Morning Reading – December 3, 2010 Alphaville: Euro-correlation max

So here’s the interesting thing. While correlation generally has been falling back from unprecedented levels this summer, one pocket of the market which has been experiencing a definitive intensification of the trend is European FX. Alphaville: More bad news for Greece

Since the details of the plan are still emerging, we are placing our ‘BB+’ long-term sovereign credit rating on Greece on CreditWatch with negative implications. Alphaville: Spanish banking negativity

A reduction in Spanish borrowing from the ECB can only be a good thing.

Right? Alphaville: Spain: a prisoner in its own citadel

It seems that not everyone was left woozy and starstruck by Monsieur Trichet’s delphic purrings. Alphaville: Peripheral spreads tightening, or not?

…Which suggests, potentially, that it might not be that peripheral spreads are improving, so much, but that German bund yields are catching up due to the contagion effect…

The Slope Of Hope: A Comparison to Consider

Let me preface this by saying that my bear mojo has been almost completely drained from my veins at this point. The best positions I have are all long ones, and after 20+ months of hearing (and repeating) Why The Drop Is Going To Start Now, I’m getting close to just focusing on the long side. Call it capitulation if you like; I think I’m past caring.

The Big Picture: NFP Day: Excuse to Sell?

…Markets face opposite risks from the Employment data than does the economy. The risk of a strong number is that it removes the incentives for the Fed to keep applying QE2 at full strength. If the economy shows a consistent strength over the next 3 months, the Fed may feel that additional liquidity and quantitative easing is no longer necessary. At a certain point, they may lift their foot off the gas pedal…

Perversely, a mildly disappointing NFP number might be a positive, as it suggests the full QE2 will be applied.

Felix Salmon@Reuters Blogs: Bailout datapoint of the day, Morgan Stanley edition

I was right about the government stepping in to save Morgan Stanley from a vicious market where it couldn’t stand alone; I was just wrong about which arm of the government would be intervening. It wasn’t Treasury, it was the Fed.

Marginal Revolution: A Kansas 8th grade exam from 1895

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