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Thursday, May 30

30th May - EU Open: Commission's recommendations, ECB data

Previously on MoreLiver’s:

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Roundups & Commentary
Markets – Between The Hedges
The Closer – alphaville / FT
US: Oil Leaked, Bond Volatility Peaked, Credit Markets Tweaked – ZH

News roundup – Between The Hedges
The 6am Cut London – alphaville / FT
Emerging Markets Headlines – beyondbrics / FT
Asia Morning MoneyBeat: U.S. Stocks Fall, Can’t Hold Tuesday Magic – WSJ
Europe Morning MoneyBeat: Another Nikkei rout – WSJ

3 Numbers To Watch: EU Eco. Sent., US Jobless & Cons. ComfortTradingFloor
The market will be eager to learn if the overall mood in the Eurozone is stabilising via today’s update of the Economic Sentiment Index. In the US, weekly jobless claims and the Bloomberg Consumer Comfort Index are released.

Market Preview: EU Sentiment and US GDPTradingFloor
European markets are expected to open higher Thursday. Traders await EU sentiment indices later today which are likely to show an improvement in May. Also, a raft of US macro data, especially first quarter GDP, will garner market attention.
Danske DailyDanske Bank (pdf) 
EU Commission due to release its confidence indicators, which we expect to show some improvement in May from low levels.
Kestääkö USA:n korkojen nousu? * Ruotsin BKT-luvut silkkoa sisältä * Komissiolta odotetusti lisäaikaa talouden tasapainottamiseen
AamukatsausTapiola (pdf)


A New Chance for European PoliticsProject Syndicate
Javier Solana: Most political leaders in Europe want the European Union to emerge from its current crisis stronger and more united. But the only way to overcome Europe’s existential crisis, and to respond to citizens’ demands for change, is to confront the EU's domestic opponents head-on in next year's European elections.

The gap between France's "hard" and "soft" economic indicators poses risksSober Look

High-Trust and Low-Trust Societies, Banks, and EuropeA Fistful of Euros
Low-trust societies, I think, emerge when the norms imposed by the elite are both compulsory and also impossible, and especially when the elite doesn’t seem to practice them itself. You could put it another way: it’s Berlusconi’s Europe, and we’re just living in it.

The Neverending Irish Success StoryKrugman / NYT

Why Germans Are Shocked by Angela Merkel's Communist PastForeign Affairs
With a general election approaching in Germany this fall, Angela Merkel finds herself mired in a scandal about her communist upbringing. The belated reckoning with Merkel's past reveals little about the chancellor's political sympathies -- and plenty about the German public's historical ignorance.

Commission takes steps under the Excessive Deficit Procedure – EU
Country-specific recommendations 2013: frequently asked questions – EU
Moving Europe beyond the crisis: country-specific recommendations 2013 – EU
Speech: Country Specific Recommendations - employment and social policy aspects – EU
Country Specific Recommendations – taxation aspects – EU
Van Rompy: Strengthening public sector accounting for sound fiscal policies in EuropeEU
Barroso on the Country-specific recommendations package 2013 – EU
Press Speaking Points at the European Semester Press Conference – EU

EU shifts policy focus in quest for growthReuters
After three years of deep spending cuts, the European Union confirmed a shift in policy on Wednesday, telling countries they must focus on structural economic reforms to boost growth, while not abandoning budget discipline.

More austerity please, you’re Britishalphaville / FT
To the untrained eye, this might look like the usual buzzword-soup from the European Commission (home of “growth-friendly fiscal consolidation”):

The European Commission recommends much of the same for the eurozoneOpen Europe

Hollande doesn't like to be bossed around by EuropeOpen Europe

A Few Thoughts on the EU RecommendationsMarc to Market
It is not a change in economics that is dictating the change in tact but politics.   Youth unemployment in the euro area is nearing 25%, with updated figures due at the end of the week. Even if they are not very organized, the populism on the right and left threatens the elites.

