30th Oct - More on Fed, Greece again a problem

Previously on MoreLiver’s:

Wednesday: Fed ends QE3

Special: Fed preview

Tuesday: USD weaker ahead of Fed

Monday: Post-traumatic Stress Test Disorder

ECB's Comprehensive Assessment (updated)

W/E: Linkfest

W/E: Weekly Support

Follow ‘MoreLiver’ on Twitter

EUROPE

Four rescue measures for stagnant eurozone – FT

Willem Buiter: Bank stress tests an unconvincing fudge and big problems remain. 1) a proper AQR and stress test followed by a speedy recapitalisation 2) temporary fiscal stimulus permanently funded and monetised by the ECB 3) ECB cancels the sovereign debt it purchases 4) radical supply side reforms

Largest economies must fix the eurozone – FT

Olli Rehn and Jean Arthuis: Only peer pressure, opprobrium and fear will shake leaders up. The year 2017 will be crucial.

  CRISIS COUNTRIES

Governments sign deal against tax evasion – FT

Agreement includes automatic exchange of information

Portugal: Recovery still intact – Danske Bank

Greece’s Euro Dilemma Is Back as Minister Sees Volatility – BB

Greek bond investors face a rollercoaster ride for the next four months as the government tries to contain the risk of snap elections

Eurozone Discusses ‘Cosmetics’ for New Financial Aid for Greece – WSJ

Now that Greece has said it will seek a credit line from the eurozone’s bailout fund once its rescue program runs out at the end of the year, the difficult negotiations on how to make the new aid palatable to both Athens and other European capitals have begun.

  GERMANY

Germany faces lower tax intake due to slower growth: Handelsblatt – Reuters

Germany will take in several billion euros less in tax revenues next year than expected due to lower growth, Handelsblatt business daily reported on Thursday, a week before experts are due to give a new estimate.

Germany's dark future – Coppola Comment

Inflation is falling fast in Germany. Today's figures show a fall in annualised CPI growth to 0.7%. And this is in the supposedly powerful core of the Eurozone.

Merkel Proposes Curbing Unions as Strikes Cripple Germany – BB

  EUROPEAN CENTRAL BANK

ECB stress tests: The view of an insider – Guest post by Klaus Kastner – Yanis Varoufakis

Anyone who concludes that the EZ financial system is on solid grounds is living in an illusion. The leverage of the large banks (mostly German and French) is far too high and they are far too reliant on ‘hot money’ for their refinancing. (for more on tests see linkfest)

Whither Europe’s Banks after the Stress Test? – PIIE

The tests underscored concerns that many banks will need more capital and a more profitable business model to survive in the future. By itself, the comprehensive assessment is unlikely to spur growth in the euro area, though some financial market fragmentation should be eased.

ECB publishes Regulation on supervisory fees – ECB

The ECB is required to levy an annual supervisory fee on all supervised banks in order to recover its expenditures for supervision.

  MACRO NUMBERS

U.K. Housing Loses Momentum With Price Growth at 9-Month Low – BB

UK house prices rise 0.5 percent m/m in October – Reuters

German Unemployment Unexpectedly Falls as Economy Weathers Woes – BB

October 2014: Economic Sentiment picks up – EC

Euro-Area Slump Concerns Ease as Confidence Improves – BB

Spanish economy climbs 0.5% in Q3 – TradingFloor

Euro zone haunts Spanish economy as growth slows, prices fall – Reuters

Spanish recovery lays bare a social crisis – FT

Spain's recovery looks questionable as GDP slows – FT

EU28 current account surplus €32.6 billion – Eurostat

UNITED STATES

  Q3 GDP

Q3 GDP at 3.5% Beats Expectations – dshort

Q3 GDP Rises 3.5% Despite Sharp Slowdown In Consumption – ZH

Why Did Q3 GDP Jump: Thank ISIS And The "War On Terror" – ZH

Real GDP increased at 3.5% Annualized Rate in Q3 – Calculated Risk

U.S. GDP grows at 3.5 percent in third quarter – WaPo

US economy grew at a faster-than-expected 3.5% rate in Q3 – TradingFloor

Trade, defense spending buoy U.S. third-quarter growth – Reuters

U.S. Economy Up 3.5% in 3rd Quarter, Capping Best 6 Months in Over a Decade – BB

Economists React to GDP: ‘Broadly Constructive’ – WSJ

Advance Q2 GDP Beats Expectations – Bespoke

Why Not to Get Too Excited About Strong Q3 – WSJ

Is Military Spending Driving U.S. GDP Growth? – WSJ

Visualizing GDP: A Look Inside the Q3 Advance Estimate – dshort

  FEDERAL RESERVE

(for more on FOMC, see yesterday’s post)

