Google Analytics

Monday, October 1

1st Oct - US Close

General europessimism in articles. The solution seems obvious to most (full fiscal and banking union combined with much easier monetary policy), but most are doubtful if there can ever be political will - and mandate from the electorate - to do that. Calendar page updated.

Follow ‘MoreLiver’ on Twitter or Facebook 

Previously on MoreLiver’s

Roundups and Commentary
Markets – Between The Hedges
The Closer – alphaville / FT
Tomorrow’s Tape: Auto Sales Likely Flattened in September – WSJ
European Summary – ZH
  European Equities Roundtrip Friday Losses But Credit Is Not Buying It
US Summary – ZH
  Stocks Hold Green Close As VIX/Credit/Rates Signal Risk-Off

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

Euro Counterfactuals (Wonkish) Krugman / NYT
if secular shifts in trade patterns are responsible, in a proximate sense, for part of Spain’s move into trade deficit and Germany’s move into surplus since 1999, what this says is that even if you get relative wages back to 1999 levels, Spain will still be in deficit and Germany in surplus – so you need to go beyond that point.

Getting worse more slowly isn't good enoughFree exchange / The Economist
The crisis in the euro area is beginning to feel like a permanent piece of the world's economic landscape: a great red spot that just churns and churns and never goes away. It isn't, though. One day the crisis will be over, either because the euro zone managed to muddle through or because it didn't, and came apart.

Growth without rebalancing is not enoughFree exchange / The Economist
The status quo is only bearable because most people suffer from the illusion that the current course will end the crises and depressions. It has not so far and almost certainly will not in the future. The cross-border claims have to be liquidated one way or another, whether by subsuming them into a pan-European identity, restructuring, or rebalancing. Yet there seems to be no political support for any of these options, which suggests that the breakup of the single currency is the most likely course.

The inflation treatmentFree exchange / The Economist
The IMF presents six case studies which help to illustrate how consolidations generally work (or don't)…while inflation might be unpalatable in many ways, the alternatives look more costly and dramatically less likely to succeed. And so the supposition ought to be that inflation will at some point become the treatment of choice.

Benoît Cœuré: Collateral scarcity – a gone or a going concern?ECB
Cœuré on collateral scarcity alphaville / FT
potential ECB response to signs that some of the scarcity will also be “of a permanent nature”.

Spinning SpainMarc to Market
we remain profoundly skeptical of claims that the country has turned a corner. Shortly after announcing what the EU's Ollie Rehn suggested was an austere budget that went above EU recommendations, Spain revised its 2012 budget deficit.

Sovereign risk-weighting, face-off du jouralphaville / FT
Basel catches European bank capital legislation letting big cross-border lenders play a bit too fast and loose with zero risk-weighting of government bonds for its taste.

In the face of on-going recession and deepening unemployment in France, François Hollande’s commitment to deficit reduction may soon put him at odds with voterseuroppblog / LSE

France facing double-dip recessionSober Look

Weekly Stress Indicators focus on FranceSaxo Bank
I have focused on France this week as the Socialist Government went beserk in austerity and tightening. This could put France at serious risk for growth and I think maybe President Hollande may need to reread the economic page on fiscal multipliers.

Bernanke defends QE3, calls for deficit reduction, but not yetWonkblog / WP

Preemptive fiscal follyalphaville / FT
We’re trying to be open-minded and could well be wrong, but once again it’s hard to avoid the conclusion that the fiscal policy debate now shouldn’t be about whether the government should borrow more in the short term to support the economy, but about how best to do so. Yet that isn’t what’s happening, not even close.

Why the Fed shouldn’t raise rates to discipline CongressMacroScope / Reuters

ISM manufacturing PMI points to expansion in September – ASA
The US ISM saves the day – Nordea
ISM Manufacturing index increases in September to 51.5 – Calculated Risk
Manufacturing ISM Rebounds Slightly – Mish’s
ISM Manufacturing Back Above 50 – Bespoke
US ISM Manufacturing – BNY Mellon
ISM Manufacturing Report’s Good, But It’s Not That Good – MarketBeat / WSJ
US PMI bucks global trend – alphaville / FT
Baffle With BS: After Chicago PMI And Durable Goods Tumble, Manufacturing ISM Soars – ZH

Weekly Market Comment: Leap of FaithHussman Funds
It would be a relief to see the data shift away from a recessionary pattern in a durable way, and I would be happier still for stock market valuations and market conditions to support a significant exposure to market risk. Both of those will arrive, but they are not here at present, and I expect there will be some downside first.

MarketBeat’s Fond Farewell to the Third QuarterMarketBeat / WSJ
interactive review of the quarter

Cofer catch-up timealphaville / FT
The glacial pace of FX reserve change continues, as documented by the IMF ’s “Composition of Official Foreign Exchange Reserves” data which was released on Friday.

Follow ‘MoreLiver’ on Twitter or Facebook 

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