MoreLiver's Daily: September 2012

Sunday, September 30

30th Sep - Weekender: Off-Topics, Finnish, Views

I will update some of my views later today, after I've visited the hospital.

Sections this weekend: Regulation, High-Frequency / Algorithmic, Trading, Economics, Bubbles, Books, Other.

29th Sep - Weekender: Europe, US, Asia

Stay tuned for more Weekender-madness soon!

Here are the links to review the last week – and more importantly, what’s ahead next week. Stay tuned for the usual weekend linkfest madness.

28th Sep - US Close

Just the regulars.

Best ones from ending week's posts - happy weekends, I will not post again today, hope you'll all manage without me until tomorrow ;)

27th Sep - US Close: Alzheimer's Ahoy!

SPX and EURUSD both visited very near their probable bottom targets and turned up - but now they have reached the channel top. My gut feeling is a bull day for Friday - that would mean a breakout from the channel to the upside. My reasoning: markets were expecting bad news - and got them and rallied afterwards. After the tomorrow's bad news (The audit results of the Spanish banks are published) markets will probably rally again. I would try to buy weakness ahead of the news, but volatility might be hell. There might not be posts on Friday due to...

The FANG promises might be broken. Spain might not make it. Maybe austerity is right. Nothing is certain - except Macronomics's another credit blast!

Budget time. Banks tomorrow. The confusion regarding ESM eligibility seems to be a big issue, after the FANG-countries announced something. Nobody is sure what it means, so you'll have to read for yourself.

Spain's budget and possible reform show, followed by plenty of bulltalk from the eurocrats. We'll see how effective this will be to soften the impact of tomorrow's data from the Spanish banks. Plenty of Finnish articles today.

26th Sep - US Close

EDIT: posted a piece on Greece's possible future outside the EMU in Finnish.

25th Sep - US Close: USE?

Wow, just hours after I promised a touch to a resistance level, the markets decide to take out the support level. See my weekly view.

Now the latest round of rumors is that IMF will not continue funding Greece unless the debts are restructured to meet 120% debt/GDP by year 2020.

Spain is in riot mode and EU is discussing a new federal budget for fiscal transfers. On Friday expect the bank audits from Spain - original need for capital €bn mio (laughable even at the time), and now that things are much worse, my guess is €200bn. Plenty of Finnish articles at the bottom!

First reports of the ESM leverage coming out. Greek situation even worse than thought - and that is an accomplishment. EURUSD's recent downchannel is turning sideways - expect horizontal range trading for a while and an eventually a move up.

Check the two previous posts for my idea of what's going on.

24th Sep - US Close: Bring out the clowns

So we wait the end of the week and news from Spain. Meanwhile, Merkel to meet Draghi and Lagarde in closed meetings in the coming 2 days. They are not going to be talking about golf. My conspiracy theory du jour is that the eurocrats want to prepare the leverage of the ESM because of Greece. They will kick out Greece after the US elections, and need to have enough of nominal backstoppage in place for Spain and Italy. Bond market support from the ECB, bank loans from the ESM?

The plans to leverage the ESM seem very strange. Just by planning this they are de facto announcing that the current measures are not enough - but that part we knew already. Leveraging the ESM makes it certain that a large part of the paid-in ESM capital will be spent in the eventual debt restructurings. So is the idea making everyone a single-A country in Europe, while simultaneously ensuring that the competitiveness never comes back? The politicians will get burned in the elections real bad. There is too much debt. Moving it from one pocket to another will not help - and they ought to understand this. The eurocrats are delusional.

If it ain’t broke, don’t fix it. If it is broken, Fixit. – MoreLiver

23rd Sep - Weekender: Off-Topics & Finnish

Se todellinen markkinavoima on se hiljainen raha, joka yrittää nähdä kakanpuhumisen läpi. Sekös poliitikkoja harmittaa, kun suunnitelmien ja ajatuksien ei pidä kelvata pelkästään äänestäjille, vaan alati maailman tilaa seuraaville lompakon päällä istuville.

Äänestäjät äänestävät yleensä koko elämänsä ajan sitä, mitä isi ja äiti jo kotona opettivat. Poliitikot tekevät teatteria näille ihmisille. Markkinavoima on se kollektiivinen n. parinsadan tuhannen ihmisen joukko, joka yrittää nähdä teatterin läpi, mitä oikeasti tapahtuu, ja mitä siitä seuraa.

