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If anyone is surprised that things in Europe will get massively surreal before this is all over, we suggest finding another thread. In the meantime, for the latest example of the utter chaos and "make it up as we go along" we go to the ECB which has just, in very polite terms, warned Belgium that its bailout-cum-nationalization plan may not be quite feasible. From Bloomberg: "The European Central Bank advised Belgium not to backstop Dexia SA’s interbank deposits and to avoid providing guarantees on debt maturing within three months because it risks interfering with the central bank’s monetary policy." Reading between the lines here, it means that the ECB is effectively telling national governments to not try and become their own central banks under the ECB's umbrella, which would likely result in not only in various sovereign downgrades (that is guaranteed) but in loss of conviction in the European Central Bank, something which the insolvent European continent and the insolvent hedge fund in its core, aka Jean-Claude Trichet Capital et Cie. which holds hundreds of billions of Greek bonds at par, can certainly not avoid. It gets better: "The ECB also said the planned debt guarantees for Dexia may last as long as 20 years, which is inconsistent with European Union guidelines for national support measures to be temporary in nature, according to a statement published on the Frankfurt- based central bank’s website and dated Oct. 13. Belgium sought the ECB’s opinion on draft legislation that would grant state guarantees on Dexia loans." Oops: the ECB may have just scuttled the currently envisioned Dexia bailout plan. Oh well, just like with the Greek 50% bond haircut, so here to it is now back to the drawing board.
It is probably not too surprising that the negative news of the day, namely that the US has decided against expanding the IMF and thus leaving the European bailout to the Europeans (at least for now), was released quietly long after happy hour started on Friday. Yet that is precisely what happened after Reuters dropped a Friday night bomb that with hours before a communique is issued by the G20 in Paris, contrary to previous rumors and representation "U.S. Treasury Secretary Timothy Geithner and his Canadian and Australian counterparts poured cold water on the idea" of injecting $350 billion into the International Monetary Fund. As a reminder, the IMF expansion myth was one of the latest rumors floated today by none other than the tag team of Geithner and Liesman. It lasted less than24 hours but it served its purpose. The full on media onslaught of never ending lies has never been more acute, more relentless, and more blatant: with every central bank and trade surplussed nation all in, the very nature of the global ponzi is at risk.
The second priority is to get the world's solvent countries' future so deeply intertwined with that of the bankrupt ones, that letting Greece, and hence France, would result in a Global Assured Destruction.
The same China which on Monday had to bail out its banking sector, is somehow expected to provide billions to plus briefly an infinitely large European liquidity hole. But those billions are nowhere near as much as what the US taxpayer will have to shovel into the European money pit once Geithner's "cold water" announcement ends up steaming for a few days in a bidless stock market.
Over the past two weeks, there is one simple thing that has been bugging skeptical macro observers: namely the paradox of i) just how ugly the European funding and liquidity situations have gotten, on the one hand, confirmed by the blow out in French bond yields (the French-Bund 10 year spread just hit an all time record yesterday) as well as continuing deterioration in credit spreads across core European nations, yet, on the other, ii) the euro, especially in that critical pair the EURUSD, has seen one of its most explosive rises in recent history, which as Zero Hedge pointed out yesterday, has totally decorrelated with the French-Bund spread, to which it had been firmly 'pegged' previously.
In other words, an internal bank run has somehow been interpreted to be stock positive... And there is your explanation for not only the paradoxical surge in the EURUSD and S&P, but why the correlation between the EURUSD and the Bund-France spread has completely broken down. Expect all of this to promptly, and very violently, correct once the market understand what an idiot it has been in the past two weeks.
Naturally, the Eurocrats will be delighted to associate the run up in risk assets and the European currency as a confirmation that the market is interpreting further lies, innuendo, and confusion as a risk on indicator, and is encouraging their behavior, when nothing is further from the truth. However, the biggest beneficiary of the recent move is none other than the insolvent French banking system, whose very own liquidity run has caused asset values to soar, on an epic misinterpretation of underlying market signals, and thus sell even more into market strength, when in fact the market should be selling alongside France...
As for unwind catalysts for this most insidious market move, we are confident that the inability of the G20 to come up with any resolution over the weekend in Paris, nor the Eurozone Summit in one week to actually present any relevant details vis-a-vis the continent's bailout, or the EFSF's expansion into some multi-trillion Bailoutstein monster, will not be met too happily by a market which has just realized it has been thoroughly fooled by the cash-crunched French banking system.
Royal Bank of Scotland is cutting back on perks for its investment bankers.
