Would be easy to call this boring, given the state of the market and volumes, but undercover Risk On definitively there. Greek 10s over the moon and far away (up 500 ticks)… Strong EUR. Seems a little easy, but who wants to fight? It’s Yule Time – at least until Friday, then we’ll see what the Mayans really meant.
"Oh Come All Ye Faithful" (Bunds 1,42% +0; Spain 5,25% -4; Stoxx 2658 +0,4%; EUR 1,326 +40)
Another boring session, worsened by year end inactivity… Good close. Fiscal Cliff haggling on-going with a positive spin this time and Risk riding high.Spain catching up and paring yesterday’s soft patch, as is Italy. ESToxx at the highest since Aug 2011. Credit very squeezed. EUR strong. Merry Mood!
"I Saw Mommy Kissing Santa Claus " (Bunds 1,42% +5; Spain 5,29% -12; Stoxx 2647 +0,7%; EUR 1,322 +50)
Utterly boring Monday session, worsened by year-end inactivity… Won’t get any better going forward, probably. Fiscal Cliff a cliff-hanger (I know, cheap)… Spain on the heavier side with contingent funding holes still popping up here and there.
"Jingle Bell Rock" (Bunds 1,37% +2; Spain 5,41% +4; Stoxx 2628 unch; EUR 1,317 +30)
Last week the big story in French headlines has been the tax exile of Gerard Depardieu in Nechin, Belgium, half a mile from the French border. French PM Jean-Marc Ayrault called the French movie star’s behavior “minable” (pathetic). A socialist MP, Yann Galut, even suggested that M. Depardieu loses his French nationality. In an open letter in the Journal Du Dimanche on December 16, Depardieu, who famously starred as Obélix, the big Gallic fellow of Astérix, carrying menhirs on his back – and sometimes throwing them at the Romans, replies. With a taste of Ayn Rand’s famous character John Galt. Gerard shrugged.
Bingo Bongo, Good News hailing, Sleepily digesting in the South to end Stuck… What an uninspiring week… Felt slow as a Sunday Afternoon– for 5 days in a row… The only thing that wasn’t lazy and laid back was the EUR.
Utterly boring Friday session, worsened by year end inactivity… PMI figures, which were actually needed on the more positive side to justify the latest levels in Risk were just so so in Europe. But, who cares? Periphery recovering further with Spain actually the best performer on the week (outside the bailed-out gang). US stuck despite better figures.
"Stuck in the Middle with You" (Bunds 1,35% unch; Spain 5,37% -1; Stoxx 2628 +0,2%; EUR 1,314 +60)
As more and more wealthy French bourgeousie flee (first Arnault, now Depardieu) the nation of their birth to the smaller and better-beer-making nation of Belgium, it seems that socialist president Hollande is not amused. His cunning plan to tax the crepe out of the uber-wealthy has back-fired - quelle surprise - and in the most passive aggressive statement in a while, Agence France-Presse notess that Hollande 'patriotically' demands "there's no other way" than to revise fiscal agreements with countries (cough Belgium cough) offering advantageous tax rates. AFP goes on to note his additional rantings, "We're reconciling our budget policies, we must reconcile our tax policies," Hollande said at a press conference in Brussels as France is "forced to renegotiate the tax convention to deal with those who have moved to some Belgian village." Shame really.
Markets getting back to some normality with the Periphery still recovering, although less today after the auctions, Bunds 5 wider on the week, Italy 10, but Spain 7 tighter across the curve from last Friday. Equities and Risk oblivious to that anyway and synching with the US. Getting difficult to find something crisp out there with reduced news flow and volatility. Excitement to be found in the US on FC developments, now that Greece, Spain and Italy are seemingly off the table and that the FED has moved to QE4.
"When It's Sleepy Time Down South" (Bunds 1,35% +1; Spain 5,38% +4; Stoxx 2622 -0,2%; EUR 1,308 +40)
Markets recovering quite nicely from the Italian shock. Add some better outlook figures and we’re all friends again. The Spanish bill auction was less punishing than could have been feared. US opening stronger. Everything else is all good again. Greek bonds stellar.
"(Ain't That) Good News" (Bunds 1,32% +2; Spain 5,45% -9; Stoxx 2623 +1,0%; EUR 1,299 +60)
Three months ago many were angry and surprised (or not at all, as realistically this was a perfectly logical move), when Bernard Arnault, head of LVMH and the richest man in socialist France, decided he had had enough, and would move to Belgium to avoid Hollande's punitive taxes on France's wealthiest. The indignant media's mocking response in France was fast and furious, with many delighted to see the billionaire leave. We wonder how the media will respond as more and more wealthy Frenchmen decide, now that the seal has been broken, to do just that and leave France to its grassroots movement where it is only "fair" that those who have more income and/or wealth, pay more than everyone else to keep the myth of the ponzi scheme formerly known as the welfare state alive and well. Such as one of France's most popular actors, Gerard Depardieu, who is the latest high profile departure to leave his native country and go to Belgium to avoid the second coming of the "fairness doctrine" (the first one of course, doing less than spectacularly with that whole USSR thing).
Surprisingly stable Risk. BTPs shot down in style. Italy? Down. Chinese data? Partially weak. Japan? In recession. French data? Weak. German data? Strong. Wow! Better have Friday’s PMI numbers really good. Analysts having to reinvent themselves once more as political experts to glare into a smoky crystal ball… Italian contagion contained, for now. Uh…Uh…!
"Uh...Uh - Bingo Bongo " (Bunds 1,30% unch; Spain 5,54% +9; Stoxx 2598 +0,0%; EUR 1,293 -20)
Shuffle Rewind 03-07 Dec " Only When I Sleep " (The Corrs, 1997)
This week in review (compared to Fri 30 Nov COB):
Click on day for related post, on title for song.
Hmmm… Need to find another way to kill time until Year End. Morning highs, lunch time lows and then trailing the US. EGBs on the stronger side with augurs seeing a weakening Germany and calls for lower rates putting the EUR under pressure. Ok, Germans: now work! Somebody has to pay the bills!
"Bruttosozialprodukt " (Bunds 1,3% +1; Spain 5,45% -1; Stoxx 2597 -0,3%; EUR 1,295 -20)
Strong start in Risk to take out new 2012 highs in Equities and trying to retrace near 2012 Credit lows, too. Core EGBs cool. Bunga Square’s rug pulling scuttled all that easy living by noon, weighting on the Periphery and boosting Core EGBs. ECB gloomy. Equity – bond divergence not a flyer yet, though… US sideways and Risk Watchers back to scanning European politics. EUR falling of the carpet.
"Magic Carpet Ride" (Bunds 1,29% -6; Spain 5,46% +8; Stoxx 2605 +0,6%; EUR 1,297 -100)
Lather. Rinse. Repeat. Over and over. Europe doing about fine on its own and with an urge to test higher risk levels, in absence of negative news. Spanish BONOs feeling sad… US look more fickle. Is the fruit getting bad? Question of Muppets getting nervous out of boredom, or what?
"Furry Happy Monsters" (Bunds 1,35% -4; Spain 5,38% +15; Stoxx 2589 +0,1%; EUR 1,307 -10)