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Thursday, October 30

30th Oct - More on Fed, Greece again a problem

Previously on MoreLiver’s:

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Four rescue measures for stagnant eurozone FT
Willem Buiter: Bank stress tests an unconvincing fudge and big problems remain. 1) a proper AQR and stress test followed by a speedy recapitalisation 2) temporary fiscal stimulus permanently funded and monetised by the ECB 3) ECB cancels the sovereign debt it purchases 4) radical supply side reforms

Largest economies must fix the eurozoneFT
Olli Rehn and Jean Arthuis: Only peer pressure, opprobrium and fear will shake leaders up. The year 2017 will be crucial.

Governments sign deal against tax evasionFT
Agreement includes automatic exchange of information

Portugal: Recovery still intactDanske Bank

Greece’s Euro Dilemma Is Back as Minister Sees VolatilityBB
Greek bond investors face a rollercoaster ride for the next four months as the government tries to contain the risk of snap elections

Eurozone Discusses ‘Cosmetics’ for New Financial Aid for GreeceWSJ
Now that Greece has said it will seek a credit line from the eurozone’s bailout fund once its rescue program runs out at the end of the year, the difficult negotiations on how to make the new aid palatable to both Athens and other European capitals have begun.

Germany faces lower tax intake due to slower growth: HandelsblattReuters
Germany will take in several billion euros less in tax revenues next year than expected due to lower growth, Handelsblatt business daily reported on Thursday, a week before experts are due to give a new estimate.

Germany's dark futureCoppola Comment
Inflation is falling fast in Germany. Today's figures show a fall in annualised CPI growth to 0.7%. And this is in the supposedly powerful core of the Eurozone.

Merkel Proposes Curbing Unions as Strikes Cripple GermanyBB

ECB stress tests: The view of an insider – Guest post by Klaus KastnerYanis Varoufakis
Anyone who concludes that the EZ financial system is on solid grounds is living in an illusion. The leverage of the large banks (mostly German and French) is far too high and they are far too reliant on ‘hot money’ for their refinancing. (for more on tests see linkfest)

Whither Europe’s Banks after the Stress Test?PIIE
The tests underscored concerns that many banks will need more capital and a more profitable business model to survive in the future. By itself, the comprehensive assessment is unlikely to spur growth in the euro area, though some financial market fragmentation should be eased.

ECB publishes Regulation on supervisory feesECB
The ECB is required to levy an annual supervisory fee on all supervised banks in order to recover its expenditures for supervision.

U.K. Housing Loses Momentum With Price Growth at 9-Month Low – BB
UK house prices rise 0.5 percent m/m in October – Reuters
German Unemployment Unexpectedly Falls as Economy Weathers Woes – BB
October 2014: Economic Sentiment picks up – EC
Euro-Area Slump Concerns Ease as Confidence Improves – BB

Spanish economy climbs 0.5% in Q3 – TradingFloor
Euro zone haunts Spanish economy as growth slows, prices fall – Reuters
Spanish recovery lays bare a social crisis – FT
Spain's recovery looks questionable as GDP slows – FT
EU28 current account surplus €32.6 billion – Eurostat

  Q3 GDP
Q3 GDP at 3.5% Beats Expectations – dshort
Q3 GDP Rises 3.5% Despite Sharp Slowdown In Consumption – ZH
Why Did Q3 GDP Jump: Thank ISIS And The "War On Terror" – ZH
Real GDP increased at 3.5% Annualized Rate in Q3 – Calculated Risk
U.S. GDP grows at 3.5 percent in third quarter – WaPo
US economy grew at a faster-than-expected 3.5% rate in Q3 – TradingFloor
Trade, defense spending buoy U.S. third-quarter growth – Reuters
U.S. Economy Up 3.5% in 3rd Quarter, Capping Best 6 Months in Over a Decade – BB
Economists React to GDP: ‘Broadly Constructive’ – WSJ
Advance Q2 GDP Beats Expectations – Bespoke
Why Not to Get Too Excited About Strong Q3 – WSJ
Is Military Spending Driving U.S. GDP Growth? – WSJ
Visualizing GDP: A Look Inside the Q3 Advance Estimate – dshort

(for more on FOMC, see yesterday’s post)
Mortgage rates are headed to 5 percent. But don’t blame the FedWaPo

Why the Fed is giving up too soon on the economyWaPo
"The problem with quantitative easing," former Fed Chair Ben Bernanke has said, "is it works in practice, but it doesn't work in theory."

