China flash PMI ( 47.8 ) plummets to lows near 2009 collapse , New Export Orders down to 44.7 - again near March 2009 low , around the horn in Europe - ECB allegedly considering " implicit " target on interest rates but doesn't plan to say what the level is , Finland trying to say good things about a Eurozone breakup not being in the cars ( but still planning for one to be safe ) , Spain planning to take steps against their weak banks , Eurozone economy data still reflects contraction for Service activity and manufacturing - German private sector figures ( compositie index ) hit three year lows , Schauble says granting Greece more time to implement spending cuts won't solve Greece's problems - noting the Eurozone had reached limits of what is economically viable in its Greece aid package.

http://www.zerohedge.com/news/perfectly-irrational-market-slides-news-spain-actually-not-verge-default

Perfectly Irrational Market Slides On News Spain Actually Not On Verge Of Default

Submitted by Tyler Durden on 08/23/2012 13:22 -0400

• default

Within seconds of the non-news headline (via Bloomberg) hitting:

*EU SAYS IT'S NOT EXPECTING SPAIN AID REQUEST 'ANY TIME SOON'

The S&P 500 is crumbling, Oil is plunging, and EUR is selling off

which just as we tweeted:

zerohedge@zerohedge

So Europe having run out of anything actionable, gets some media outfit to repackage old stuff in ALL CAPS and flash it as breaking stuff

and...


http://www.zerohedge.com/news/european-no-action-just-talk-rumor-mill-back

The European "No Action, Just Talk" Rumor Mill Is Back

Submitted by Tyler Durden on 08/23/2012 10:57 -0400

• European Central Bank
 
• Germany
 
• International Monetary Fund
 
• Primary Market

Merkel must be back from vacation, cause Europe just fired up the all talk and no action rumor mill again.

• Spain in talks with Euro-Zone over terms of sovereign aid, according to "sources" - RTRS

So far so good - this is to be expected by the country whose bonds are trading lower only because this has been priced in for the past month.  But:

• No final decision has been made by Spanish authorities to request a bailout  - RTRS. So.... no news?
• No decision expected before September 12 at the soonest,politicial negotiations to intensify on September 14 or 15 - RTRS. So... no news because the ESM which is critical to the Spanish bailout is contingent on the German constitutional court. But hey - let's pretend like someone is doing something
• Preferred option is EFSF buying Spanish bonds on primary market, ESB buying in secondary market - RTRS. So... the EFSF whose 4th largest backer is Spain will be buying Spanish bonds, and the ECB, which Germany has just said 9 to, will be buying more bonds?
• Finally,
  • Discussions being held at the technical level, focus on conditions, monitoring. So.... more talk and absolutely no action, with Spain as usual demanding no conditions to its bailout, while Germany and the Troika telling Rajoy he has to essentially resign and work for the IMF when he tells the world that Spain is broke.
  And this is the "news" sending the EURUSD higher by 50 pips. Because, oddly enough, while talk is cheap, what this non-news does prove, is that Spain is now officially broke. Which must be great news.

and...










http://www.zerohedge.com/news/china-flash-pmi-plummets-new-export-orders-collapse-lehman-lows

China Flash PMI Plummets As New Export Orders Collapse To Lehman Lows

Submitted by Tyler Durden on 08/22/2012 22:57 -0400

• China
 
• Lehman
 
• Markit

It was the best of times (US equities); it was the worst of times (the world's growth engine - China). HSBC-Markit just announced the Flash PMI for August and it's not pretty - printing at a nine-month low (47.8 vs 49.3 in July). Of course, China's own version remains in the Schrodinger-like >50-expansion state for now but with all 11 sub-indices in this evening's data pointing to weakness, we suspect not even the Chinese can sell that data for much longer. So what next - RRR? Massive stimulus? - don't hold your breath given the recent reverse repos and the already creeping-inflation in food and energy prices. The piece-de-resistance of the data-dump though has to be (in line with Japan's trade data last night) is the New Export Orders slumped to 44.7 - lowest since March 2009 when trade finance collapsed post-Lehman.

