http://www.sfgate.com/business/bloomberg/article/Anti-Monti-5-Star-Polls-Third-in-Sicily-s-3990251.php

Oct. 29 (Bloomberg) -- Italy’s anti-austerity movement is polling third in Sicilian regional elections that were marked by a low turnout and could serve as a barometer for the national vote due no later than May.

Giancarlo Cancelleri, the Sicily governor candidate of Beppe Grillo’s 5 Star Movement, got more than 18 percent of votes yesterday, preliminary official results show. The Democratic Party’s Rosario Crocetta garnered more than 31 percent, according to data from more than 25 percent of polling stations posted today on the region’s website, while Nello Musumeci, backed by former premier Silvio Berlusconi’s People of Freedom party, won about 26 percent.

The yield on government bonds rose the most in almost a month on concern about prospects for Prime Minister Mario Monti’s caretaker administration. Berlusconi, whose party is the biggest in the national parliament, threatened on the eve of the Sicilian vote to topple Monti’s government, saying its economic policies are deepening Italy’s fourth recession since 2001.

Should Berlusconi’s party drop its support, President Giorgio Napolitano may be forced to call an early vote before an election due by May. That, along with voter opposition to Monti, may fan Europe’s debt crisis, as the premier’s mix of higher taxes and public spending cuts has contributed to a decline in the financing costs of the euro region’s second-biggest debt.

Low Turnout

More than half of Sicily’s eligible voters failed to go to polling stations. The turnout when the polls closed at 10 p.m. was 47.4 percent, according to the region’s website, compared with 66.7 percent in 2008. Final results won’t be available until later today.

“Any significant move toward anti-austerity or non- conventional political forces such as Grillo could be dangerous for market confidence,” Biagio Lapolla, a rate strategist at Royal Bank of Scotland Group Plc in London, said before the vote. Still, in the “bigger picture some rejection of austerity can help shape the European policy agenda toward a more realistic approach where growth is given greater opportunity.”

The yield on Italy’s 10-year yield, which has dropped more than 200 basis points under Monti’s tenure, advanced nine basis points today to 4.99 percent at 1 p.m. in Rome after hitting 4.903 percent on Oct. 26. Borrowing costs dropped today at an auction of 8 billion euros ($10.3 billion) of six-month bills.

Anti-Austerity

While reducing Italy’s debt-financing costs, Monti’s austerity drive helped the 5 Star Movement emerge in opinion polls as Italy’s second-biggest political force. In local elections last May, the 5 Star won four mayoral seats in northern Italy, including the city of Parma.

Since June, the total support for parties backing Monti, including the People of Liberty and the Democratic Party, has fallen below 50 percent in most polls. Those parties hold more than two-thirds of the seats in both chambers of the Parliament elected in 2008.

Political power in Italy is up for grabs as the dominant parties of the last two decades also struggle to shake the taint of corruption.

Earlier this month, Monti’s government disbanded the city council of Reggio Calabria in southern Italy to end alleged infiltration by criminal groups. That decision followed the arrest of a local government member of the Lombardy region in the north by prosecutors for allegedly buying votes from the ’Ndrangheta, the Calabrian mafia. The region’s governor, Roberto Formigoni, is being investigated for corruption in a separate inquiry and denies any wrongdoing.

Sicilian Theatrics

The theatrics around elections in Sicily, with more than 4 million registered voters, showcased the outsiders and establishment forces vying to replace Monti. Newer voices such as that of Grillo, a former comic turned political gadfly, used the race in Sicily to show policy makers at the national and European levels that voters are poised to repudiate austerity.

Italians will watch to see whether the 5 Star of Grillo, who swam the 3.5 kilometers (2.2 miles) from the mainland to Sicily to open the election campaign in Italy’s poorest region, can turn his anti-austerity stance into votes elsewhere in the country. Elections in Lazio and Lombardy will take place in January.

Unelected Monti was named prime minister last November after Berlusconi resigned amid legal woes and as the Italian benchmark 10-year bond yield topped 7 percent. Within weeks, Monti passed 20 billion euros in austerity measures, overhauled the pension system and embarked on changing labor-market rules in the euro region’s third-biggest economy.

Read more: http://www.sfgate.com/business/bloomberg/article/Anti-Monti-5-Star-Polls-Third-in-Sicily-s-3990251.php#ixzz2Ai3c5pJ5

http://www.zerohedge.com/news/2012-10-29/spanish-bad-bank-emerges-confirms-spanish-real-estate-absolute-disaster

The Spanish Bad Bank Emerges, Confirms Spanish Real Estate Absolute Disaster

Submitted by Tyler Durden on 10/29/2012 12:28 -0400

Bad Bank

Real estate

The details of the Spanish bad bank are being released and it is ugly - far uglier than many had believed. And while the Spanish government expects priovate interest to take some of this massively discounted 'crap' off their hands, we have three words: 'deleveraging' and 'no bid!'.

*RESTOY SAYS BAD BANK AIMS TO BE PROFITABLE
*SPAIN BAD BANK TO DISCOUNT LOANS AVG 46%; FORECLOSED ASSETS 63%
*SPAIN AIMS FOR BAD BANK NOT TO COUNT TOWARDS PUBLIC ACCOUNTS
- *SPAIN TO DISCUSS BAD BANK WITH INVESTORS IN COMING DAYS
- *SPAIN BAD BANK TO INCLUDE FORECLOSED ASSETS, LOANS, STAKES
The Spanish government remain in a world of their own with this level of self-delusion. Discount details below...

