11th Jul - W/E: Roundup of the world's week

Due to holidays and lack of daily posting, here are the articles and events of the ending week that I wanted to make a note of.

EUROPE

Is There A Right To Secede? – Project Syndicate

The EU has brought 28 countries into a closer political and economic union. Paradoxically, it has also made it more feasible to contemplate the breakup of some of those countries.

Brussels round up – Europp / LSE

Cannabis use across Europe, EU banking, and who will get the EU’s remaining ‘top jobs’?

http://blogs.lse.ac.uk/europpblog/2014/07/11/brussels-round-up-cannabis-use-across-europe-eu-banking-and-who-will-get-the-eus-remaining-top-jobs/

Europe’s Debt Wish – Project Syndicate

Kenneth Rogoff: It is difficult to see how Europe can revive economic growth without significant debt restructuring or rescheduling. But Europe’s politicians seem utterly unable to contemplate this scenario, thus placing a huge burden on the ECB.

Opinion: Watch Out for Little Green Men – Spiegel

When Moscow-backed troops appeared in Crimea earlier this year, the media dubbed them the "Little Green Men." Now NATO members should ask themselves how they will respond if the soldiers begin appearing in Estonia and Latvia too.

Think the Bundesbank’s Buttoned Down? Witness the Bubapalooza – WSJ

Hollande’s Danish spectacles – Market Monetarist

Is France the next trouble spot in the euro zone?

  JUNCKER’S COMMISSION

Juncker begins to fill in the gaps – Reuters

European Commission president-elect Jean-Claude Juncker will hold talks with the various political groupings in the European Parliament as he seeks to develop policy positions. Most interesting would be indications about which way he is bending in the growth versus austerity debate.

Could the discussion on EU fiscal rules still endanger Juncker's election? – Open Europe

Juncker's first move – Bruegel

The incoming President of the European Commission should show he means business by rationalising the college of Commissioners

Juncker’s Make-or-Break Presidency – Project Syndicate

It is possible that Jean-Claude Juncker, once he is confirmed as European Commission President, will confound his critics and become the radical reformer that the EU needs and public opinion wants. Pro-Europeans should hope so, because the next few years look like a make-or-break period for the entire integration project.

Juncker: The next Econ/Monetary Commissioner will be a Socialist – Open Europe

Juncker denies belief in ‘United States of Europe’ – FT

Juncker wants 'fair deal' for Britain – euobserver

Juncker Doesn’t Want Dijsselbloem for Next EU Economics Chief – WSJ

  TTIP

Blogs review: The EU-USA Transatlantic Trade and Investment Partnership – Bruegel

The European Union and the USA are currently negotiating a free trade agreement, known as the Transatlantic Trade and Investment Partnership (TTIP). After a draft has been leaked to the public, an intensive public debate over possible advantages and disadvantages of such a deal has erupted. While there is some debate over how large the economic benefit of such a free trade agreement can be in face of already relatively low trade barriers between the EU and USA, critics claim that the deal will lower standards of consumer protection, provision of public services and environmental protection in the EU.

EU wants a piece of America’s fracking boom – WaPo

The European Union is pressing the United States to lift its longstanding ban on crude oil exports through a sweeping trade and investment deal, according to a secret document from the negotiations obtained by The Washington Post.

  EUROPEAN CENTRAL BANK

ECB remains long on words, short on action – TradingFloor

Factbox: How does the ECB's four-year loan scheme work? – Reuters

ECB Summons Bankers for Catch-Up as Stress Test Looms – BB

ECB watchdog says bank safety checks running according to plan – Reuters

Exclusive: ECB keeps banks on tight leash with October test results – sources – Reuters

ECB looks to banks to deliver quantitative easing on its behalf – Reuters

ECB Plans to Limit Stress-Test Inputs in Bank Checks – BB

ECB's Coeure: rates to stay low, Europe needs more investment – Reuters

ECB’s Cœuré: The eurozone is like a grueling triathlon – Craig Willy

ECB's Coeure: rates to stay low, Europe needs more investment – Reuters

Draghi Backs Coeure in Call for Europe-Level Reform Push – BB

Don't stretch budget rules too far, ECB's Coeure tells EU – Reuters

Draghi urges euro zone states 'to be sovereign together' – Reuters

Draghi Says Europe Needs Higher Powers as Leaders Quarrel – BB

Draghi coaxes politicians to lead reforms – FT

Nowotny Sees No ECB Urgency for Action as Stimulus Bites – BB

Has the ECB backed German ‘reform contracts’ for the eurozone? – Open Europe

Can Anything Halt European Deflation? – WSJ

Great Graphic: Disinflation or Deflation in Europe? – Marc to Market

ECB Puts Numbers On Gains From Economic Reforms – WSJ

Statistics Pocket Book, July 2014 – ECB

Monthly Bulletin, July 2014 – ECB

The Phillips curve relationship in the euro area – ECB

SME access to finance in the euro area: barriers and potential policy remedies – ECB