China Flash PMI lowest in 9 months - almost back to 2009 lows...

as all 11 sub-indices suggest pain...

and from the Slog , talk of a secret / special deal for Greece ....

http://hat4uk.wordpress.com/2012/08/23/athensberlin-exclusive-slog-prediction-vindicated-as-leaks-about-special-deal-start-appearing/

ATHENS/BERLIN EXCLUSIVE: Slog prediction vindicated as leaks about special deal start appearing.

Finance Grump…Greek escape

Sources in Berlin and Paris were making it clear last night that, whatever emerges from the Merkel/Samaras meeting in the German capital tomorrow, a deal is already on the table. The task of Antonis Samaras is to prove he is willing to honour that deal – in every sense of the word – not to do the impossible being requested in public by German politicians.

Eleven days ago, The Slog posted that relations between Greece and the Troika had relaxed because, as a high-level Athenian source alleged:

“Something has been agreed, and whatever it is has made the bondholders and the Troika irrelevant overnight. There are half-hearted references to repayment schedules, but they don’t have that sense of panic evident just a few short weeks ago. But you can see that Samaras is now pushing for more austerity progress.”

The piece continued: ‘A deal has been done to pay off bondholders and forgive the residue of the debt…Somebody, somewhere in Europe flicked a switch within the last ten days, and everyone relaxed….Brussels or Berlin…or both…or others…have given Samaras a big reassurance that if he sticks with the [austerity] programme, Greece will not be thrown out of the euro. Those same people have given similar assurances to the key players in the IMF and bondholder groups…that if they take another haircut, the EU will pay off the balance and give them their money back…It is becoming increasingly potty to stick with the view thatnothing is going on here.’

Trusted sources have stuck with that view, and seemed more certain last night than the week before last. And now leaks are beginning to appear in the influential MSM titles around the globe: said Bloomberg late last night (BST), ‘…officials look for ways to stave off an immediate crisis…[including]….front- loading aid payments to Greece to help it over liquidity hurdles; lowering the interest rate or extending maturities on loans; and pushing for a second debt writedown, this time focusing on bonds held by public institutions, notably the European Central Bank…’

Further, while Jean-Claude Juncker sprayed out some more bombast yesterday -  telling the Greeks they have a “last chance” to avert bankruptcy – German officials specifically were briefing to the effect that if Greece wants more time, it “could receive concessions if it demonstrates a desire to achieve its main bailout goals”.

And of course, Herr Miserable Schäuble got himself a world media splash yesterday by saying ‘more time’ wouldn’t solve Greece’s crisis. (As always with Wolfie, he didn’t elucidate what would.) But the truth is – as The Slog has contended for some time – that the EU economy couldn’t stand a mess right now, and Greece’s geopolitical hand is too strong to risk chucking Athens out of the eurozone. This focus too is reflected on the front pages of French and German MSM titles today: most German newspapers are concerned with the German economy (still growing) and investment in education. In  turn, key analyst group Markit announced today that “…the July and August readings would historically be consistent with [eurozone] GDP falling by around 0.5%-0.6% quarter-on-quarter.” In the French press, there’s been a  concerted campaign against Francois Hollande over the last few days from both Left and Right: ‘Where are the promises?’ ‘Government under fire’ and ’100 days of doing nothing’. Not a peep about any ‘eurozone crisis’.

OK: the unvarnished truth was given to The Slog on 13th August as ‘pay off bondholders and forgive the residue of the debt’. What is being floated in the financial press right now is ‘front- loading aid payments to Greece to help it over liquidity hurdles; lowering the interest rate or extending maturities on loans; and pushing for a second debt writedown‘. Ignore the words and extract the kernel of reality:

1. Front-loaded aid = cash = available immediately to pay off debt…plus further help from reduced rates. If this isn’t debt forgiveness, then the Pope is a Muslim.

2. Extending maturities on loans = more time.

3. A second debt writedown = haircut = main creditor is the ECB. ECB forgives the debt, and prints some more euros to pay itself back. See also this conclusion from my original posting: ‘I don’t know for certain: but logic points the finger at Mario Draghi.’ Well of course it would: Signor Dragi can, should he wish, do pretty well anything he wants…and he has.

