Quote of the Day: Did you
know that Ireland and Spain were once rated AAA? For Ireland, Oct 2001 to March 2009; and for Spain, Dec 2004 to Jan 2009. – Rebecca
Wilder / EconoMonitor
Joke of the Day: EU commission chief Jose Manuel Barroso has
come to the defence of more budget cuts to bring confidence back to southern
economies, even as the IMF said the effects of austerity may have been
underestimated. – euobserver
Previously on MoreLiver’s
Roundups and
Commentary
News – Between
The Hedges
Markets – Between
The Hedges
Recap – Global
Macro Trading
The Closer – alphaville
/ FT
Roundup – A
View From My Screens
Tomorrow’s Tape: J.P. Morgan, Wells Fargo Kick Off
Bank Earnings – WSJ
US Summary – 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
Monetary union continues its painful progress – Le
Monde / presseurop
With the entry into force of the stability
mechanism and the consensus on plans for a banking union, the Eurozone has
compensated for the “birth defects” of the single currency, albeit at the price
of a widening rift with other member states.
The Bump In The Night – Mark Grant / ZH
We have no solution for Cyprus, no answer for Spain and no plan for Greece as the IMF has made
two things quite clear. Number one is that they will not give Greece any more
money and number two is that they expect Europe to take the unavoidable
financial hit and that it will not be them that is going to get left holding
the proverbial bag.
S&P Will Downgrade France And Italy Next, CDS Implies – ZH
European
bank stocks rallying after news that Basel III requirements might be postponed.
The Eurozone's commitment to supporting
Spanish banks questioned by S&P, others – Sober
Look
The good news is that Spanish banks' borrowings
from the ECB fell in September, following the ECB's commitment to do
"whatever is necessary" to make sure Spain (and others) stay in
the Eurozone - reducing the redenomination risk. Nevertheless the latest data
from the nation's banking sector still shows declines in lending and losses
associated with rising bad loan balances.
An overlooked currency war in Europe – Daniel Gros /
voxeu.org
Switzerland has pegged its currency to the euro at a level that helps it sustain a
12% current-account surplus and one of the lowest unemployment rates in Europe. This column argues that the Swiss
peg involves currency manipulation that is, as far as Europe is concerned, the same order of
magnitude as China’s intervention. It has had a significant impact on the euro exchange
rate and a non-negligible effect on the EZ economy.
Focus: EU commission to tighten rules on
regional state aid to regions – euobserver
Competition and regions have always been
uncomfortable policy bedfellows, but scarce public money is making it harder to
draw up guidelines on how state aid should be invested.
EU chief defends austerity as criticism mounts – euobserver
EU commission chief Barroso has defended more
budget cuts in the south, despite IMF doubts on the policy.
Monthly Bulletin, October 2012 – ECB (pdf)
Statistics Pocket Book, October 2012 – ECB (pdf)
USA
Housing Recovery in Perspective – The
Big Picture
Two charts –
shorter looks good, while longer says not much has changed.
Stock Market Troubles – The
Short Side of Long
When I look at the current condition of US
stocks, it definitely reminds me of previous cyclical bull market tops just as
the business cycle expansion was coming to an end. Be it overbought prices,
narrowing breadth participation, tightening credit spreads, extremely prolonged
complacent volatility, overly bullish
sentiment readings without a bear in sight or the fact that the Long Bond
refuses to sell off - it all links to the economic fundamentals deteriorating
rather rapidly.
FOREX
A tinhat-full of dollars – alphaville
/ FT
HSBC: Many will still argue that the USD will
retain its safe haven allure, especially given the constraint intervention will
place on the JPY and CHF as alternative safe havens. However, the environment
for the USD is changing, with the market increasingly having to question its
value and not relying on its safe-haven role during this crisis.
Australian Dollar Hops Higher on Jobs – Marc
to Market
The Australia’s jobs data surprised on the upside and is spurring some second
thoughts about an RBA rate cut next month.
Yen Bulls Spooked – Marc to
Market
The dollar initially fell against the yen in
the immediate knee-jerk reaction to S&P two-notch cut of Spain’s sovereign
rating. It dipped briefly below
JPY78. However, it has rebounded smartly
and is holding above yesterday’s highs.
There are four considerations today.
IMF
The IMF game changer – alphaville
/ FT
IMF has played bad cop to the global economy
for generations now, enforcing austerity, conditionality and accountability
wherever it goes. And, for the most part, it’s the emerging world that’s
suffered most. Recanting on some of these closely held beliefs, especially now
that the bitter medicine is predominantly being applied to the developed world,
is awkward to say the least.
IMF Suddenly Decides It Might be OK to Loosen
Austerity Tourniquets Now that Gangrene is Setting In – naked
capitalism
The IMF and the GOP – Krugman
/ NYT
OTHER
G10 Weekly: Severe headwinds facing the Swedish
economy – Nordea
In this week’s edition of G10 weekly we
elaborate on the severe headwinds facing the Swedish economy. We also address
the process of global deleverage, which appears to be far from over.
Perspectives Oct 2012: A new monetary era – Pictet
EMEA Weekly, Week 42 – Danske
Bank (pdf)