Now here is an impressive chart. Despite all the bother for markets – to put it lightly – including a quite unremarkable earnings season on both sides of the pond, expectant markets continue to climb the wall of worry noted in a recent market comment, but more on this later.
June’s EU summit marked something of a turning of the tide on eurozone integration. That was, and still is, our view. It has also helped open up what is now a challenge underway to the Bundesbank dominated mind-set of the European Central Bank (ECB). What will come of this remains to be seen but Mr. Draghi pulled no punches with his comments last week; ‘the ECB is ready to do whatever it takes to preserve the euro’ ... ‘to the extent the size of the sovereign premia hamper the functioning of the monetary policy transmission channels, they come within our mandate ... and believe me, it will be enough’. But there was much else said last week by others.
Spain, Italy and France called for a swift implementation of the decision taken at June’s EU summit and specifically for the use of the European Financial Stability Facility (EFSF) and the European Stability Mechanism (ESM) to be used in a ‘flexible and efficient manner’ as agreed to ensure financial stability for the eurozone. Over the past weekend, Mrs. Merkel, in a conversation with Mr. Monti, endorsed the view that the EU summit conclusions must be implemented ‘as quickly as possible’. More >