Huge post, sorry about that. With the 'death of austerity', coming central bank meetings and worries about their balance sheets, worsening macro in US and Europe, plenty of articles coming out. Coverage in the next couple of days might be erratic: about to (again) hospitalize the 'less-handsome' MoreLiver, and plenty of writing to do elsewhere.
Previously on MoreLiver’s:
Current Specials:
Special:
Reinhart & Rogoff Debacle (updated)
Roundups & Commentary
News – Between
The Hedges
Markets – Between
The Hedges
Daily Interest Rate Monitor – Global Macro Monitor
Recap – Global Macro Trading
The Closer – alphaville
/ FT
US: S&P Comes Within Whisker Of All Time Highs, Fails – ZH
EUROPE
Analysis - The maze behind EU "treaty
change" – Reuters
If there are two words
that tense the jaws of European policymakers and prompt a concerned sucking of
teeth, they are treaty change.
A European QE Disconnect to Come? – PragCap
Japan’s Yen strategy is inherently zero-sum.
That is, if the lower Yen boosts Japanese growth then it’s essentially
stealing from someone else’s growth. We’ve seen this most clearly in Europe in recent years where the weak Euro has
benefited Germany and not the periphery nations (who are all current account deficit
nations). So it’s interesting to note
that the decline in the Yen is hurting…Germany!
OECD Fears Euro-Zone May Snatch Defeat From Jaws
of Victory – WSJ
The euro zone is at
risk of snatching defeat from the jaws of victory by abandoning efforts to cut
budget deficits and fix long-standing economic problems, the OECD's chief
economist warned.
Increasing Likelihood of Unstable German
Coalition Following Next Elections – Mish’s
ITALY
The Italian Miracle – Krugman
/ NYT
Italy is a mess. Yes,
it has a prime minster, finally; but the chances of serious economic reform are
minimal, the willingness to persist in ever-harsher austerity — which the Rehns
of this world tell us is essential — is evaporating. It’s all bad. But a funny
thing is happening [bond yields are at crisis lows]
Letta Plans to Respect EU Budget Rules as Tax
Cuts Prepared – BB
ECB
ECB Preview: Draghi very likely to cut again – Danske
Bank (pdf)
We think a rate cut is
very likely on Thursday and expect Mario Draghi to cut the refi rate to 0.50
%. A deposit rate cut
is very unlikely, in our view. The ECB might present an instrument targeting lending
to SMEs. The ECB is likely to work in tandem with other institutions on this. The
market is already pricing in an ECB refi rate cut and therefore there is a risk
the ECB could disappoint
ECB gears up for rate cut, likely this week – Reuters
At the end of last
week, the ECB reported that bailing in of Cypriot depositors did not scare
other euro zone depositors. In fact, the ECB noted that deposits rose in March
across the region, including in countries that have been suggested as potential
candidates for the next aid package,
MACRO
NUMBERS
Euro-Area Economic
Confidence Falls More Than Forecast – BB
Economic mood in euro
zone sours again in April – Reuters
German Inflation Rate
Plunges to Lowest in More Than Two Years – BB
UNITED STATES
This Is What Passes For A Good Earnings Season
In The "New Normal" – ZH
While one can easily
game expectations and quiet cut forecasts the night before earnings just to
"allow" the company to beat them easier, one thing that can not be
fudged are trends in time, in either revenue or EPS.
Steen Jakobsen: I have
said all along in Q1 that the “real economy” is much weaker than the underlying
economic data suggests and certainly considerably weaker than the survey data
projects. In nominal terms the US needs 4 percent growth to avoid recession.
FEDERAL
RESERVE
FOMC Preview: A softer tone – Danske
Bank (pdf)
The Trapdoors at the Fed’s Exit – EconoMonitor
Nouriel Roubini: The
exit from the Fed’s QE and zero-interest-rate policies will be treacherous:
Exiting too fast will crash the real economy, while exiting too slowly will
first create a huge bubble and then crash the financial system. If the exit
cannot be navigated successfully, a dovish Fed is more likely to blow bubbles.
Is Monetary Policy Capable of Offsetting Fiscal
Austerity? – Macro
& Musings
So Mike Konczal’s
assessment of this experiment is that monetary policy has not been able to
offset fiscal austerity. Paul Krugman
agrees as do other observers who question the effectiveness of monetary
policy in a liquidity trap. I agree that there is an interesting experiment
going on, but Konczal and Krugman (K&K) oversell what it means and ignore
other recent developments that shed light on the efficacy of monetary policy.
MACRO
NUMBERS
Consumer spending
rises, driven by utility costs – Reuters
Personal Income
increased 0.2%, Core PCE prices up 1.1% year-over-year – Calculated
Risk
Analysis: Weak Pattern
in Income, but Consumers Still Spending – WSJ
Consumers Saving Less
– WSJ
Spending On Services
Jumps, Incomes Disappoint, Savings Rate Near Five Year Lows – ZH
Real Disposable Income
Per Capita: Up Only 0.34% Year-over-Year – dshort
March Spending Driven
By Surge In Services – dshort
Real spending up 0.3
percent in March, in line with expectations – Handelsbanken
Pending home sales
rise in March: NAR – Reuters
Existing Home
Inventory is up 12.1% year-to-date – Calculated
Risk
Pending Home Sales
index increases in March – Calculated
Risk
Dallas Fed: Regional Manufacturing Activity
"stalls" in April – Calculated
Risk
Dallas Fed Implodes: Biggest Drop And Miss On Record
– ZH
Q1 2012 GDP Details:
Single Family investment up, Commercial Investment Low – Calculated
Risk
ASIA
Chinese Leverage: A Ticking Time Bomb? – BCA Research
Concerns about China’s credit and banking system are overblown.
