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Monday, November 3

3rd Nov - Good US data, BOJ behind, ECB ahead

Previously on MoreLiver’s:

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Juncker’s new Commission is the most ‘politicised’ in the institution’s historyEuropp / LSE
In line with the growing politicisation of the institution over recent decades, the 28 members include a record share of former prime ministers and deputy prime ministers. The percentage of Commissioners who have a partisan affiliation with their country’s current government, and the percentage who have previously gained ministerial experience in national politics, are also at record levels in comparison to previous Commissions.

Austria’s creative bookkeeping beats Greece on secret debtsekathimerini
Eurostat made Austria add 29 billion euros ($36 billion) to its debt ledgers, making it the region’s biggest loser of tightened data rules, with an adjustment topping the one slapped on Greece’s wayward bookkeepers in 2010

Polish QE?FT

Guest post: The Riksbank at zero — lessons for othersFT
Sweden’s Riksbank cut its key interest rate to zero last week because inflation was too low. The Riksbank has been noted – and criticised – for raising rates in 2011 to tackle a credit and housing bubble. Peter Doyle, an economist and former mission chief for Sweden for the IMF, argues that the recent experience of the world’s oldest central bank has more to teach policymakers.

What Does IMF’s Appointment of Crisis Veteran Say About Europe’s Economy?WSJ
IMF chief Christine Lagarde named Poul Thomsen, architect of the controversial Greek bailout and one the fund’s top crisis-fighters, to lead its European Department on Monday.

German austerity is not only damaging the Eurozone, but is also starving the country of its own much needed investmentEuropp / LSE
A common argument in the context of the Eurozone’s economic problems is that Germany should pursue a more expansive fiscal policy to help generate growth in the rest of the single currency area. Bob Hancké writes, however, that while such a strategy might be justified in terms of its wider effects across Europe, the German economy itself is also struggling from the pressures of restrictive spending policies. He argues that unless the country increases public investment there is a very real chance of Germany developing into a dysfunctional economy, with the only hope for growth residing in exports and citizens struggling with both low wage growth and spiralling income inequality.

It's time to say Auf Wiedersehen to Germany's economic miracleTradingFloor
Stephen Pope: Germany can no longer boast efficient infrastructure * Government's obsession with 'Black Zero' threatens to lag economy * By 2040 the population will be lopsided toward retirees

It's time to say Auf Wiedersehen to Germany's economic miracleTradingFloor
German manufacturing PMI picked up in October, but there are many present and future problems threatening the country's Wirtschaftswunder, or 'economic miracle', says Stephen Pope.

European Harmony? Merkel Hands Cameron an Ultimatum and for First Time Ever Sees Britain’s Exit from the EUWolf Street
The German government draws a line. If Britain steps over it, it doesn't belong in the EU. And it's not about money.

Germany 'would accept UK exit from EU' to protect migration rulesBBC
Chancellor Angela Merkel has reportedly warned David Cameron she would rather see the UK leave the EU than compromise over the principle of free movement.

EU migrants should not be entitled to access national welfare systems for first three yearsOpen Europe

ECB Skips Fireworks for Day One of New Role as SupervisorBB

Pulling the eurozone back from the brinkBruegel
Whatever its flaws, OMT is the closest thing to a safety net the eurozone has

Should the ECB care about inflation differentials? Bruegel
It is crucial to keep the average inflation rate close to two percent so that inflation differentials are possible without deflation in some parts of the euro area, which in turn might endanger area-wide financial stability and price stability.

Fed heads one way, BoJ the other. What now for ECB?Reuters

The ECB should stop fearing the GermansThe Economist
We are hosting a round-table discussion on what the European Central Bank can do to stave off deflation and boost growth in the euro zone. First up is Paul de Grauwe of the London School of Economics.

The Draghi Put on TrialProject Syndicate
The European Court of Justice will rule soon on the legality of the European Central Bank's "outright monetary transactions" scheme to finance crisis-stricken eurozone countries. But, instead of asking whether the ECB’s mandate allows it to act as lender of last resort, EU leaders should be making the case for why it should.

Draghi Stress Tested as BOJ-Riksbank Moves Pressure ECBBB
The extra easing now leaves Draghi under pressure to intensify his own response to weak inflation or surrender in a renewed global currency war that has policy makers looking to jolt consumer prices by embracing weaker exchange rates.

