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Wednesday, October 9

9th Oct - US Close: Still playing chicken

Fed minutes contained no surprises - except that the FOMC really, really wants to taper - but is too scared of the feedback. More on Yellen, and some good ones on Europe. Of course, the U.S. shutdown continues, but no proper news yet.

It only takes a minute, girl! 

Previously on MoreLiver’s:

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Roundups & Commentary
Markets – Between The Hedges
Daily Risk Monitor – Global Macro Monitor
The Closer – alphaville / FT
US: Dow Dead-Cat Bounces Off 200DMA; Nasdaq Ends Below 50DMA – ZH

Winding Down EU Banks: The Job No-One WantsWSJ
The top job in Europe’s new bank resolution regime has become something of a poisoned chalice. Lawyers for European Union states this week urged the European Commission to take on even more powers over winding down troubled banks. But the commission immediately said it didn’t want them.

European Union: ‘Super-administration for EuropePresseurop
The EU’s 28 member states are examining options for the liquidation of ailing banks within the framework of the banking union, reports Handelsblatt.

The Myth of German EuroskepticismProject Syndicate
Daniel Gros: According to conventional wisdom, the eurozone crisis has reduced citizens’ trust in the EU and in European institutions in general across all member states, with several recent reports claiming that the German public, in particular, has turned its back on Europe. But the conventional wisdom is simply wrong.

Marine Le Pen's Eurosceptic "National Front" Party Takes Lead in France National PollMish’s

Meanwhile, in Europe...ZH

Danish current account surplus breaking every recordNordea

Investors endorse all the progress made in SpainNordea
Spain found close to EUR 11bn of interest for its new 30-year benchmark, a strong signal of how receptive the European bond market is and a testament of all the progress Spain has already made

The economic consequences of low interest ratesECB
Public lecture by Benoît Cœuré, Member of the Executive Board of the ECB, at the International Center for Monetary and Banking Studies, Geneva, 9 October 2013

U.S. Bond Strategy: Trim Duration FurtherBCA
The counter-trend rally in U.S. Treasurys that we had anticipated has largely played out and it is time to position for an eventual resumption of the cyclical bear market. We recommend moving bond portfolio duration to a fully below benchmark stance.

S&P 500 Is NOT OversoldShort Side of the Long

Deutsche Bank: Debt Ceiling "Will Get Resolved With A Big Sell-Off"ZH

Deadlock Worry Jolts the Market for T-BillsNYT

Reflections on the current sad state of US politicsNordea

The GOP rewrites its ransom noteWaPo

Why America Needs a Stock-Market CrashThe New Yorker
Congress needs adult supervision. Since the President can’t provide it and the Republican leadership won’t, the market might well have to step in and do the job. Such a resolution wouldn’t be pretty, but history suggests it would be reasonably effective

Understanding the Game Being Played in WashingtonHBR

Comment: Politics, Policy, Deadbeats and DefaultCalculated Risk

The shutdown, currency sovereignty and sovereign defaultCredit Writedowns

What’s So Special About November 1?Macro and Markets

Government Shutdown: Don’t Believe the HypeReason

Complacency on Wall Street Could Be Worse Than a PanicNYT

Collateral crunch feared as T-bill yields leapFT
Are T-bills cash, or aren’t they?alphaville / FT

Fed’s Evans: Budget Showdown Gives Him ‘Great Pause’WSJ

IMF says Fed taper risks $2.3tn hit to bondsFT
Fund issues warning in global financial situation assessment

Re-Decentralizing the FedProject Syndicate
Financial circles are buzzing about Janet Yellen’s nomination to take over as Chair of the US Federal Reserve. But they are largely ignoring another, more fundamental question: How much discretion should the Fed be given to conduct daring monetary-policy experiments like the vast quantitative easing of the last five years?

FOMC Minutes September 17-18 meeting FED

FOMC Minutes Reveal "Most Fed Officials Saw QE Tapering In 2013" ZH

Taper? Forget About It Now Bespoke

FOMC Minutes: "Considerable risks surrounding fiscal policy" Calculated Risk
There was a significant debate on asset purchases at the last FOMC meeting.  Those who didn't want to reduce asset purchases expressed several reasons including "Considerable risks surrounding fiscal policy" (no kidding!). Even those who wanted to reduce asset purchases "indicated that they favored a relatively small reduction to signal the Committee's intention to proceed cautiously".