Markkinamekanismin hyvä puoli on, että rahat tuppaavat kasaantumaan niille, jotka näkevät parhaiten. Sen takia se on äänestäjiä parempi poliisi. – Juhani Huopainen

This weekend's sections include Economics, Regulation, Trading & Markets, Hedge Funds, Algo & HFT, Other. Some pretty interesting ones, but no absolutely must-read articles.

If anyone is having a bad day, remember that in 1976 Ronald Wayne sold his 10% stake in Apple for $800.

22nd Sep - Credit Guest: Zemblanity

Our weekly guest star Macronomics states that he spent two hours on this post. Obviously that is a lie. If you like his institutional-quality research for free, please visit and follow his site and let him know that he is providing a valuable service to you. As a blogger I know that compliments are worth a lot, so why not give him one?

Last week in review and next one previewed!

21th Sep - US Close

Talk that Spain would file the bailout request next week.

The best from ending week's posts.

Supposedly a quiet Friday, as there are no events or numbers marked into the calendar. I disagree. It is Friday, usually a very good day for market movement as people square off their positions ahead of the weekend. Markets are also at somewhat important levels - EURUSD has climbed back up to 1.30, and either turns down again for new lows (1.2850 perhaps) or breaks back up and the bull trend would be continuing. SPX future is similarly licking the 1560-resistance, and Spanish bond yields look far easier today, after the 6% yield was rejected yesterday. My bet is today will be a risk-on day: funny, as markets are already at resistance levels and one would easily be inclined to expect the exact opposite.

20th Sep - US Close: Austerity Fail

Here we go, Italy:

*revises 2012 GDP to -2.4% from -1.2%

*revises 2013 GDP to -0.2% from +0.5%

*raises 2012 deficit target to 2.6% from 1.7%

*revises 2013 deficit to 1.6% of GDP from 0.5%

*sees 2012 debt at 126.4% of GDP, 2013 debt at 127.1%

19th Sep - US Close

Japan joined the central bank's bonanza with additional QE. Otherwise nothing going on - negativity in commentary on the Fed's QE and Europe in general.

18th Sep - US Close

Markets continued being soft, but not dramatically so. Boring day - but we are approaching limits of the correction. Either the risk appetite shows up now - or the bad fundamentals takes the markets lower first. The Spanish 6% yields are worrying me - the eurocrisis could flare up again very quickly.

Slight recoil in risk markets - SPX and EURUSD coming down a bit and trying to test support levels, and discussion is again moving to the political situation in US (i.e. can the congress solve the fiscal cliff or not - estimated impact of no solution is 5%/GDP). Again I remind you that a dip from current levels will incite a round of comments from the talking heads, and the current dip should be eyed as a buying opportunity. Spanish 10-year bond rose to near 6%, and that is probably the critical level to watch.

Good morning!

17th Sep - US Close: Realization

Source: BCA Research

Spanish yields quietly moving up, after Madrid is seen backtracking on austerity and not calling for the bailout. Expect imminent supporting statements should the yields rise more. Tonight's post has plenty of material - most notably on the QE3. Commentary on Europe is turning negative: the ECB's conditional backstop is not seen to be enough without a good banking union - whatever that means. Also, QE glory is giving ground to the fiscal cliff in US and China.

Plenty of market commentary and views in the Other section.

Good morning! All the coverage on ECB’s decision is in my ECB Watch-post (continuously updated). The Federal Reserver’s QE3 is in Fed Extra.

16th Sep - Weekender: Views, Off-Topics, Finnish

First my views, followed by interesting off-topic articles and then some in Finnish... (click the charts for larger versions)

A running linkfest on the Fed's QE3 (last update 19-Sep 23:00 GMT)

Plenty of stuff - even though the ending week was rich in events and price volatility, the economists and nerds have not been lazy either.

Previously on MoreLiver’s:

16.9. Weekender: Europe & USA

15.9. Credit Guest: Pareto Efficiency

15.9. Weekender: Weekly Support

14.9. US Close

14.9. US Open

14.9. Weekender: Best of The Week

14.9. EU Open

Follow ‘MoreLiver’ on Twitter or Facebook

The weekend's huge reading package, heavy on Europe and Fed's latest QE-dance

15th Sep - Credit Guest: Pareto Efficiency

A shining star of a guest post from "The Great Bond in The Sky" - Macronomics.

The last week in review, next one previewed

14th Sep - US Close

Here are the “best” article links from the past week.

