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Monday, September 3

3rd Sep - "US Close"

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

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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European Safe Havens Bid As Big Three Questions RemainZH
SocGen answers: How will the ECB address seniority? When will Spain request assistance? Is the German Constitutional court ruling only preliminary?

Bulgaria Refuses To Join EurozoneZH
"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.

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 LeaderDealBook / NYT

"Moral hazard 101" with professor DraghiSober 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.

Spain Moves Back onto the Economic Frontlineqfinance
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.

Greece And The End Of The European Dream?Pension Pulse

Draghi's "Promise" Sends Hope Off The ChartsZH
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.

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 NotesTim 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 Cliffbruegel
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.

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 ContractionZH
Data table of world’s PMI readings

Key Upcoming EventsZH
from SocGen and Deutsche Bank

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