Fed looks toward debate on raising rates as quantitative easing endsWaPo
Though there is general agreement that the recovery is gaining strength, there is still significant debate - both inside and outside the central bank - over when and how to respond.

Why Three Fed Voters (Two Hawks, One Dove) Mattered in FOMCWSJ
Yes, the Fed kept its “considerable time” language to describe the delay between the end of quantitative easing — which, as expected, came today – and the first rate hike. But what does that mean? It’s really quite a fuzzy, subjective term.

Fed’s Axis of Opposition Shifts from Hawks to DovesWSJ

Inflation break-evens are Fed's new focusTradingFloor
Markets moved a little closer to the FOMC projections following yesterday's statement, although the moves won't gain momentum unless market pricing of inflation expectations increases. It is likely there will be a significant correlation between the five and 10-year break-even rates and the USD over the coming months as markets either front-run an early 2015 tightening or push it out to 2016.

FOMC RecapTim Duy’s Fed Watch
Despite the market turbulence of recent weeks, the general outlook of monetary policymakers remain generally unchanged.  In general, they continue to see the direction of activity pointing to a mid-year rate hike.  The actual date is of course data dependent, but they have not seen sufficient data in either direction to change that baseline outlook.

How the Fed got from eternity to hereFT
Eternity is over. The dollar is rising, now that investors expect US rates to start rising, and this puts pressure on US exporters, while pressing down on inflation. There are also QE’s other consequences. Stocks look overvalued and bubbly, just as the bond market is signalling concern about an economic slowdown.

USD: QT – the underappreciated dollar tailwindNordea
Everybody is pondering the impact on the USD from a hawkish FOMC. The NY Fed’s announcement that it will test term repo operations is however also important – and more important than you think. Any and all moves from the Fed to absorb liquidity are positive for the dollar since it constitutes reverse QE, what can be termed Quantitative Tightening

US: Fed ends QE – FOMC reviewNordea
Today the Fed ended QE and made its forward guidance on rates more data-dependent. The central bank turned slightly more hawkish in its assessment of the economy by removing the characterization of labour market underutilization as “significant.” We stick to our expectation for the first Fed rate hike in mid-2015.

Tantrums, tapers and turning pointsTradingFloor
Today, we look at the progression of US monetary policy normalisation as the Fed ends its asset purchases, and discuss the implications for US rates, equities and, most significantly, the USD.

Letting go of Daddy's handThe Economist
For the markets, the more alarming news in yesterday's Fed statement was the relative hawkishness about the timing of the first interest rate increase.

Why didn’t QE3 raise inflation expectations? FT

BOJ Outlook Report: What to WatchWSJ
The Bank of Japan is set to release its latest three-year forecasts for economic growth and prices on Friday

BoJ: you know we said “about” two years, right?FT
Eighteen months ago, the stated aim of all this activity was to achieve an inflation rate of about 2 per cent “at the earliest possible time, with a time horizon of about two years.” Now it’s buying time.

As deflation deadline nears, BOJ faces prospect of failureReuters
With just five months left before Governor Haruhiko Kuroda's self-imposed deadline for banishing deflation, the Bank of Japan is preparing for failure, and the first casualty could be its facade of board unity.

