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EUROPE
President Hollande's
failure to cut spending puts France on collision course with the eurozone
“The urge to merge meets the dash for trash” – FT
Matt King believes
that the combination of the remarkably supportive liquidity environment of the
past few years and the lack of better alternatives will remain in place for a
while — even as credit fundamentals keep deteriorating and valuations become
less and less attractive. This “greater fools game” is unlikely to end well…King’s
new note is about the incentive for investors in European credit to shift down
in quality.
Lawrence Summers: While Britain's economic growth has been rapid recently,
this is only because of the depth of the hole that London dug for itself.
While the US, German, UK, and Swedish banks cut back on exposure to Russia in Q4 2013, French banks did not very much. France's $50 bln is by far the greatest exposure.
Moreover, they note that a good part of France's exposure is illiquid as it is in the form of
Soc Gen's ownership stake of Russia's 9th largest bank Rosbank, worth about $22
bln.
EUROPEAN
CENTRAL BANK
The ECB must - and can – act – Bruegel
By coyly debating the
definition and likelihood of deflation, while hoping for a renewal of
inflation, the ECB is ignoring increasing risks, especially the growing cracks
in the Italian fault line… The ECB may already have waited too late. Even if it
were to finally act, its past delays may render its actions and
Addressing weak inflation: The ECB’s Shopping
List – Bruegel
Think Tank Sees Workaround for
ECB Bond Buys – WSJ
Inflation forecasts by the ECB have fallen substantially below the two
percent threshold. It was a mistake that the ECB did not act earlier.
Conventional policy measures are unlikely to change inflation dynamics
substantially. The ECB therefore needs to start buying assets. We propose to
buy €35bn per months of a portfolio of ESM/EFSF/EU/EIB bonds, corporate bonds,
and ASB. Buying international securities is not advisable as it would be against
international commitments (full 25-page pdf-document).
ECB seen on hold as inflation picks up, QE a
way off – Reuters
ECB will likely hold
off policy action on Thursday, waiting for new forecasts from its staff in June
before deciding whether to counter low inflation that ticked up last month.
Draghi Grapples With Money Markets Showing
Revival Too Soon – BB
Draghi may need to
take action to stop money-market investors getting ahead of themselves.
Goldman Sachs’s Take on this Week’s ECB Meeting – WSJ
A Glance at the ECB’s Dashboard – WSJ
Why European QE Will Not Help (In 2 Simple
Charts) – ZH
MACRO
NUMBERS
Euro zone businesses
off to bumper start in second quarter: PMI – Reuters
PMIs Point To Pick-Up
in Euro Zone Domestic Demand – WSJ
Spanish Services at
Seven-Year High as Euro-Area Index Increases – BB
Volume of retail trade
up by 0.3% in both EZ and EU – Eurostat
Euro retail sales data
indicates strong private consumption – Danske
Bank
Euro zone retail sales
surprise with a month-on-month rise in March – Reuters
Euro-Zone Retail Sales
Rise as Economy Grows – WSJ
Part of the surprise: Feb
revised to 0.1% from 0.4% – TradingFloor
Improved consumer sentiment could result in
pent-up demand in durable goods being unleashed after being withheld during the
crisis…Retail sales in the euro zone defied expectations of a fall and rose on
the month in March driven by sales of food, drinks and tobacco, but spending
patterns differed widely across the bloc…Part of the surprise: Feb revised to
0.1% from 0.4%
UNITED STATES
The data is not
conclusive but, given the Fed view, we believe the risk seems skewed towards a
tighter job market than perceived by the Fed.
The Fed’s riposte on short v long-term
unemployment – FT
Deutsche Bank’s 11 Reasons Why Everyone Is
Buying Treasurys – ZH
U.S. economic growth is set to rebound strongly in the second quarter as the
scars of a brutally cold winter fade, but inflation pressures will remain tame
through 2015, according to the OECD
MACRO
NUMBERS
Trade Deficit
decreased in March to $40.4 Billion – Calculated
Risk
March Trade Deficit
Worse Than Expected – ZH
US trade deficit
narrows to USD 40.4bn in March – TradingFloor
Vital Signs: Capital
Goods Trade Is Firmly in Deficit – WSJ
CoreLogic: House
Prices up 11.1% Year-over-year in March – Calculated
Risk
Q1 GDP Cut To -0.6% At
Goldman, -0.8% At JPMorgan – ZH
ASIA
China’s
leaning towers – FT
Nomura says every
property market leading indicator at the national level turned down in Q1, and
for most monthly indicators the rate of decline accelerated through the quarter.
The question is no longer “if” or “when”, but rather “how much” China’s structurally oversupplied property market
will correct.
OECD cuts China 2014 growth forecast to 7.4
percent – Reuters
China's economic growth is likely to slow to 7.4 percent in 2014 from 7.7
percent last year due to the government's drive to curb credit risk and
excessive factory capacity, the OECD said on Tuesday.
OTHER
Strong European Data Weighs on Dollar – Marc
to Market
Oh the thinks you can think – FT
Discussing the
megatrends. Link to full report available.
The permanent damage from the crisis – FT
OECD has published its
latest guess at the permanent damage from the crisis and the different causes
in different countries.
An Update on May to October Seasonality – The
Fat Pitch
Macro Horizons:
European Domestic Demand Perks Up – WSJ
Grand Central: Will
Yellen Drop a Bombshell Wednesday? – WSJ
Hilsenrath’s Take: Will Yellen Drop a Bombshell Wednesday? * OECD Cuts
Global Growth Forecast, Urges ECB Action * Australia’s Central Bank Keeps
Interest Rates at Record Low * New Zealand Banks Aren’t Playing Ball With RBNZ
* Brazil Still Grapples with Inflation Problem
US Open: Algos
Concerned By USDJPY Tumble – ZH
Trading rules for the
newly enthuasiastic retail trader – Abnormal Returns
Five Things Revealed
by Markit’s IPO Filing – WSJ
IRA SOHN INVESTMENT CONFERENCE
The Complete Ira Sohn Conference Post-Mortem – ZH
Paul Tudor Jones Presentation – Value Walk
Why Bill Ackman Is Bullish on Fannie, Freddie – WSJ
David Einhorn Shorts Athenahealth; ‘Caught Up In a Bubble’ – WSJ
Notes from the Conference – The
Reformed Broker
Notes: Einhorn, Tudor
Jones, Shumway, Laffont & More – market
folly
Thoughts on Macro Ideas from the Ira Sohn Conference – Global
Macro Trading
FINNISH
Onko
itsenäisessä keskuspankissa mitään järkeä? – Tyhmyri
Sixten
Korkman eurokriisistä: Katastrofilta vältyttiin – Verkkouutiset
Miksi
alhaisten korkojen aika? – Roger Wessman
"1970-luvun
politiikkaa" - Saksa ja Ranska sanasodassa euron devalvoinnista – Verkkouutiset
Italiasta
uhkailuja eurosta lähdöllä – Verkkouutiset