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Monday, October 6

6th Oct - Bears take control after lousy data

#Dombrovskis said (kudos to Open Europe)
The next Commission will be committed to bringing € agreements into EU framework, means treaty change

If EU states demanded a mechanism for country to leave € COM would provide tech support. Refuses to say personal view

Pointed out earlier flaws in the EMU structure, yet when questioned on it he rejected euro as cause of crisis

Euro has been a huge success despite crisis, even countries outside the euro had crises so I think euro is not the problem

Points out that his country went through a deep crisis without the euro - (does not mention his currency was pegged to euro)

Previously on MoreLiver’s:

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Behold the Euroglut FT
Deutsche Bank’s Saravelos argues that Europe’s huge excess savings combined with aggressive ECB easing will lead to some of the largest capital outflows in the history of financial markets.

Europe has forgotten its moral debt to IrelandThe Telegraph
Ambrose Evans-Pritchard: ECB's treatment of Ireland and Italy is a constitutional scandal, yet nobody held to account

Cameron's fiscal briberyFrances Coppola / Pieria
David Cameron's speech at the Conservative Party conference has generated approving comments across the media…The heart of his speech was a double tax cut promise. But it's a conditional promise. These tax cuts will only take effect after the deficit has been eliminated. But eliminating the deficit completely in two years under the shadow of war without trashing the economy would be an extraordinary feat, requiring sacrifices not only from “hard-working people” but from the businesses that employ them. Does anyone really think this is at all realistic?

Blinded EU can learn from one-eyed USFT
If you listen to German officials, their philosophy is hard to distinguish from Tea Party Republicans

Eurozone Asymmetriesmainly macro
Your reaction to this little imaginary story is that it couldn’t possibly happen because other Eurozone countries would not permit it to happen… And in this real world story I too wonder why other Eurozone countries allow Germany to get away with it.

How is my region doing within the European Union?Eurostat
The regional yearbook 2014 provides an overview of European regional statistics covering a wide range of fields. It thus gives a more detailed picture than national level data and helps in understanding the regional diversity that exists in the EU.

EUR rates: A liquidity roadmap revisitedNordea
Liquidity remains at the forefront of what’s up and down on EUR rates. With the ECB last week internalized we update our liquidity roadmap for Eurozone. We highlighted downside risks last time, and we do so again. The ECB is the reason as last Thursday was a relatively hawkish one with e.g. an elaborate dismissal of a firm balance sheet target being a goal in itself. The market has been revised up in terms of implied rates, and is having a hard time nailing the Eonia fixing correctly.

Latvia’s Dombrovskis Brings Fiscal Hawk Record to EU Commission WSJ
How to Bring Italy and France’s Budgets in Line With EU Deficit Rules Will Be Immediate Challenge

France tells Europe it must focus on growth rather than deficitsFT
The EU must change policy to avert the threat of prolonged low growth and low inflation, including easing the tempo of deficit reduction, according to France’s finance minister.

The Bond Market Trumps Brussels On France’s Deficit WSJ
However much Brussels snipes about fiscal self-restraint, the French government is likely to try to muddle along unless forced to take measures by the bond market.

Brussels Ready To Sanction France For EU Treaty-Busting Budget PlanZH
EU likely to reject France's 2015 budget, ask for tighter oneReuters

ECB's Costa says Portugal has to meet budget goalsReuters

Greek budget promises higher growth, tax cutsReuters
Greek Budget Leaves Creditors Unconvinced on ExitBB
Greece’s creditors insist the country should retain access to bailout funds next year even as the government seeks an almost-balanced budget for the first time in decades, two officials with knowledge of the matter said.

Private sector QE can work in the euro areaFT
Gavyn Davies: The ECB’s own brand of QE, taken together with the Asset Quality Review due to be announced in October, is intended as a rifle shot, aimed directly at the defective banking system. Although a very long time in coming, it may eventually prove more successful than copying the blunderbuss approach adopted in other countries.

Will EU Bank Asset Quality Review Boost Transparency, Investor Confidence?CFA Institute

The "Disappointing" Impact Of Euro Devaluation On European GDPZH
Natixis: 10% depreciation of the euro increases the euro zone’s level of GDP by only 0.2 percentage point…We see no link between the relative growth of the euro zone and the euro’s exchange rate.

If Europe insists on sticking to rules, recovery will be a dreamFT
Wolfgang Münchau: A euro devaluation would have to be extreme to have a big impact on, say, Italian exporters

Euro zone sentiment falls in Oct to lowest level since May 2013 – Reuters
German industry orders plunge by largest amount since 2009 – Reuters
German Factory Orders Slump Most Since 2009 – BB

Is There a Wage Growth Puzzle? Tim Duy’s Fed Watch
Be cautious in assuming that this time is different. The unemployment and wage growth dynamics to date are actually very similar to what we have seen in the past. Low wage growth to date is not the "smoking gun" of proof of the importance of underemployment measures. There very well may have been much more labor market healing that many are willing to accept, even many FOMC members. The implications for monetary policy are straightforward - it suggests the risk leans toward tighter than anticipated policy.

US midterm elections offer limited prospect for economic changeFT
Mohamed El-Erian: Investment in real economy must come from private sector

USD: Quantitative Tightening and the drop in inflation expectationsNordea
The Fed’s favourite measure of inflation expectations are now at levels where it normally starts QE programmes, not stops them. Most markets seem to be trading in line with the Quantitative Tightening (QT) theme, in which inflation premiums are being reduced in various markets. Unless the Fed is seen changing its goal posts, a strong labour market developments will keep the Fed on its exit track, underpinning the USD. QT is the gift that keeps on giving.

