Spain are about to be answered; first from the ECB and then from Germany’s acceptance or rejection of the Draghi plan. The “Game of Muddle” will
be ended and real answers to real insistences will be given.
A Pivotal Week for Europe's Central Bank Leader – DealBook
/ NYT
"Moral hazard 101" with professor
Draghi – Sober
Look
Traders will buy bonds just outside the three
year range and wait for them to roll down the curve. They are going to capture
the relatively high income as well as the capital appreciation from the rapidly
declining yield as the maturity shortens with time. And once the bonds are
within the range, there is a "free put option" from the ECB who will
not permit yields from rising above a certain levels.
Can Draghi Be Believed? – Project
Syndicate
The ECB’s latest program of bond purchases will
be big enough to ensure that Draghi does not lose face. But it will not be big
enough to dispel convertibility risk and hence demonstrate the ECB’s
credibility as a lender of last resort. And it is the ECB’s credibility
problem, not that of member states, that is the principal reason for
unsustainably high borrowing costs in Italy, Spain, and other distressed
eurozone countries.
EUROPE: PIIGS
Any solution is in the hands of politicians in
the eurozone which requires either closer co-operation or a break-up. But
instead we seem likely to see more muddling through where on the evidence so
far everything gets worse while politician’s claim success.
http://pensionpulse.blogspot.fi/2012/09/greece-and-end-of-european-dream.html
Draghi's "Promise" Sends Hope Off The
Charts – ZH
The critical point being - for all the
anticipation of Draghi's bond-buying plan and its implicit conditionality, the
Spanish yield curve has priced it all in and more - as the 2s10s curve is now
at all-time (pre- and post- Euro-era) record steeps.
FROB and (bail-in) gristle – alphaville
/ FT
It certainly looks like breaching creditor
equality, in this case to stop taxpayer losses on write-downs of any Frob-held
securities… imagine explaining to taxpayers why your
earlier recapitalisation has to be written down — and it’s not easy to resist
this move: governments can easily rewrite their own laws to favour official
creditors, as Greece has shown.
USA
Did the Republicans Force Bernanke's Hand? – Tim
Duy’s Fed Watch
While I think the state of the economy should
have forced the Fed's hand long before now, the possibility that they might
only get one more bite at the apple should be extra inducement to act.
Quick Data Notes – Tim
Duy’s Fed Watch
That same low growth looks consistent with
inflation drifting below the Fed's mandate, providing the Fed with plenty of
justification to act. This is especially
case given the downside risks posed by the global environment and fiscal policy.
Of course, that was the case three meetings ago. But each meeting has brought us closer and
closer to a new round of easing, and we may finally have crossed the line.
Blogs review: The Fiscal Cliff – bruegel
What’s at stake: In an update to its budget and
economic outlook, the Congressional Budget Office (CBO) reminded of the
approaching “fiscal cliff” – a popular wonk-speak used to describe the
significant automatic cuts in federal spending and tax increases scheduled to
take place at year end under current laws.
OTHER
As Bonds Are Proven Right Once Again, Is 400
The Next Stop For The S&P? – ZH
quick look
at previous bond/stock dislocations
Global Manufacturing Update Indicates 80% Of
The World Is Now In Contraction – ZH
Data table
of world’s PMI readings
Key Upcoming Events – ZH
from SocGen
and Deutsche Bank