http://www.zerohedge.com/news/2013-02-05/overnight-europe-open-levitation-returns
Submitted by Tyler Durden on 02/05/2013 07:07 -0500
http://elpais.com/elpais/2013/02/05/inenglish/1360072913_020286.html
http://elpais.com/elpais/2013/02/05/inenglish/1360063465_696193.html
Overnight Europe-Open Levitation Returns
- Bond
- British Pound
- Citigroup
- Corruption
- European Central Bank
- Eurozone
- headlines
- Italy
- LTRO
- Mean Reversion
- Non-manufacturing ISM
- Risk Premium
- SocGen
Just when one thought the old overnight futures levitation on a surging EURUSD regime was over, and was replaced by some semblance of normalcy, here comes Europe, sending the EURUSD screeching higher by some 100 pips from a support threatening 1.3460 on no news, with absolutely nothing changed, and pushing US futures to virtually unchanged from yesterday morning wiping out the entire day's losses in 3 short hours of near-zero volume overnight trading.
On the chart below spot the moment Europe opens: apparently the mere fact of Europe opening is now fundamentally strong news.
What little news there was was decided mixed. Initially PIIGS bonds resumed sliding, but retraced following Spain's January Services PMI which printed at 47, spiking from December's 44.3, even as the Employment PMI plunged to 42.0, the lowest since January 2012. How the economy's services are faring better when there is no economy to speak of is perhaps best answered by Argentina's set of economic data metrics.
Then we got Italian Services PMI, which in turn was far worse than expected and the prior number, or 43.9, vs Exp. of 45.8 and 45.6 last, a French Services PMI which was unchanged and in line with expectations, and a German PMI just inching above expectations, from 55.3 which was also the expected print, higher to 55.7, resulting in a blended European Services PMI of 48.6, vd the 48.3 expected, or a 10 month high. Naturally, this number is unsustainable with the EURUSD this high, but that takes us back to the much discussed economic chicken or redenominated currency egg problem at the heart of the Eurozone so we won't spend more time on it.
But perhaps the most indicative number of what is really happening was the European retail sales number which too missed expectations, declining -0.8%, below the -0.5% expected, and down from a downward revised -0.1%.
In a nutshell: this is what passes for a good day in Europe. In the meantime, the political scandal scene in both Italy and Spain is unchanged, and getting worse, especially with Rajoy summarizing it all with this absolute pearl according to El Pais: Rajoy Says ‘"It’s All Untrue, Except Some of It." No seriously, he said that.
As for the getting worse part, according to a La7 poll, the block of frontrunner Bersani is now losing ground before Italy's vote in two weeks, while Hollande made demands to have an exchange-rate policy and that it was not all up to the ECB to set rates. So French socialists must see the EURUSD rate too then?
Some additional comments from sellsiders on the ongoing fiasco in Europe via Bloomberg:
BNP Paribas:
- EUR correction in full swing as Spanish and Italian headlines adding upward pressure on euro-zone risk premium: note to clients
- Spanish bond auction need to get decent result to ease bond market tensions
- BNP still sees Italy’s center-left as likely winner of lower house
- EUR correction shouldn’t surprise as much of good news already priced in; however, a broad range of investors are still underweight EUR and will be tempted to buy dips
- SocGen:
- Correction can continue until ECB’s meeting on Thursday although Spanish and Italian political concerns seem unlikely to be the catalyst for a real turn in trend, Kit Juckes, strategist at SocGen, writes in note
- Too soon for bears to come out in earnest
Citigroup:- Next big test for peripheral sentiment is Spanish auctions on Thursday; shift in investor mood recently may result in weaker demand for bonos, Valentin Marinov, strategist at Citigroup, writes in note
- Downside risk for EUR/GBP could grow on renewed widening of peripheral bond yield spreads; concerns about hung Italian parliament and reform process after elections could prompt more profit-taking in periphery
- Indications on Thursday that demand for SPGBs may be weakening, due in part to larger than expected LTRO repayments, could also push Spanish yields higher and EUR
- EUR/GBP could drop towards 0.85 near term, though move will be viewed as tactical correction; longer term risks are still to upside
JPMorgan:- Berlusconi win in vote may not prompt Italy aid
- All sides would have interests in managing possible fallout
A recap of key FX events from SocGen:Contagion made a brief comeback in Europe yesterday as markets wonder what to make of political developments in Madrid and whether plummeting Italian markets are a sign of investors deserting local securities before the election. Unless a change of the guard takes place and puts government reforms on shaky ground, this should prove not more than a bump in the road. However the reaction has made for some pretty compelling viewing as three days have been enough to unwind virtually all of the tightening in the 2y bono/bund spread of January. Profit taking in stocks was overdue some will argue after an unbroken eight-month winning streak, especially when the last leg up was accompanied by lower volumes. A market that was technically on the cusp of being overbought last week has gone into mean reversion mode, something that has not yet fully come to fruition in EUR/G10 crosses though we have taken a first step. Does this all of a sudden turn the EUR into a sell on rallies? It is unclear down which path the allegations of corruption against Mr Rajoy will take us, but the level of spread widening was certainly persuasive enough for some to take a defensive stance. An 3-big figure move is standard procedure if retracements of last September, October and December are any guide. With fresh Spanish supply coming on Thursday, this could be the way forward until then, with 400bp an obvious key target for the 10y spread over bunds. Prior to yesterday, the 15d rolling correlation of EUR/USD with the S&P 500 was 0.79 and with the 2y bono/bund spread it stood at -0.52. The EU services PMI (final data) should not make a big difference and will only serve to reaffirm the divergences in the euro area, something that will certainly spring up during the ECB's Q&A on Thursday
In the US the only release likely to retain market participants' attention will be the Non-manufacturing ISM report.
