Chillin' out till it needs to be funded
The Asia story led by India dominated Global markets in early trading and was significantly bolstered by various easing of conditions agreed at the summit by Angela Merkel. Germany suggested almost that all bailout funds be used interchangeably but while italy and Spain look to a longer term solution to raising independent debt at lower cost Germany is sure about there being conditions to meet before new bonds raising will be allowed and that there will be subsequently more conditions with each such debt issue, making sure the Union in the orks does not mean Germany is carrying everyone else’s debt
The Euro of course should be down either way, if the EU Summit and management committee members keep approving the measures required then from the increasing easy flow of money and if the EU cannot agree to a “real’ solution then for the political volatility. Euro retracing from 1.26 levels after the good news sunk in
Spain’s audit of home accounting at its banks is due in a couple of weeks and Spanish government will with Industry and Consumer segmi then be busy with another few verifications till September and till then it will likely be on a “daily allowance” basis for the EU citizens with immediate decisions at summit swhere a cash shortage is discovered.
The ESM will fund spain and others only after EFSF is used up and both will be used together without any extra seniority in directly funding Spanish Banks but Direct fundin gof banks will have extra conditions of budgetary control and discipline.
French GDP came to a full circle again in Q1 and the year on year growth is also right next to Zero a gap of nearly 1% from last quarter including the 0.5% gain in public spending. Net Exports are already contributing negatively to the French GDP. German retail sales contracted 1% on year but consumer consumption as we saw the last few weeks has picked up in May in France to a 1% growth, PPi down by 1% on month. The Swiss are hoever back from the brink with leading indicators moving above 1% in the few months after pegging the currency to the Euro. EMU money supply ( for all 26 nations) is contracting again with Industry and Consumer sentiment in the negative in double digits. something about this HICP calculation of inflation is a little insulated from the actuals as all inflation indicators are, HICP tagging along at 2.4% unchanged despite the sle of negative news confirmed everywhere else including Italian retail sales
The US Balance sheet is reviewed separately in the yet due Thursday Fed Update as business has been rocking again in Asia! meanwhile commodities have started moving up again ahead of monetary easing being assured as crude turned back from 90 and copper and Natural Gas though aborted incipient rallies, moved up from bottoms in May