China’s Financial FloodgatesProject Syndicate
As China’s economy starts to slow, following decades of spectacular growth, the government will increasingly be exposed to the siren song of capital-account liberalization. It should not allow itself to be tempted from its tried and tested course by calls for a policy that has led too many emerging economies onto the rocks.

The tumultuous week of protests that has shaken Hong KongFT
Fears rise over end game for pro-democracy protests as rhetoric escalates on both sides

Sliding Australian dollar creates cross-rate opportunitiesTradingFloor
Little chance of respite for the sliding Australian dollar * The RBA thinks the currency is above its "fundamental value" * The Reserve Bank of New Zealand is taking steps to bring down the high NZ dollar

Guide to the Markets Europe 4Q2014 JPM
Guide to the Markets 4Q2014JPM

Dollar strength and inflation expectations Sober Look

Country Risk Quarterly ReportBBVA

Bond investing isn’t about forecastingMedium

Bridgewater Warns Low Volatility Markets "Sow The Seeds Of Their Own Demise"ZH

Monetary policy: An unconventional toolFT
Martin Wolf: The Fed’s quantitative easing raises questions about whether it has worked and its legacy

Emerging markets election wrap-up Danske Bank
Brazil: Silva disappoints - Rousseff set for re-election * Latvia: pro-EU governing coalition likely to stay in power * Bulgaria: centre-right set to return to power but with a fragile coalition

Why public investment really is a free lunch FT
Lawrence Summers: The IMF finds that a dollar of spending increases output by nearly $3

September Sentiment SummaryShort Side of Long

Daily Central BanksWSJ
Hilsenrath’s Take: Pressure to Devalue Builds as Finance Officials Meet * Jobs Report Keeps Early Fed Rate Hike On Table * Bernanke, Paulson and Geithner Face Grilling Over AIG Bailout * Bank of England Plans Additional Protection for Depositors * South Africa’s President Appoints New Central Bank Chief

Daily MacroWSJ
European and Asian share markets were solidly higher despite another poor showing from German industrial data and concerns that the European Union is poised to reject France’s deficit-based budget. The motivator here is the fact that investors in New York on Friday took a very positive reading of that day’s U.S. jobs report, which showed continued improvement in the labor market.

FI Eye-Opener: Search for inflation not yielding results yetNordea
Bond yields rise, but only modestly. Eonia overnight rate sinks to new record-lows. Yields with more upside today. US payrolls strong – still no wage growth. French disobedience not going unnoticed. Focus remains on central banks – Q3 corporate earnings season starting. German, Austrian and US supply.

Dollar Corrects a BitMarc to Market

(For more, see Weekly Support)

The Investment Climate and the Week Ahead Marc to Market

The Macro Week Ahead: Tactically bearish, HK tense, US ebola, DraghiTradingFloor
The previous week seemed to be a mirror as we once again saw credit tighten for the week, equities continue to bleed and the US dollar go from strength to strength – looks like our defensive feeling and thoughts played out.

What Matters for Global Markets in the Week AheadWSJ

Emerging Markets: Week Ahead PreviewMarc to Market

Global Central Banks Weekly CalendarWSJ

Strategy: On the radarNordea
Key views & trades: flirting with €-QE * Asset allocation: “all trades are identical” syndrome fading * EUR inflation: inflation markets not buying the FX relief story * FX: the surprising SEK strength * Riksbank: FX intervention more likely than QE * SEK rate vol: possible to sell SEK payers above UFR in ZC strategies * Regulation: new SNDO guidelines marginally linker positive * Bond indices: major changes towards year-end

Kansantaloudellinen aikakauskirja 3/2014Taloustieteellinen yhdistys
Kirjoituksia mm. osuus- ja säästöpankkien suorituskyvystä ja menestyksestä viime vuosina, innovaatiopolitiikan haasteista ja pankkikriisien ennakoinnista, sekä katsauksen 1980-luvun jälkipuoliskon talouskehitykseen.

EKP:n toimien kustannus pieniRoger Wessman
EKP on jälleen kasvattamassa pitkäaikaisia rahoitusoperaatioitaan antamalla pankeille eri kanavia pitkin halpaa rahoitusta. Tämä herättää kysymyksen mitä halpojen luottojen antaminen maksaa keskuspankkijärjestelmälle ja siten euroalueen kansalaisille keskuspankkien viimekätisenä omistajina. Vaikka operaatioiden koko on valtava, kustannukset jäävät todennäköisesti pieniksi. Ainakin alustavasti operaatiot ovat itse asiassa keskuspankille liiketoiminnallisestikin kannattavia, kuten aikaisemmat operaatiot ovat olleet.

4000 vuotta erehdyksiä ei riitä – EKP yrittää vieläJan Hurri / TalSa
Viisas oppii erehdyksistä mutta hölmö luulee tulosten muuttuvan samaa yritystä ja erehdystä toistamalla. Viisas ottaisi jo 4 000 vuoden erehdyksistä onkeensa ja uskoisi, että hintojen säännöstely on onnetonta talouspolitiikkaa. EKP ei tätä usko, vaan yrittää entistäkin päättäväisemmin.

Hongkong ei hetkauta kiinalaisiaTalSa
Hongkongin suurmielenosoitukset saavat valtavaa uutishuomiota länsimaisessa mediassa. Kiinassa asia ei näytä kiinnostavan ketään.

Viikkokatsaus: Hiljainen viikko (haukotus)Nordea
Tulevaa: Fed: Kokouspöytäkirjat * Suomi: Teollisuuden suunta ei muutu * BoE: Ei uutta Mennyttä: Yhdysvallat: Työmarkkinat paransivat * EKP ei kertonut tarpeeksi uutta * Euroalue: Inflaatio hidastui lisää * Suomi: Velka nousi Q2:lla