Very strong day, EURUSD didn't even pause at the 1.30 level and stocks continue pushing upwards. The commentary on Europe is getting, if not more negative, at least clear that the crisis is not yet finished. But for the time being, markets are "Fed Up" :)

13th Sep - US Close: Fed Up

So we got the QE, markets are happy: stocks up but near channel highs, EURUSD up but sitting below major 1.30 resistance, inflation expectations up. Next week back to Europe, plenty of issues still ahead. Given how certain markets were that QE is coming, perhaps the move to aggressively hit where it matters - mortgage bonds - was what caused the positive reaction. So somewhat more aggressive than what had been expected.

After this "superweek, the next major driver will be Europe: there are plenty of open issues left on the table - and many of the solutions presented are vague. EDIT: I updated the US Open post.

- Whose that?

- It’s you. You ain’t got hair, but you got gums.

So now we wait the Fed... EDIT: Thanks to the anon commentator on how to push the Savonian printing magnate on the Bank of Finland's balance sheet due to the escalating support of the PIIGS. The message has been forwarded and was welcomed.

Fed day. My gut feeling is that after the CB action from US is seen and analyzed, markets will turn their focus to the holes in the European plan. American QE is now almost 100% priced in, so I expect slight kneejerk positive reaction followed by "sell the news" in both SPX and EURUSD.

Previously on MoreLiver’s:

12.9. US Close: Eurozone 2.0

12.9. US Open: Yes, But...

12.9. EU Open: Karlsruhe 10 GMT

12th Sep - US Close: Eurozone 2.0

Posting early, updating after US Close. What a day: German court gives thumbs up to the "Eurozone 2.0", while Barroso gives a speech on moving towards a full union. This is explicitly and implicitly something we were promised would never happen. Inch by inch, slowly, but surely.

Germany's policy seems to be avoiding doing things in open, in order not to alienate voters. The bad thing is that the solutions become less open for criticism and control. Soon everyone will be unelected, immune from prosecution and perhaps later fully anonymous.

Oh well...

A quick trip to hospital is in order - so posting prematurely, will update the missing pieces later.

Just a morning quickie.

Quick recap of previously posted links. Announcement at 08:00 GMT (10:00 local time). A 'Yes' is overwhelmingly expected, but possible conditionalities are of interest. Someone commented earlier that leaving in limits and conditions (e.g. need for a parliamentary approval on enlargement or new uses) effectively provides Germany a "super-veto" on future europhiling.

11th Sep - US Close: Waiting...

SPX trapped in range but EURUSD reaching higher towards the 1.30-level. The banking union plan has been completely leaked, and ze Germans will surely vote ja on the ESM and the fiscal pact - so the only open question now is the Fed...Plenty of QE already priced in, so "selling the news", especially with EURUSD could make a lot of sense.

ESM vote, leaked European banking union plans, and the latest Finnish 'bribery-like' (I don't want to get sued) Finnish scandal that seems to involve everyone. I'm not sure if they will even get scared or just more careful in the future. If scared, maybe we will see less shit like this in the future. If more careful, it will only be hidden deeper. Pure amateurs, they didn't even give identical stories in police interrogations. They are not accustomed to being investigated, unlike the regular criminals. They are not regular criminals, they are the elite. Do they actually belong to M.O.R.E.?

All about two things: the Fed’s possible QE and the ESM decision. So what if the ESM ruling is delayed – it is still expected to pass - unless there is something else, like a need to use the ESM in ways that are not exactly kosher.

10th Sep - US Close: QE? Sold the News

Today plenty on the QE, fully priced in and probably that’s why markets tanked. In the old days you bought the rumor and sold the news. Apparently nowadays you have to buy on nothing and sell on rumor. Or perhaps today's market action was just a risk-off move ahead of the big events. Dutch elections, ESM vote and the ECB plan were other topics. EDIT: by the way, I noticed this is MoreLiver's 1008th post. Wow...

Markets are completely dead - literally in the eye of the storm. Missing links to be updated soon.

Still missing few entries, but posting anyways and updating later. I translated Bruce Krasting’s piece to Finnish and posted it in the Finnish blogosphere – it attracted several high-quality comments. It will be a heavy week event-wise, but I'm not expecting shocks similar to the ECB's bomb last week. Luckily today seems like a day without significant events and everyone has time to catch their breath and think what all this means. I'm scared that the more people think about these things, the more they will see the holes I have been writing about...

