Recap 5-21-12

Main Items:

· The ECB approved an increase in the limit of the ELA program for Greek banks from EU90B to EU100B – Bloomberg

· G8 Statement did not surprise. Quotes:

1. Our imperative is to promote growth and jobs.

2. We welcome the ongoing discussion in Europe on how to generate growth, while maintaining a firm commitment to implement fiscal consolidation to be assessed on a structural basis. We agree on the importance of a strong and cohesive Eurozone for global stability and recovery, and we affirm our interest in Greece remaining in the Eurozone while respecting its commitments.

3. We agree that all of our governments need to take actions to boost confidence and nurture recovery including reforms to raise productivity, growth and demand within a sustainable, credible and non-inflationary macroeconomic framework

· Chicago Fed improved to 0.11 in Apr vs -0.29 prev

· Italian PM Mario Monti proposed a bank guarantee fund for all of the Eurozone at the G8 meeting this weekend. The plan would entail Europe’s governments jointly funding guarantees for deposits. The idea apparently has the backing of the ECB and Obama – Reuters

· according to Jean-Claude Juncker, “if we had a secret vote about Greece remaining in the eurozone, we’d have an overwhelming majority against it” – Bloomberg


  • BBG reported that Chinese premier Wen Jiabao said on Sunday:
  1. We should continue to implement a proactive fiscal policy and a prudent monetary policy, while giving more priority to maintaining growth.
  2. Wen called for “putting stabilizing growth in a more important position”
  3. Current economic operations are generally stable and growth is still within the expected range, but the domestic and external environments are becoming even more complex, Wen said

Spain revised up its budget deficit for 2011 to 8.9% of GDP from 8.5% after receiving new estimates from regional governments and information about unpaid bills, the Budget Ministry said. Europe’s statistics agency, Eurostat, plans to send a team to Spain within the next two weeks to determine why the country revised higher its 2011 deficit numbers – Bloomberg

Germany’s 3.6mn car and engineering industry workers (IG Metall union) will receive a 4.3% wage increase, effective as of 1 May 2012 – their largest pay increase since 1992.

Upcoming Data:

  • Tues: UK CPI EU Consumer Confidence, Richmond Fed Mfg Idx, Japan Trade Balance
  • Wed: BoJ, EU HoG Meeting, Canada Retail Sales, Home Price Idx, US New Home Sales, China HSBC Flash Mfg PMI
  • Thurs: EU PMI, German IFO, UKGDP, US DGO, Jobless Claims, Japan PMI
  • Fri: Italy Hourly Wages, UMichigan Confidence
  • Mon: Italy Business Confidence, South Korea Business Survey,


The catalyst for the next move may be the PMI prints on Thurs. (Expectations are for a marginal uptick to 46 from 45.9, but the chart below suggests some upside risk)
Until then, this bounce / squeeze could continue tomorrow.