And the details are as follows (from worst to first):
- *BAD BANK SETS 79.5% DISCOUNT FOR FORECLOSED LAND
- *BAD BANK SETS 67.6% DISCOUNT ON LOANS WITH NO REAL GUARANTEE
- *BAD BANK SETS 63.2% DISCOUNT ON UNFINISHED DEVELOPMENTS
- *BAD BANK SETS 33.8% DISCOUNT ON LOANS WITH REAL GUARANTEE
- *BAD BANK SETS 56.6% DISCOUNT ON LOANS FOR OTHER LAND
- *BAD BANK SETS 54.2% DISCOUNT ON FORECLOSED NEW HOMES
- *BAD BANK SETS 53.6% DISCOUNT ON LOANS FOR URBAN LAND
- - *BAD BANK SETS 40.3% DISCOUNT ON LOANS FOR UNFINISHED WORKS
  - *BAD BANK SETS 32.4% DISCOUNT ON LOANS FOR FINISHED HOMES
  Visually this is as follows:
  
  What this table shows is up through what point there are no natural bids on given Spanish assets. In other words, nobody will bid on Spanish Land at even an 80% haircut!
  and the comedy continues:
  
  *BAD BANK VALUES NOT REFERENCE FOR NON-TRANSFERRED ASSETS: FROB
  
  *SPAIN SAYS BAD BANK'S BUSINESS PLAN IS STILL PROVISIONAL
  
  *BAD BANK TO HAVE `MODEST RESULTS' IN FIRST YEARS, FROB SAYS

http://www.athensnews.gr/portal/8/58710

Pasok cancels Stournaras' meeting with party MPs

29 Oct 2012 6:06 pm

Members of Pasok's economic affairs committee are demanding that the parliament have the final say on privatisations

Frictions between Pasok and Finance Minister Yannis Stournaras emerged after the latter's initiative to call to his office Pasok MPs who are members of the party's economic affairs committee and who are demanding that the parliament have the final say on privatisations.

Stournaras began telephone contacts, via his secretary, with Pasok MPs inviting them to a meeting at his office. When Pasok headquarters learned about the meeting they intervened and cancelled it, reminding Stournaras that only the party’s leader, parliamentary group secretary and relevant rapporteur, namely Filippos Sachinidis, have the authority to convene meetings of the party's parliamentary working groups.

Last week the Finance Minister had stated in parliament that privatisations will be discussed in the parliamentary Standing Committee on Economic Affairs and not in the parliamentary plenum, and that the parliament’s approval is not required. (AMNA, dv)

http://www.athensnews.gr/portal/11/58713

Troika letter "closes" discussion on disputed labour issues

29 Oct 2012 6:06 pm

The troika reject the preservation of the marriage benefit and the residual extension of the branch collective labour agreements

The troika of international lenders on Sunday evening sent a letter to Labour Minister Yiannis Vroutsis in which they "close" the discussion on the disputed issues of marriage benefits and collective labour agreements, ministry sources told state-run AMNA news agency.

According to the sources, the EC-ECB-IMF representatives state that "the Greek side, in the context of the negotiation on the labour issues, achieved the biggest possible agreement".

The troika rejects the preservation of the marriage benefit and says that its abolition has been already voted, while they are also absolutely negative to the preservation of the residual extension of the branch collective labour agreements.

However, they appear to be positive towards the ministry's proposals on the layoff compensations, so that the cuts will be contained at 15 percent for the high salaries, while the freeze on the three-year salary maturity raises will be maintained until the completion of the Medium-Term Programme at the end of 2015.

DEMOCRATIC LEFT

"We do not want to vote for the changes in the labour regime", Democratic Left central committee secretary Spyros Lykoudis said on Monday, speaking on public radio, leaving, however, open windows for a compromise.

"The labour issues have five sides. If they (the troika) step back in four of them, then okay. We do not play games here, neither us nor the other side. We speak on the substance," he said.

Asked whether the government will face the risk of collapsing if the measures are tabled in a single article, he said: "That is true, but I believe prudence and a collective sense will prevail in order for a solution to be found. We truly want the government's cohesion and not a political and governmental crisis to arise..."

Democratic Left spokesman Andreas Papadopoulos, speaking on private VIMA radio station earlier on Monday, said that he doesn't know if his party will vote against the package of measures, but he clarified that it will not accept the foreseen changes to the labour regime.

"There is time for negotiation, provided this takes place at a high level," said Papadopoulos, referring to the troika's persistence on not accepting changes on the issue of residual extension of branch collective labour agreements and in the abolition of the wedding benefit. (Athens News/dv, AMNA)

http://hat4uk.wordpress.com/2012/10/29/greek-crisis-now-pasok-joins-souvelis-is-withdrawing-coalition-support/

OCTOBER 29, 2012 · 9:21 AM

↓ Jump to Comments

GREEK CRISIS: Now PASOK joins Souvelis is withdrawing Coalition support

Venizelos…squeezing out of the door

Yesterday afternoon Pasok leaders told Greek Finance Minister Yannis Stournaras that they will join the Souvelis-led Democratic Left Party in refusing to support any law giving way to the Troika’s demands for the repeal of labour laws, the marriage allowance, and government job cuts. I am also told that collective bargaining laws and an open MP veto of certain privatisations remain as sticking points.

Over the weekend, the Thursday IMF presentation to junior finance ministers was re-happened (in that the Commission stopped denying its existence). Somewhere along the line, however, there has been a degree of confusion about what the IMF would say – Antonis Samaras still claims he thought the presentation would be positive – and it remains obvious that Berlin and Draghi decided, during Tuesday, that they didn’t buy into the agreement.

“I think what happened was that the speed of events gave Berlin the jitters,” says one reliable source, “What’s not entirely clear is why that was”.

Other sources are clear about the why:

“The Troika was all smiles Sunday, but then went away and wrote up something completely different. What they wanted was for the progress to stall. This is all about waiting until after Obama gets re-elected before chucking Greece out of the eurozone”, said another.

I have to say, this theory doesn’t work for me: surely, if stalling was the game, you’d write an equivocal report now, and then a more damning one after November 6^th? Also -White House pressure or not – both Berlin and the ECB would greatly prefer a deal with Greece to a messy exit while we still have the Spanish crisis on our hands.

Either way – as I noted last Friday – within 24 hours Samaras may well lack the Parliamentary mandate to do any deal, good or bad. Brussels is losing control of this one, and I cannot see an easy solution to it.

