Archive - Apr 18, 2013 - Story

Yesterday it was headlines from Bini-Smaghi and Weidmann punching the lights out for the Euro (which as we have been saying all along, needs to be lower not higher to promote some glimmer of hope for Europe). Moments ago it was two new headlines, which if not market crushing on their own, show how increasingly precarious Europe is.

• ITALY PARLIAMENT FAILS TO ELECT PRESIDENT IN FIRST BALLOT
• MERKEL FALLS SHORT OF COALITION MAJORITY ON CYPRUS VOTE

In other words, despite hopes that the Italian political chaos would stabilize following a compromise presidential candidate (which we noted earlier today we would believe when we saw), Italy continues to be an ungovernable chaos. As for Germany, Merkel was forced to rely on opposition votes to pass the critical Cyprus rescue package on which she has literally bet the future of Germany and her political career. While not unexpected, this portends poorly for the Chancellor's September reelection chances, especially if the German anti-Euro party continues its recent surge in popularity in the past few weeks.

• Apple reportedly stops placing Mac component orders (DigiTimes)
• Apple Ordered to Remove Obscene Content From China Store (BBG)
• Texas Ammonia-Plant Blast Kills as Many as 15 People (Reuters)
• Boston Probe Said Focused on Person Dropping Bag at Site (BBG)
• The Chinese cold trade war comes come to roost: US becomes Japan’s top export market (FT)
• Berlusconi, Bersani back Marini in presidential vote (Ansa)
• German parliament backs Cyprus bailout (Reuters)
• China Vows Wider Yuan Movement (WSJ)
• Morgan Stanley Sees Core Earnings Weaken (WSJ)
• Gold Miners Lose $169 Billion as Price Slump Adds ETF Pain (BBG)
• G-20 Draft Affirms Pledge to Avoid Competitive Devaluations (BBG)
• IMF warns on risks of excessive easing (FT)
• The battle for the Swiss soul (Reuters)

Following yesterday's most recent Europe-led rout, the market is attempting a modest rebound, driven by the usual carry funding currency pair (EURUSD and USDJPY) levitation, although so far succeeding only modestly with not nearly enough overnight ramp to offset the bulk of yesterday's losses. In a centrally-planned, currency war-waging world, it is sad that only two key FX pairs matter in setting risk levels. But it is beyond hypocritical and highly ironic that according to a draft, the G-20 will affirm a commitment to "avoid weakening their currencies to gain an advantage for their exports." So the G-20 issues a statement saying nobody is doing it, when everyone is, thus making it ok to cheapen your exports into "competitiveness"? In other words, if everyone lies, nobody lies. Of course, also when everyone eases, nobody eases, and the world is back to square one. But that will only become clear eventually.