Belgium

While regional independence is superior to both the failing European Union and the façade of special interest controlled democracy, one further action should taken by any jurisdictions that choose secession: Newly restored sovereign nations should repudiate their share of the illegitimate sovereign debt when they exit existing unions and nation-states. Created by distant banking elites buying national politicians and parliaments to load up on sovereign debts that can never be paid off, this massive national debt load is illegitimate and destructive to existing and new national economies. Governments have three ways to deal with debt loads of this magnitude: The first is hyperinflation designed to destroy the payoff value of the debt, second is the official repudiation of the debt or third, a combination of both options. Attempting to hold the bankers accountable is not an option. The first nations to repudiate sovereign debt will have the advantage; and as nations undertake this endeavor, they should keep this in mind: All government bureaucracies grow until contained, taxes rise until curtailed and politicians borrow and seek power until thrown out of office.

Might have missed something today .

The weakness after the US close and soft sentiment figures understood.

The mid-morning change in mind and subsequent rebound seems a bit puzzling here.

PMIs rather bad, the rest not good enough…

Uuuhh. Yesterday a heart attack and today Lights Out? Then again, markets went up seamlessly with no trigger and can thus slide the same way.

AAPL will need to come up with a helluva surprise mini iPad that does the cooking and bring the kids to school to turn around things overnight.

Spain situation still by far not settled enough to last without some real interventions / decisions.

Mostly boring.

European equity resilience seems surprising, given the otherwise gloomier mood. No news still played out as being good news and even catch-up to US levels seems a doubtful explanation.

Beats me.

This week was more spaced out with pessimism followed by Spain and equities ripping higher on  no news, at least nothing major nor new.

So we’ll dedicate the week to the Fab Fours’ song, which title’s abbreviation  has always been linked to substance abuse.

Just be careful when coming down…

Spacy week, though… Song pick of yesterday’s said it all. Somehow, things have spun out of control and the rocket started stalling and then drifting into the void…

Poor Major Tom left the capsule too early.

Regional elections in Spain over the weekend. As Rajoy denies there’s any pressure to seek help, BONOs slide. Damned if you don’t; damned if you do…

Interesting to see Core EGBs’ only muted reaction to the fading Risk sentiment, though (Bunds and UST still +15 on the week).

First “decent” Spanish auction in ages, decent being just normal, if not even boring. In absence of hard facts, outside the hypnosis trick “All will be well! Believe me…", I’d like to remain on the cautious side, though.

On EU decisisons, it could look like Good Cop / Bad Cop act, if it wasn’t clear that the players actually mean what they are saying.

Won't be EZ...

European Risk remains buoyant (unlike in the US), but the question is whether Moody’s upholding Spain a tick above Junk is really worth a 30bp plus relief rally?

Hmmm… Bunds getting trashed by equities and Spailout; Spain getting a lift on the latter, but a break from Greek Troika news and German back pedalling.

Spain better, but had lost 20 bp just yesterday.

Equities stopping out and squeezing. Credit ripping tighter.

Risk On, but not everywhere. Wild...

European equities trying to decouple from EGBs and US equities, trying to trade “No news is good news”.

Low action day.

Short term trading strategy buy Spain on weekend bail-out hopes and resell rapidly might need to be deepened. Not much to chew on eventually.

Particularly light on hard data, take away from this week’s action was reduced volatility in the EGB world (unlike rather more jumpy and eventually depressed equities).

After rainy weeks, better weeks, we pretty much had a rather sleepy week.

Stronger Periphery trapping European equities, with the latter dragged down by US apathy.

Risk adverseness factors (equities – Periphery - EUR) decoupling.

US equities seem utterly tired.

Somehow the last months’ rally ahead of QE has tired everyone and since delivery every step seems sooooo heavy.

Stronger Periphery close will be the usual opportunity for politicians to rant about the lack of clout of rating agencies.

Good Jump in Risk appetite. Question is how far. Lack of absence of negative news, or better, markets simply ignoring the latter, doesn’t make for a convincing bullish rebound.

I’d say: We won’t get fooled again! European Bull trap.

With government bond markets increasingly manipulated directly via central-bank intervention - and becoming increasingly illiquid - the odd situation we find ourselves in once again is that CDS markets perhaps provide a 'cleaner' picture of where credit risk is actually being traded between market participants (hedgers or speculators). To wit, Bloomberg's ever-insightful Michael McDonough has noticed a significant divergence between market-implied perceptions of risk (CDS) and ratings-agencies perceptions among several nations. Most notably France and Italy (with Belgium close behind) appear considerably 'over-rated'. Italy's implied rating is equivalent to BB+ at S&P - well below its average rating of BBB+ and France's implied rating of A is around four notches below its composite rating. Spain also appears set for more pain as its market price implies a sub-investment grade rating is imminent.

Eerily quiet after yesterday’s post-ECOFIN cacophony…

No real take-away today: sometimes you need a breather and everyone agrees.