Stay tuned.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_28/10/2012_467700

Troika refuses to make concessions on labor reforms, says FinMin

Greece's foreign lenders have refused to make any further concessions on changes to labor laws contested by a junior coalition partner, the country's finance minister said on Sunday, prolonging an impasse on a crucial austerity package.
Athens has been locked in talks with its European Union and International Monetary Fund lenders on the austerity package for months, but a final agreement has been held up by the small Democratic Left party's refusal to back the new wage laws.
The party, which says the changes undermine labor rights, has said it will vote against the measures when they are put to a parliamentary vote next week.
The party has demanded the troika of European Commission, European Central Bank and IMF lenders allow a national wage agreement to apply to all employees rather than just unionized workers. It also wants the lenders to withdraw a plan to axe the 10 percent salary hike employees get when they marry.
"The troika has not accepted the (party's) demands,» Finance Minister Yannis Stournaras told reporters.
A government official, who declined to be named, said Athens would present the bill on labour and other measures in parliament on November 5.
Near-bankrupt Greece needs a comprehensive deal on the austerity package and reforms to unlock its next tranche of aid before it runs out of cash in mid-November. Greece's gross public debt is equivalent to 171 percent of its economic output, according to the International Monetary Fund.
The Democratic Left party has the support of 16 deputies in the 300-seat parliament and the government - which has a 176-seat majority - could pass the package without its support.
But a vote against the package by the party would undermine the already fragile coalition and perhaps tempt other lawmakers to defect and vote against unpopular measures.

The austerity package contains spending cuts and tax measures worth 13.5 billion euros as well as a long list of structural reforms to kick-start Greece's failing economy. [Reuters]

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_29/10/2012_467733

Nowotny says ECB is banned from forgiving Greek government debt

The European Central Bank is banned from taking part in a Greek debt restructuring because it would be tantamount to printing money to finance governments, Governing Council member Ewald Nowotny said.

“For the ECB, forgiving debt isn’t possible because it would be equivalent to indirect state financing,” Nowotny told journalists in Vienna on Monday. “Therefore, the ECB certainly can’t participate in a such actions of the public sector.”

Germany’s Der Spiegel magazine reported on Sunday that Greece’s international creditors propose a so-called haircut in their latest report on the country’s finances. German Finance Minister Wolfgang Schaeuble rejected such a debt restructuring, saying it’s unrealistic to expect public or private bondholders to take further losses on their Greek holdings.

The ECB holds about 45 billion euros of Greek government bonds purchased as part of the now terminated Securities Markets Program, according to data compiled by Bloomberg.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_28/10/2012_467701

ECB's Nowotny calls for more time to be given to Athens

European Central Bank governing council member Ewald Nowotny called Sunday for Greece to be given more time to sort out its finances, ahead of a eurozone meeting which will examine if the debt-wracked country should get two extra years to carry out reforms.

Nowotny, also Austria's top central banker, stressed in the interview with national broadcaster ORF that a Greek bankruptcy or exit from the eurozone would have «very negative effects» on «jobs for example» and in particular on other southern European countries.

Without referring directly to Athens's request for a two-year reprieve, Nowotny noted that Greece has «a long-term problem that is not solvable in two years and without outside help».

"Either we are ready to help over the long-term or there is a risk of collapse, with all of its consequences,» he said, adding that decisions have to be made quickly.

Greek Finance Minister Yannis Stournaras told parliament on Wednesday that the troika of creditors -- the European Union, the European Central Bank and the International Monetary Fund -- have granted Athens two extra years to bring its deficit to 3 percent of gross domestic product.

But officials at both the EU and the IMF were quick to make it clear that the troika had not yet reached any final deal with Athens.

The request is expected to be examined during Wednesday's meeting of eurozone ministers and officials. [AFP]

and.....

http://globaleconomicanalysis.blogspot.com/2012/10/eu-bureaucracy-has-lost-control-of.html

Monday, October 29, 2012 3:24 AM

EU Bureaucracy has Lost Control of Italy; Social Mood Turns Black

In Italy, former prime minister Silvio Berlusconi waged a full frontal attack on technocrat prime minister Mario Monti, Germany, Angela Merkel and the EU imposed austerity during a 1.5 hours press conference near Milan.

The problem for Brussels is Berlusconi can force a vote because by withdrawing his support to Monti's government.

The People of Liberty party needs to consider that "with a no-confidence vote by us, we would determine a situation that would be interpreted in a certain way by the financial markets and would cause early elections," Berlusconi told reporters yesterday near Milan. "We will consider these facts and decide whether to immediately withdraw our support of the government."

Such a step would likely force President Giorgio Napolitano to call early elections, before a vote due by May. It also would probably fan Europe's debt crisis, as Monti's austerity policies have contributed to a decline in Italy's bond yields, with markets more focused on Spain in recent months.

"It's impossible to say what is in Berlusconi's head now, but if he decides to end his support to Monti, early elections become almost inevitable," said Roberto D'Alimonte, a professor of politics at Rome's LUISS University. "Berlusconi would lose the elections anyway, but would likely get more votes thanks to an anti-austerity platform and that would increase his party's bargaining power in the next parliament."

In Sicily, exit polls show the candidate of Beppe Grillo's Movimento 5 Stelle (Giancarlo Cancellieri) as the winner for the Regional Governor position with 27% of the votes.

Reader "AM" who is from Italy but now lives in Hong Kong writes ...

Hello Mish

I am also an Italian citizen living in Hong Kong. I have been away from Italy since 1995 but I still read and follow Italian (and European) news and politics. I believe the EU will not hold together over the medium term and some countries, for example Belgium, Italy and Spain, might not survive the collapse of the EU in the current form and might even break up.

Some headlines from the "Corriere della Sera" from this weekend for your information that might turn out to be eventful over time and some related considerations of mine:

Record Vote Avoidance in Sicily

Key Points

Only 47% of the people eligible voted yesterday in the regional elections in Sicily vs. close to 60% in 2008.

