Will the bears forever have a trail of tears ? Time is the answer.
Comments »Finland and the Netherlands Vow to Block ESM Purchase of Bonds
“Fears about the imminent collapse of the European financial system appeared to have subsided somewhat since last week’s EU summit, where leaders announced new steps to bolster bank and sovereign funding.
But there could be a big kink in this plan.”
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BNP Said To Mull Plan For $50 Billion Spain-Italy Funds Gap
“BNP Paribas SA (BNP), France’s largest bank, may narrow a 40 billion-euro ($50 billion) funding gap in Spain and Italy by moving some loans in those countries to deposit- rich Belgium, three people with knowledge of the matter said.
The bank is seeking to tighten the mismatch of loans and deposits in European countries by the transfer of export-lending and project-finance portfolios to Belgium, the people said, citing Chief Financial Officer Lars Machenil at a meeting last month in Paris. The bank also studied moving commodities-finance assets to Switzerland, they said, declining to be identified because the discussions aren’t public.”
Comments »An Independent Auditor Says France Will Need to Save 43 Billion Euros This and Next Year to Avoid a Fiscal Cliff Scenario
“France needs as much as 43 billion euros ($54 billion) in savings this year and next, the nationalauditor said, setting the stage for budget cuts by Socialist President Francois Hollande.
The coming year is “a crucial one in which the budgetary calculation will be difficult — more difficult than thought because of slower growth,” Didier Migaud, who heads the audit body, told journalists today in Paris. “It will require an unprecedented brake on spending and higher taxes.”
Comments »A Stealth Stimulus Cited by the Bulls
$GS: “We recommend being long an equally-weighted basket of benchmark 5-year Spanish, Irish and Italian government bonds, currently yielding 5.9%”
“Below is Goldman’s quick take on the E-Tarp MOU (completely detail-free, but who needs details when one has money-growing trees) announced late last night. In summary:”
Comments »ESM To Provide Direct Funding, Breaking Link Between Sovereigns and Banks
“Ireland’s bid to avoid a second bailout may be buttressed by what Prime Minister Enda Kennycalled a seismic shift in European policy.
After 13 1/2 hours of talks ending at 4:30 a.m. in Brussels today, leaders of the 17 euro countries opened the door to recapitalizing banks directly with the European Stability Mechanism, instead of through the government, once Europe sets up a single banking supervisor.
“The fundamental principle of the ESM providing the funding to break the link between the sovereign and the bank has now been established,” Kenny said after the summit.”
Comments »China To Trial Capital Account Conversion In Qianhai Zone
“China will make Qianhai, part of the Shenzhen economic zone, a test ground for freer yuan usage and capital account convertibility, the National Development and Reform Commission said today.
Companies in Qianhai will be encouraged to sell yuan- denominated bonds in Hong Kong and to experiment with cross- border loans in the Chinese currency, Zhang Xiaoqiang, the vice chairman of the national planner, said at a press conference in the city today.”
Comments »Don’t Worry About $JPM’s Trading Loss…You Got it Covered
AOL Starts a $400M Stock Buyback Program At $27-$30 Per Share
BofA-Merrill Lynch Analysts: Fed to Prop Up Economy in September
Spanish and Italian Bond Yields Take a Trip to the Moon
Italy’s borrowing costs have risen consistently over the past few days. Today Spain’s bond yields popped above 7%.
Comments »The EU Financial Summit Produces a Bailout for Cyprus, But Clouds Action Over Italy and Spain
As expected, when you do not have many options to choose from you deliberate and disagree over how to move forward; this is the folly that continues at the European financial summit of 27 leaders.
Comments »Former Obama Adviser Bernstein: US Can’t Avoid Falling Off ‘Fiscal Cliff’
“The U.S. economy won’t avoid falling over the edge of a fast-approaching fiscal cliff, when tax breaks expire at the same time automatic spending cuts kick in at the end of the year, says Jared Bernstein, a former adviser to President Barack Obama.
The outcome of the November presidential elections won’t make any difference at all, Bernstein adds.
“If you actually play out the difference scenarios here, the president wins, Romney wins — it’s hard to see that we don’t go off this fiscal cliff,” Bernstein tells CNBC. “Because I don’t see how this compromise gets made.”
Comments »Italy Completes Another Bond Auction Showing the Highest Interest Rates Since Late Last Year
“Italy sold 9 billion euros ($11.2 billion) of Treasury bills at the highest rate since December amid concerns a European Union summit this week will fail to solve the sovereign-debt crisis.
The Rome-based Treasury sold the 185-day bills at 2.957 percent, up from 2.104 percent at the last sale of similar- maturity debt on May 29. Investors bid for 1.62 times the amount offered, similar to the 1.61 times last month.
National flags of Italy hang above stalls at an indoor market in Rome. Photographer: Alessia Pierdomenico/Bloomberg
The yield on Italy’s 10-year bond fell 5 basis points to 6.14 percent at 11:07 a.m. in Rome, leaving the difference with German bunds to 460 basis points. A bigger test for the Italian treasury comes tomorrow when Italy sells as much as 5.5 billion euros of longer-maturity debt.”
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Draghi Feared to Take ECB Deposit Rates to Zero or Less
Draghi is expected to lower interest rates in the EU zone to bolster lending and growth. However this may take deposit rates to zero or less; this is seen as a no no by the fed and described as the ‘twilight zone’.
Comments »Italy’s Unelected PM Mario Monti: “Eurobonds, Or I Resign”
“Update: According to subsequent press reports, Monty has denied he threatened to resign. i.e., Monti just blinked. So now it is up to Merkel who will either have a very short life, or Monti will have to come up with a different professional suicide gambit.
Just when we thought the European drama couldn’t get any more poignant following Merkel’s statement earlier which boils down to “No eurobonds or death”, here comes Italy’s unelected PM and former Goldmanite, Mario Monti, threatening that the beggar will pull the trigger on his own political career if he is not allowed to be a chooser. From Il Giornale: “If the Chancellor does not give up I will tell you that I resign because if things do not change are not able to bring Italy out of the abyss”
Comments »Stockton, Calif. to Take Up Bankruptcy Budget Plan
“(Reuters) – Stockton, California was poised on Tuesday to take a major step toward becoming the largest U.S. city ever to file for bankruptcy after talks with its creditors on Monday at midnight.”
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Cyprus Bailout May Be Up To Over Half The Size Of Its Economy
DB: Consumer De-leveraging to End in Two Years
“Deutsche Bank’s latest research on US consumer leverage suggests that the deleveraging process may have another couple of years to run. They determined the long-term trend line based on consumer debt to GDP ratio from 1953 to 2003, thus excluding the bubble years. Then they compared the current leverage to this line and looked at the rate of convergence. The intersection with the trend line is expected to take place in a year.”
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