May 27th, 2011 15:08:20 GMT.

Fresh record for Swissy


Trades to 0.8520 on EBS. EUR/CHF made its record run yesterday…

Swiss remains the favored place to hide from both the US slowdown and the Greek contagion.


May 27th, 2011 15:05:21 GMT.

Trichet: EMU Mid-Term Inflation In Line With Price Stability


FRANKFURT (MNI) – Inflation in the Eurozone in the medium term will
be in line with the European Central Bank’s definition of price
stability, ECB President Jean-Claude Trichet said in a German newspaper
interview released Friday.

Trichet told the Aachener Zeitung that “in the medium term, price
developments will correspond to our definition of price stability: below
2%, close to 2%.”

With respect to the sovereign debt crisis, Trichet rejected again a
restructuring of Greek debt, demanding that “Greece must completely and
rigorously implement this program” of fiscal consolidation imposed on

“It is very important,” he continued, “to correct the errors of the
past and thus to pave the way for the sustainable creation of jobs.”

It is of the upmost interest for Germany as well “that Greece
submits to an economic adjustment and is a stable partner in Europe and
the Eurozone,” he argued.

Trichet professed a lack of understanding at objections to help for
Greece, arguing that “everywhere in the world, among friends people help
each other” and that it would be strange “if Europeans in difficult
times turned out to be less unified than can be seen elsewhere in the

There were “no discussions at all” about providing aid during the
Asian crisis, he pointed out.

Trichet demanded that the European Commission and the Parliament
“go further and be much stricter” in strengthening Europe’s fiscal rules

“We need automatic sanctions for deficit sinners,” he said. “The
whole process — from the determination of a threatening budgetary tilt
up to the actual pronouncement of sanctions — has to take place

–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com

[TOPICS: MT$$$$,M$$CR$,MGX$$$,M$$EC$,M$X$$$,M$$G$$]


May 27th, 2011 15:01:00 GMT.

Mr. Market loves him some cable


They hated it after the ECB fixing passed, knocking it down to 1.6412 from 1.6464 after the US personal income data. We have retraced that entire move. I have no particular idea why.


May 27th, 2011 14:56:34 GMT.

France coming around on “burden sharing”


It looks as though Sarkozy’s position on restructuring of Greek debt is beginning to evolve. He know says he favors private-sector “burden-sharing”.

“France will not use the word ‘restructuring’,” Sarkozy declared.
“We must not envisage this reality.”

However, if the issue is whether the private sector can “share part
of the burden, we are not at all in ‘restructuring’,” he said. “There is
no problem….It’s the direction to which each side should converge.”

The ECB remains adamantly opposed to any sort of reprofiling/restructure of course, but the politicians seem to finally be in agreement that the status-quo is unsustainable.

Timing of any sort of move toward “burden sharing” remains an open issue


May 27th, 2011 14:55:44 GMT.

US BudgetRecap: Hill Leaders Shift Fiscal Hope On Biden Panel


–Vice President Biden Sees Broad Accord On $1 Trillion In Savings
–In Symbolic, Political Votes, Senate Defeats Four Budgets
–Senate Budget Committee Chairman Conrad Says Biden Talks Are Key
–Sen. Conrad: ‘Makes No Sense’ For Senate Dems To Offer Own Plan Now

By John Shaw

WASHINGTON (MNI) – In unusually frank assessments of the state of
fiscal policy deliberations on Capitol, both top Democratic and
Republican lawmakers said this week the traditional congressional budget
process is now virtually irrelevant and any hope for a fiscal agreement
now rests on budget negotiations led by Vice President Biden.

The peripheral role of the regular congressional budget process was
in stark display this week, as the Senate voted on four budget
plans–and defeated all of them.

Senate Budget Committee Chairman Kent Conrad, who has been working
on various versions of a fiscal year 2012 budget, defended his decision
not to offer a Senate Democratic alternative.

“It makes no sense for us to go to a budget mark up at this moment
that would simply be a partisan mark up when bipartisan efforts are
underway,” Conrad said before the Senate budget votes Wednesday.

He cited the talks led by Biden as “this new effort, a leadership
effort, with our president represented at the table. We ought to give
that a chance before we pass a budget resolution that may be required to
implement any plan they can come up with.”

“We don’t need a Democratic budget or a Republican budget. We need
an American budget. We need a budget that is bipartisan,” Conrad added.

In a series of symbolic and political votes, the Senate first
rejected the fiscal year 2012 budget that was drafted by House
Republicans and passed by the House last month.

The Senate vote was on a motion to take up the Ryan budget. It was
rejected on a 57 to 40 vote. In other words, 57 senators voted not to
take up Ryan’s budget while 40 voted to consider the plan. It was a
mostly party line vote, with five Republicans joining Democrats in
blocking the Ryan budget.

