EU Bank Stress Tests on Sovereigns

EU Bank Stress Tests on Sovereigns

The 2011 European bank stress test results, due Friday July 15, will be closely scrutinised, and most notably on sovereign risk. This year, the EBA hope that tougher guidance and capital criteria, and substantial transparency will go a long way to winning market credibility. We estimate that under the new guidance, sovereign losses in the adverse scenario could amount to €50bn, compared to €28.2bn in 2010. And, adding the tougher capital criteria, the capital shortfall in the 2011 tests is likely to far exceed the very modest €3.5bn identified last year. The real issue is how easily banks, if needed, can raise new capital and whether governments have the necessary strength to offer “backstop measures”. The risk is to see the already frail periphery suffer yet more market aversion.

Exclusive: EU calls emergency meeting as crisis stalks Italy

Exclusive: EU calls emergency meeting as crisis stalks Italy

By Luke Baker
BRUSSELS | Sun Jul 10, 2011 2:45pm EDT

(Reuters) - European Council President Herman Van Rompuy has called an emergency meeting of top officials dealing with the euro zone debt crisis for Monday morning, reflecting concern that the crisis could spread to Italy, the region's third largest economy.

NYT: No, We Can’t? Or Won’t?

OP-ED COLUMNIST
No, We Can’t? Or Won’t?
By PAUL KRUGMAN
Published: July 10, 2011

If you were shocked by Friday’s job report, if you thought we were doing well and were taken aback by the bad news, you haven’t been paying attention. The fact is, the United States economy has been stuck in a rut for a year and a half.

WSJ: Mortgage Rates Are Great, If You Qualify

HOMES JULY 10, 2011
Mortgage Rates Are Great, If You Qualify

By TOM LAURICELLA

With interest rates near rock bottom and home prices down, this ought to be a great time to buy a home. But for most people, it's a lousy time to get a mortgage.

NYT: Somehow, the Unemployed Became Invisible

Somehow, the Unemployed Became Invisible
By CATHERINE RAMPELL
Published: July 9, 2011

GRIM number of the week: 14,087,000.

Fourteen million, in round numbers — that is how many Americans are now officially out of work.

German Industrial Production: Japan effect conspicuously absent

Industrial output in Germany expanded strongly in May, rising by 1.2% mom, which more than made up for April's 0.8% decline. The trend in manufacturing is stronger still, with a 1.2% gain in May after a contraction of just 0.3% in April. Hence, in the first two months of Q2 industrial output was up 1.1% from the Q1 average, and manufacturing up 1.7%. Clearly this points to upward risks to predictions that the economy suffered a soft spot in Q2, and our 0.2% qoq forecast for GDP is looking a bit low.

Brazil: Monthly inflation slows less than expected, annual reading picks up

Monthly IPCA inflation slowed in June, to 0.15% m/m (consensus was 0.07%), down from 0.47% m/m a month earlier (or from 0.23% m/m in mid-month IPCA-15 inflation), helped by seasonal factors. Transport and food prices were the main driver for the deceleration, as food price inflation fell into negative terrain, while transport price deflation got deeper. Transport price deflation intensified to -0.61% in June from -0.24% a month before, mainly on a decline of 4.25% on fuel prices (mostly ethanol, but also gasoline), despite a jump in airfares (from -11.57% to 12.85%). Food price inflation swung to -0.26% from 0.63% a month before.

ECB Watch: The Gentleman is not for turning

ECB Watch: The Gentleman is not for turning

Two down, more to come: as expected and officially signalled one month ago, the ECB raised all its interest rates by 25bp, bringing the key refinancing rate to 1.5%. But markets were clearly expecting signs that the ECB now believes that it is coming close to an appropriate level of interest rates which were conspicuously absent. In fact, we read the Introductory Statement as suggesting quite clearly that further rate hikes in the near future are the most likely scenario.

CNNMoney: Housing prices: No rebound in sight

RECOVERY AT RISK
Housing prices: No rebound in sight
By Chris Isidore @CNNMoney July 7, 2011: 8:33 AM ET

NEW YORK (CNNMoney) -- Housing prices are likely to keep falling the rest of this year, and probably won't show much improvement next year either, according to a survey of economists.
A CNNMoney exclusive survey of 27 economists showed the battered housing market is facing myriad problems and won't turn around anytime soon.

WSJ: Rents Rise, Vacancies Go Down

REAL ESTATE JULY 7, 2011
Rents Rise, Vacancies Go Down
By WESLEY LOWERY

Apartment landlords are enjoying rising rents and falling vacancies.

The average effective rent, the amount paid after discounting, was $997 in the second quarter of the year, up from $974 a year earlier, according to a report scheduled for release Thursday by Reis Inc., which tracks leasing data for 82 markets. Second-quarter rents rose in all but two markets.