The results will become available later today and there are no official exit polls, but one partial exit poll in the Palermo province projects the candidate of Beppe Grillo's Movimento 5 Stelle (Giancarlo Cancellieri) as the winner for the Regional Governor position with 27% of the votes.

Whoever wins will not be able to govern Sicily without complex and likely most unstable alliances with other parties because of the extreme fragmentation due to the decline of the established parties.

The mainstream media is desperately trying to support the established parties, especially the moderate small political centre parties (including trying to break up Berlusconi's PdL party in order to ferry votes to the centre).

Their problem is that the centre and centre-left are crumbling. Instead of the rise of a moderate centre, the nationalistic and local right is rising: Movimento 5 Stelle is projected at over 20% of the national vote.

Berlusconi Attacks Monti and Germany

Berlusconi is back with a frontal attack to Mario Monti, Germany, Angela Merkel and the EU imposed austerity during a 1.5 hours press conference near Milan on Saturday, 10/27.
Berlusconi might withdraw support to Monti's government already this week leading to early national elections in January or February. This will be fought tooth and nail by the Italian and EU establishments.
Berlusconi wanted to announce the withdrawal of his support for Monti's government already during the call on Saturday but his family and counselors managed to convince him ponder the decision for a few more days.

This is a major, major political event in Italy and in the EU

Berlusconi is back and might even form a new party if he cannot fully reform the PdL, his current party, part of which has been drifting toward supporting Monti for a second mandate.
Berlusconi can and will force a vote because by withdrawing his support to Monti's government, he is accelerating the events, forcing his opponents, such as the PD (Partito Democratico, the reformed communists) to quickly drop support for the current government too because it will be fatal to any party to get to the elections still supporting Monti which is now a major liability for anyone close to him and his government.
The EU bureaucrats have managed to impose an unelected government onto Italy but now the situation is exploding in their face and they seem to be genuinely surprised by the events i.e. the massive rise of the right in all its forms (localist, nationalist, radical, anti EU, anti Euro and populist).
The political situation in Italy is fragmenting into at least five major aggregation areas: i) PD (reformed communists) estimated at 25% of the national vote; ii) Movimento 5 Stelle at 20% to 30%; iii) Berlusconi, possibly with his new party, for which there are no estimates and which just announced an alliance with Lega Nord, let's pencil in 20% together with Lega Nord; iv)The moderate, fragmented, catholic centre supporting Monti which is rapidly losing strength and that we can model at 20%; v) The radical left (communists) at 10%;

The establishment is in panic. This was first page news on all Italian newspaper on Saturday evening and already on Sunday there has been a massive onslaught against Berlusconi from all sides. Expect an EU onslaught shortly.

Think what you want about Berlusconi's ethics and morals but he has an uncanny ability to assess the secular mood (he is a media tycoon after all) and where popular sentiment is going and he has just seen a major opening now at the right of all established parties and against the EU.

Northern Italy has been fermenting with protests and is becoming radical. The paradox is that the rich part of the country is collapsing under the Euro and the EU driven austerity, crushed by competition from Germany, competition from Asia and other emerging region with weaker currencies and improving technology and skills and by high commodity and energy costs.

Angela Merkel seems to have misread the situation, underestimated Berlusconi and made major strategic blunders by openly driving out Berlusconi and getting an enemy for life and by openly supporting the failed Sarkozy reelection bid. Sarkozy is now gone, Hollande is now openly confronting her and Berlusconi could be back, possibly indirectly pulling the levers of Italy's next government as party president.

Angela Merkel is increasingly despised in Italy (and beyond) with a speed which I found surprising. The social mood of the country is turning black very quickly.

Expect massive fireworks in Italy and in the EU shortly. I believe that the EU bureaucracy has lost control of Italy but have not realized it yet. The EU is also about to lose control in Spain, Greece and possibly France.

Best Regards,
AM

Mike "Mish" Shedlock

and.....

http://www.zerohedge.com/news/2012-10-29/overnight-sentiment-cloudy-if-not-quite-frankenstormy

Overnight Sentiment: Cloudy, If Not Quite Frankenstormy

Submitted by Tyler Durden on 10/29/2012 07:06 -0400

It is cloudy out there as Sandy enters the mid-Atlantic region, although for all the pre-apocalypse preparations in New York, the Frankenstorm may just be yet another dud now that its landfall is expected to come sufficiently south of NYC to make the latest round of Zone 1 evacuations about overblown as last year's Irene hysteria (of course it will be a gift from god for each and every S&P company as it will provide aperfect excuse for everyone to miss revenues and earnings in Q4). That said, Wall Street is effectively closed today for carbon-based lifeforms if not for electron ones, and a quick look at the futures bottom line, which will be open until 9:15 am Eastern, shows a lot of red, with ES down nearly 10 ticks (Shanghai down again as the same old realization seeps day after day - no major easing from the PBOC means Bernanke and company is on their own) as the Friday overnight summary is back on again: Johnny 5 must defend 1400 in ES and 1.2900 in EURUSD at all costs for just two more hours.

What has happened so far for those who aren't happily in bed expecting all hell to break loose. In a nutshell:

Spanish retail sales implode -12.6% from -2.0% last as VAT hike kicks in (it's all Jorge Bush' fault)

German government spokesman says not sure when Troika report on Greece will be complete and that no Greek OSI is coming - so no distressed exchange, and no OSI... suddenly that long GGB2 "slam-dunk" rerun not looking too hot.

Japan FinMin Jojima calls on BoJ to take bold policy steps to help beat deflation

BoE Chief Econ Dale growth to falter after Olympic boost. BoE MPC Bean Q4 may be weak, economy bumping along bottom despite Q3 data, some headwinds abating however.

Greek FinMin Strounaras EU/IMF lenders refuse to concede on reforms. Greek FinMin to show reforms progress at Wednesday EuroGroup meeting. Troika seeks 150 new Greek reforms - Der Spiegel.

