Summary: Stocks closed down in U.S. (S&P 500 biblically -6.66%) and Asia continues falling in sympathy. FX picture unchanged, commodity currencies getting hammered as growth outlook got worse. FOMC coming up, and the Fed must and will do something, if only talk.
Views: Seems I was wrong on the possible U.S. surprise bounce up until the FOMC. Maybe today a relief rally? Keep the Brazil short. The intraday action on EURUSD is somewhat against my previous bearish view: the market seems more comfortable testing the upside, not the downside. Keeping out of the market for now.
EURO CRISIS
“..the only way forward is for the ECB to guarantee the entire stock of Eurozone debt and for Eurozone members to adopt effective, national fiscal institutions”
They still don’t get it – Wyplosz via voxeu.org
Letter from Absolute Return Partners: Very good euro crisis commentary
Why the U.S. of AA Matters – Pragmatic Capitalism
“meeting of the ECB board have become heated”, “(ECB) is engaging in extend and pretend”
Asia Getting Hammered, Discouraging Report on ECB Commitment – naked capitalism
Chart of Fed and ECB balance sheets
A Study in Central Banks – Infectious Greed
Mario Monti Is Sick Of Everyone Making Fun Of Italy’s Economic Indecisiveness, Not Even Going To Mention The Bunga-Bunga – Dealbreaker
FINANCIAL CRISIS
Links to roundups of Monday’s rout.
Monday extra: carnage recap – Abnormal Returns
Roubini Bloomberg Videos on ECB Policy, Europe U.S Economies - EconoMonitor
Some interesting points, e.g. ..they will figure a way around (Dodd-Frank) and TARP BAC.
What A Day! – The Daily Capitalist
Secretly Broke in Australia – Mish’s
Apparently all AAA-rated sovereigns have higher CDS price than U.S. That is the market’s opinion on the U.S. credit-worthiness.
Sovereign CDS Close for 8/8/11 – Stone Street Advisors
John Mauldin’s latest letter
Breakfast with Dave – Pragmatic Capitalism
EMERGING
“weight and speed mean emerging markets drive global growth, commodity prices and inflation.”
Why the tail wags the dog – The Economist
Emerging market resilience – Didier, Hevia & Schmukler via voxeu.org
DIVERSION
http://blog.thomsonreuters.com/index.php/riots-in-london-bonus-graphic/
The Business of Austerity – The New Yorker
Linkfest For The Smartest People On The Web – Simoleon Sense