Euro area risk-free interest rates – ECB

  UNITED KINGDOM

UK Economists Back Action on House Prices Risks – WSJ

BOE Raising Rates Too Soon Risks Denting Recovery, BCC Says – BB

U.K. to Fight for City of London in Court Clash With ECB – BB

U.K. Industrial Production Slides. Does It Matter? – WSJ

BOE Deputy Governor-Designate Shafik Says Slack Is Shrinking – BB

Pound’s Rally Becoming Burden, Goldman Sachs Says – BB

The capital adequacy of banks – BOE

Out of the euro but run by the euro? – Open Europe

The UK & ECB prepare to lock horns at the ECJ in what could be the most important case yet

  GERMANY

Commerzbank Said Next to Face Penalties in U.S. Probe – BB

Is Germany Leading Euro-Zone Weakness? – WSJ

  PORTUGAL / ESPIRITO SANTO

Europe Is Broken Again; Espirito Santo Halted – ZH

Espirito Santo: The Full Timeline – ZH

Portuguese Stocks Enter Bear Market – ZH

Portugal Leads Drop in Euro-Area Bonds on Espirito Santo Concern – BB

Europe’s Sell-Off: Analysts React – WSJ

Some Recent Euphoric Comments About Portugal – ZH

BES Resumes Trading, Surges Then Tumbles – ZH

Banco Espirito Santo: All The Latest News – ZH

What Analysts Are Saying About Banco Espírito Santo Now – WSJ

Temper tantrum, tempest, or teapot? – FT

What sparked yesterday's renewed concerns around the eurozone? – Open Europe

Portuguese Bank Reveals Exposure After Missed Payment Shakes Markets – BB

No Periphery Panic as Losses Pale Versus 2012: Chart of the Day – BB

Portugal Smolders as Allianz Says Crisis Isn’t Over – BB

Espirito Santo Turmoil Shows ECB's Challenge in Managing Systemic Risk – BB

  SPAIN / IMF

Spain: Article IV Consultation – IMF

Spain: 2014 Staff Report; Staff Supplement; Press Release – IMF

Spain: Selected Issues – IMF

IMF Gets It Wrong Again – Simon Nixon / WSJ

  GREECE

Greece Resists Troika on Third Bailout as Draghi Protests Delays – BB

  MACRO NUMBERS

House prices down by 0.3% in the euro area – Eurostat

Four is a trend? – The Economist

UNITED STATES

Inflation Hysteria Redux – Tim Duy’s Fed Watch

If you are making a short-term bet on higher headline inflation, primarily you are making a bet on energy and food.  That bet is about the Middle East and weather, not monetary policy.  I don't have an opinion on that bet.  If you are betting on inflation over the medium-term, primarily you are making a bet on higher core inflation. More to the point, you are betting against the Fed.  You are essentially betting that the Fed will not do what it has done since Federal Reserve Chair Paul Volker - tighten policy in the face of credible inflationary pressures. I would think twice, maybe three times before making that bet. 

When The Fed Starts Raising Rates – Tim Duy’s Fed Watch

I think the flattening of the yield curve should be a concern to the Fed.  It suggests that while we frequently hear Janet Yellen described as a dove, the expectation is 7that her actual policy approach will be cautious bordering on hawkish.

BIS Slams the Fed – Mish’s

Ridiculous Question of the Day: "Is The Fed Going To Attempt A Controlled Collapse?"

The Fed shouldn’t try to pop bubbles. Just ask Sweden. – WaPo

FT: Fed’s Reverse Repo in 60 seconds – Youtube

New Tool from Atlanta Fed: GDPNow – Calculated Risk

Did China Just Crush The US Housing Market? – ZH

Financial Sector Reform: How Far Are We? – FED

Fed’s Fischer suggests including financial stability among chief goals – WaPo

Fed’s Fischer: Financial Sector Reform: How Far Are We? – Calculated Risk

Fischer worries about macroprudential policy – FT

Fed’s Plosser Says U.S. Policymakers Conflicted Over Risk Taking – WSJ

Plosser Says Fed Must Consider Higher Rates as Policy Goals Edge Closer – WSJ

Plosser Says Rate Increase Closer Thank Many People Think – BB

Fed’s Plosser: Federal Reserve Must Prepare Markets for Rate Increases – WSJ

Fed’s Lockhart Isn’t Convinced of Firmer Inflation Trend – WSJ

Fed’s Lockhart: Still Sees First Fed Rate Boost Some Time in 2015 – WSJ

  FOMC MINUTES

What to Watch For in the Fed Minutes – WSJ

Minutes Show Fed Fears Investors Are Too Complacent; QE To End In October – ZH

Hilsenrath's "QE Is Dead, Long Live The Easy Policy" Summary – ZH

Bonds & Stocks Surge Despite Fed Warning Over Complacency – ZH

FOMC Minutes: QE3 Expected to End in October – Calculated Risk

Minutes show path to exit becoming more concrete – WaPo

Fed Stimulus Is Really Going to End and Nobody Cares – WSJ

Fed Has Little Uncertainty, Despite Forecasting Misses – WSJ

The Fed as universal banker – FT

Are Investors Complacent About Risk? Concern Raised in June Fed Meeting – BB

Fed Moves Closer to Choosing Main Stimulus-Exit Tool – BB

Fed mulls policy exit, eyes October end of asset purchases – Reuters

QEInfinity Not – Tim Duy’s Fed Watch

Creeping nationalization – Coppola Comment

Portugal’s Problems Aren’t a European Crisis – WSJ

ASIA

End to China’s property boom has barely begun – FT

George Magnus: Financial markets are having trouble pricing the implications

China’s shadow banking is risky, but how risky? – FT

In China, shadow banking is a broad concern, given liquidity mismatches in the system, opaque asset quality and the fact that the end-users of such finance are often in the riskier sectors of the economy such as real estate and those struggling with over-capacity.