Daily Central BanksWSJ
Hilsenrath’s Take: Yellen Surprises With Willingness to Displease Doves * Fed Ends Bond Buys, Sticks to ‘Considerable Time’ on Rates * Parsing the Fed: How the Statement Changed * End of QE3 Means Fed Statement Finally Shrinks * Former Fed Chief Greenspan Worried About Future of Monetary Policy * Translation Adds Complexity to European Central Bank’s Supervisory Role

Daily MacroWSJ
The Federal Reserve’s policy statement Wednesday was, as is its way, balanced between the observation of disinflationary risks on the one hand and labor market tightening risks on the other. But if anything, the stronger-than-expected assessment of the latter meant that the market read the statement as more hawkish than expected and stocks and bonds both took it negatively.

EMEA Weekly, Week 45Danske Bank

Commodities: Has the oil market become immune to geopolitics?Danske Bank

Olli Rehn FT:ssä: Jos näin olisi, "Suomi johtaisi show'ta Pohjoismaissa"TE
Jos pitkäaikainen alijäämä ja kasvava valtion velka johtaisi nopeaan talouskasvuun, Ranska ja Italia olisivat euroopanmestareita, Japani olisi maailman johtava talousmahti ja Suomi johtaisi show'ta Pohjoismaissa.

Euroopan keskuspankki kävi ostoksilla SuomessaTE
EKP on ostanut Nordea Suomen katettuja kymmenen vuoden joukkovelkakirjalainoja (Bloomberg)

Finnvera: Pankit suuntaavat vientirahoitustaan suuryrityksilleVerkkouutiset
Suomessa pienten ja keskisuurten yritysten vientikauppojen rahoitus on Finnveran mukaan entistä vaikeampaa.

Kotitalouksien varallisuus on pienoinen mysteeriTalSa
Ovatko kotitaloudet ylivelkaantuneita vai eivät? Aihe puhuttaa paljon, mutta mitä oikeastaan tiedetään suomalaisten varallisuudesta.

Työllisyys nousuun palkkoja laskemalla?Roger Wessman

Rahatalous haltuun -luentosarjan materiaalit, osa 1Raha ja Talous

Haircut nostattaa taas hiuksia – Kreikka pyrkii takaisin markkinoilleYLE
Euroalueen velkakriisin käynnistänyt Kreikka suunnittelee irtautumista pelastusohjelmasta ja paluuta kansainvälisille rahamarkkinoille. Asiantuntijat tyrmäävät Kreikan haaveet, mutta Kreikan velkojen ei enää uskota horjuttavan koko euroaluetta.

Joka neljäs äänestäisi nyt keskustaa – kannatus ennätyslukemissaYLE

Putkonen: Ministeriö kylvää rasismia salailullaanPS

Juha Sipilän hallituksen ohjelmaYLE
Keskustavetoisen porvarihallituksen ohjelma on lyhyt ja strateginen.

Alexander Stubbin toisen hallituksen ohjelmaYLE
Jos pääministeripuolueena jatkaisi kokoomus, hallitusohjelmasta tulisi nykyistä strategisempi ja tiiviimpi.

Timo Soinin hallituksen ohjelmaYLE
Perussuomalaisten johtama hallitus tiivistäisi hallitusohjelmaa nykyisestä.

Antti Rinteen hallituksen ohjelmaYLE
Sosiaalidemokraattien johtamassa hallituksessa lait ja normit saavat ymmärrystä.

Näkökulma: Lyhyt, lyhyempi, hallitusohjelmaYLE
Pitäisikö hallitusohjelman olla vain pääkohdat listaava pohjapaperi, jotta tällä hallituskaudella nähdyt riidat ja ulosmarssit vältettäisiin jatkossa? Onko vähemmistöhallituksen muodostaminen edessä myös Suomessa Ruotsin tapaan vaalien jälkeen, pohtii A-studion politiikan toimittaja Hanna Juuti.

Poliitikot eivät tavoittele kesäksi sixpackiäYLE
Kesäkuussa 2011 muodostettiin kuuden puolueen hallitus, jossa olivat kokoomus, SDP, vasemmistoliitto, vihreät, RKP ja kristillisdemokraatit. Poliitikot myöntävät nyt, että laaja hallituspohja, sixpack, oli tarpeettoman työläs eikä kovinkaan järkevä. Sellaista ei toivota seuraavaan hallitukseen.