Simples.

Except for on small  problem: even after all this has been agreed in a last-minute cliffhanger, Greece is still going to need Bailout III before too long.

At which point, Athens will get The Spanish Deal: a full bailout, called something else.

But when that happens, will the Germans still be in there and fighting? I continue to have my doubts.

and from Zero Hedge Hedge - peak desperation from Europe and the ECB  ? Nope , we're just getting started I fear ....

Peak Desperation: ECB "May" Set "Secret" Bond Caps, Bild Says Without Citing Anyone

Submitted by Tyler Durden on 08/23/2012 06:47 -0400

• Bond
 
• European Central Bank
 
• Germany

Just when we thought we had seen and heard it (and by it we mean lies, innuendo and desperation) all, here comes the one thing that confirms where the ECB, and Europe, is concerned, we ain't ever seen nuthin' yet. According to Bloomberg, the ECB may set secret ceilings on the yields of govt bonds from countries requiring bailout aid,Welt reports, without citing anyone. Note the words "secret" and "without citing anyone" because they really are key. Because it is unclear whether Bild is truly stupid enough to assume that what amounts to a limitless bond purchase operation could remain a secret and not show up on the ECB balance sheet. What it really is, is merely a last step desperation attempt by Mario to keep on talking down bond yields, since a month into his "believe me" speech, the ECB has yet to do anything, let alone secret or not so secret yield caps, let alone Spain demanding a bailout, let alone the ECB even reaching a consensus with Germany and Bundesbank both opposing any incremental money printing. Welt says that the ECB could also set a range for yields, merely another absolutely idiotic "detail" in the ECB's "secret" plan. Supposedly the advantage of a range is that the ECB wouldn’t need to defend a set price at any cost, could tolerate S/T deviations. The (lack of) logic for this measure is that central bankers no longer believe that announcing a ceiling and making it public would be enough to calm markets. But nothing, nothing, can prepare one for what comes next: Secret yield ceilings would only work if they aren’t leaked says Welt. Yup. They said that. This is where blood shoot be shooting out of your nose at escape velocity.

Some additional minor details from Welt:

• May be difficult to ensure secrecy as ECB bond purchase plan is controversial, not all council members in total agreement on best course of action
• No decision has been made yet on how ECB can best act in  markets

We can only hope this is a desperate attempt at media disinformation to get the German public against further bail outs, or better yet, outright humor to challenge the Spiegel's just as desperate recent leak on not so secret yield caps, because if this is truly an "indication" of the ECB's remaining ammunition, then Europe has at most days left.

and from The Telegraph liveblog.....

http://www.telegraph.co.uk/finance/debt-crisis-live/9493671/Debt-crisis-live.html

11.31 Reuters has a tale this morning that the European Central Bank is considering setting a yield target on purchases under a new bond-buying plan, but won't tell anyone what the levels are. Here's more from the newswire:

Such an "implicit target" was one option being examined but nothing would be decided before the ECB's Sept. 6 policy meeting, one source said. Such a target could be flexible.

Another said nothing would be decided before that meeting, but would not rule out this possibility.

ECB President Mario Draghi signalled earlier this month that the bank may start buying government debt to reduce crippling Spanish and Italian borrowing costs, comments that fuelled a broad-based upturn in sentiment on global markets.

Christian Schulz, a former ECB economist at Berenberg, told Reuters that setting a specific, known, yield target could open up the ECB to a political debate with governments over the appropriate level to aim at, something the bank would want to avoid.

But, he added that not making the target public could also be problematic:

That's an invitation to markets to do what you don't what them to do, which is sell, sell, sell to see where you would intervene.

We think that an explicit, clear, open target would be extremely helpful. The Swiss experience shows that if you don't announce a clear target, markets are likely to test where the target is.

