Europe

While debates over the significance of the Eurosystem's TARGET2 imbalances may have faded into the background now that sovereign yields in the Eurozone remains broadly backstopped by the ECB's debt monetization generosity, and fears about an imminent European breakdown fall along the lines of populist votes more than concerns about lack of funding, the BIS has finally chimed in with the truth about what the TARGET2 number really showed.

The simplest outline for this week concerns inflation.

Stocks have erupted higher in the last month based on the belief that the economy is roaring once again. However, this is all about sentiment, not reality. The Fed’s own real-time GDP tracking tools has collapsed from predicting growth of 3.5% in early February to just 1.9% last week.

While “growth” isn’t coming anytime soon… INFLATION is.

The key economic release this week is the employment report on Friday, which as Janet Yellen noted in her speech on Friday, is the only economic event (together perhaps with the CPI report on April 15), that could potentially derail a now practically guaranteed rate hike.

• Geopolitics, Deutsche Bank drag global stocks lower (Reuters)
• Deutsche Bank Turnaround Plan Gets Mixed Reaction (BBG)
• Conservative Groups Jeopardize GOP Plan to Repeal Health Law (WSJ)
• Russian Hackers Seek Hush Money From Liberal U.S. Groups (BBG)
• Automakers Near a Victory on Rollback of Fuel Standards (NYT)
• Brought Down by Long Bust, Texas Oilmen Pray for Another Boom (WSJ)
• General Motors Waves Goodbye to Europe (BBG)
• PSA targets Opel turnaround as GM exits Europe (Reuters)

"Think About and Prepare For" End Of Euro - TV3 Agenda Interview

David McWilliams interviewed Lara Marlowe and Cormac Lucey about the elections in France (April 23 and May 7) for TV3’s Agenda and the short interview about the French elections, Le Pen and the risks posed to the euro is a must watch.