ECB's Draghi Talks Down Inflation Risks, Urges Pooling of Sovereignty

Spain to announce bad bank details at 5pm Madrid time

And while everything may be closed, events will still happen. Here is what is on the docket for today and the rest of the week via Goldman Sachs:

One of the key focus points for FX markets next week will be Japan. Given that we continue to expect worse trade numbers out of Japan for October and coupled with the sluggish consumption stemming from the termination of the eco-car subsidies, we expect the BOJ to lower its inflation and growth outlook and announce additional easing at the upcoming meeting. We think that a JPY10tn increase in the Asset Purchase Program is the most probable. The BOJ could also commit to continuing its Asset Purchase Program until core inflation reaches 1% though this is less likely. There are a slew of other Central bank meetings this week. We expect the central banks of Norway, Russia and the Czech MPC to stay on hold and we continue to forecast a 25bp cut for Hungary and Israel by the end of this year. The RBI is expected to cut the cash reserve ratio by 25bp while leaving the repo rate unchanged at 8.00% given the weak inflation print for September.

On the data front, the next week should give us more clarity on the outlook for US growth, as we get the US Manufacturing ISM and US labor market data, including ADP Employment and Non-Farm Payrolls numbers for October. We continue to look for signs of a sustained recovery in Chinese domestic activity. We get the official China PMI and the final HSBC PMI early on Thursday morning which could be expected to pick up modestly given the strong Flash print. In October, our Advanced GLI momentum improved to 0.9%mom from September’s reading of -0.01%mom, making this the first time momentum has been positive and increasing since December 2011, a strong signal for improvement in the global cycle. Given that the Korean exports print out on Wednesday is expected to increase sharply over October, as revealed by the 20-day exports number, we will look at the Global PMI releases on Thursday to see whether GLI Momentum will remain in the ‘Expansion phase’ for our October Final GLI print with its broader set of components.

The Week Ahead

Monday October 29

Israel MPC: Consensus expects no change to the overnight rate at 2.25%

German CPI (October): With the growing tension between the Bundesbank and the ECB and given the strict ECB inflation mandate it is important to look for signs of inflation in Germany as this might reduce the scope for additional policy easing. That said, consensus expects 1.9%yoy down from 2.0%yoy from September.

Japan IP (September): Consensus expects -3.1%mom down from -1.6%mom in August.

ECB Weidmann Speech

Also Interesting: US Personal Income, US Personal Spending

Tuesday October 30

Japan Monetary Policy Meeting: The BOJ will release its biannual Outlook Report at this meeting. We expect the BOJ to lower the inflation and growth outlook and announce additional easing with the highest probability assigned to an extension of the Asset Purchase Program budget by JPY10 tn. While less likely we also think that the BOJ might commit to continuing its Asset Purchase Program until core inflation reaches 1%

India RBI Meeting: We and consensus expect the RBI to leave the repo rate unchanged at 8.00% given the weak inflation print in September. Consensus also expects a cut to the cash reserve ratio from 4.50% to 4.25%.

Spain GDP (2012-Q3): We and consensus expect the Spanish economy to contract by 0.4%qoq unchanged from 2012 Q2.

Hungary MPC: Consensus expects a 25bps cut to the base rate currently at 6.50%.

Brazil IGP Inflation (October): We expect 7.62%yoy; consensus expects 7.64%yoy down from 8.07%yoy in September.

US Consumer Confidence (October):We expect 74.0 and consensus expects 72.5 up from 70.3 in September

Fed Dudley Speech

ECB Draghi Speech

Also Interesting: Euro area Consumer Confidence, Germany Unemployment, South Korea IP

Wednesday October 31

Norway Monetary Policy Meeting: We and consensus expect no change deposit rates at 1.50%.

South Korea Exports (October):Korean 20-day exports rose sharply in October by the most in 10 months, most likely boosted by recovering China domestic activity and better US data. Consensus expects -0.5%yoy up from -2.0%yoy in September.

US Chicago PMI (October): We expect 51.0, consensus expects 51.4 up from 49.7 in September.

Also Interesting: UK Consumer Confidence, Euro Area CPI, Canada GDP, South Korea CPI

Thursday November 1

Global PMI’s (October)

Russia MPC: Consensus expects no change to the overnight auction-based repo-rate at 5.5%

United States ADP Employment Change (October): Consensus expects 137.5K down from 162.0K in September

US ISM (October): We expect the October ISM number to print lower at 50.5. Consensus expects 51.1 down from 51.5 for September.

Also Interesting: Czech MPC, Brazil IP, US Initial Jobless Claims, US Non-Farm Productivity

Friday November 2

Euro-area Manufacturing PMI (October): We expect the Euro area final estimate to print at 45.3 in line with the flash PMI. This is consistent with -0.4%qoq GDP growth in the Euro area. Consensus expects 45.3 unchanged from 45.3 in September.

US Non-Farm Payrolls (October): We expect the payrolls number from September to be 125K; consensus expects 124K up from 114K in August.

US Unemployment Rate (October):We and consensus expect 7.9% up from 7.8% in September

* * *

And a comprehensive recap of recent events via Deutsche Bank:

We don’t often begin the EMR with the weather but today’s headlines will likely be filled with updates on what could be the largest storm in history to hit the mainland of the United States. Hurricane Sandy is forecasted to make landfall late Monday night and is already causing disruptions to several modes of transportation along the eastern seaboard. New York City’s subway, bus and train services have been shut, 5,000 flights have been cancelled ahead and Amtrak services in the Northeast Corridor north of New York have been stopped ahead of the hurricane’s arrival.

As for the market the NYSE will be fully closed today (and possibly tomorrow pending confirmation) after having earlier planned to only close its physical trading floor and allow electronic trading to continue. A rare occasion indeed as it would be the first weather-related closure of the stock exchange since Hurricane Gloria hit in 1985. In other markets, the CME announced that its floor trading on the NYMEX oil market will be suspended today but electronic trade at all of CME will open at their regularly scheduled time. The Securities Industry and Financial Markets Association (Sifma) has called for fixed income securities trading to end mid-day today.

