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Monday, August 11

11th Aug - Less panic, instead, genuine fear

Previously on MoreLiver’s:

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Spain: Higher domestic demand and improved competitivenessDanske Bank

Is pessimism about European debt levels justified?Mainly Macro

Jakobsen: Growth in Eurozone looks like a 'total loss' for 2014TradingFloor
Eurozone GDP figures are out on Thursday and with industrial production in Germany, France and Italy down, the signs aren’t good. The prediction is for 0.1% growth but Saxo’s Steen Jakobsen warns we could see a negative number.

Italian growth: New recession or six-year decline?
The Italian economy slipped back into recession in the first part of 2014. This column argues that this characterisation is based on a criterion for a recession standard in most of Europe – two successive quarters of negative growth. However, there are other commonly applied criteria to define a recession. US standards, for example, would treat Italy’s economic situation as one, six-year-long recession. Whereas one cannot say whether one criterion is superior to the other, announcing a recession has further impact on the economic activity in the respective country.

Break-even rates for bonds weigh on EURTradingFloor
The ECB is likely to go for 'extraordinary measures' * US and German bonds have different breakeven rates * QE likely to kick off after ECB stress test results released

Putin’s DilemmaProject Syndicate
The West's sanctions on Russia are already having a powerful effect, and the expectation that they will be tightened further is a huge concern for investors and the Russian government. And, though some Russians dream of autarky, the need to maintain living standards – the foundation of Putin’s domestic support – rules it out.

BofA Warns "Wealth Effect" Spending Muted, Consumers CautiousZH

US loan growth rate the highest since the recessionSober Look

Fed Exit Fears Overstated, S&P Economist SaysWSJ

What Chinese financial repression looks likeHumble Student

5 Things to Watch in Japan’s GDPWSJ

Is the Australian model in trouble?FT
Officially, Australia has avoided recession for more than two decades — an impressive achievement for a small open economy…the newest data suggest that Oz’s luck is beginning to change.

Daily Central Banks WSJ
Hannon’s Take: BOE’s Patience on Rates May Be a Virtue * Decline in ‘Slack’ Helps Fed Gauge Recovery * Fed’s Fischer Skeptical U.S. Growth Slowdown is Permanent * How China’s Trying to Boost Its Economy: ‘Qualitative Easing’ * Central Banker Says India ‘on Course’ to Meet Inflation Targets

Daily MacroWSJ
It’s not clear that the trio of geopolitical tensions on everyone’s mind – the Russia-Ukraine conflict, the Israeli-Palestinian conflict and the battles in Iraq – have been the main drivers of market sentiment or just the trigger for investors to exit risk assets. There also are concerns about weaker economic data in China and Germany, the world’s second- and fourth-biggest economies, respectively, and the ongoing risk that in midst of all this uncertainty the Federal Reserve might yet signal plans to expedite rate increases.

What Matters for Global Markets in the Week AheadWSJ

The Week Ahead: Hard times as fear eclipses greedTradingFloor
Patrick Butler: Investors scramble for the exit as geopolitics takes its toll * Russia's sanctions to hit EU food producers hard * Eurozone economy is already extremely fragile

Quiet Start to a Quiet WeekMarc to Market

That high yield questionFT
BofAML: “investors have capitulated out of HY bonds and that now is a good time to add exposure to an asset class still expected to deliver 7 – 8 per cent total returns in 2014”. But RBS says don’t do it.

Great Graphic: Growing Currency Mismatch?Marc to Market
Emerging markets have steadily increased borrowing in foreign currencies, primarily, but not exclusively US dollars.   Fed tapering and the prospects of a rate hike toward the middle of 2015 has not slowed this foreign currency borrowing binge.   This mismatch may save funding costs in the short-term, but if the dollar rises, this mismatch can turn into an  Achilles' Heel quickly. 

Weekly: BoE/UK economy and the GBPMacro Credit FX

What We are Likely to Learn in the Coming DaysMarc to Market
Much of the data due out in the coming days will  flesh out details of what is generally understood in broad strokes.  This is especially true of Japan and euro zone's first estimates of Q2 GDP.

Euron hajoaminen – vain jos poliittinen johto vaihtuu kuten 1930-luvullaTyhmyri

Luottoluokittajat pelkkiä viestintuojia eurokriisissäRoger Wessman

Suomen taloudessa ei ole työvoiman tarjontaongelmaaAkateeminen talousblogi