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Monday, May 6

6th May - US Close: Dullish

Previously on MoreLiver’s:
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Roundups & Commentary
Markets – Between The Hedges
Daily Interest Rate Monitor – Global Macro Monitor
The Closer – alphaville / FT
Europe: With Japan On Holiday, European Bonds Have Worst Day In Six Weeks – ZH
US: 'New-Normal' Equity Highs On Lowest Futures Volume Day In Seven Months ZH

Soros versus Sinn: The German QuestionProject Syndicate

What Did Draghi Say?Marc to Market
Part of the expectations game requires the belief that there is more the ECB can do.  Without this expectation, the effectiveness of the current policy stance is compromised. 

No Resolution on Bank ResolutionWSJ
The debate about who should take losses when European banks fail drags on.

Europe's Shadow Economy: As Big As GermanyZH

The euro and the ECB: Perspectives and challenges aheadECB
Keynote address by Yves Mersch, Member of the Executive Board of the ECB, Journée Boursière, Luxembourg, 6 May 2013

The euro, monetary policy and reformsECB
Speech by Mario Draghi, President of the ECB, on receiving an honorary degree in political science, LUISS “Guido Carli” University, Rom, 6 May 2013


Spanish yields and the ECB’s austerity defencealphaville / FT
The rally in Spanish yields probably wasn’t about the deficit reduction itself, aggressive though it was. The more likely explanation was the perception that the ECB is, if not happily accepting, then at least willing to tolerate Spain’s missing its budget deficits.

An update on Sloveniaalphaville / FT
According to two senior eurozone officials, concerns have focused on “non-cooperation” between Slovenia’s finance ministry and central bank, which is responsible for supervising the financial sector. One of the officials said the central bank was being “obstructionist” towards the new government’s clean-up efforts.

Senior Eurozone Official: "As Spain Goes, So Goes Slovenia" - Mish's

2s-10s, the updateMark Dow
The downdraft that started in March presaged the April volatility. It is a tribute to market strength that we only got volatility and not a more meaningful sell off. It is now turning up.

You Know The Market Is Frothy When...ZH
BofAML’s latest investor survey: rotation is not going to happen, asset bubbles biggest concern, credit markets overvalued. Barclays: bad macro, asset prices might snap back to them.

Flash Crash, Three Years Later: What Have We Learned?WSJ

Positive Reaction to Earnings This SeasonBespoke

Corporate Profits as a Percentage of GDP Hits All-Time HighPragCap

China' weak credit transmissionSober Look
It seems that China has caught a developed nations' disease in which stimulus no longer translates into improved growth.

China trip notes part 3 – Growth is not enoughNordea (pdf)
The people and companies I met during my visit to China were generally optimistic on the overall economy. However, their mind-sets turned dark, when the subject was changed to social matters, such as corruption, income inequality, heavy social burden and pollution. This makes me believe that China has developed to a stage where growth is no longer enough.

EM Preview for the Week AheadMarc to Market

Welcome to the post-BRIC worldFree exchange / The Economist

The political economy of structural reform in the BRICDB Research
The BRIC economies, like most other economies in the world, experienced a slowdown in 2011-12. The bears are worrying that this slowdown might contain a significant structural component. These concerns seem somewhat overdone.

When Deficits Become a ProblemTim Duy’s Fed Watch
L. Randall Wray thinks the Paul Krugman has made the leap to MMT by acknowledging the ability of the central bank to control interest rates.  Wray sees that Krugman was faced with an intellectual roadblock to MMT… But I don't see anything inconsistent between the Krugman of the past and that of today. 

Naive Fiscal CynicismKrugman / NYT
What governments don't actually do.

More on Naive Fiscal CynicismMainly Macro
Paul Krugman is absolutely right that one of the rationales for the IMF and others framing fiscal policy in terms of the ‘speed of consolidation’ is a belief that left to themselves politicians will always and everywhere let debt rise.