Hurricane Sandy aside we have an eventful week in the US with the final payrolls and unemployment report before next Tuesday’s election being the main data to watch. Personal Income/Spending today, Consumer Confidence tomorrow, Chicago PMI on Wednesday and the ISM on Thursday are also key releases this week. In terms of the earnings season, we have 114 of the S&P500 companies lined up this week with Ford, Pfizer (Tues), Visa, Mastercard (Wed) Exxon (Thurs) and Chevron (Fri) being the more notable firms to report.

In Europe, Germany’s employment data and Eurozone confidence surveys are scheduled for Tuesday. This will be followed by Euro-wide CPI and unemployment data on Wednesday, together with the ECB’s latest bank lending survey on the same day. Spain is due to redeem EUR20.3bn of bonds in the first half of the week. Earnings season will also pick up pace in Europe this week as 66 Stoxx600 companies are expected to report. UBS, Bayer, BP, Barclays, BBVA, Royal Dutch Shell, and RBS to name a few are the key ones.

Asian markets are trading mixed overnight, led by losses on the Shanghai Composite (-0.36%) and Hang Seng (-0.33%). The property-heavy Hang Seng index is underperforming following the Hong Kong Government’s announcement of a new 15% stamp duty for non-local buyers of real estate, in addition to new taxes on homes resold within three years of purchase. In China, official industrial profits data for September were released on the weekend which showed the first monthly increase in profits in five months (+7.8%yoy), although year-to-date profits remain down 1.8%yoy, led by the poor performance of metal smelting firms (-68%yoy). The Nikkei is outperforming (+0.03%) despite weaker than expected retail trade numbers (-3.6% vs -1.5% expected), which is perhaps adding further weight to calls for the BoJ to expand asset purchases when it meets tomorrow. On that note, a Bloomberg survey indicated that all but one of 27 economists surveyed expect the BoJ to ease further at tomorrow’s meeting. Japanese retail sales and IP as well as Chinese PMIs are the key Asian data this week. Away from equities, credit markets are generally softer overnight with the Asian and Australian IG indices 4bp and 1bp wider, respectively.

It was a relatively quiet weekend in terms of news with developments in Greece the main headlines of note. According to Der Spiegel, the troika are proposing a restructuring of Greek debt in addition to giving Greece two more years to reach fiscal targets. German FM Schauble said over the weekend that he is against further Greek debt haircuts but a Greek debt buyback is “something one could consider more seriously” (Ekathimerini). The same newspaper is reporting that the Greek government faced a Sunday deadline to reach full agreement on the EU13.5bn in austerity measures in order to get its next bailout tranche payment of EU31.5bn. The Euro Working Group (EWG) of eurozone finance ministry officials will convene again on Monday to discuss the conclusions Athens has come to, followed by a Wednesday video conference.

Away from Greece, Italy’s former PM Berlusconi said that the People of Liberty party is considering withdrawing support for Monti’s government claiming that Monti’s policies are driving Italy into a deeper recession. Party officials were downplaying Berlusconi’s comments, adding that the former PM did not have the support of party members to bring the government down (FT). Finally, with just over a week before the US Presidential election, the latest Reuters/Ipsos poll showed Obama enjoying a small edge over Romney (49% vs 46%), although it appears increasingly likely the result will boil down to results in a handful of key swing states.

http://www.guardian.co.uk/business/2012/oct/29/eurozone-crisis-mario-draghi-ecb-germany

Investigative journalists appears in court over Lagarde List

In Athens today, an investigative journalist appeared in court after publishing what may be the controversial list of tax evaders.

Kostas Vaxevanis, a magazine editor, was arrested on Sunday after publishing what he says is the Lagarde List – 2,000 names of people who are suspected of using Swiss bank accounts to dodge the Greek tax authorities.

Vaxevanis arrest caused outrage in Greece – and some astonishment that the first (and so far only) person apprehended over the scandal is the man who published it.

Here's a typical reaction:

Vaxevanis appeared before a packed courtroom this morning, where he was told that he has until Thursday to prepare his defense.

There were large crowds outside, who applauded the editor and his legal team when they emerged afterwards - and insisted that publishing the list (which was lost by the previous Greek government) was in the national interest:

Our correspondent, Helena Smith, has now interviewed Vaxevanis lawyer, Harris Ikonomopoulos, who argued that the case is extremely important.

Ikonomopoulos said:

It is a matter of huge public interest that documents which have not been investigated for three years be finally revealed.

The publication of the list would not have been necessary had Papaconstantinou and Venizelos [former finance ministers] along with the tax fraud office done their jobs and the political environment was not now being fuelled by rumours.

Vaxevanis has published what he considers to be a double-checked copy of a document that many state authorities have themselves been looking for in recent weeks, fulfilling his duty as a journalist acting in the public interest. Instead of being praised for doing so ... he is treated as an enemy of a system that despite a verbal commitment to transparency appears still unwilling to act in pursuit of it.

http://www.telegraph.co.uk/finance/debt-crisis-live/9639964/Debt-crisis-Troika-paves-way-for-taxpayer-losses-live.html

15.21 Like Mariano Rajoy, Mario Monti was cool on plans for an EU 'super commissioner'.

The plan drawn up by German Finance Minister Wolfgang Schaeuble would bolster the power of the EU's economic and monetary affairs commissioner, giving them power to intervene in countries' budgets and propose changes before they are agreed in parliaments. But, Monti said the a budget commissioner would be a sign of mistrust.

One of his best lines to come out of the press conference was that Europe is 'facing adolescent difficulties'.

15.05 Mario Monti has fielded questions about his political future during his press conference after Silvio Berlusconi threatened to topple Monti's government. The leader of the centre-right People of Freedom (PDL) party - the largest in parliament - said the party would decide in the coming days whether to end its support for Monti in a move that could trigger an early election.

