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The Danish Dilemma: What the Euro Crisis has Wrought

May 31, 2012
Denmark, like Switzerland, offers negative interest rates.  This is not just bills either, but in Denmark's case, rates are negative through the 2-year tenor.  Swiss rates are negative through the 4-5 year sector.  The Danish situation is similar to Switzerland's.  
As money seeks refuge from the uncertainty in the euro zone, especially w…
The Danish Dilemma: What the Euro Crisis has Wrought The Danish Dilemma:  What the Euro Crisis has Wrought Reviewed by Marc Chandler on May 31, 2012 Rating: 5
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Concrete Example of Potential Compromise in EMU

May 31, 2012
I have characterized my understanding of the euro zone investment climate as three no's:  No ECB backstop for sovereigns.  No joint bond.  No euro zone break-up.  That implies a prolonged period of slow growth.  It risks chronic political instability.
It also follows from this that I don't expect Greece to leave or be ejected from monetar…
Concrete Example of Potential Compromise in EMU Concrete Example of Potential Compromise in EMU Reviewed by Marc Chandler on May 31, 2012 Rating: 5
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Redenomination Risk: Is the Genie Out of the Bottle?

May 31, 2012
We have argued that the German effort to make the Greek election into a referendum on the euro was misguided. Greece made its decision to join more than a decade ago. Opinion polls indicate that this is still the case: Greek people, by an overwhelming majority, want to stay in EMU.
The memorandum of understanding has…
Redenomination Risk: Is the Genie Out of the Bottle? Redenomination Risk:  Is the Genie Out of the Bottle? Reviewed by Marc Chandler on May 31, 2012 Rating: 5
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The SNB is Preventing Needed Adjustment

May 31, 2012
The Swiss National Bank does not miss an opportunity to remind market participants that it is determined to cap the Swiss franc's appreciation. The cost of imposing its will appears to be rising. The Financial Times today reports estimates of the magnitude of its intervention range from CHF20 bln to CHF100 bln in recent weeks. Such a wide r…
The SNB is Preventing Needed Adjustment The SNB is Preventing Needed Adjustment Reviewed by Marc Chandler on May 31, 2012 Rating: 5
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Month-End Adjustment Gives Brief Reprieve

May 31, 2012
The US dollar is mostly softer against major and emerging market currencies today.  Many observers will talk about the string of better than expected data from Europe and the polls that suggest the ND are ahead in Greece and that the Irish will easily support the fiscal pact in today's referendum.  Yet the risk is that the firmer tone in the …
Month-End Adjustment Gives Brief Reprieve Month-End Adjustment Gives Brief Reprieve Reviewed by Marc Chandler on May 31, 2012 Rating: 5
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Great Graphic: The Billion Dollar Question Great Graphic: The Billion Dollar Question Reviewed by magonomics on May 30, 2012 Rating: 5
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Creditors and Bureaucrats Push Back

May 30, 2012
The financial crisis has called into question political and economic orthodoxies. In Europe, EU officials and the ECB President have encouraged new bold thinking. Anything seems possible. Moreover, the push-back against austerity, which began prior to the French elections, perhaps when Draghi endorsed calls for a growth pact, also has re-open th…
Creditors and Bureaucrats Push Back Creditors and Bureaucrats Push Back Reviewed by Marc Chandler on May 30, 2012 Rating: 5
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Flash: EU Head Fake?

May 30, 2012
EU says it will consider allowing banks borrow directly from the ESM.  This is a head fake.  The ESM does not exist yet.  It is not ultimately the EU's decision.  The ECB and Germany will also have a say.  The reason that banks are unable to borrow directly from the ESM is that it lets the sovereign off the hook.  Borrowing from those facili…
Flash: EU Head Fake? Flash:  EU Head Fake? Reviewed by Marc Chandler on May 30, 2012 Rating: 5
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One Driver: European Crisis

May 30, 2012
There is one main driver in the capital markets today and that is the heightened anxiety coming from the European debt crisis.  It is not that a significant new development took place, but rather investors appear to be struck by the paralysis of policy makers.  The Greek and French elections are still a couple weeks away, Spain seems nearly rudde…
One Driver: European Crisis One Driver:  European Crisis Reviewed by Marc Chandler on May 30, 2012 Rating: 5
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