Today's German IFO sentiment index surprised to the upside, though I see the numbers to be of mediocre quality after digging deeper behind the headline numbers. The repayments of LTRO2 were significantly less than expected (so the implicit monetary tightening by removing liquidity did not happen, and EURUSD sold off). The European Commission released its updated economic forecasts, and the numbers are grim. The 2013 will be spent in recession, just like 2012. And now all eyes on the Italian elections. Bunga bunga!
I'll try to post a "Best of the Week" and a Special on the Italian elections later today. Come back during the weekend for my usual posts.
Previously on MoreLiver’s:
Roundups &
Commentary
Frontrunning – ZH
Overnight: Dull Levitation Returns – ZH
The Lunch Wrap – alphaville
/ FT
Emerging N.Y. headlines – beyondbrics
/ FT
Daily press summary – Open Europe
Morning MarketBeat: Stocks Hit Pothole – WSJ
Dollar Consolidates After Big Week – Marc
to Market
Morning Briefing
(EU/US): Il ritorno di incertezza – BNY
Mellon
The end of the Italian election might just
mark the beginning of a renewed period of uncertainty for the Euro-area
EUROPE
Ifo Business Climate Index Rises Sharply – CESifo
Euro Slides As First
LTRO-2 Repayment Less Than Half Expected – ZH
Adjustment and growth
in the euro area economies – ECB
Benoît Cœuré, Member of the Executive Board of the
ECB, Nova School of Business and Economics and the Banco de Portugal, Lisbon,
22 February 2013
The future of global
economic governance – ECB
Jörg Asmussen, Member of the Executive Board of the
ECB, Hertie School of Governance, Berlin, 22 February 2013
Deficits: good
marketing in a time of austerity? – alphaville
/ FT
Let's take a moment for a high level overview of
public debt-to-GDP ratios in the
eurozone. If that's not your idea of fun, well, you probably wouldn't be
reading FT Alphaville. Courtesy of a note by Lasse Holboell W. Nielsen of the
Economics Research team at Goldman Sachs
COMMISSION’S FORECAST
Winter forecast 2013 – European
Commission
The EU economy: gradually overcoming headwinds
Euro zone economy to
shrink again in 2013, EU says – Reuters
The euro zone will not return to growth until 2014,
the European Commission said on Friday, reversing its prediction for an end to
recession this year and blaming a lack of bank lending and record joblessness
for delaying the recovery.
EU Says Euro Zone to
Shrink in 2013 as Unemployment Rises – BB
The 17-nation euro zone’s gross domestic product will
fall 0.3 percent this year, compared with a November prediction of 0.1 percent
growth, the Brussels-based commission forecast today. Unemployment will climb
to 12.2 percent, up from the previous estimate of 11.8 percent and 11.4 percent
last year.
Most euro zone countries will reduce their budget
deficits this year even though the recession in the single currency area is
likely to continue but some, like Spain, will badly
miss agreed targets, European Commission forecasts showed on Friday.
Spain’s Deficit
Widened to 10.2% on Bank-Rescue Cost: EU – BB
Rescuing lenders including Bankia SA (BKIA) added 3.2
percentage points to the budget gap last year while rising unemployment and
falling asset prices crimped government income, the commission said today. The
deficit will narrow to 6.7 percent of gross domestic product this year before
growing in 2014 to 7.2 percent -- more than twice its 2.8 percent target -- as
temporary austerity measures expire.
The European Commission said on Friday it was not the
time to decide if it will give Portugal more time
to bring down its deficit to below EU-mandated levels.
The European Commission is considering giving France more time
to bring its budget deficit below EU limits and will likely decide in May, the
EU's top economic official said on Friday.
The EU's
self-defeating approach must end now – re-define
What we need at this point is a grand political
bargain, and that is one that only Mrs Merkel can offer. We will require a
period of five to ten years of adjustment in the European economies which needs
to happen both in deficit countries as well as surplus ones not suffering from
the immediate crisis. During the course of this adjustment, financial support
needs to be made available at reasonable cost to the economies to provide
political and economic space for structural reforms and medium-term fiscal adjustment.
ITALY
To many in the outside world, Silvio Berlusconi is the
clown prince of politics - better known for his bunga-bunga parties, outrageous
comments and courtroom battles than for any obvious political nous.
Evidence from Italy shows that electoral
reforms can often have the opposite effect of what is intended – europp
/ LSE
Italian elections re-open risk of EU crisis – euobserver
Italian
voters are heading to the polls on Sunday and Monday in a closely-watched race
that could bring the country to the brink of a bailout.
OTHER
Weekly Credit Update – Danske
Bank (pdf)
Are rates mispriced
or are investors missing something? – alphaville
/ FT
The disconnect we've noticed between commodity
fundamentals and forward rates appears to be popping up in other asset classes
as well.
IN FINNISH
Yritystuet yhtä
hautomista ja munimista – Olli Herrala / KL
Enbuske: Vain oma
paska pyyhitään – Tuomas Enbuske