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Friday, May 2

2nd May - W/E: Best of the Week

Here are the ”best” from my posts of the ending week. Last week’s edition here.

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IMF preferred creditor status and the Eurozone
By lending €30 billion to Greece in 2010, the IMF introduced the option to permanently waive the requirement that a borrowing country is on the path to stability. This option increases the chance of moral hazard and undermines the strong framework for the preferred creditor status.

Changing Continent: European Parliament Elections 2014 WSJ

ECB, BOE want to resurrect shadow banking in EuropeSober Look
The ECB and BoE published a joint paper calling for the return of securitization markets in Europe (see below). This goes completely against the grain of the latest Basel accord which has started imposing much higher capital requirements for holding securitized paper.

Draghi Tells German Lawmakers ECB Bond-Purchases UnlikelyBB
Draghi told German lawmakers that a quantitative-easing program isn’t imminent and is relatively unlikely for now, according to a euro-area official present at the meeting.

The ECB betting on "creditless" recoverySober Look
Of course Japan too had a "creditless" recovery - until it didn't. But let's not make such silly comparisons.

ECB's empty toolbox makes it look the other wayTradingFloor
The macroeconomic environment in Europe is screaming out for further policy action but the only thing that would work is fixing the banks. As no-one wants to do that, the ECB is pretending the banks are OK, and that will not fix anything.

Europe’s Credit Squeeze Gives ECB a HeadacheWSJ
Until the euro zone’s banking sector has been put onto a sound footing, the problems with credit transmission are bound to persist. The ECB and the banks’ regulator is trying to do this by imposing severe stress tests and capital requirements. But the process takes time.

Europe Banks Face Toughest Simulated Slump in Stress TestBB
EU unveils tougher bank tests in bid to draw line under crisisReuters
ECB Squeezed and EBA Posts Stress Test ScenariosMarc to Market
European banks must show they can survive simultaneous routs in bonds, property and stocks, in the toughest test so far by regulators aiming to restore confidence in an industry that had to be rescued by taxpayers in the financial crisis.


Japan’s 20-Year Deflationary Spiral Is About To EndAsia Confidential
Myth of a Japanese economic recovery * More stimulus soon * Wage growth around the corner * Positives from inflation…Offset by bond market risks

Why AUDJPY is the Swiss army knife for tradersTradingFloor
Whether you trade single stocks or index CFDs, I can’t think of a more relevant item than the AUDJPY to keep on the screens. In 2012, it was the European sovereign bonds. In 2013, it was the EURJPY. But AUDJPY is forever – and it just might have a story to tell you at this very moment.

Global Macro Part 3: Stocks & BondsShort Side of Long
Cyclical equity sectors are starting to under-perform defensives * Stock vs Bond ratio is giving us a bearish non-confirmation! * Treasuries have done poorly over the last year & could rebound! *

Berkshire Hathaway: Playing out the last handThe Economist
Warren Buffett’s 50 years running Berkshire Hathaway have been one of business’s most impressive winning streaks. How will it end?

Asness on the central paradox of efficient marketsForbes
Efficient market? Baloney, says famed value- and momentum strategist Cliff Asness, Chief Investment Officer at AQR Capital Management, who sat down with me to discuss his unique quant strategy. A video and transcript of our conversation follows.

Euroopan maiden velkaantuminen - paranemaan päin? Juhani Huopainen / US

Suomi on hyötynyt taloudellisesti EU-jäsenyydestäJuhani Huopainen / US

Myyntimiehelle näytettiin ovea: Hollanti uhkasi euroerollaJuhani Huopainen / US

Kreikkalaisen tilastobluffin paluu – nyt EU:n luvallaJan Hurri / TalSa
Kreikan tuoreet taloustilastot osoittavat, että taito tilastojen kaunisteluun on tallella ja käytössä. Tuore bluffi "kohentaa" valtion budjettitalouden alijäämän ylijäämäksi yksinkertaisella keinolla: se jättää suuren määrä menoja laskuista pois. Temppu on tuttu kriisiä edeltäneeltä ajalta – mutta nyt EU hyväksyy sen.

Rationaaliset valtionlainamarkkinat?Roger Wessman

Lisää joko-tai –näkemyksiäHenri Myllyniemi / US
Euroalueen sisäiset eroavaisuudet näyttäytyvät kaikkialla...Mutta ainoa asia, jossa tällaisia eroja ei hyväksytä on valtiolainojen hinnoittelussa.

EU-kriitikoiden vaalivoitto voi muuttua tappioksi Jan Hurri / TalSa
Erityyppiset "EU-kriittiset" protestipuolueet saavat ennusteiden mukaan runsaan kannatuksen EU:n ensi kuun parlamenttivaaleissa. Protestiäänet eivät silti riittäne pysäyttämään EU:n liittovaltiokehitystä – se voi jopa voimistua. Poliittiset täyskäännökset nähdäänkin jäsenmaiden omissa parlamenteissa, jos missään.

Euron tulevaisuus - markan toinen tuleminenSami Miettinen / US

Ideoita inflaation piristämiseenHenri Myllyniemi / US