11.19 More chatter from Finland, where senior politicians are trying to dampen talk of a eurozone break-up. Now, the prime minister, Jyrki Katainen, has said that people thinking Finland is planning to exit the single currency are "mistaken". He said:

The world is full of incorrect ideas of what Finland is after. Some think that Finland is planning to exit the euro or that Finland would be the first one to leave. This is a mistaken view.

...

Finland isn’t seeking stronger rules for the monetary union because of scepticism toward the euro. We want stronger rules because we’re positive on the euro.

Earlier this week, Finland's president said that quitting the euro was not an option after the country's foreign minister indicated that Finland was preparing for a break-up.

10.57 Spanish media is reporting today that the country will empower its banking authorities to swoop in on lenders that appear to be heading for trouble and if necessary liquidate them.

AFP reports:

The new legislation, reportedly to be passed by government ministers either this Friday or on August 31, was leaked to the leading daily El Pais and the business paper Expansion.

Aimed at preventing new banking catastrophes, it gives the Bank of Spain and the state-backed Fund for Orderly Bank Restructuring (FROB) new powers to intervene before crises erupt.

...

The Bank of Spain could intervene early even in a bank that complies with liquidity and solvency requirements, if there is objective evidence that it cannot continue to meet those standards, the papers said.

The central bank would have extensive powers to demand that the suspect bank provide an action plan within 10 days, agree a debt restructuring plan with creditors or fire the management.

09.20 The downturn in the eurozone economy has extended into a seventh month, with the composite index coming in at 46.6 in August, compared to 46.5 in July. A number below 50 marks a contraction.

Services activity shrank to 47.5 from 47.9, marking a two-month low. Manufacturing output ticked up, however, rising to 44.6 from 43.4 in July.

Rob Dobson, senior economist at Markit, commented:

The August Markit Eurozone Flash PMI reinforces the prevailing view of the economy dropping back into recession during the third quarter of 2012. Taken together, the July and August readings would historically be consistent with GDP falling by around 0.5%-0.6% quarter-on-quarter, so it would take a substantial bounce in September to change this outlook.

09.08 A little more detail on those German private sector figures. The composite output index - that measures activity in both manufacturing and services - fell to 47 in August, which marks a three-year low.

Behind that fall was a contraction in services activity to 48.3 in August from 50.3 in July while manufacturing output ticked up to a two-month high of 44.6.

Germany's statistics office has also confirmed a preliminary estimate showing that German GDP slowed to growth of 0.3pc in the second quarter after expansion of 0.5pc in the first.

08.56 Germany's finance minister has said that granting Greece more time to implement spending cuts would not solve its problems. Wolfgang Schaeuble told Germany's SWR radio that "more time is not a solution to the problems", warning that more time could also mean "more money".

The eurozone had reached the limits of what is economically viable in its Greek aid package, he added.

08.44 Martin Weale, of the Bank of England's Monetary Policy Committee, has been speaking to French newspaper, Les Echos.

He told them that he does not think it necessary to extend quantitative easing asset purchases at the moment and did not think it would be wise to cut short-term interest rates either:

At this stage, my personal opinion is that it is not necessary to increase the size of the asset purchase programme. Cutting short-term interest rates to zero or to 0.25 percent could produce perverse effects, such as weakening the financial position of certain banks - the interest rates on their deposits - or money market funds.

08.33 These figures are unlikely to hearten Mrs Merkel as she heads into her meeting with the French president. German manufacturing and services data is out and shows the country's private sector shrank for the fourth month running in August. Orders from abroad for its goods sank at the fastest rate in more than three years, indicating that Europe' powerhouse economy is feeling the pinch from the eurozone crisis.

Markit's composite Purchasing Managers Index (PMI), measuring activity in both manufacturing and services, slipped to 47.0 in August, according to a flash estimate, below the 50 mark that separates growth from contraction that it crossed in May.

Markit's Rob Dobson said the German data did not bode well for the currency bloc as a whole:

What people were hoping was that ongoing German economic strength would aid growth and recovery in the broader euro zone economy. Given these numbers, it looks very much as though a blow is being dealt to that.

What we've now seen over most of 2012 is that conditions in Germany and France are at best muted and in many cases weakening as we come into the middle of the year.