Mortgage rates are headed to 5 percent. But don’t blame the Fed – WaPo

Why the Fed is giving up too soon on the economy – WaPo

"The problem with quantitative easing," former Fed Chair Ben Bernanke has said, "is it works in practice, but it doesn't work in theory."

Fed looks toward debate on raising rates as quantitative easing ends – WaPo

Though there is general agreement that the recovery is gaining strength, there is still significant debate - both inside and outside the central bank - over when and how to respond.

Why Three Fed Voters (Two Hawks, One Dove) Mattered in FOMC – WSJ

Yes, the Fed kept its “considerable time” language to describe the delay between the end of quantitative easing — which, as expected, came today – and the first rate hike. But what does that mean? It’s really quite a fuzzy, subjective term.

Fed’s Axis of Opposition Shifts from Hawks to Doves – WSJ

Inflation break-evens are Fed's new focus – TradingFloor

Markets moved a little closer to the FOMC projections following yesterday's statement, although the moves won't gain momentum unless market pricing of inflation expectations increases. It is likely there will be a significant correlation between the five and 10-year break-even rates and the USD over the coming months as markets either front-run an early 2015 tightening or push it out to 2016.

FOMC Recap – Tim Duy’s Fed Watch

Despite the market turbulence of recent weeks, the general outlook of monetary policymakers remain generally unchanged.  In general, they continue to see the direction of activity pointing to a mid-year rate hike.  The actual date is of course data dependent, but they have not seen sufficient data in either direction to change that baseline outlook.

How the Fed got from eternity to here – FT

Eternity is over. The dollar is rising, now that investors expect US rates to start rising, and this puts pressure on US exporters, while pressing down on inflation. There are also QE’s other consequences. Stocks look overvalued and bubbly, just as the bond market is signalling concern about an economic slowdown.

USD: QT – the underappreciated dollar tailwind – Nordea

Everybody is pondering the impact on the USD from a hawkish FOMC. The NY Fed’s announcement that it will test term repo operations is however also important – and more important than you think. Any and all moves from the Fed to absorb liquidity are positive for the dollar since it constitutes reverse QE, what can be termed Quantitative Tightening

US: Fed ends QE – FOMC review – Nordea

Today the Fed ended QE and made its forward guidance on rates more data-dependent. The central bank turned slightly more hawkish in its assessment of the economy by removing the characterization of labour market underutilization as “significant.” We stick to our expectation for the first Fed rate hike in mid-2015.

Tantrums, tapers and turning points – TradingFloor

Today, we look at the progression of US monetary policy normalisation as the Fed ends its asset purchases, and discuss the implications for US rates, equities and, most significantly, the USD.

Letting go of Daddy's hand – The Economist

For the markets, the more alarming news in yesterday's Fed statement was the relative hawkishness about the timing of the first interest rate increase.

Why didn’t QE3 raise inflation expectations? – FT

ASIA

BOJ Outlook Report: What to Watch – WSJ

The Bank of Japan is set to release its latest three-year forecasts for economic growth and prices on Friday

BoJ: you know we said “about” two years, right? – FT

Eighteen months ago, the stated aim of all this activity was to achieve an inflation rate of about 2 per cent “at the earliest possible time, with a time horizon of about two years.” Now it’s buying time.

As deflation deadline nears, BOJ faces prospect of failure – Reuters

With just five months left before Governor Haruhiko Kuroda's self-imposed deadline for banishing deflation, the Bank of Japan is preparing for failure, and the first casualty could be its facade of board unity.

