Italy

It is a centrally-planned "market" and everyone is merely a bystander. Last night, following a dramatic China PMI miss, which as previously reported tumbled to the worst print since early 2014 and is flashing a "hard-landing" warning, the Shanghai Composite first dipped then spiked because all a "hard-landing" means is even more liquidity by the PBOC (which as we suggested a month ago will be the last entrant into the QE party before everyone falls apart). Then, this morning, a surprise beat by the German (and Eurozone) PMI was likewise interpreted by the algos as a catalyst to buy, and at this moment both European stock and US equity futures are their session highs. So, to summarize, for anyone confused: both good and bad data is a green light to buy stocks. In fact, all one needs is a flashing red headline to launch the momentum igniting algos into a buying spasm.

Krugman wants his US readers to believe that all proper economists now agree that cutting deficits was a bad mistake, and it’s only self-interested finance types and ideologically-motivated politicians and think-tankers that take a different view. But that’s nonsense. Just think about it: “Everyone agrees that austerity was a mistake”… apart from every government in Europe except the Greeks, and the economists and many of the civil servants that advise them. Krugman and his fan-club do not constitute all serious opinion, much as they might like to regard themselves that way. It’s all very nice sitting in a US university office preaching to the Europeans (or, indeed, preaching in the New York Times)

As previously observed (skeptically), a main reason for the surge in the DAX, and thus the S&P, on Friday was premature hope that the Greek talks earlier were a long-overdue precursor to a Greek resolution, and as we further noted yesterday, subsequent bickering and lack of any clarity as we go into today's critical "final ultimatum" meeting between Merkel and Tsipras, is also why the Dax was lower by 1.1% at last check, even if the EURUSD continues to trade like an illiquid, B-grade currency pair whose only HFT purpose is to slam all stops within 100 pips of whatever the current price may be.

It appears clear that the war reparations 'issue' will not go away anymore. Either Berlin pays what legal experts determine should be paid, or it risks becoming a pariah in its own neighborhood. That the Germans in the 1950s and 1960s, at home and in schools, chose not to tell their children anything about their crimes cannot serve as an excuse to silence the children of its victims. It seems the only way to save the European Union, that Germany has made its economy so dependent on, is for Germany to pay up.

A study shows industrial robots' impact on economic growth is comparable to the impact of railroads, highways, and IT and given gains in labor productivity and aggregate growth, low- and middle-skilled workers could end up displaced.

China and Russia have taken the lead in establishing the Asian Infrastructure Investment Bank, seen as a rival organization to the World Bank and the Asian Development Bank, which are dominated by the United States with Europe and Japan. These banks do business at the behest of the old Bretton Woods order. The AIIB will dance to China and Russia's tune instead.

For merchants in Italy, there's a tradeoff for putting up an awning that may end up casting a shadow on the sidewalk. 

In the aftermath of the ECB's QE announcement one topic has received far less attention than it should: the unexpected collapse of risk-sharing across the Eurosystem as a precursor to QE. This is what prompted "gold-expert" Willem Buiter of Citigroup to pen an analysis titled "The Euro Area: Monetary Union or System of Currency Boards", in which he answers two simple yet suddenly very critical for the Eurozone questions: which "currency boards", aka national central banks, are suddenly most at risk of going insolvent, and should the worst case scenario take place, and one or more NCBs go insolvent what happens then?

And then there were none. Like dominoes, US allies have fallen in line on the heels of the UK's decision to join the China-sponsored Asian Infrastructure Investment bank and now, the stanuchest supporter of Washington's position on the venture looks set to defect as well.

• Clinton Charity Tapped Foreign Friends (WSJ)
• Dollar Set for Worst Week Since ’13; S&P Futures Rise (BBG)
• Shale Producers Have Found Another Lifeline: Shareholders (BBG)
• BOJ Kuroda says no sign of 'currency war' brewing in world (Reuters)
• Fed Is Pushing and Pulling on Rates Riddle (WSJ
• Brent oil falls towards $54 on OPEC output, Iran (Reuters)
• Iran Talks Stall Over Ending of Sanctions (WSJ)

"Ignoring direct pleas from the Obama administration, Europe’s biggest economies have declared their desire to become founding members of a new Chinese-led Asian investment bank that the United States views as a rival to the World Bank and other institutions set up at the height of American power after World War II," The Times notes, in yet another indication of declining US influence.

Many analysts regard this as further evidence that the Fed is caught in a bind. What is yet to be appreciated by most analysts is that it is unlikely that the massively over-leveraged and debt-saturated financial system can weather increases in interest rates.

Russia must get aggressive in the economic war. You can win this economic contest in 24 months, if certain special zones in Russia simply are allowed to copy Swiss banking rules and regulations, as wealth will always flow to secure locations where taxes are low. You know what banking privacy and security did for Switzerland, it made a poor country with few natural resources the wealthiest nation in the world.

Even as a Graccident becomes more likely by the day, there are still plenty of signs that EMU members are prepared to present a unified front in the face of uncertainty.

The United States government just went from “Please, baby, don’t leave me,” to frustrated threats and whining. After the UK announced it will join new China-led Asian Infrastructure Investment Bank (AIIB) as a founding member late last week, Germany, France and Italy decided yesterday to follow Britain’s lead and join as well. Welcome to the beginning of the end of the US dollar’s domination. It’s happening.