Economists React: China’s Exports Rise, But Not Enough – WSJ

OTHER

Monday Daily Macro – WSJ

Surprisingly weak German industry data, which is causing people to revise down their growth forecasts for the country. It’s a headwind euro-zone policymakers could do without. Elsewhere, Ukraine’s showdown with pro-Russian rebels and the ISIS insurgency in Iraq are simmering in the background without registering much market impact.

Monday Daily Central Banks – WSJ

Blackstone’s Take: ECB’s Not-So-Targeted Loa7n Program May Still Deliver * Hilsenrath’s Take: Analyst Expectations for Fed Rate Hikes are Shifting * Robust June Hiring May Move Forward Likely Fed Rate Hike, Analysts Say * As Food Prices Rise, Fed Keeps a Watchful Eye * Banks Face Added Capital Requirements

Tuesday Daily Macro – WSJ

Another day, another set of bad data from Germany. Yesterday it was weak industrial production numbers. Today, it’s declines in German exports and imports. But because imports fell by more than exports, the German outcome is bad news for its neighbors as well. Germany’s huge balance of payments surpluses, which have been running at more than 7% of GDP, were one of the root causes of the euro-zone crisis. Elsewhere, there are further signs of a softening tone to the global economy, including slipping business sentiment in New Zealand and a surprise fall in U.K. manufacturing.

Tuesday Daily Central Banks – WSJ

Hilsenrath’s Take: Yellen Didn’t Rule Out Monetary Policy to Combat Bubbles * Fed Defends Its Approach to Punishing Banks for Improper Foreclosures * Is BOE Gov. Mark Carney’s Recovery for Real? * ECB Would Need Good Reason to Start Asset Purchases, Lautenschlaeger Says * Economic Growth Likely to Strengthen in India But Slow in Germany

Wednesday Daily Macro – WSJ

All eyes will be on the minutes to the mid-June Federal Open Market Committee meeting, looking for signs of how soon policy might start to be tightened. Soft Chinese inflation, meanwhile, leaves scope for policy makers there to provide some stimulus to shore up a fast flagging property market.

Wednesday Daily Central Banks – WSJ

Hilsenrath’s Take: Labor Market Converging More Rapidly Than Expected Toward Fed’s Objectives
* Fed’s Kocherlakota Sees No Urgency To Raise Short-Term Rates * Fed’s Lacker: ‘Middling’ Productivity Gains Will Restrain U.S. Economic Growth * Currency Reserves Swell in Asia * Poland Still More Likely to Raise Rates Than Cut Them, Central Banker Says

Thursday Daily Macro – WSJ

What happened to global industry in May? Weak output and production numbers released Thursday by 7Italy, France and Japan added to similar drops reported by Germany and the U.K. in recent days. It could be a strange, temporary effect. But it’d definitely be worth watching

Thursday Daily Central Banks – WSJ

Hilsenrath’s Take: A War-Weary Fed’s Reluctant Embrace of New Weapon * Fed Sets October End for Bond Buying * Fed Officials Discussed Role for Interest on Reserves * China Central Bank Said Committed to Rate Reform * Draghi Calls for Euro-Zone Rules for Economic Reforms

Friday Daily Macro – WSJ

After Thursday’s flurry of excitement triggered by banking problems in Portugal, markets settled down again on Friday. However bad the news is for Portugal, investors seem to have decided that the Espirito Santo Group’s woes aren’t going to reignite the euro crisis. More worrying, though, will be signs of economic weakness from across Europe and much of the rest of the world. May industrial production data released over the past week or so have been consistently gloomy. These data tend to be volatile, so it could be a temporary effect. But they’re so widespread it would be foolish to completely ignore the data.

Friday Daily Central Banks – WSJ

Hilsenrath’s Take: Bond Dealers See Fed Rate Hikes Stopping in 2017 at 3.5% * Fed’s George Sees Room For Rate Hikes This Year * Partisan Divide Over Fed on Display in House Committee Hearing * Lawmakers Seek Disclosure of High Earners at Federal Reserve Banks * U.S. Says It Won a Victory in China Currency Battle. Did It?

June Economic Update – Short Side of Long

Global manufacturing continues to expand, driven by DMs * China & BRICs continue to show below trend economic activity * US leading economic indicators remained positive in June * Michigan consumer sentiment still remains at multi year highs * European consumer confidence is persisting on the upside * Japanese household survey turns around as Nikkei rebounds… * South Korean exports are a great barometer of global economy *