The T Report: Nike Named Head of the ECB

Posted by on Aug 10, 2012 in Uncategorized | No Comments

This is Getting Really Really Really Really Really Old

Weak Chinese economic data.

European economic data. I didn’t bother adding the word weak, since that seems either redundant or implicit in the phrase “European economic data”. Seriously, does anyone bother to look at it, or does everyone now just take a quick glance and know it sucks? I think that is the stage I’m at.

So why can’t we muster a really good sell-off? S&P futures are a whopping 5 points below fair value. IG18 is having what counts as a cataclysmic open – it is 1.25 bps wider.

It is hard to get bearish given the potential that the ECB will finally do something. Maybe propping up markets on the hopes of a plan is their intention? If they have real plans, isn’t it time to put them in place?

The economies in Europe will deteriorate every single day that currency redenomination risk and/or sovereign default risk is a near term risk. Until Europe does something there is no need to look at the economic data, it will be bad. It will also continue to be a drag on our economy and the Chinese. It really is that simple. Taking redenomination risk off the table, and giving Spain and Italy the funding relief they need is a “necessary” condition to have any hope of creating growth in Europe. It is not a “sufficient” condition as it alone won’t spark growth, but so long as at is at the forefront of people’s thoughts the economies will suffer.

If they are going to do something, do it now. Waiting is only making the problem worse. The economies will not have even a slim chance of improving while the ECB does nothing. So in the words of one of the greatest advertising slogans ever