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Monday, April 20

20th Apr - China eases, but Greece a worry



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EUROPE
Finnish coalition talks start as Sipila’s party secures victory – FT
Do the Finnish elections change anything as Greece hunts for deal with creditors? – Open Europe


  GREECE
The ECB Is Considering A Parallel Greek Currency – ZH
Putin To Give Athens €5 Billion For Advance Gas Pipeline Fees – ZH
Russia gas deal would not solve Greece's problems: Schaeuble – Reuters
Wolfgang Münchau: Greek default necessary but Grexit is not – FT
Talks with Greece have gained momentum but still long way from target: IMF – Reuters
Moscovici says Greece must deliver reforms to stay in the euro zone – Reuters
Greece's Varoufakis warns of Grexit contagion – Reuters
Euro working group to meet Wednesday, deal still sought: Greek official – Reuters
Mohamed A. El-Erian: 11 Acts Toward a Greek Tragedy – View / BB
Germany: The mood about Greece – increasingly weary – Nordea
Irresisistible Force Meets Immovable Object – Marc to Market
Chart Of The Week: Is Greece Set To Exit? – Alpha Now
Greece on the Brink – Krugman / NYT

  EUROPEAN CENTRAL BANK
When The ECB Starts Buying Corporate Bonds And Stocks Here's Where It Should LookZH

Euro area economic outlook, the ECB’s monetary policy and current policy challengesECB
Draghi’s speech at IMF meeting

Annual Report 2014ECB

UNITED STATES
CPI review: the inflation cycle has turned Nordea
With more signs that underlying inflation has bottomed out today’s CPI report supports the view that the US inflation cycle has turned, marking a key milepost along the road to Fed tightening. A second straight increase in core CPI inflation should give Fed policy makers greater confidence that inflation will reaccelerate toward 2% over the medium term, supporting our expectation that policy normalisation will begin in September.


ASIA
Macro Focus – China slowdown and commodity importsABN AMRO
China’s reform strategy implies lower import growth. China is rebalancing its exports and public spending-led growth model towards a more long-term sustainable alternative, marked by a rising share of private consumption. This goes hand in hand with a gradual economic slowdown, which also implies that import growth is structurally coming down. In this report, we will focus on what this means for China’s commodity imports.

China Moves to Stimulus Mode With Cut to Bank Reserve Ratio – BB
China Cuts Reserve Ratio Most Since 2008– ZH
PBoC cuts the reserve requirement by 100bp in aggressive easing move – Danske Bank
China Floats QE Trial Balloon, PBoC May Launch LTROs – ZH
Economists React: China’s Aggressive Cut in Banks’ Reserve Requirement Ratio – WSJ


OTHER
KVP's Macro Take: China eases rates - so it's equities risk-onTF
China cuts reserve requirement ratio by 100 basis points to 18.5% * Before this, China US-listed ETFs were tanking, on potential financing pressure * RBA, BoE minutes key this week and AUD over 0.7800 is short addition territory

  ECONOMICS
The Effect of Fiscal Policy on Growth and Stability – Econmatters
The True Levels of Government and Social Expenditures in Advanced Economies – PIIE
Confidence – Simon Wren-Lewis
Pricing Risks Across Currency Denominations
Types of EZ convergence: Nominal, real and structural – vox
Current account "Core-periphery dualism" in the EMU – Bank of Italy
It’s a Near-Zero World, and ‘Structural Reforms’ May Actually Hurt – WSJ
Blanchard on Countours of Policy – John Cochrane
Did macro theory fail us in the crisis? – Simon Wren-Lewis
Noah Smith: What Causes Recessions – sticky prices? – View / BB
Olivier Blanchard: Rethinking macroeconomic policy: Introduction – vox


REGULARS
Daily Central Banks WSJ
Hilsenrath’s Take: What If This Is As Good As It Gets? * China’s Central Bank May Take a Page from Europe’s Playbook * China Central Bank Cuts Banks’ Reserve-Requirement Ratio * Draghi Rejects Talk of Greek Exit * Bank of Japan Chief Says He Sees Progress On Higher Inflation

Daily MacroWSJ
The Chinese central bank’s decision to cut its banks’ reserve requirement helped distract European investors in early trading – Asian markets were down on Friday’s Wall Street losses and concerns that Chinese regulators might want to take some of the steam out of the rampant Chinese equity market. But Chinese policy makers’ decision to return to monetary stimulus as a means of goosing the economy is largely bullish news for risk assets. Less positive is uncertainty over Greece. Will Greece default?

Danske DailyDanske Bank

Euro rates updateNordea

Eye-OpenerNordea
PBoC cut the reserve ratio * Little progress on Greece * New records in German yields * Will continued solid sentiment indicators support the EUR?

Morning MarketsTF
While the market looks ahead to Friday's crunch meeting in the Latvian capital between Greece and its EU lenders, China takes decisive action by slashing its bank reserve requirement ratio in an effort to avert a hard landing for its increasingly fraught economy.

Daily FX CommentMarc to Market
Greek and Chinese Forces Drive Markets on Monday

Daily ShotTF
In the event of a Grexit, any damage can be managed by the national central banks, and the European Stability Mechanism. These institutions will be promptly recapitalised. Such actions, however, will anger citizens of some member states, whose taxpayers' funds will used to fix the damage caused by Greece. Given the chaos and the political backlash such an outcome will generate, it's unclear when - if at all - confidence in the currency union will be restored

Daily Press SummaryOpen Europe
Deputy Greek PM: Snap election or referendum are possible options if talks fail * Wohlgemuth: Brexit “far more dangerous” for Germany than Grexit * Stubb ousted as Centrists win Finnish elections – eurosceptic Finns could enter government * Former IMF official: ECB acted ‘outrageously’ in Irish crisis *

US OpenZH
China To The Rescue: Global Equity Market Rebound After Latest Chinese Easing

FX UpdateTF
The USD is on a weak footing to start the week, as market sees few catalysts on the horizon to shift the US rate outlook. Meanwhile, the Euro may have a negative correlation with risk appetite, meaning risky assets may need to recover to see the Euro back lower.

From the FloorTF
USDJPY looks like it is shaping up for a test of 118.40 that could conceivably usher in a run all the way to 115 in a move that seems to sum up the relative weakness of the greenback. Weakness is the name if the game in China too after the PBoC's surprise 100 bps cut on the RRR.

Martin Sandbu’s Free LunchFT
Productivity and politics: The UK's output per hour matters more than politicians' public finance promises


FINNISH
AamukatsausNordea
Länsimaiden teollisuuden näkymät kirkastuvat |  Kiina leikkasi pankkien vakavaraisuusvaatimusta | Keskusta aloittaa hallitustunnustelut

Vaalit paisuttavat velkamyyttiäJan Hurri / TalSa
Suurten puolueiden puheenjohtajat lupaavat painaa velkajarrua ensi töikseen vaalien jälkeen, ettei "lapsillemme" jää liian suurta laskua. Kotitalousjärkeilyyn vetoava velkakammo on kuitenkin uhkapeliä: se voi tietää talousanemian pitkittymistä ja velkaisuuden pahenemista.

Rusinat talouspolitiikastaHenri Karjalainen / US

Millä saamme Suomeen kasvua ilman viennin apua?Henri Myllyniemi / US