Ryan’s FY’12 budget resolution would cut spending by $5.8 trillion
over a decade compared to President Obama’s February budget. It would
reduce budget deficits by $1.6 trillion over a decade.

Democrats blasted many features of Ryan’s plan and have been
particularly focused on its recommendation to fundamentally overhaul
Medicare. Senate Majority Leader Harry Reid insisted that Ryan’s fiscal
plan would effectively “kill” Medicare.

Senate Minority Leader Mitch McConnell said the Democratic move to
force a vote on the Ryan budget was a political move to improve their
electoral prospects in 2012.

The Senate voted 97 to 0 to block consideration of President
Obama’s FY’12 budget. Republicans said the Obama budget does not
confront the nation’s severe fiscal problems. Democrats said the
president has made adjustments since his budget was first offered in

The Senate also rejected two Republican budgets. One by Sen. Rand
Paul, would have made massive spending cuts in order to balance the
budget in five years. It only received seven votes.

A second Republican budget by Sen. Pat Toomey would have balanced
the budget in nine years by bringing spending down to 18.5% of GDP. It
received 42 Republican votes.

McConnell scorched Senate Democratic leaders for their fiscal
failures. “This is a complete and total abdication of their
responsibilities. And there is no excuse for it. We have an obligation
to come up with a plan. Democrats are officially abdicating their
responsibility this week,” he said.

Meanwhile, Biden held two meetings of talks this week and it seems
likely that the negotiations will extend well into July

Biden told reporters Tuesday that the talks are going well, but
difficult decisions are on the horizon.

“Everybody knows at the end of the day we’re going to have to make
some really tough decisions on some of the big ticket items, but I think
we’re in a position where we’ll be able to get to well above a trillion
dollars pretty quick in terms of what would be a downpayment on the
process,” he said.

Biden added that he’s “confident” that there will be an agreement
on a “relatively large number” of budget savings now which will be a
“downpayment” on a larger package of $4 trillion in budget savings.

The Vice President said the final agreement will have to include
tax changes. “Revenues have to be in the deal,” he said.

The Biden talks are exploring a deficit reduction package that can
be developed to coincide with this summer’s vote on debt ceiling

Biden is negotiating with House Majority Leader Eric Cantor, Senate
Minority Whip Jon Kyl, Senate Appropriations Committee Chairman Dan
Inouye, Senate Finance Committee Chairman Max Baucus, Assistant House
Minority Leader Jim Clyburn and Rep. Chris Van Hollen, the top Democrat
on the House Budget Committee.

The administration is represented by Biden, Treasury Secretary Tim
Geithner, White House budget director Jack Lew and the director of the
National Economic Council Gene Sperling.

Congressional Republicans have said they want a package of
“trillions” in spending reductions as a condition for voting to increase
the debt ceiling this summer.

** Market News International Washington Bureau: (202) 371-2121 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$]


May 27th, 2011 14:45:15 GMT.

Pimco’s Gross: US Default Would Be ‘Disastrous’ For Dollar


By Ian McKendry

WASHINGTON (MNI) – Bill Gross, head of bond giant PIMCO, warned
Friday that a technical default by the U.S. government on its debt would
send the wrong signal to credit markets and that while it may not be a
negative for U.S. Treasury securities, it would be terrible for the

“I simply think a default of six, twelve days, eighteen days, not
only sends the wrong signal, but a disastrous signal to the world credit
markets,” Gross said on CNBC Friday.

“It would result in not necessarily a negative for Treasury bonds,
but a disastrous implication for the dollar,” Gross added.

Gross said if the dollar was defaulted on, investors might start to
hold euros, yen, or the Chinese yuan instead. He also said countries
like Brazil, Canada and Germany would do better because they are not
technically defaulting.

Gross said while it is obvious that both Democrats and Republicans
want to reduce the deficit, he does not think legislation will happen
until 2012.

“It’s probably a few years away and debt holders will simply have
to adjust to that stretch of timespan,” Gross said.

“As we approach 2012 perhaps higher yields are the result, but I
don’t see a panic, I’d simply sense that unless we get something done
over the next several years we are in a real mess,” Gross added.

Gross also said blue chip stocks are more appealing than
in terms of real yields and real interest rates.

He noted that stocks like Coca-Cola and Procter and Gamble offer
dividend yields close to 2% with inflation protection while the U.S.
Treasury’s 10-year TIPS — which also offers inflation protection — is
yielding around 0.5%.

“On that standpoint alone I think stocks relative Treasury’s are a
much more attractive alternative,” Gross said.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,M$$FI$,MN$FX$,MFU$$$]

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