15th Oct - Nasty risk-off moves

Thought of the day: I've noticed it is not wise to underestimate the resiliency of European stupidness. In Finland, being critical toward the euro currency is a luxury that only few can afford, as it is a career-killer. Only few economics professors dare to say anything negative about it. I really wonder how Europe turned this way. Perhaps it was a dream, that no-one wants to give up, even if it has to be turned into a nightmare.

Previously on MoreLiver’s:

Tuesday: ECB at court, Fed talks down the USD

Monday: Falling US inflation outlook

W/E: Linkfest

W/E: Weekly Support

Friday: Weak oil, softer Fed, German Europe

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EUROPE

Bill Black: EU Austerity Witch Doctors Attack Each Other – New Economic Perspectives

As things go from bad to worse in the eurozone the putative adults have begun to fight openly in front of the kids.  The putative adults, of course, have refused to act like adults for six years and instead have lived in a fantasy world in which austerity – bleeding the patient – is the optimal response to a recession.

SEK: time to think unconventional thoughts – Nordea

Low inflation has triggered calls of a Riksbank rate cut in October. Whether the Riksbank lowers the repo rate to 5bp or to 10bp may be an interesting question, but how the Riksbank signals a continued easing bias is a way more interesting question. It is time for the market to ponder usage of unconventional tools, all of which are likely to be quite SEK-negative.

Why are economists in denial about the eurozone? – The Money Illusion

Eurocrisis Round Two, Blame the Germans Edition – Edward Hugh

There are lots of things wrong with the Euro Area and it’s institutions, and much needs to be done, but sending 18 countries on an experiment with consequences that wouldn’t be benign and might not work doesn’t seem like exactly the best way forward if you’re not sure about what you’re doing.

  BUDGETS 

French budget to break the rules yet again – TradingFloor

France flags deregulation measures as budget clash with EU looms – Reuters

France tests EU rules with 2015 budget – Reuters

Hollande Touts French Economy Plan as EU Budget Patience Fades – BB

Italy's Renzi to present budget as dispute brews with Brussels – Reuters

Merkel No-Deficit Dogma Means No Stimulus for Germany – BB

  CRISIS COUNTRIES

Remember the EU periphery? It’s still out there – TradingFloor

Greek yields droop as trust collapses * Strong approval readings for anti-EU party another headache * Worst-case scenario would be Greek sovereign default

Impact of six-year Greek recession laid bare – FT

Greece’s latest annual survey of living standards, published on Monday by the country’s independent statistical agency Elstat, highlights the deepening impact on households of a wrenching six-year recession.

  EUROPEAN CENTRAL BANK

Opinion: Germany finds historic parallel for opting out of QE – MarketWatch

David Marsh: How 1978’s Emminger Letter makes quantitative easing less likely

Health checks heighten rationale for Italy bank takeovers – FT

Up to a third of the 15 Italian banks undergoing tests could fail

ECB Dark Room Crunches Bank-Test Data Amid D-Day Nerves – BB

ECB staffers are combing through almost 39,000 points of data on the euro area’s 130 biggest banks before the results of the ECB’s Comprehensive Assessment are released on Oct. 26.

UNITED STATES

Nation’s budget deficit falls to lowest level since Obama took office – WaPo

What QE4: US Monetizable Deficit Drops To Just $483 Billion – ZH

  MACRO NUMBERS

Empire Fed Manufacturing Plunges, Biggest Miss In Over 3 years – ZH

Empire State Manufacturing: Huge Drop in Rate of Expansion – dshort

New York state factory activity drops from near five-year high – Reuters

Weakest Empire Manufacturing Report Since April – Bespoke

U.S. retail sales give cautionary sign on consumer demand – Reuters

Retail Sales decreased 0.3% in September – Calculated Risk

Retail Sales Bloodbath: Control Group Has First Decline Since "Polar Vortex" – ZH

