Google Analytics

Wednesday, March 27

27th Mar - US Close: European Disaster

Credit markets in Europe go back into crisis mode: German bond yields collapse, Southern Europe's surge. Switzerland is not the safe haven anymore. Cyprus to open its banks tomorrow, while seasonals and macro are not good for the risk assets. ECB coming up next week, and probably will not do anything. Terrible stuff. Read the two ones marked red.

Previously on MoreLiver’s:

Follow ‘MoreLiver’ on Twitter or Facebook

Roundups & Commentary
Markets – Between The Hedges
Daily Interest Rate Monitor – Global Macro Monitor
The Closer – alphaville / FT

Tomorrow’s Tape – WSJ
Europe: Stocks & Bonds Battered By Return Of LTRO Stigma– ZH
US: Phrase Of The Day: "Irrational Divergences" – ZH
Morning Briefing (Asia) – BNY Mellon

Europe: No Need To Worry, The Fire’s DownstairsPawel Morski

The EU is pretty emphatic about what the future of bailouts looks like: No more blank cheques, the ESM will not become a TARP, and uninsured depositors are in the firing line, as are senior bondholders; taxpayers are not.In this both Mr Dijsselbloem and the rest of the European authorities are in agreement…However, there are two important problems here 1) depositors over €100,000 control enough money to overturn the European economy if they stampede; 2) there’s – to a fairly fine level of precision – zero evidence that the people in charge know what they’re doing. In short, the last thing the Eurozone needs right now is uninsured depositors thinking hard about the prudence of their investments.

The Euro Zone’s Slinky EconomyWSJ
How long Europeans tolerate these boom-bust cycles that are exacerbated by the ECB’s inability to respond to local factors is another matter.

Deutsche Bank: Luxembourg and Malta should learn from Cypruseuobserver
Luxembourg and Malta on Wednesday (27 March) rejected comparisons between their banking sectors and Cyprus. But Deutsche Bank says they also have reason to worry.

Propaganda, Modern Media, and the Dijssel-BombWSJ
That’s why Dijsselbloem’s comments got such a reaction. He was offering his honest opinion. He wasn’t playing from the Bernays handbook. The eurocrats may have tried to “walk back” the comments, but it was too late. The market heard it clearly.

A Teutonic Shift: Europe's New Safe HavenZH
As Switzerland is getting targeted, investors move to German bonds.

Cross-asset credit/volatility in Europe and movements in financial spreadsMacronomics

Italy's Bersani struggles to overcome election stalemateReuters
Italian center-left leader Pier Luigi Bersani was left with only slim hope of forming a government after last month's deadlocked election as talks with rival party leaders ended with a further rejection from Beppe Grillo's 5-Star Movement.

Italy 5-Star Movement refuses to back centre-left governmentReuters
Italy's anti-establishment 5-Star Movement on Wednesday flatly rejected overtures from centre-left leader Pier Luigi Bersani, who is trying to muster the numbers to form a government after last month's deadlocked general election.

Italian Bonds Yield Most Over Bunds This Year on Senate DeadlockBB

Spain Says 2012 Deficit Is Bigger Than First Estimated: EconomyBB
The Spanish government said its 2012 budget deficit will be bigger than first estimated after the EU requested changes in how tax claims are computed.

Portugal government says no risk Cyprus deal can be templateReuters
The Portuguese government ruled out any chance of a tax on bank deposits under a bailout for Cyprus being used as a template for other euro zone states, and said its own depositors remain confident in Portuguese banks.

The euro has been a massive failure. So why does Poland want in?Wonkblog / WP
It’s fair enough if Poland wants to develop closer ties to its European neighbors. But as Paul Krugman notes, joining the euro would deprive Poland of the strategy that allowed it to weather the recession so effectively. The key to the Polish miracle was massive currency devaluation.

Meanwhile, in Greecealphaville / FT
Dromeus Capital. The name might ring a bell. It’s the fund which did its homework on underpriced Greek assets last year, making a killing. Pretty striking, then, that they’ve now gone cautious on Greece.

Why Fed hawks and doves are both starting to talk about ending QEWonkblog / WP
Hawks, who want to curtail quantitative easing programs because of the risks they create. And doves, who see evidence that they’re working well enough at stimulating growth that they might soon no longer be needed.

2s-10s: be vwery, vwery afwaidmarkdow
The spread between the two yields doesn’t look so good for risk taking.

Chart o’ the Day: Can We Break the Cycle in 2013?The Reformed Broker
Every year so far, post-Credit Crisis, we've played the same game this time of year - economic momentum slows down, fears from Europe resume and the US stock market takes a nasty tumble.

Perinteinen kreikkalainen tragedia Kyproksella – jumalat rankaisevat heihin luottanuttaTyhmyri

Nobelisti tavoittelee yleisöäVesa Varhee / TalSa