6th Dec - Don't vet the vets

Today's headline wordplay simply means that veterans of challenging situations need not be quality-controlled. They already know their business. On that note, I take the time to thank the veterans of all sides and hope that European leaders will in future come up with better ideas to ensure peace than a common currency. Happy independence day, Finland!

- MoreLiver 

News (Tue morning) – BTH

News (Tue morning) – The Trader

Recap (5-Dec) – Global Macro Trading

Morning Briefing – BNY Mellon

Market Preview – Saxo Bank

Danske Daily – Danske Bank (pdf)

FX option vols – Saxo

TV: Bloomberg, CNBC, BBC

Markets Live – alphaville FT

Debt crisis: live – The Telegraph

EZ crisis Live blog – The World / FT

The eurozone’s terrible mistake – Felix Salmon / Reuters

The worst case scenario is that the EU kicks the can down the road with one new bailout facility after another, until it eventually gives up throwing good money after bad and imposes the restructuring which was inevitable all along. In that case, as one hedge fund manager was explaining to me last week, private sector creditors get devastated: because the EU and the ECB and the IMF won’t take any losses on their loans, all of the haircut, pretty much, will have to be borne by a private sector which accounts for only a fraction of the debt

6th Dec - Sentimental Elsa

Nomura's view on EZ devaluations

S&P has put all the eurozone countries on downgrade warning, stating the obvious. The Italian welfare minister cries while announcing pension cuts. Lot of handshaking and smiling at the press from Merkel and Sarkozy – a lot of attempt to kick the can even further, this time until March, when the EU Treaty changes would be handled. As Peter Tchir said, there must be a lot of trans-Atlantic phone calls going on at the moment. Remember what I told you about Sarkozy? WSJ seems to agree.

Finland celebrates independence day today. This is the first year when no veterans decorated with the Mannerheim's Cross (a decoration given to roughly one soldier in thousand) are able to attend the gala in the Presidential Palace. Times change. My last FX deal on the desk was in USDDEM, and I guess my first deal if I ever return to a desk will be in USDDEM as well.  Times change.

5-Dec Endless Parlay

Hello there! During the weekend I put online the Weekender - Poker face of eurocrats with review/preview stuff and an editorial on Sad Sarkozy, and a Best of the Week. In this post there are links to 2012 outlooks by both GS and CS. If I would read only two today, BNY Mellon’s morning brief and BTH’s news collection would be kings. I’m on Twitter, Facebook and you can always email me for suggestions and requests. 

                     

News – BTH

News – The Trader

Morning Briefing  – BNY Mellon

Danske Daily – Danske Bank (pdf)

Market Preview – Saxo Bank

FX option vols – Saxo

TV: Bloomberg, CNBC, BBC

Markets Live – alphaville FT

Debt crisis: live – The Telegraph

EZ crisis Live blog – The World / FT

EURO CRISIS

Do Eurozone leaders finally ‘get it’? Not quite yet – Charles Wyplosz / voxeu.org

This week’s announcements by German Chancellor Angela Merkel and ECB President Mario Draghi that the Eurozone is taking steps towards a closer fiscal union seem to be calming markets and restoring confidence in the decision-making of Eurozone leaders. This column argues, however, that the devil is still in the detail.

Best of the Week

Here are the top picks from this week's posts.  

- MoreLiver

EURO CRISIS

Goldman: "As The Endgame Approaches, The Rally In AAA-Euro Area Sovereign Bonds No Longer Seems Sustainable" – ZH
In a ‘break-up’ scenario, the creditor ‘core’ countries will be confronted with a wave of insolvencies, which would also worsen their fiscal position. And in the middle ground between these two outcomes, where we currently stand, the ECB will be intermediating growing intra-Eurosystem imbalances. Through this monetary channel at the heart of EMU, the ‘shadow’ credit risk of the core countries is already rising, and at an increasingly rapid pace.

Weekender - Poker face of eurocrats

US vs. the rest

Here’s my weekender post – enjoy. Last week saw some concentrated and coordinated action from the central banks, which is good, but unless the politicians follow up, nothing has been solved. If the French would not have an upcoming presidential election and  "values" (being even more socialistic than the Swedes but a lot more corrupt), things could be much smoother.


I have a massive déjà vu as this is the umpteenth time we are waiting for a final solution and trying to decipher from between the lines what our great leaders actually want - and what they are prepared to compromise. Whatever follows, my gut feeling is that the European leadership does not have the poker face required to keep things under wraps.

In the early nineties during the ERM breakup, when Finland was defending the currency peg with astronomical interest rates, a friend of mine called me and said he had seen the finance minister Mr. Viinanen walking on the street. The minister's facial expression and physical posture gave the situation away - the game was lost.

The one I would be paying close attention to is Sarkozy's face. If the EU-leaders cannot agree on a proper fiscal union and thus save the PIIGS refunding, the French banks will be bankrupt and Sarkozy will not only lose the presidential elections, but also France will be downgraded in all possible forums - credit rating, world politics and economically.

The macro news coming out of US was ok/strong while European macro got worse again. Of course, US has not decoupled from the rest of the world and reversion to the mean is about to follow - as Europe will not improve in any meaningful way, this would imply disappointing news from US next.

 

I’m on Twitter, Facebook and you can always email me for suggestions and requests.  

- MoreLiver

Then to this weekend's summarized link fest: