Idag har vi viktigt möte från FED, samt en massa PMI data!

HSBC China manufactoring PMI kom in på 49,3 vilket kan jämföras med Flash 49,5 och föreg. 48,2
Officiella China PMI kom in på 50,1 mot väntat 50,3 och föreg 50,2´

Totalt sett känns det väldigt soft patch!

Sen kom PMI från Europa!

Frankrike Mfg PMI 43,4 mot flash 43,6 och föreg. 45,2….. sämre
Tyskland Mfg PMI 43,0 mot flash 43,3 och föreg 45…. sämre

EZ Mfg PMI 44,0 mot flash 44,1 och föreg 45,1… sämre
EZ Mfg PMI NEW ORDERS 42,8 mot flash 42,9 och föreg. 43,5… sämre

Europa går utan tvekan i helt jävla fel riktning. Tidigare tycker jag datan rimmat med -1% BNP (give and take!) vilket skulle innebära att det är en förhållandevis ”grund” recession. Men nu börjar jag bli tveksam. Fortsätter det här kan det lika gärna bli -2,5% i år?!?!?! Hur långt kan det gå innan vi får ”riktig” action. Alltså hur ont måste det göra innan politikerna känner sig ”tvingade” att ta osköna beslut, som kanske riskerar deras jobb i ett omval?????

Att marknaden är så pass stark beror på att man förväntar sig action från ECB. Kommer det inte ”action”… ja då kommer det gå ner, believe me. Kommer det ”action”, ja då är risken stor att det är Sell the facts. Läste nånstans att det har varit 19 ”avgörande” möten kring krisen i Europa….. känns inte som att det tjugonde kommer lösa alla knutar heller.

Vad kan komma från Draghi imorrn? så här skriver;

SocGen

Deutsche Bank.

“So what could be on the table?
Direct/indirect and ECB specific/common action with other institutions. The latter point is crucial in our view.

Indirect intervention: Further vLTROs

Indirect action would consist in counting on banks, following a suitable injection of liquidity, to continue to support the sovereigns. This could take the form of another LTRO, providing both the cash and the visibility on duration which could incentivise banks to re-engage in carry trade. Such a solution would also entail another extension in collateral eligibility, or at least progress on the effective capacity of peripheral banks to absorb the new forms of collateral made eligible last December.

We think that another “tweak” could be added: making the repos “non-recourse”, i.e. limiting the liability of the ECB’s counterparty to the initial level of collateral, in practice the end of the “margin calls”. This would provide an insurance against the risk of a further deterioration in the value of the sovereign bonds purchased by the banks, which would still enjoy the strong yields. While the risk taken by the central bank would of course be high, we think that such a move would be very efficient to re-start the peripheral bond markets.

Direct intervention: SMP

Direct ECB-specific action would in practice be a resumption of SMP, the ECB’s bond buying rogram. A mere resumption in our view may not be very efficient beyond the immediate short term rally. This could be addressed by providing more guidance to the market in terms of time span/quantity of purchases, basically emulating QE in the US. This would be quite a stretch for the ECB and its general allergy to pre-commitment, while moral hazard could also be high.

One of the drawbacks of SMP is the presumption of seniority on ECB purchases since the Greek PSI episode. The main advantage of such an option is its simplicity. To decrease the impact of the drawback the reactivation of the SMP would need to be accompanied by an intervention of the rescue mechanism on the primary markets in our view.

My comm, båda har testats, inget funkar, och inget löser det egentliga problemen.

Coordinated intervention: Best strategy

ECB action in common with other institutions would in practice imply a coordination with the EFSF/ESM. This can take two forms. First, combining the EFSF/ESM with the ECB. A maximalist version of this would be the solution advocated by Nowotny, i.e. granting the EFSF and later the ESM a banking licence. As we discussed above we think that the ECB may be very uncomfortable with this solution after having rejected it on legal grounds last year.

As an alternative, as we have already mentioned in Focus Europe, there is the possibility to “reverse” this scheme and allow the EFSF/ESM to guarantee SMP operations. This would remove the “seniority issue” since the ECB would in any case be indemnified in case of restructuring. It would also deal with the liquidity issue of the EFSF/ESM, but it would not solve its main shortcoming: insufficient size

Hence, as we described from page 7 in Focus Europe on 20 July, the best solution given current constraints would be parallel interventions of the EFSF/ESM on the primary market and of the ECB on the secondary market to guarantee the efficient transmission of its monetary policy. Ideally, macro prudential instruments could be used to differentiate the monetary stance across member states.

The advantage of any form of EFSF/ESM involvement is that it would create effective conditionality, since a MoU would be needed. This is a crucial point. A major concern is the future implementation of structural reforms in Italy post Monti. First, opposition parties are taking a very populist stance. Second, the possibility that the former Prime Minister Silvio Berlusconi may seek re-election has not boosted investors’ confidence given his record in terms of delivering reforms in our view. Third, the parliamentary parties are still failing to change an electoral law that is not conducive to stable governments. A MoU would bind the next Government to the implementation of the structural reforms as long as it span beyond 2012.

Note that the ex-post threat to remove support is more credible than in the case of a full programme as the ‘rescued’ sovereign does not lose access to the primary market. Is this likely? We note that Pierre Moscovici, France’s finance minister, after saluting Draghi’s speech, mentioned in the same breath the possibility of EFSF intervention in the primary market. An article in Le Monde (27 July) appears to confirm this possibility. According to the French newspaper, the ECB will not be the only one to intervene, but based on their sources there would be concerted action with the EU member states. The EFSF/ESM would intervene in the primarymarket following requests from Italy and Spain. The ECB will act on the secondary market if and only if the two sovereigns are willing to activate the rescue mechanism that, again, entails a ‘light’ MoU. The latter may be easier to digest for Spain and Italy, while at the same time providing some sort of ‘controls’ as advocated by Germany.

It follows that any form of “common intervention” would have an impact on the timing of any market intervention. Indeed, at the very least a MoU would have to be agreed with the receiving countries, which would at least in Germany require the intervention of the Bundestag’s budget committee.

At this point the sequence of the events is uncertain. Will the ECB intervene before the primary market intervention is activated? The ECB may be concerned that no action in August would risk disappointing markets. A compromise would be to at least wait for the requests from Spain and Italy. We think that the ECB could opt to wait to activate SMP as long as at the press conference on 2 August Draghi explicitly announces the existence of concrete plans for a coordinated ECB-EFSF/ESM action.

My komm, det är den här typen av action marknaden förväntar sig!

Standard monetary policy: No further rate cuts just yet

Our expectation is that 2 August is likely to be an occasion for non-standard (“quantity”) monetary policies. Standard (“price”) monetary policy, or the level of policy rates, we suspect will take a backseat this month. A monetary policy “price” response would in any case be more effective after a “quantity” response given the current impairments of the monetary transmission mechanism.

Last month the ECB surprised the consensus by reducing the deposit rate to zero. The impact on core and semicore short-term yield curves was dramatic, but as an incentive for banks to ‘use’ their excess reserves, the ECB is fighting an uphill battle to overcome high levels of risk aversion.
Interbank lending is unlikely to normalize easily. Having taken the bold move to adopt a zero policy rate only last month, the normally cautious ECB — historically it has been reluctant to embark on a innovative policy without being clear about its ramifications and how to exit — may wish to assess the impact of the policy before deciding to reinforce it by pushing the deposit rate into negative territory.”

my komm, gäsp!

Imorgon vet vi!!!