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Wednesday, July 3

3rd Jul - Lagarde, Leyen, Italy, banks #4127


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EUROPE
Tariff Shocks: The Role of Value Chains in Europe – IMF

  BANKS
EU watchdog warns of €135bn bank capital shortfall – FT
EBA says new global rules will raise minimum requirements 22.4%

Deutsche Bank faces restructuring costs of up to €5bn – FT
Plan to shrink investment bank set to push lender to net loss for this year

  ITALY
EU Spares Italy From Debt Censure as Budget Update Convinces – BB
EU’s executive body doesn’t take any disciplinary action * Populist government sees 2019 deficit in line with EU rules

Italy Faces a 40-Billion Euro Reckoning – BB
Investors are celebrating the possible EU deficit truce. But it will be hard for the populists to climb down from their promises on the 2020 budget.

The EU Commission chose not to ask for an EDP against Italy, for the time being – ING
The 2019 budget re-assessment and the related decree were deemed enough by the EU Commission not to pull the trigger now. However, the ghost of an EDP against Italy could be re-awakened in the autumn should the 2020 budget draft point to deliberate deviations from the Stability Pact path

The Excessive Deficit Procedure Was Not Supposed to Be the "Naughty Corner" – PIIE
If properly designed, an EDP could have been the place where a better policy mix was achieved, combining a softer adjustment path and policies to improve potential growth.

  VON DER LEYEN
Von der Leyen’s elevation baffles Germany – FT
European Commission’s next boss has suffered negative headlines as defence minister

Von der Leyen tapped to run European Commission – Politico
German defense minister, at head of slate of candidates for top EU jobs, faces resistance in Parliament.

The inconvenient truth about Ursula von der Leyen – Politico
The woman nominated for Commission chief has plenty of critics back home.

EU Top Jobs Go to People Who Didn’t Campaign – BB
Their challenge will be to lead Europe, and stand up to big member states.

Europe reacts to the Council’s nominations for EU leadership – Open Europe

  EUROPEAN CENTRAL BANK
Bond investors cheer Lagarde nomination for ECB top job – FT
IMF chief joins a club of central bankers that is becoming more dovish as economic concerns mount

Lagarde set to inherit lingering Draghi influence at ECB – FT
IMF head lacks economics training but her political skills could prove useful

ECB needs a rocket scientist, not a rock star – Politico
In proposing Christine Lagarde for top job, EU leaders choose politics over economics.

El-Erian: Lagarde Is an Inspired and Unusual Choice to Lead the ECB – BB
It’s become almost an impossible job, but she is used to those.

The World of Monetary Policy, According to Christine Lagarde – BB
Incoming ECB president may have to revive a stumbling economy * Public comments suggest IMF chief supports Draghi’s stimulus

A Lagarde-Run ECB Might Mean a Very Different Kind of Presidency – BB
IMF chief will be first politician to take charge of ECB * Role might draw more on salesmanship than policy creativity

New ECB President: Christine Lagarde – Nordea
Not much is known about the next ECB President Christine Lagarde’s views on monetary policy. That means a lot of attention will concentrate on her future comments and volatility in the market could increase slightly.

No technocrat, Lagarde brings listening, diplomacy to ECB table – Reuters


UNITED STATES
What a good US jobs report will mean for markets – ING
Employment growth in the States is softening, but this is more to do with a lack of workers with the right skills to fill vacancies rather than any meaningful downturn in demand. Given the positive implications for wages, we believe the risks are skewed towards more modest Fed policy loosening than the market expects.

U.S. trade, services industry data point to slowing economy – Reuters

U.S. Employment Is Looking Cooler Ahead of Friday’s June Jobs Data – BB
ADP figure trails forecasts, ISM employment gauge weakens * Decline in jobless claims shows labor market remains tight

U.S. factory orders fall for second straight month – Reuters

U.S. Services Gauge Drops to Lowest Since 2017 – BB


OTHER
Monthly Executive Briefing – Danske Bank
The global macroeconomic situation continues to show signs of weakness * Central banks in the euro area and the US have lately signalled a readiness to mitigate the economic weakness * At the G20 meeting in Tokyo late June, the US and China struck a ceasefire deal after the latest escalation in early May

China Leading Indicators – Danske Bank
Short-term weakness, but no hard landing


REGULARS
Five Things to Start Your Day Asia – BB

Eco Day Asia – BB
Lagarde Supremacy, Depth of Fed Cut, Truce Too Late * President Trump names two economists to serve on Fed board * Khashoggi murder should prevent G-20 in Riyadh, UN expert says

Five Things to Start Your Day Europe – BB

EU Open Rundown – RANsquawk

FirstFT Daily Briefing – FT

Brussels Briefing – FT
All the winners and losers from the EU’s top job reshuffle: Who won and who lost in the EU’s great power game?

Brussels Edition – BB

Brussels Playbook – Politico
Ursula von der Leyen’s path to power — How the EU chorizo is made — Meet your new leaders

Danske Daily – Danske Bank

Eco Day Europe – BB
Lagarde's New Gig, Fed Nominees, Trade-War Tallies * IMF chief prepares to transition to another multi-economy job * Vietnam becomes latest victim in U.S. tariff battles

Daily Market Comment – Marc Chandler
Yields Extend Decline

Five Things to Start Your Day US – BB

US Open Rundown – RANsquawk

US Open – ZH
Global Bond Yields Tumble As Risk Rally Returns; S&P Inches Away From 3,000

Eco Day US – BB
Fed Picks, Make-or-Break Jobs Data, Lagarde's New Job * Trump two central bank picks likely to support easier policy * This week’s U.S. jobs report is key for Fed’s rate strategy


FINNISH
Aamukatsaus – Nordea
EU:n johtajat ehdottivat Christine Lagardea EKP:n johtoon ja Ursula von der Leyenia komission johtoon | Riksbank kokoustaa tänään, laskee korkopolkuaan | Italian hallitus leikkasi valtionbudjetin alijäämää