But Monti dismissed fears that his government could fall. He said he did not consider Berlusconi's comments to be a threat to him and the unelected ministers in his technocrat government. Monti added that he and his colleagues had not sought office and were only serving a limited term. He indicated he intended to continue until elections expected in April.

14.50 Mariano Rajoy has said that he is personally against the idea of a European Commissioner with increased budgetary powers and believes the issue should be dealt with as part of a wider debate on the future of the eurozone. He said:

We need to fix these objectives - fiscal union, banking union, political union...And we must set a time scale. We are giving a message that we really want greater European integration. We can't say something is this first, then something else, without saying where we're going.

This is an idea, that considered on its own, I personally don't like. As part of a variety of measures for fiscal union, it could be considered.

14.33 And at another press conference, Mariano Rajoy and Mario Monti are speaking following their meeting in Madrid. The pair have said that they support keeping Greece in the eurozone. Rajoy said:

Our commitment towards the euro is unshakeable and we will take any measures necessary to guarantee its stability and irreversibility.

Rajoy has also said that Spain does not need European aid for now. He adds that the country will call for a rescue package if it is thought to be in the interests of Spaniards.

14.25 Speaking of Francois Hollande, the French president has given a press conference in the midst of his meetings at the OECD. According to flashes coming through on Bloomberg, he has said that the eurozone is "close to exiting crisis" and that he wants to find a "durable" solution to the Greek issue at the forthcoming Eurogroup meeting.

13.39 Reuters is reporting that Greek lenders will delay posting their six-month results by one more month to the end of November, pending their recapitalisation from the EU and IMF. The government had previously pushed back the reporting deadline to October 31.

12.45 Data out from the Federal Statistics Office in Germany today shows that German wages had their sharpest rise in almost four years in July. That is in stark contrast to the pay cuts and job losses seen in most of the eurozone.

German wages rose by 3.2pc year-on-year in July, the highest increase since a 3.4pc expansion in October 2008. The wage increases measured in the quarterly sample taken in July were due mainly to higher wage rounds agreed in the chemicals and metals industries, the statistics office said. In May, Germany's largest industrial union IG Metall clinched a deal that secured its 3.6m workers their biggest pay rise in 20 years with a 4.3pc pay increase. Two months earlier, public sector workers won a 6.3pc raise over two years.

12.37 AFP reports that Greek finance minister, Yannis Stournaras, is to meet the Greek banking federation today to talk about recapitalising banks with money expected from international creditors.

Stournaras and Georges Zanias, head of the Union of Greek Banks, were to meet with bank executives at lunchtime to work out details of how to help institutions hit by the write down of more than €100bn in privately held government debt in March.

The European Union's temporary rescue fund has earmarked around €50bn for the task, and much of an EU-IMF lifeline worth another €31.5bn is also expected to help banks restore solid balance sheets so they can provide more support to the wider Greek economy.

11.52 This won't be music to Francois Hollande's ears as he heads into crisis talks with the heads of the IMF, World Trade Organisation and other economic bodies (see 09.22).

As the French president holds talks on the debt crisis and ways to spur growth, the heads of 98 of the biggest French businesses pleaded the case for a €30bn cut in welfare charges paid by French employers over two years, and large cuts in public spending.

Hollande, who is on the ropes in opinion polls, faces the headache of fulfilling pre-election pledges to create jobs and kickstart growth while applying austerity measures to plug a €37bn hole in public finances.

In an open letter to the president, Afep, which represents more than 90 of France's top companies, wrote:

With a record public spending of 56pc of gross domestic product, we have reached the limit of what is tolerable.

The letter continued:

For companies, the working costs must be reduced by at least €30bn over two years by cutting the employers' portion of welfare charges.

The business leaders also called on the French government to slash public spending by €60bn - or 3pc of gross domestic product - over five years. But French finance minister Pierre Moscovici rejected the demand for huge tax cuts for companies, saying he did not "think" that this could be done.

According to AFP, he said this was because the Afep's suggestion that the cut in employers' welfare charges could be offset by reduced public spending and an increase in value-added tax would cut into "the purchasing power of the French", who were "clients" of these firms.

11.32 Such is the degree of uncertainty in Greece that the country is considered a riskier investment than Syria.

Ekathimerini reports that an annual survey of finance directors by BDO found that the debt crisis remains one of their key concerns, so much so that Greece is considered a riskier place to invest and set up a business than war-torn Syria. Here's more from the Greek news site:

Only Iran and Iraq are considered more risky than Greece, which also struggles to convince its international creditors that it deserves bailout loans to avoid bankruptcy and a possible euro exit.

"CFOs are becoming increasingly wary of Southern Europe, parts of which they now see as risky as the politically unstable countries of the Middle East," said BDO chief executive Martin Van Roekel.

Greece isn't the only country in the 17-country group that uses the euro in the survey's top 10 riskiest countries to invest in. Spain, which even as the eurozone's No. 4 economy with a long-standing relationship with Latin America, stands at No. 7.

This reluctance by finance directors, particularly from fast-growing economies such as Brazil and China, to invest in Europe's indebted countries goes to the heart of the financial crisis. A major part of these countries' recovery is dependent on the private sector stepping in to fill the investment gap left by cuts in government spending.

11.08 The Greek haircut debate rumbles on. Angela Merkel's spokesman has said that German law would not allow a second debt haircut for Greece while new aid for the country is being discussed. Responding to questions about a new writedown of Greek debt to enable it to stay in the eurozone, Steffen Seibert said:

German budget law, in article 39, says that credits can only be given when it is considered unlikely that there will be a default. We would be tying our own hands with such a measure and it would certainly not be in Greece's interests.

10.55 A job advert posted by the European Central Bank, which is looking to recruit a Greek lawyer-linguist, has provoked interest on Twitter.

10.40 Italy has sold €8bn of six-month bills at an auction this morning. Rome's borrowing costs eased to 1.35pc, having paid 1.5pc on the same maturity at a sale at the end of September.