Key Passages From Fed Minutes Show Officials Torn on TaperingWSJ
Despite their angst, many officials still want to start winding down the program this year and end it next year.

Fed Admits It Is Caught In A Catch 22ZH
Suggest tapering due to an improving economy and watch "financial conditions" tighten (i.e., stock tumble, rates soar), crashing the "economy"... or do nothing.

Most Fed Officials Saw QE Tapering This Year, Minutes ShowBB

Fed decision not to taper was 'close call' for several –minutesReuters

No Wild Reaction After These Fed MinutesWSJ

Shorter FOMC minutes: this economy management stuff is hardalphaville / FT
Public revelations of internal Fed divisions were always a risk of Bernanke’s more democratic approach to overseeing the Fed. But they also can undermine policy, especially when forward guidance is such an integral part of said policy. And perhaps the main lesson we take from the minutes is that Janet Yellen’s hands are going to be very, very full next year.

Janet Yellen’s Long History as a Regulator – WSJ
A Look at Yellen’s Research: Unemployment, Advertising and Out-of-Wedlock Births – WSJ
Nine amazing facts about Janet Yellen, our next Fed chair – WaPo
Janet Yellen’s Historic Nomination For Federal Reserve Chairwoman – The Daily Beast
Wall Street Reacts to Janet Yellen: ‘She Has Her Work Cut Out for Her’WSJ
White House Talking Points on Yellen – WSJ
Janet Yellen in her own words: An exclusive interview – WaPo
*Economists Don’t See Much Difference Between Yellen Fed and Third Bernanke Term – WSJ
Is Yellen a Hawk in Dove's Feathers?View / BB
A new hand on the tiller – Free exchange / The Economist
Janet Yellen’s Short and Storied Newspaper Career – WSJ
Chinese Think Tank Puts Shadow Banking at 40% of GDPWSJ

Asia: learning the lessons of 1997beyondbrics / FT
Is it 1997 redux? Not in East Asia, according to the World Bank’s East Asia And Pacific Economic Update: most economies here “are in a relatively strong position to face this shock, with significantly lower vulnerabilities than in the run-up to the 1997–98 Asian crises”.

Compassionate MeritocracyProject Syndicate
While Singapore's leaders have long advocated political meritocracy at home, their political model can and should influence other countries, especially those with a Confucian heritage. In this sense, Singapore’s strong relationship with China could be a game changer for political meritocracy – and thus for democracy.

The most important charts in the world BI
From the Wall Street's brightest minds.

Great Graphic: Potential Head and Shoulders Top in SterlingMarc to Market

Still Some Hurdles On The Fiscal PathiMFdirect
We created  an index of ‘fiscal difficulty’ that shows the biggest challenge ahead for advanced economies is to maintain budget surpluses until debt ratios return to lower levels.  We expect this will take several years.

Valtio ei ole kotitalousTalSa
Kotitaloudet eivät voi elää yli varojensa, miksi valtiot voisivat? Kyse on talouden eri sektoreista, joiden sekoittaminen toisiinsa johtaa haitallisiin seurauksiin. Hallituksen finanssipolitiikka tuhoaa yksityisen sektorin nettovarallisuutta.

"Suomella paljon veroparatiisin piirteitä"TalSa
Suomella on paljon veroparatiisia muistuttavia piirteitä, verotusneuvos Markku Hirvonen sanoo. Hän uskoo kuitenkin, että kansainvälinen tietojenvaihto tehostuu.

Suomesta veroparatiiseihin 320 miljoonaa vuodessaTalSa
Suomesta siirtyy veroparatiiseihin 320 miljoonaa euroa vuodessa. Finnwatchin mukaan tietojen saaminen yritysten toiminnasta on hyvin vaikeaa. Kansalaisjärjestöt tukevat ehdotusta maakohtaisesta kirjanpidosta, koska pelko tietojen julkisuudesta jarruttaisi veropakoilua.

Puolet maailmankaupasta kulkee veroparatiisien kauttaKansan Uutiset

Kotitalouksien velkaantumisaste ennallaan Q2 2013Tilastokeskus