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Tuesday, September 4

4th Sep - US Close: ECB not enough


Some very interesting research notes outlined in the links. Draghi seems intent on going to support the short end of the bond market with unlimited ammunition, but it will probably not be enough.

Seems like ECB will go all-in, but it will be more like "is it already in".

Previously on MoreLiver’s:

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Roundups & Commentary
Markets – Between The Hedges
The Closer – alphaville / FT

Draghi hints at short term bond buying – Kiron Sarkar / The Big Picture
Difficult to Discern Signal in Today's Price Action – Marc to Market
US Summary: Silver Rips, Oil Slips, Equity Dips  ZH
 
Reference
TV: Bloomberg, BBC
Debt crisis: live – The Telegraph
The Euro Crisis Blog – WSJ
Tracking Europe’s Debt Crisis – NYT
FX Options Analytics – Saxo Bank
European 10yr Yields and Spreads – MTS indices

EUROPE
Restoring confidence in the euro areaqfinance
The only magic wand that anyone could wave over the current mess would be a sudden pledge from the ECB to buy as much sovereign debt as was needed to calm markets. This wouldn't cure anything, but it would "restore confidence", at least for a while. If it was allied to a sudden urge by all members of the eurozone to meld together into a fiscal union, then the magic trick would be complete. However this latter point is right up there with "pigs might fly".

Ambassadors to tell the world EU is not falling aparteuobserver

EUROPE: ECB
The Battle BeginsMark Grant / ZH
The rumor is that Mr. Draghi is going to propose a plan to buy short sovereign debt (0-3 years) without limit if a nation fills out the requisite form and officially asks for aid with conditionality.

Mario Draghi Reprises Hank Paulson: Demands Full Monetization Authority Or Else Threatens With End Of EuroZH
Mounting his strongest case yet for ECB bond purchases, Draghi told lawmakers in a closed-door session at the European Parliament in Brussels yesterday that the bank has lost control of borrowing costs in the 17-nation monetary union.

Reasons Are Justified for ECB But Will It Be Enough?Bondsquawk
Goldman Sachs’ Huw Pill lists reasons for the ECB’s buying-spree initiative.

What Happens Once Mario Draghi Unleashes The European Creosote BankZH
Eventually, however, the ECB might have to engineer a massive “Paris Club” debt renegotiation, which is how governments forgive and restructure debt owed by developing countries.

What’s Next for the ECB?PIIE
This will be a critically important week for both the ECB and the euro area as a whole, even if there won’t be many details or explicit targets provided.

EUROPE: PIIGS
Spain’s funding costs post a Draghi-ing alphaville / FT
Deutsche Bank: Spain’s average refinancing costs would have to be lowered to 3.9% for the remainder of the decade to offset the one-off impact of the €100bn bank recapitalization if the latter is kept on Madrid’s books.

The One Chart To Explain Why ECB's Short-Dated Bond Buying Program Will FailZH
The market expects Spain's short-dated cost-of-funding to more than double (to 6.5% from 3% currently) over the next three years.

Nomura: "Spain Will Need Full-Blown Bailout"ZH

Greek tax evasion, mapped and crunchedalphaville / FT
Tax evasion in Greece: In flagranteFree exchange / The Economist
Very interesting study methodology produced a map of tax evasion intensity and which sectors and professions are most evasion-intense.

Leaked Troika Letter Demands Greek Workweek Be Expanded To Six DaysZH

USA
ISM Index
ISM Manufacturing index decreases slightly in August to 49.6 – Calculated Risk
US: Soft set of data supporting the case for QE3 – Nordea
Flash Comment: US - ISM stuck below 50 – Danske Bank (pdf)
US ISM Manufacturing – BNY Mellon
Recession-Type Numbers? You Bet! – Mish’s
Third Month of Contraction – PragCap
Manufacturing Is Sluggish For 3rd Straight Month – The Capital Spectator
Weaker Than Expected – Bespoke
Weak Across the Board – Bespoke
Biggest Miss In Construction Spending In One Year – ZH

ASIA
Six indicators pointing to China's deteriorating conditionsSober Look

As The Iron Anvil Falls, Will Australia Be Stuck Below It?ZH

OTHER
New financial forecast: On your mark, get set…Nordea
or go straight for the full pdf


IN FINNISH
Podcast-vinkki: "Kuinka ratkaisisin kriisin kolmessa päivässä"euroetana
YLE:n Politiikkaradio tarjoilee ratkaisuja eurokriisiin jo lähes liukuhihnatuotantona. Tällä kerralla ratkaisijana on Esko Seppänen, jolta homma hoituisi kolmessa päivässä. Ratkaisu on aivan erilainen kuin Nallella. Se alkaisi perjantaina iltapäivällä Euroopan keskuspankissa...

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