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Tuesday, October 23

23rd Oct - US Close: Pre-Open Dive

Markets were very weak after the bad Q3 earnings, signaling that the QE-effect is spent, and it’s back to fundamentals for now. Most of the reaction probably came from the bad Spanish news, and the yields on Spanish government debt increased somewhat. Incidentally, given the worries over the earnings, tomorrow we’ll see Q4 macro numbers from Europe and US, and these could set the tone for the rest of the week. 

Fed is probably a non-event on Wednesday – but do notice that Draghi is visiting the lion’s den – he’s speaking to the Germany’s parliament, Bundestag, on the merits of the ECB’s OMT program. He will hold a press conference after the debate, and the market could use a word or two now. Perhaps he will provide that? Elsewhere, Canada's central bank surprised everyone and hinted that the end of easy monetary policy is going to end some day. Why? Are they worried about the house prices, or do they know something? Are they trying to do some "Chuck Norris"-monetary policy - creating growth by building up the inflation expectations?

Previously on MoreLiver’s:

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Roundups and Commentary
Markets – Between The Hedges
The Closer – alphaville / FT

Roundup: Buy Italy and Sell France? – Kiron Sarkar / The Big Picture
Tomorrow’s Tape: New Home Sales, FOMC Decision – WSJ
European Summary: European Stocks And Bonds Plunge Most In A Month – ZH
US Summary – ZH

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

Britain has left the European Union in all but nameThe Telegraph
To all intents and purposes, the UK is already out. We stayed still. Europe galloped away without us. No doubt we can find some elegant formula to paper over the split. As my friend Daniel Hannan puts it, we could devise a Swiss arrangement while pretending that we are still EU members.

Draghi’s Open Checkbook May Swing Crisis-Weary BundestagBB
Mario Draghi travels to Berlin tomorrow to face the German Bundestag and tell them why saving the euro means writing a blank check.

Eurozone wage adjustment, chartedalphaville / FT
includes a link to an interesting report from Credit Suisse. You’ll have to register, though.

Bank of Spain Warns on Deficit TargetsWSJ
Spain's central bank said Tuesday the country's economy contracted slightly less than expected in the third quarter but repeated a warning that tax-revenue shortfalls could cause the government to miss its 2012 budget-deficit target.

The Gray Economy: Europe's €1.5 Trillion A Year Black HoleZH
Charts from Bloomberg Briefs

A Spate of Recent Positive Events in the Euro AreaPIIE
The euro area’s efforts to stabilize its financial picture got a boost from several developments in the last week

As Market Plunges, Bob Janjuah Opines: "Tactical Short Risk Time"ZH
Full note from Nomura

On This Date In 1929, The Black Thursday Selling Has BegunArt Cashin / ZH

S&P 500: 2012 vs 1987Bespoke

FOMC PreviewMarc to Market
When and if the Fed cuts in 2013 GDP forecasts (the Bloomberg consensus is for 2% growth, which also seems to implicitly make assumptions about the thrust of fiscal policy), it likely announce a change in its asset purchase program. It could come as early as December, when its forecasts are updated.

The fraught Fed-chairman choiceFree exchange / The Economist
But still, the election is close, and there’s a significant probability that Romney will win. So it’s worth asking: what happens then? Romney is on the record that he would choose a chairman constitutionally averse to punchbowls. But what would that mean, in practice? According to Appelbaum, there are basically three names on Romney’s list: Greg Mankiw, Glenn Hubbard, and John Taylor.

Will the stock market freak out over the fiscal cliff?Wonkblog / WP
The Bank of America’s fund manager survey in October found that the fiscal cliff is the “#1 risk for investors (42 percent of respondents vs. 27 percent for the E.U. debt crisis).”

Bank Of Canada: "Withdrawal Of Stimulus Will Likely Be Required"ZH
With comments from Goldman Sachs

Short-Term USD/CAD OutlookBNY Mellon
Following the more-bearish-than-expected commentary from the Bank of Canada this morning,  USD/CAD looks particularly interesting on its daily chart.

Pre-Crisis Indicators; Inflation Study; Dangerous Bonds; Japanese Auto Exports to China; Actual China Banking and Debt StatisticsHistorySquared

Päättäjät elävät kuin tuhlaajapoikaPauli Vahtera / IL blogit


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