Feedback loops – mpettis
Early this month
Martin Wolf had another of his very interesting articles, this time on China, which I think suggests some of the concerns
we must have about the upcoming adjustment. Wolf argues that it may be useful
to think about Japan as a model for understanding the adjustment process in China
Martin Feldstein: The
opaque nature of China’s government makes it difficult to see where Chinese economic policy is
heading, and thus how the Chinese economy will develop in the years ahead. But China’s new leaders have signaled where they want
the economy to go, and, most important, they have put talented people in charge
of the process.
AUSTERITY
Austerity debate misses half the point – Hugo
Dixon / Reuters
The austerity debate
misses half the point. It is true that governments, especially in the euro
zone, shouldn’t chase an austerity spiral ever downwards. But they can’t just
sit on their hands. They must drive even harder for structural reforms.
Market’s $20 Trillion Yielding 1% Shows
Austerity Mistaken – BB
At a time when
politicians are squeezing budgets to cut borrowing, the bond market is clamoring
for more debt, pushing yields on almost $20 trillion of government securities
to less than 1 percent.
The era of austerity is over (for now) – Wonkblog
/ WP
The era of austerity
began on February 5, 2010.
That was when the finance ministers and central bankers of the seven major
industrialized powers flew to the remote Arctic village of Iqaluit, Canada. That meeting of the Group of Seven came at a
time when the extraordinary financial rescues and fiscal and monetary stimulus
of the crisis seemed to have done their job and the world economy was on the
mend.
DEUTSCHE BANK
Releases Q1 Earnings Early – ZH
To Raise as Much as
$6.3 Billion – BB
Profit Rises, as Bank
Plans to Raise New Capital – DealBook
/ NYT
To Sell Up To 90
Million Shares, Will Raise €2.8 Billion In New Capital – ZH
Buffers to Beat Peers’
After €2.8 Billion Boost – WSJ
At $72.8 Trillion, The
Bank With The Biggest Derivative Exposure In The World – ZH
Investment bank holds
firm as Deutsche performs capital volte face – WSJ
No German Jain Brings
Deutsche Bank to World as Client’s Man – BB
OTHER
Undoing central bank balance sheet expansions – Fatasmihov
While it might not be
an example for all advanced economies it is useful to point out that some
central banks, such as Japan and Sweden have seen large declines in the size of their
balance sheet in recent episodes (Japan in the mid-2000a, Sweden in the Fall of 2010) without any disturbance
to the financial sector or interest rates.
This Week's Emerging Market Highlights – Marc
to Market
The loss of simple narratives in FX – alphaville
/ FT
About that peaking global oil demand – alphaville
/ FT
We’ve been reading a
lot lately about the potential for cheap natural gas to replace oil-derived
transport fuels in the US — and perhaps globally.
Billionaires Flee Havens as Trillions Pursued
Offshore – BB
More than 30 percent
of the world’s 200 richest people, who have a $2.8 trillion collective net
worth, according to the Bloomberg Billionaires Index, control part of their
personal fortune through an offshore holding company or other domestic entity
where the assets are held indirectly.
Rethinking Macroeconomic Policy – iMFdirect
FINNISH
Tilanne
ja näkymät 2/2013 – Teknologiateollisuus
Teknologiateollisuuden tilaukset vähenivät
selvästi. Presentaatio
(videopuhe, kalvoesitys)
BoF
Online 2/2013: Rahoitustransaktiovero, likviditeetti ja rahapolitiikka – Suomen
Pankki (pdf)
Transaktiovero vähentäisi olennaisesti
markkinoiden likviditeettiä, poistaisi likviditeettiä tuottavan
markkinatakaustoiminnan lähes kokonaan sekä eliminoisi loputkin pankkien
välisestä rahamarkkinakaupasta, jolloin pankkien likviditeetti tulisi hyvin
riippuvaksi EKP:n fasiliteeteista. (tiivistelmä)
Kuluttajien
luottamus talouteen heikkeni huhtikuussa – Tilastokeskus
Kuluttajien luottamusindikaattori oli
huhtikuussa 6,4, kun se maaliskuussa oli 10,2 ja helmikuussa 9,6. Huhtikuussa
luottamus talouteen oli alemmalla tasolla kuin vuotta aikaisemmin ja lisäksi
heikompi kuin pitkällä ajalla keskimäärin.
Tältä
näyttää Euroopan talouden sääennuste – YLE
Näin työttömyyden, BKT:n ja valtion velan
ennustetaan muuttuvan Euroopassa viiden vuoden aikana. Paina play ja katso
ennuste.
Keskusta
suosituin, SDP romahti – YLE
Hallituksen kompurointi sote- ja
kuntauudistuksessa ja kehysriihen päätösten korjailuissa näkyy puolueiden
kannatusluvissa. Vuosia gallup-kärjessä ollut kokoomus on menettänyt
ykköspaikkansa ja SDP:n suosion lasku jatkuu.