The division's chief financial officer, Chris Kyle, has sent an internal memo telling staff the firm will not subsidise Christmas parties and other end-of-year entertainment.
In addition, it says no-one will be given new Blackberry phones, headsets or other telecoms equipment.
The RBS unit is also refusing to pay for any new magazine or newspaper subscriptions.
People working late have been told the bank will not pay for taxis to take them home until 10pm, an hour later than had previously been the case.
Staff are also reminded that all travel lasting less than four hours must be in economy class, without exception.
This is not what Europe needed, 6 days ahead of the G20 ultimatum's expiration for Europe to somehow fix itself, and hours after Deutsche Bank said the rating agencies may go ahead and put France on downgrade review. Just out "Moody's notes that the government's financial strength has weakened, as it has for other euro area sovereigns, because the global financial and economic crisis has led to a deterioration in French government debt metrics -- which are now among the weakest of France's Aaa peers." As for the timing... "Over the next three months, Moody's will monitor and assess the stable outlook in terms of the government's progress in implementing these measures, while taking into account any potential adverse economic or financial market developments."
Nobody could have foreseen this, nobody, certainly not the vacuum tubes who took the S&P for a ride for nearly 150 points. As Reuters reports, "the euro fell to a session low versus the dollar on Monday after comments from German Finance Minister Wolfgang Schaeuble saying the EU summit would not present a definitive solution to the euro zone debt crisis prompted investors to sell the single currency." No, that's not true, it's impossible. You mean all those hopes... Dashed? "A Bundesbank report saying the German economic outlook had deteriorated further also curbed some of the market optimism that had helped push the euro to a one-month high earlier in the session. The euro hit a session low of $1.3824 before recovering slightly to last trade down 0.3 percent on the day at $1.3840." And since the EURUSD and stocks trade as one... You know the rest.
Occupy Wall Street protesters insist their movement echoes this year’s Arab revolutions. A better analogue is the Tel Aviv tent-city protests.
As the Occupy Wall Street protest enters its third week, with demonstrations popping up in more than 10 cities, the protesters are aggressively pushing a comparison to the Arab Spring. Some say the movement has channeled the zeal (or perhaps the naivete, others would argue) of the 1960s antiwar demonstrations. But it’s not Tahrir Square or Chicago in 1968 that Occupy Wall Street most resembles. It’s the protests for economic justice that swept Israel this summer.
I met a guy named Max, sipping McDonald’s corporate coffee. “I work for the U.N. now, doing geospatial analysis,” Max said. He was more than a little drunk, skeptical of the movement, and may or may not have been telling the truth. “I was watching the Russians today on the Internet. And they are following the protests closely.” Max said he lived nearby and had just dropped by to check out the scene. “The protesters have … no mission,” he told me. “It’s like they are fighting a ghost.”
The same could be said of the Tel Aviv protests, which nevertheless galvanized an apathetic Israeli generation into political engagement.
TRIPOLI, Libya -- Secretary of State Hillary Rodham Clinton traveled to the Libyan capital on Tuesday, bringing encouragement and millions of dollars in new U.S. aid to a transitional government struggling to consolidate its control over a country ravaged by dictatorship and civil war.
The decision will allow the Treasury Department to avoid failing to label China as a currency manipulator for a sixth time under President Barack Obama.
"Unfortunately, you can’t delay the truth. And the truth is this, China manipulates its currency, which costs America good-paying jobs,” said Alliance for American Manufacturing Director Scott Paul in a statement.
"I don’t know what’s worse, China’s continued currency manipulation, or the Administration’s apparent unwillingness to confront it.”
As a presidential candidate, Obama regularly slammed the Bush administration for failing to label China as a currency manipulator. However, his administration has followed in the footsteps of his predecessor by ignoring China's extremely undervalued currency.
The 5.2% rate is the highest CPI measure since September 2008, and it has never been higher since the CPI measure was introduced in 1997.
The Retail Prices Index (RPI) - which includes mortgage interest payments - rose to 5.6% from 5.2%.
The latest RPI measure is the highest annual rate since June 1991...
...Bills for gas and electricity have risen 9.9% in the past month, and are up 18.3% on the year.
Transport has risen 12.8% on the year, and food was 6% higher than 12 months ago...
...many economists agree with the Bank of England that inflation may soon start to fall... "The September figure should represent a peak in the rate of inflation," said Chris Williamson, chief economist at financial information company Markit...
Looking ahead to the first fiscal quarter of 2012, which will span 14 weeks rather than 13, we expect revenue of about $37 billion and we expect diluted earnings per share of about $9.30