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Tuesday, October 14

14th Oct - ECB at court, Fed talks down the USD

Previously on MoreLiver’s:

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EU bank
Following the financial crisis, European banks have taken steps to revise unsustainable business models by deleveraging. By this metric they have made substantial progress – but this column argues that improper management of the deleveraging process may threaten the recovery. The authors find that equity increases played a much larger role than asset decreases, and recommend increasing the disposal of bad assets.

German economic gloom spooks markets, bolsters EU investment callsReuters
Germany slashes its economic forecastsFT

The great Lira revolt has begun in ItalyThe Telegraph
Ambrose Evans-Pritchard: Italy's Five Star Movement has thrown down the gauntlet, calling for a euro referendum to end depression and save democracy, writes Ambrose Evans-Pritchard

EU agrees laws to end banking secrecyFT
EU finance ministers took an important step towards ending banking secrecy in Europe by agreeing legislation that would require all 28 countries to disclose assets held by foreign EU nationals in their financial institutions.

Goldman Slashes European Growth Forecast, Sees Triple-Dip Recession In Q3ZH

Eurozone Budgets Under the SpotlightProject Syndicate
Eurozone governments have enjoyed an extended period of low interest rates. But, as indebted governments submit their budgets to the European Commission for review, they should consider the fiscal impact of a sudden reversal in bond-market sentiment, which is neither entirely rational nor sympathetic to political rhetoric.

Italy says will not increase planned deficit cut in 2015 budgetReuters
Italy has no intention of tightening its 2015 budget plans, Economy Minister Pier Carlo Padoan said on Tuesday, despite reports that its budget might be rejected by the European Commission.

Hollande Touts French Economy Plan as EU Budget Patience FadesBB

France pushes for investments to boost growth quicklyReuters
The French government urged Germany and other European partners on Tuesday to agree a program of investment that would have a quick economic impact rather than just boosting growth in the long run.

Merkel Vows Austerity Even as Growth Projection CutBB
Merkel says Germany will not soften its strict budget stanceReuters
Merkel on Tuesday rejected calls for Berlin to ditch its plans for a balanced budget next year and to instead invest more in order to shore up the faltering German and euro zone economies.

Timeline: Events that led to ECB bond-buying programme court caseFT
As the European Court of Justice begins deliberations on the legality of the European Central Bank’s bond-buying programme, here are the key dates that got us to this point

ECB defends bond plan at top EU courtFT
Central bank says it was essential in preventing break-up of eurozone

Draghi’s Whatever It Takes Bid Saved Euro Area, ECB SaysBB
Draghi helped save the euro with his pledge to do “whatever it takes” as lenders prepared for a collapse of the currency, an ECB lawyer told a hearing today.

A declining EUR would be a win-win for Germany and the ECBTradingFloor
There's growing disagreement between the ECB and Germany over the appropriate use of monetary policy but if handled correctly, both can achieve their goals: ECB can meet its inflation target and the Germans can fend off the need for QE. It all comes down to the exchange rate.

Sweden: September CPI triggers Riksbank response – Danske Bank
The Riksbank to cut rates in October – Nordea
Sweden slides further into deflation, prices -0.4% – FT
U.K. Inflation Rate Falls to Five-Year Low of 1.2% - BB
Industrial production down by 1.8% in euro area – Eurostat

US quantitative measures worked in defiance of theoryFT
Above all, what matters is less the amount of assets they buy than the credibility of their commitment to doing what it takes to get the economy back on target. The BOJ seems to have absorbed that lesson. Whether the ECB has done the same is far less clear.

More QE might be appropriate if U.S. economy faltered- Fed's Williams Reuters

Australian Business Confidence Survey Adds to Gloom on EconomyWSJ

Daily Central BanksWSJ
Hilsenrath’s Take: Despite Mixed Risks in U.S., Rate Timing Hasn’t Shifted Much * Fed’s Evans Says Biggest U.S. Risk is Premature Rate Hikes * PBOC Makes Further Move to Ease Policy * Nobel Prize in Economics Awarded to Jean Tirole * ECB’s Praet Warns Deflation a Risk in Eurozone

Daily MacroWSJ
Inflation data out of the eurozone Tuesday were starkly weaker across the continent, with outright deflation now a palpable risk, as was industrial output. The French economy is struggling, but without a clear route to growth in the short term, and sentiment numbers out of Germany suggest it too might be seizing up. Although the raft of bad news makes it more likely that the European Central Bank will be allowed to launch all-out QE, there’s a growing suspicion that even this won’t be enough. Meanwhile, the region’s anti-European political parties gain traction.

Poor European News Lifts the Dollar Marc to Market

Global: are markets adjusting to the end of Fed QE?Nordea
Global risk sentiment has deteriorated lately. The turn-around in risk sentiment could be due to politics or growth-bearish comments from the officialdom. It could however also be that markets are adjusting to the end of Fed QE. The Quantitative Tightening theme has explained many market moves over the past few months and quarters.

Bonds: Plumbing the depthsNordea
Bonds are currently finding support from a multitude of sources, and even though the yields at offer look almost ridiculous in a longer-term perspective, even lower yields are ahead. Curves should bull-flatten some more and after near-term volatility, narrowing in intra-Euro-area spreads is set to continue.

If you believe the bond markets, we are all Japanese nowFT
Low yields have an easy explanation: declining growth and low inflation, writes Peter Tasker

Euroalueen rahapolitiikka tehdään USA:ssa?Juhani Huopainen / US
USA:n inflaationäkymät ja EURUSD:n kurssi kulkevat käsi kädessä

Palvelujen liikevaihto touko-heinäk. +2,8% YoY – Tilastokeskus
Myynti laski elokuussa kaikilla kaupan toimialoilla – Tilastokeskus
Palkansaajien mediaaniansio €2 928/kk vuonna 2013 – Tilastokeskus
Inflaatio kiihtyi syyskuussa 1,3 prosenttiin – Tilastokeskus