OTHER

Daily Central Banks – WSJ

Hilsenrath’s Take: Yellen Surprises With Willingness to Displease Doves * Fed Ends Bond Buys, Sticks to ‘Considerable Time’ on Rates * Parsing the Fed: How the Statement Changed * End of QE3 Means Fed Statement Finally Shrinks * Former Fed Chief Greenspan Worried About Future of Monetary Policy * Translation Adds Complexity to European Central Bank’s Supervisory Role

Daily Macro – WSJ

The Federal Reserve’s policy statement Wednesday was, as is its way, balanced between the observation of disinflationary risks on the one hand and labor market tightening risks on the other. But if anything, the stronger-than-expected assessment of the latter meant that the market read the statement as more hawkish than expected and stocks and bonds both took it negatively.

EMEA Weekly, Week 45 – Danske Bank

Commodities: Has the oil market become immune to geopolitics? – Danske Bank

FINNISH

Olli Rehn FT:ssä: Jos näin olisi, "Suomi johtaisi show'ta Pohjoismaissa" – TE

Jos pitkäaikainen alijäämä ja kasvava valtion velka johtaisi nopeaan talouskasvuun, Ranska ja Italia olisivat euroopanmestareita, Japani olisi maailman johtava talousmahti ja Suomi johtaisi show'ta Pohjoismaissa.

Euroopan keskuspankki kävi ostoksilla Suomessa – TE

EKP on ostanut Nordea Suomen katettuja kymmenen vuoden joukkovelkakirjalainoja (Bloomberg)

Finnvera: Pankit suuntaavat vientirahoitustaan suuryrityksille – Verkkouutiset

Suomessa pienten ja keskisuurten yritysten vientikauppojen rahoitus on Finnveran mukaan entistä vaikeampaa.

Kotitalouksien varallisuus on pienoinen mysteeri – TalSa

Ovatko kotitaloudet ylivelkaantuneita vai eivät? Aihe puhuttaa paljon, mutta mitä oikeastaan tiedetään suomalaisten varallisuudesta.

Työllisyys nousuun palkkoja laskemalla? – Roger Wessman

Rahatalous haltuun -luentosarjan materiaalit, osa 1 – Raha ja Talous

Haircut nostattaa taas hiuksia – Kreikka pyrkii takaisin markkinoille – YLE

Euroalueen velkakriisin käynnistänyt Kreikka suunnittelee irtautumista pelastusohjelmasta ja paluuta kansainvälisille rahamarkkinoille. Asiantuntijat tyrmäävät Kreikan haaveet, mutta Kreikan velkojen ei enää uskota horjuttavan koko euroaluetta.

  POLITIIKKA

Joka neljäs äänestäisi nyt keskustaa – kannatus ennätyslukemissa – YLE

Putkonen: Ministeriö kylvää rasismia salailullaan – PS

Juha Sipilän hallituksen ohjelma – YLE

Keskustavetoisen porvarihallituksen ohjelma on lyhyt ja strateginen.

Alexander Stubbin toisen hallituksen ohjelma – YLE

Jos pääministeripuolueena jatkaisi kokoomus, hallitusohjelmasta tulisi nykyistä strategisempi ja tiiviimpi.

Timo Soinin hallituksen ohjelma – YLE

Perussuomalaisten johtama hallitus tiivistäisi hallitusohjelmaa nykyisestä.

Antti Rinteen hallituksen ohjelma – YLE

Sosiaalidemokraattien johtamassa hallituksessa lait ja normit saavat ymmärrystä.

Näkökulma: Lyhyt, lyhyempi, hallitusohjelma – YLE

Pitäisikö hallitusohjelman olla vain pääkohdat listaava pohjapaperi, jotta tällä hallituskaudella nähdyt riidat ja ulosmarssit vältettäisiin jatkossa? Onko vähemmistöhallituksen muodostaminen edessä myös Suomessa Ruotsin tapaan vaalien jälkeen, pohtii A-studion politiikan toimittaja Hanna Juuti.

Poliitikot eivät tavoittele kesäksi sixpackiä – YLE

Kesäkuussa 2011 muodostettiin kuuden puolueen hallitus, jossa olivat kokoomus, SDP, vasemmistoliitto, vihreät, RKP ja kristillisdemokraatit. Poliitikot myöntävät nyt, että laaja hallituspohja, sixpack, oli tarpeettoman työläs eikä kovinkaan järkevä. Sellaista ei toivota seuraavaan hallitukseen.