Sources: ECB to keep TLTRO terms unchanged unless economic picture darkensReuters

Guide to banking supervisionECB

SSM Quarterly ReportECB
Progress in the operational implementation of the Single Supervisory Mechanism Regulation

Speech Danièle NouyECB
Hearing at the Committee on Economic and Monetary Affairs of the European Parliament

Markit Spain Manufacturing PMI – Markit
Markit / ADACI Italy Manufacturing PMI – Markit
Markit France Manufacturing PMI – Markit
Markit / BME Germany Manufacturing PMI – Markit
Markit Eurozone Manufacturing PMI – Markit
Markit / CIPS UK Manufacturing PMI – Markit
Euro Manufacturing Remains Near Stagnation as Italy Contracts – BB
U.K. Factory Growth Unexpectedly Accelerates – BB

The decline of U.S. labor under-utilizationBruegel
Slack in the American labor market is being absorbed quickly, but the actual size of the gap remains an open question. While most FOMC participants consider that the decline in the unemployment rate overstates the improvement in labor market conditions, the FOMC chose this week to no longer characterize the degree of labor underutilization as “significant”.

ISM Manufacturing index increases to 59.0 in October – Calculated Risk
ISM Surges To 3 Year Highs; Ignores PMI, Construction Spending Plunge – ZH
ISM: Continued Expansion – dshort
ISM surprises to the upside in October – TradingFloor
U.S. factory activity accelerates; construction spending weak – Reuters
Manufacturing in U.S. Expanded More Than Forecast in October – BB
Markit US Manufacturing PMI – Markit
Very robust ISM report – Danske Bank
ISM Manufacturing Report Stronger Than Expected – Bespoke
US: Manufacturing firing on all cylinders – Nordea
Construction Spending decreased 0.4% in September – Calculated Risk

Market reaction to Japan’s latest QEZH
Japanese Stocks Up 1600 Points, USDJPY Up 5 Handles Since QE Ended; Kuroda Opposition Grows

Kuroda’s Stimulus Turns Focus Back to Abe’s Third ArrowBB

Why the yen run will end in tearsTradingFloor
Bank of Japan's actions will push USDJPY to new heights * Japanese opposition to monetary largesse is growing * When the JPY train reverses, it could be quick and brutal

HSBC South Korea Manufacturing PMI – Markit
HSBC China Manufacturing PMI – Markit
China - slower export growth adds to downward pressure on PMIs – Danske Bank
Asia Factory Conditions Worsen – WSJ
China Oct PMIs point to cooling economic momentum, growth target at risk – Reuters
China Services Gauge Joins Manufacturing in Slowing Down – BB

Daily Central BanksWSJ
Hilsenrath’s Take: On Elections, the Fed and Policy Rules * Fed’s Kocherlakota: Dissent Driven by Persistent Inflation Weakness * Fed’s Lacker Says Inflation Is Low and Not a Problem * European Central Bank’s Bond Conundrum * Split Vote Shows BOJ’s Kuroda Walking on Tightrope

Daily MacroWSJ
In Asia, weak PMIs in China and South Korea raise the risk that their central banks will respond to the Bank of Japan’s surprise move Friday to increase its asset purchase program, which weakened the yen, with tit-for-tat measures to weaken their own currencies. The risk of an Asian currency war looms. On the better news side, European PMIs were mostly higher, suggesting that the deflationary spiral in the eurozone could be easing up, helped by a weaker euro.

FI Eye-Opener: Anti-establishment sentiment surges in SpainNordea
US yields rise on the back of booming equities and rising wage pressures. Intra-Euro-area spreads with clear narrowing. S&P 500 hits new closing highs. US wage pressures finally building. Spanish political landscape looking increasingly uncertain. Rebound in Euro-area inflation overshadowed by the drop in core. Another big week: US elections, ECB, payrolls… Austrian, German, Spanish & French supply.

Global FX Strategy - BOJ untapered the Fed taperNordea
Volatility came back with a vengeance in October as global markets were wrong-footed on the back of disinflation and QE hangover worries. Overall, we expect volatility to be back for good. For Emerging Markets however, the coming month promises to be less eventful than the month that just passed.

World Week AheadWSJ
Economies Going Separate Ways

Macro Digest: Simple views from a simple man TradingFloor
Steen Jakobsen: China growth heading south, could hit 5% * German/Eurozone recession is certain * Volatility to rise, govt. bond yields to fall

Beware of Repaying Sovereign Debt!Klaus Kastner

Celebrity Central BankersProject Syndicate
Kenneth Rogoff: Many academics find it puzzling that central bankers’ speeches and statements generate so much fanfare.

Strategy Sweden: On the radarNordea
Riksbank: flat-lined for many quarters * SEK rates: Swedish govies in a cross-market perspective * Sweden macro: a repeat of 1999? * FX vol: front-end rate convergence an anchor for FX vol * ECB: light is shed on the December TLTRO * EUR macro: is Italy the elephant in the room? * Central banks: what´s priced in?

Vaarana "tuhoisa tie" – eläkeyhtiön toimitusjohtaja uskoo silti Suomen voittoonVerkkouutiset
Eläkevakuutusyhtiö Varman toimitusjohtaja Risto Murto tuskailee poliitikkojen päätöksentekokykyä, mutta luottaa suomalaisten valmiuteen ottaa vastaan vaikeita päätöksiä.