Retail Sales Even Worse Than Economists's Low Forecasts – dshort

Retail Sales in U.S. Dropped More Than Forecast in September – BB

Weak retail sales point to slowdown in US economy – Danske Bank

Producer Prices in U.S. Decrease for First Time in a Year – BB

ASIA

China - Drop in inflation boost to growth – Danske Bank

OTHER

Daily Central Banks – WSJ

Hilsenrath’s Take: Commodity Price Drop Gives Fed Additional Breathing Room * European Policy Makers At Odds as Eurozone’s Economic Woes Mount * Europe’s Highest Court Hears Clash on ECB Policy * Bank of Mexico Confident About Meeting Inflation Target by Mid-2015 * Bank of Korea Cuts Base Rate

Daily Macro – WSJ

Equity markets might have taken a breather from the prior days’ selloff on Tuesday, but they were back in the red from the start of European trade on Wednesday. Wall Street’s failure to hold onto earlier gains and an absence of any good news on the domestic economic horizon continued to keep markets in the gloom. Things weren’t helped by soft inflation figures in China, which underscore the presence of global deflationary pressures.

Fed and ECB will not take separate paths – TradingFloor

Fed is nearly not as hawkish as markets think * ECB will not be able to meet its monetary goals * Decline of the EURUSD about to reverse?

Treasury Yields Collapse, 30Y Tests Taper Tantrum Lows – ZH

10Y Treasury Yield Crashes Beloe 2% - ZH

OPEC Members' Rift Summarized (In 1 Simple Chart) – ZH

BAML FMS Takeaways – Global Macro Trading

Fund Managers' Current Asset Allocation – October – The Fat Pitch

Yield Forecast Update – Danske Bank

Lower rates ahead of the New Year

Weekly Bond Update: Core yields rally on global risk-off – TradingFloor

A host of risk factors – including bleak economic growth outlook globally, Ebola fears and geopolitical risks – has ignited the worst correction in financial markets since 2012.

BIS warns on 'violent' reversal of global markets – The Telegraph

Investors take zero-rates for granted and unwisely believe that central banks will protect them, says the capital markets chief of the Bank of International Settlements

FINNISH

Pääkirjoitus: EU-jäsenyydellä yhä vankka tuki – IS

Vieraskynä: Ruotsi valuuttasotaan? – Nordea

Anders Borg : Ruotsista näkökulmaa Suomen talouteen – Henri Karjalainen / US

Irlannin talouslukujen hämmentävät ongelmat – Irlannin viralliset lukemat ”kreikkalaistuvat” – Tyhmyri

Terveisiä Darwinilta, pääministeri Stubb – Jan Hurri / TalSa

Analyysi Pääministeri Alexander Stubb on verrannut euroa talouden darwinismiksi, jossa vahvat vievät ja heikot vikisevät. Stubb esitti vertauksensa, kun Suomi oli euromaiden "kolmen A:n kovasta ytimessä". Nyt ensimmäinen suuri luottoluokittaja on antanut Suomelle potkut tuosta ytimestä. Se oli tervehdys Darwinilta.

  TALOUSKOKOUS

Nouseeko Suomi, löytyykö taloudesta yhteinen sopu? – YLE

Ruotsin ex-valtiovarainministeri tekee raportin Suomen talouden haasteista – YLE

Stubb luetteli vaiheet kohti parempaa Suomea – HS

Soini boikotoi Stubbin talouskokousta – YLE

Keskusta tyrmäsi talouskokouksen hyödyn – YLE

  MAKROLUKUJA

Teollisuuden liikevaihto supistui touko-heinäkuussa lähes prosentin vuodentakaisesta – Tilastokeskus

Palkansaajien ansiot nousivat heinä-syyskuussa 1,3 prosenttia – Tilastokeskus

Kansantalouden tuotanto pieneni elokuussa vuodentakaisesta – Tilastokeskus

Elokuussa 2014 vaihtotase lievästi alijäämäinen, pääomaa vietiin nettomääräisesti – Tilastokeskus