http://elpais.com/elpais/2013/02/05/inenglish/1360072913_020286.html
EL PAÍS hands over PP treasurer’s secret papers to prosecutors
Newspaper’s editor-in-chief takes view that submission of documents does not violate professional secrecy protecting source
EL PAÍS Madrid 5 FEB 2013 - 15:01 CET
The editor-in-chief of EL PAÍS, Javier Moreno, on Tuesday morning handed over the documents known as “Bárcenas’ secret papers” to the Judicial Police in response to an order from the Anticorruption Prosecutor’s Office. The documents allegedly contain handwritten accounts by the former Popular Party (PP) treasurer, Luis Bárcenas, showing cash donations and outgoing payments from 1990 to 2008, with the exceptions of the years 1994, 1995 and 1996. Moreno also handed in other documents published by EL PAÍS which relate to alleged illegal financing on the part of Spain’s ruling party.
The editor-in-chief consulted with EL PAÍS´s legal advisors and the newspaper’s management before taking the decision to comply with the judicial order. Moreno was satisfied that the handing over of the documents will not in any way compromise the identity of the source who supplied EL PAÍS with the papers.
The order from the Anticorruption Prosecutor’s Office is part of an investigation set up to determine whether the PP received illicit donations and made irregular payments to leading party members during the 1990-2008 period, as is suggested by the documents published by this newspaper.
The papers handed in comprised 14 handwritten sheets allegedly compiled by ex-treasurer Bárcenas, the contents of which were published fully in last Sunday’s edition of EL PAÍS. The notes detail payments to various leading party officials from 1990 onward, as well as other expenses. In the entry column, donations from companies or businessmen are listed, most of which violate the Party Financing Law.
The other documents handed over were first published on January 27 and show certain aspects of the Madrid Popular Party’s internal accounting, in particular donations by various companies to one of the party’s foundations (Fundescam). This money was, allegedly, used to finance electoral campaigns. Also included are checks for donations of less than 3,000 euros, which ended up in the PP’s coffers without being examined by the Court of Auditors because they were below the minimum legal threshold that triggers the need for them to be declared.
http://elpais.com/elpais/2013/02/05/inenglish/1360077725_858684.html
Bárcenas summoned by High Court judge in connection with Gürtel case
Former PP treasurer also to appear before anticorruption prosecutors on Wednesday to answer questions on alleged slush fund
Luis Bárcenas runs out of his Madrid home on Tuesday morning. / CARLOS ROSILLO (EL PAÍS)
High Court Judge Pablo Ruz has summoned the former Popular Party (PP) treasurer, Luis Bárcenas, to appear before him on February 25 to answer questions on possible tax fraud and money laundering in connection with the ongoing probe into the so-called Gürtel kickbacks-for-contracts scandal which has embroiled Spain’s ruling party, judicial sources said Tuesday.
The former accounts man for the PP has been shown to have held Swiss bank accounts in which at one point he had up to 22 million euros deposited. Bárcenas took advantage of a tax amnesty introduced by the government last year to declare 10 million euros of the funds in the accounts, paying a fine of only one million.
Ruz has also issued an injunction against Jesús Sepúlveda, the former mayor of Pozuelo, an upscale Madrid dormitory town, to answer questions on alleged irregular payments and gifts made to him and his family by the Gürtel corruption ring in the period 2000-2005. Sepúlveda is the former husband of Health Minister Ana Mato, who has denied receiving luxury goods and trips as gifts from the ring.
In a parallel development, the Anticorruption Prosecutor’s Office on Tuesday also summoned Bárcenas to answer questions on an alleged slush fund used to supplement leading party’s members’ salaries, judicial sources said Tuesday.
Political headache
Bárcenas, the man behind what has become a huge political headache for Prime Minister Mariano Rajoy in a case that has attracted the close attention of the international media, is due to appear before the prosecutor on Wednesday.
Former PP congressional lawmaker Jorge Trías has also been cited to appear before the prosecutor. In an interview with EL PAÍS, Trías claimed he was aware of envelopes stuffed with money being handed over to PP officials, records of which were kept by Bárcenas in separate ledgers maintained by Bárcenas.
The injunction follows a probe opened by the anticorruption office on December 24 into an alleged parallel accounting system undisclosed to the tax authorities that recorded the supposed payments to PP members and donations to the party. For the moment there are no indications of the alleged concealed accounting system being linked to Bárcenas’ Swiss bank accounts. However, there are signs that some of the contributions made to the PP could be connected to the Gürtel case.
http://elpais.com/elpais/2013/02/05/inenglish/1360063465_696193.html
Anti-corruption prosecutors subpoena PP’s tax records from the past 13 years
No criminal offenses likely as payouts did not exceed 120,000 euros
Anti-corruption prosecutors have assumed jurisdiction in the ongoing political fray over Luis Bárcenas' secret ledgers by asking the AEAT tax office for records covering the past 13 years pertaining to the Popular Party's (PP) finances, judicial sources told El PAÍS on Monday.
Those sources didn't rule out that prosecutors will also subpoena the PP's tax records from the 1990s.
At the same time, EL PAÍS was also asked to turn over copies of all the documents pertaining to the former PP treasurer's ledgers, on which it has been basing a series of daily reports since Thursday, including allegations that party officials had been collecting payments on the side along with their regular salaries. At least half a dozen party leaders were given money for diverse matters, including paying for repairs for their homes that were damaged in terrorist attacks, as EL PAÍS has been able to ascertain.
Sources close to the investigation say it is likely that no criminal tax offenses have been committed because none of the payouts appear to have been more than 120,000 euros. But, the sources add, there could be violations if it is determined that the PP never deducted tax from the payments it offered to its officials.
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