9th Sep - Weekender - Views, Off-Topics and Finnish

Good evening everyone! First the views, followed by select articles in Finnish and ending week's Off-Topic links (see also last week's Views-post)

Weekender's background readings. Feedback is appreciated - I really don't know what my three readers like.

8th Sep - Weekender: Weekly Support

The last week in review, and next one previewed!

SKYFM Classic Rap Channel

Here’s this week’s guest post from the steamroller Macronomics.

Here are the best links from the past week.

7th Sep - Guest: On Mario's Shock and Awe

SKYFM's Dreamscape-channel

Guest post by Bruce Krasting, the old skool-buccaneer of the high seas of FX. I pretty much came to the same conclusions as he did, so instead of writing down my thoughts, better let the man speak as he wrote it already. All the coverage on ECB’s decision is in my ECB Watch-post (continuously updated).

Payrolls were bad, and most commentators are now expecting more QE from the Fed. Next week’s calendar is packed with risk events. I’ll try to formalize my market views during the weekend.

Payrolls coming up. All the coverage on ECB’s decision is in my ECB Watch-post (continuously updated). I wrote my own quick views in last night’s US Close: "Euro-QE" (with plenty of high-quality article links)

All the coverage on ECB’s decision is in my ECB Watch-post (continuously updated). I wrote my own quick views in last night’s US Close: "Euro-QE" (with plenty of high-quality article links). For this morning, only the regulars and couple of payroll previews. It is very hard for me to see how the payrolls could turn the market bearish right now - after the ECB the sentiment is bullish, market is technically strong, and good numbers would mean everything is good, while bad numbers would mean everything is still bad, but future looks nice and QE is more probable. I will update my views during the weekend. I was happy with the previous views and levels, and they worked up to the ECB's "bomb". I think we are in for uncertain times, as it is impossible to preview when the weaknesses in the ECB plan show up.

6th Sep - US Close: "Euro-QE"

The ECB decision is finally here, and hopefully the devil will not be in the details this time. It took time, but finally they came up with QE.

All the coverage on ECB’s decision (continuously updated is at ECB Watch.

ECB's plan - all material collected to one place. I will update this post continuously and latest additions are at the bottom of the post, as usual. Last update: 19-Sep 23:00 GMT. See 30th Jul - Special: ECB WATCH (last update 7-Aug) for even more ”believe me”-material.

The dreaded ECB day is here - whatever comes out of it, the expectations seem to be very low based on the headlines. The market reaction remains a question mark - key will be the possible road map and the strength and viability of the promises to be given.

Sorry about the late update.

5th Sep - US Open

Away from keyboard.(EDIT updated!)

4th Sep - US Close: ECB not enough

Some very interesting research notes outlined in the links. Draghi seems intent on going to support the short end of the bond market with unlimited ammunition, but it will probably not be enough.

Seems like ECB will go all-in, but it will be more like "is it already in".

Risk markets selling off slightly. ECB expectations managed by leaked reports that the "believe me"-man will buy the Quantanameras.

Moody's negative statement on EU due to the commission's powers to loan money in the names of the member countries. Some pretty decent markets-related links at the bottom, and one particularly nasty opinion in Finnish.

3rd Sep - "US Close"

Wow, I thought it would be a dull day – but while the markets are closed, the commentators are still apparently working. Plenty on the ECB and Spain, with Bulgaria announcing that they are not interested in joining the eurozone.

Of course, US is closed, but here are the headline updates.

US holiday, so probably a quiet day. During the weekend I posted on full turboboost, please see them as there were several gems in there. This week it will be the ECB rumors and in the US the unemployment numbers on Friday. Thus I would not be surprised to see quiet range-trading and minor sell-offs in risk markets. Have a good week!

2nd Sep - Weekender: Views, Off-Topics and Finnish

Good evening everyone! First the views, followed by my selection of the ending week's Off-Topic links and select articles in Finnish.

Sections this week include Portfolio, Trading, Hedge Funds, High Frequency and Others. No "must-read"-articles here, except for the ones specifically interested in the particular topic.

Sections this week Regulation, Economics, Housing. Especially in Economics the Gordon's paper is interesting even for non-specialists.

A lot on the banking union for Europe in this post. I believe it is perhaps even more important than ECB's response, as the ECB's response without a workable banking union will not help in the long run. So it's either a union or a break-up.

1st Sep - Weekender: Weekly Support

The ending week in review – and next one previewed. The missing links will be updated as soon they are published.

Credit guest post from the true Chuck Norris, Macronomics!

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