Brussels gives six states more time to fix budgetseuobserver
Six EU countries are to be given extra time to bring down their budget deficits after the EU commission took a lenient stance on national measures.

EU Guide to Broken BelgiumWSJ

EU, OECD press Spain to focus on reforms, growthReuters

EU's Rehn says Italy has little room for maneuver on deficitReuters

Letta: Italy to stick to commitments after end of EU procedureReuters

Statistical press release: Monetary developments in the euro areaECB (pdf)

ECB Says Private Lending Contracted for 12th Month in April BB

European Credit Contraction Accelerates, Spanish Loan Creation CratersZH
SocGen: credit to the euro area private sector is contracting further to -0.9% yoy from -0.7% yoy. Looking at the country level, we still see signs of credit crunch in the peripheral economies. In Spain, outstanding loan to non financial corporation is contracting at -19.1%. Yet, there is little incentive to borrow given the lack of confidence in future growth.

Press release: Financial Stability Review May 2013ECB
Full pdf, key risks: 1) A further decline in bank profitability, linked to credit losses and a weak macroeconomic environment 2) Renewed tensions in sovereign debt markets due to low growth and slow reform implementation 3) Bank funding challenges in stressed countries 4) Reassessment of risk premia in global markets, following a prolonged period of safe-haven flows and search for yield.

ECB Warns Financial Weakness Could Break Best Lull in Two YearsBB

ECB: Financial Sector In Best Condition Since 2011WSJ
The euro zone's financial sector is in better health now than at any time in the last two years, the European Central Bank said Wednesday in its half-yearly Financial Stability Review.

ECB Targeted as Blockupy Protesters Descend on FrankfurtBB
ECB will remain operational during demonstrations planned in FrankfurtECB

Fed’s Rosengren Open to ‘Modest’ Cut in Bond Buys in a ‘Few’ MonthsWSJ
A Fed official who has strongly supported the central bank's bond-buying stimulus efforts is willing to see the purchases pared back sometime soon if the economy continues to recover at its current pace.

September Looking GoodTim Duy’s Fed Watch
I think the Federal Reserve is leaning toward a September policy shift.  While it is as always data dependent, I think the data will need to be pretty weak to push the Fed to December. 

The Fed's tricky messaging: Tapering is not tighteningWonkblog / WP
Rosengren’s comments signal yet another way the Fed could tailor its bond purchases to the economy and do more with less. Maybe not only is tapering not the same as tightening, but tapering could eventually lead to more easing.

The Fed's been keeping the economy afloat. That's the problemWonkblog / WP
An expansion like this one, driven heavily by Fed monetary easing, is better for those who are already doing well than would be the case if fiscal policy were driving the recovery train.

Once again, the US consumer is expected to save the daySober Look

10 Under-Reported Realities In The US Labor MarketZH

Japanese Investors Step Up Foreign Bond SalesMarc to Market

Bonds - When volatility is waking upMacronomics

Stress Indicators: Fixed income carnage?TradingFloor
Steen Jakobsen: This week our Stress Indicators show signs of panic in fixed income. The CRB commodity index is broken and the super cycle looks to be confirmed while the US Index has decisively changed. Meanwhile, the IMF and EU continue to play pretend-and-extend.

The view from PimcoButtonwood / The Economist
Artificially assisted growth and purchased financial stability may breed shortfalls and asset bubbles * International and regional systems may fragment, and growing income inequality may destabilize geopolitics * Supply shocks and currency debasements may lead to higher and less stable inflation * Absent a growth revolution, haircuts may increase over the secular horizon

A handy collateral deckalphaville / FT
FT Alphaville attended the Sifma collateral conference last week. We found these slides, used by Greg Lyons of Debevoise & Plimpton, to be a very useful explainer of upcoming regulatory reforms

Gane: The FederatorWSJ
“Jetpack lowers the interest rate” :)