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Thursday, October 29

29th Oct - EZ sentiment improves, US GDP doesn't





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EUROPE
EU strikes deal on handing break-up powers to bank supervisorsFT
The draft would ban such banks from proprietary trading — making financial bets using their own money — and in some cases require them to prove to supervisors that their investment banking activities did not pose a threat to financial stability. If the supervisor is not convinced, the bank would either be required to split off its trading arm or face a significant increase in its capital requirements.

Nouriel Roubini: Europe’s Politics of DystopiaProject Syndicate
The recent victory of the conservative Law and Justice party in Poland confirms a recent trend in Europe: the rise of illiberal state capitalism, led by populist right-wing authoritarians. Failure to act decisively now will lead to the eventual failure of the EU and the rise of dystopian nationalist regimes.

Cameron Sees EU Reform Drive Gaining Momentum After Nordic PushBB
Negotiations with EU are set to gain momentum as he received the conditional support of like-minded Nordic leaders in his push to improve the bloc’s single market and cut red tape.

Philip Stephens: If Angela Merkel is ousted, Europe will unravelFT

Germany cracks down on Afghan migrantsPolitico
Merkel’s government claims deportations will rise “significantly.”

ECB May Well Ease Further But Is Running Out Of RoadOpen Europe
The ECB's options and whether it would have any significant impact.

Goldman Why The ECB's Monetary Policy Has Been A FailureZH

Turkey: another election, another inconclusive outcome?Danske Bank

Euro-Area Confidence Makes Surprise Leap to Four-Year HighBB


UNITED STATES
Look to economists for nuance on Fed’s decision-makingReuters

  Q3 GDP
BEA: Real GDP increased at 1.5% Annualized Rate in Q3 – Bill McBride
Economic Growth in U.S. Cools as Companies Rein In Inventories – BB
Inventories hurt U.S. third-quarter GDP, domestic demand strong – Reuters
Economy grows an anemic 1.5 percent in third quarter – WaPo
Languid GDP Report Feeds Into No-Hike Scenario – WSJ
U.S. Third-Quarter GDP – At A Glance – WSJ
Economists React: ‘Growth Should Pick Up’WSJ
Q3 GDP Misses Expectations On Sliding Inventories – ZH
Q3 GDP: Investment – Bill McBride
GDP Release: “The Ship is Slowly Sinking” – Marcus Nunes


OTHER
BoJ preview: QQE expands on low inflationNordea
We expect the BoJ to expand the monetary easing programme tomorrow as half of the market analysts do. Disappointing inflation and GDP growth are the main reasons. Without more monetary easing, the Abenomics will likely appear as a failure and put the plan of reviving Japanese economy at risk.

J. Bradford DeLong: The Tragedy of Ben BernankeProject Syndicate
Bernanke’s new memoir is the story of a man who may have been the best-prepared person in the world for the job he was given, but who soon found himself outmatched by its challenges, quickly falling behind the curve and never quite managing to catch up.


REGULARS
Morning MoneyBeat AsiaWSJ
U.S. Stocks Surge After Fed Holds Steady on Rates

Morning MoneyBeat EuropeWSJ
Hawish Fed, Corporate Earnings Weigh

Morning MoneyBeat USWSJ
Third-Quarter GDP in the Spotlight After Fed Meeting

Danske DailyDanske Bank

Global DailyABN AMRO
Fed leaves door open for December rate hike…which will likely depend on US data, financial conditions and EM risks * Our base case remains for a 2016 rate hike, but chances of an earlier move have increased

Euro rates updateNordea

Eye-OpenerNordea
Markets caught off guard as Fed kept December door open * Dollar stronger vs all G10 currencies * Fed, data boost likelihood of BOJ staying put

Morning MarketsTF
Dollar-denominated assets rallied strongly and broadly last night in a forceful welcome to renewed hopes that the US Federal Reserve will soon increase interest rates for the first time since 1986.

Daily Press SummaryOpen Europe
US Trade Representative warns against expectations of individual UK trade deal post-Brexit * Berlin and Vienna trade barbs as Germany extends "temporary" border controls * “Reform of EU lawmaking is now at least as important as any one-off repatriation of powers” * French Central Bank Governor: ECB asset purchase programme “is a long-distance run, not a sprint” * Greek government to submit new raft of measures to parliament in bid to unblock bailout cash * Front National leader suspected of letting fellow MEPs vote in her place while absent from parliament * EU member states grant carmakers more leeway on emissions * MEPS reject Commission compromise on GMO opt-outs * German Vice Chancellor announces top-job ambitions

Daily ShotTF
Yesterday, the Fed made clear that a December hike should not be discounted. Market reaction was, if anything, complacent.

Brussels PlaybookPolitico
Fortress Europe — Business without borders

US OpenZH
Futures Fade As Hawkish Fed Deemed Not So Bullish After All

FrontrunningZH

FX UpdateTF
Despite the USD strength on the back of the FOMC meeting, the market remains sceptical that the US economy will improve sufficiently ahead of the December FOMC meeting to signal a hike. This magnifies the importance of the next batch of incoming US data. Tonight the focus shifts to the Bank of Japan.

From the FloorTF
The rather hawkish FOMC statement yesterday impacted all markets given the indications on a rate hike, but incoming data will be decisive.


FINNISH
AamukatsausNordea
Globaalin talouden epävarmuus ei enää huoleta Fediä - jenkkikorot nousivat ja dollari vahvistui * Riksbank laskee vielä korkoakin * Japanin keskuspankki ilmoittaa osto-ohjelman laajentamisesta