Nicholas Spiro, of Spiro Sovereign Strategy, said that tomorrow's auction of long-dated paper will be a more important test of sentiment. He pointed to "heightened political risk" in Italy, where a threat by former Italian prime minister Silvio Berlusconi to topple premier Mario Monti's government provoked an outcry across the political spectrum on Sunday.

Berlusconi accused the government of "fiscal extortion" and said Mr Monti's policies were creating a "spiralling recession".

Despite that, Mr Spiro noted that the Italian Treasury got all it debt out at the door today at a lower yield. "Mr Berlusconi's posturing is no competition for the 'Draghi effect', he said, adding:

The external backdrop is more important in perceptions of Italy's creditworthiness than the domestic one. However, there's a degree of market complacency regarding Italian political risk. The political scene in Italy is becoming more populist and less and less supportive of Mr Monti's economic agenda. Even if an early parliamentary election is averted, the politics of economic reform in Italy are going from bad to worse.

09.59 At 08.40, we mentioned Ambrose's story this morning that the EU-IMF troika of inspectors in Greece has called on European bodies and official creditors to write off a chunk of their loans.

This has rattled Germany and ECB policymaker, Ewald Nowotny, has come out and said the bank could not participate in a public sector writedown of Greek debt as this would amount to indirect state refinancing. He said:

From the ECB's perspective, a debt waiver is not possible as that would correspond to indirect state financing. Hence, the ECB cannot take part in such an operation, which would quasi concern the public sector.

09.50 Spain is to announce details of its 'bad bank' today. The deputy governor of the Bank of Spain will outline details of the bank, known as SAREB, at 5pm in Madrid. The bank will soak up toxic property assets held by the country's lenders.

09.33 And on that meeting between Mario Monti and Mariano Rajoy, happening in Madrid at lunchtime, Bloomberg writes that the pair will be trying to mask a growing divide over Europe's new bailout strategy. The newswire reports:

While both have jointly argued against extra budget austerity as the price for help from the European Central Bank, their interests diverge when it comes to whether they should ask for assistance together. A go-it-alone strategy by Spain would probably cut Italy’s borrowing costs while leaving Rajoy to weather the political flak of seeking emergency funds.

“Rajoy was probably pressed by Monti in August to accept a pre-emptive” bailout, said Gilles Moec, co-chief European economist at Deutsche Bank AG in London. “It would have made things so much smoother in Europe and for Italy as well. Rajoy is very much following his own route now.”

European officials are waiting for Spain to trigger a bailout plan unveiled by ECB President Mario Draghi last month and designed to draw a line under the region’s debt crisis.

While Draghi’s plan to buy potentially unlimited quantities of government debt has soothed markets for now, a botched Spanish rescue could still trigger further turmoil.

09.22 Another meeting happening today is between French president,Francois Hollande, and heads of the World Bank and other economic bodies. They will meet later this morning at the Paris headquarters of the OECD to discuss the debt crisis and ways to kickstart growth.

An official told AFP that Hollande had called the meeting "to discuss international economic issues and economic and social recovery ... to spur growth, jobs and competitiveness".

Those attending include World Bank chief Jim Yong Kim, the International Monetary Fund's Christine Lagarde, World Trade Organisation head Pascal Lamy, International Labour Organisation Secretary General Guy Ryder and the OECD's Angel Gurria.

They will all then go on to Berlin to hold talks with Angela Merkel on Tuesday.

09.19 Traders are battening down the hatches this morning as Hurricane Sandy forces stock markets to close in America. It will be the first time markets have closed since the September 11 terrorist attacks.

Markets on this side of the Atlantic are down, with the FTSE 100 off 0.45pc to 5780; the CAC down 0.91pc to 3404; the IBEX fell 0.37pc to 7746 and the DAX fell 0.45pc to 7198.

09.06 A VAT rise has done little to boost consumer appetite in Spain. Official data out this morning shows Spanish retail sales slipped 10.9pc year-on-year in September. That follows a 1pc rise in sales taxes at the beginning of that month.

08.48 Also over the weekend, Mario Draghi moved to defend his bond-buying plans and also to back Wolfgang Schaeuble's 'super commissioner' plan, which would allow the EU to intervene in countries' budgets and propose changes before they are agreed in parliaments.

Draghi told Spiegel that he supported a plan drawn up by the German finance minister to bolster the power of the EU's economic and monetary affairs commissioner. He said:

I am fully in favour of it. Governments would be wise to seriously consider it. I firmly believe that, in order to restore confidence in the euro area, countries need to transfer part of their sovereignty to the European level.

Draghi also reiterated his defence of the ECB's disputed programme of buying the bonds of debt-wracked countries to drive down their borrowing costs, which has proved unpopular in Germany.

He hit back at the charge the scheme would lead to inflation and stressed his determination to keep price rises in check:

Because of inflation, my family lost a large part of its savings at that time. You can therefore rest assured that I am personally and not only professionally committed to delivering price stability.

The European Central Bank has helpfully uploaded a full version of Draghi's interview, which you can read here.

08.40 Are taxpayer losses on the horizon in Greece? Ambrose Evans-Pritchard, the Telegraph's International Business Editor, reports that the 'troika' has called on European bodies and official creditors to write off a chunk of their loans, paving the way for first taxpayer losses since the sovereign debt crisis began.

A draft version of the Troika report obtained by Spiegel magazine said EMU governments and the European Central Bank must accept their share of losses in order to bring Greece’s public debt back to 120pc of GDP by 2020, deemed the sustainable level.

Greece must carry out a further 150 reforms, some involving a drastic loss of sovereignty. Troika payments will be held frozen in a special account under creditor control.

The Troika will have power to raise taxes automatically. There must be new laws to make it easier to fire workers and adjust the minumum wage.

In exchange, Greece should be given two extra years until 2016 to meet budget targets, costing up to €38bn.

German finance minister Wolfgang Schauble said over the weekend that taxpayer "haircuts" were unthinkable. "The question has very little to do with the reality in eurozone member states," he said.

Catharsis Ours

Monday, October 29, 2012