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Tuesday, April 26

26th Apr - Europe- and pre-Fed anxiety

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Anatole Kaletsky: Roman Europe? Project Syndicate
As the EU disintegrates, Germany has shown that it cannot provide the leadership needed to save
it. With the UK, France, and Spain unwilling or unable to take on the role, that leaves Italy, which is resuming its historic role as a source of Europe’s best ideas and leadership in politics, and also, most surprisingly, in economics.

Schaeuble Channels Meghan Trainor: NoMarc Chandler

Europe MonthlyDaiwa
Despite the swoon in financial markets at the start of the year, euro area GDP growth likely remained steady in Q1. But extra stimulus, particularly from fiscal policy, will be required to prevent lowflation and negative rates becoming a permanent feature of the euro area economy.

Russia Economic ReviewDaiwa
Despite failed talks in Doha, the relative stability of oil prices and the rouble has been maintained. Domestic demand remains weak, but real wage growth in February provides cause for optimism.

Mario Monti: EU may well disintegratePolitico
The former Italian prime minister and European commissioner blames cynical national governments for endangering the unity of the bloc.

Marine Le Pen hopes Britain inspires others to quit EU ‘swamp’Politico
The National Front leader plans a visit to the UK before the referendum.

Danish People’s Party wants EU referendum too Politico
Denmark’s second-biggest party also eying a rethink on the EU.

The Euro's Next Existential Crisis View / BB
So long as at least one of the four rating agencies judges Portugal to be worthy, its government debt remains eligible to participate in the ECB's bond-buying program. But if the country drops to sub-investment grade at all four, the ECB’s own rules forbid it from buying any more Portuguese government securities

Spain Political Deadlock May Spur New Elections and Market WoesBB

Greece Faces New IMF Curve Ball to Unlock Aid: ScenariosBB
Creditors' demand for fiscal `contingency measures' is thorny * Risk resurfaces of ruptures in the ruling Syriza party

Why Eurozone Inflation Expectations Are Going Up and Down at the Same Time WSJ
Investors believe in slightly higher inflation in the near term, but are increasingly gloomy about the central bank's power to stoke up prices over the longer run

German parliament to invite Draghi to testify on ECB policy: sourcesReuters

Fed preview: Dovish expectations and the lurking hawkTF
Investors believe the Fed is stuck and is only able to raise rates slowly – perhaps only once in 2016. Everyone is perhaps a bit too comfortable. A hawkish surprise – maybe this week or in June – could be ahead.

El-Erian: What to Watch for at the Fed MeetingView / BB

FOMC preview: Fed to open the door for a June rate hike?Nordea
A Fed rate hike is highly unlikely at this week’s FOMC meeting, which concludes tomorrow. We expect the FOMC again to refrain from making an explicit risk assessment, indicating an extended policy pause. The risk, however, is tilted towards a mildly hawkish statement, opening the door for a rate hike in June.

EURUSD: cataloguing the Fed’s fearsNordea
While the Fed has become PhDs in pessimism, their long list of worries will be looking less problematic in coming months. In Europe, we are likely to see more negative effects due to the appreciation of the EUR while Eurostoxx banks suggests downside risks to loan growth later in 2016. We remain in the sell-on-rallies camp regarding EUR/USD.

What happens if the Fed gets less dovish?Cam Hui
Despite the dovish tilt of the Yellen Fed, BCA Research pointed out that the Fed seems to go through a stop-start hawk-dove policy loop - and we are currently nearing a dovish extreme.A reversion to a more hawkish tone in its communications would therefore be no big surprise.

5 Things to Watch at the Fed MeetingWSJ

John Hardy: FOMC likely to avoid impact BoJ merely to tinker TF
Policymakers at the US Federal Reserve and the Bank of Japan will find themselves with little room to manoeuvre when they meet this week. Watch for a Fed statement on Wednesday that seeks to avoid impact and for the BoJ merely to tinker or do nothing at its meeting on Thursday.

Wolfgang Münchau: The revenge of globalisation’s losersFT
Its failure in the west is down to democracies’ inability to cope with the economic shocks

Danske DailyDanske Bank

Euro rates updateNordea

Soft calendar today * Modest disappointments from Germany and Sweden * Longer yield continue to rise * GBP gains more as valuations stretched

Morning MarketsTF
Weaker oil prices weighed on sentiment in Japan dragging the benchmark Nikkei 225 lower. The Shanghai Composite clawed back into the black after surrendering early gains and Hong Kong's Hang Seng index retreated. In Australia leading miners dragged the benchmark S&P/ASX200 lower. Meanwhile many investors in Asia are sidelined as they await the outcome of key central bank meetings this week – the Fed on Wednesday and the Bank of Japan and the Reserve Bank of New Zealand on Thursday.

Daily Market Comment Marc Chandler
Greenback Mostly Softer, Sterling Shines

Daily Market CommentMacro Man
Mind the gap

Daily ShotTF
The Bank of Japan has a range of tools at its disposal when its policymakers meet on Thursday, and the bank is likely to act as inflation expectations have dropped. Aggressive BoJ easing action could prove painful for holders of a massive net long position in JPY. In the FX markets,the euro looks too expensive based on the rate differentials and the US dollar undervalued for the same reason.

Matt Levine’s Money Stuff – View / BB

Daily Press SummaryOpen Europe
May calls on UK to remain in EU but leave European Convention on Human Rights * Foreign Affairs Committee sees Brexit negotiations taking more than two years but eventual agreement in mutual interest of UK and EU * Labour Remain campaign to focus on workers’ rights * France moves to delay EU trade talks with Latin American bloc * Obama urges Europe to step up defence spending * Government procurement proves major sticking point in EU-US trade talks * Greece targets agreement on bailout review as cash position worsens * King of Spain in last-ditch talks with political leaders to avoid repeating elections * Austrian daily editor-in-chief: “Political life as we knew it is now a thing of the past” * Norway to give extra cash to asylum seekers who return home

Brussels PlaybookPolitico
Playbook presidential primary — TTIP teeters

As Fed Meeting Begins Futures Are Flat In Sleepy Session; Apple Earnings On Deck


FX UpdateTF
Currency traders are reluctant to commit to fresh positions ahead of Wednesday's Fed meeting where anticipation is muted and the Bank of Japan's meeting Thursday where uncertainty about the potential for fresh policy moves is far greater.

From the FloorTF
The iron-ore rally has alarmed authorities in China sufficiently to take action but while that has punctured the monster move since early April bargain-hunting investors have turned their attention elsewhere.

Öljyä korkoihin * Saksan talouselämän luottamus pysytteli pitkälti ennallaan * USA:sta julkaistaan nippu lukuja tänään * Markkinoilla valmistaudutaan Fedin huomiseen kokoukseen

Euroopan kuolemaRevalvaatio

Raimo Sailas: Talouteemme on tulossa menetetty vuosikymmenHS
Pääministeri on arvioinut, että tarvittavat menojen leikkauspäätökset on nyt tehty. Valitettavasti tätä on vaikea uskoa.