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The Drudge of the Daily News – Alternate Style

Mainstream Mixup

BREAKING — DOW FUTURES WATCH — Market Collapse -100 In First Trades — Farce Reigns And Risk Aversion Rises. Yen Up, Euro Down

DOW -100+

US Equity Futures Tumble To 3-Week Lows

As JPY-crosses suggested in the early Asia session, US equity futures are off to a tough start. S&P 500 futures are down 14 points from Friday’s close, testing down to their 50-day moving average and back to 3-week lows. The S&P 500 is now -3.2% from its post-Un-Taper highs. Treasury futures are at 3-month high (price) implying around a 4-5bps drop in yields to 2.58% for 10Y and 1.35% 5Y.

Chart: Bloomberg

A 10-Word Guide To How Screwed Up Things Are

“Farce reigns and risk aversion rises. Yen up, euro down.”

Read more:

Italian government in chaos after Berlusconi move

WASHINGTON (MarketWatch) — The Italian government was under pressure Sunday after former Prime Minister Silvio Berlusconi’s party said all five of its ministers would resign from the cabinet.

Italian President Giorgio Napolitano and Italian Prime Minister Enrico Letta devised a plan to try to avoid snap elections in the wake of the resignations at a meeting Sunday evening.

Shutdown looms as House votes to delay health law

How The Market Reacted To Prior Government Shut Downs

CEO Of Italy’s Largest Bank Surprisingly Resigns

The situation in Italy appears to be going from bad to worse. With a confidence vote pending for Tuesday as the government dissolves into chaos for the umpteenth time, and following the resignation of the CEO of one of Italy’s largest non-financial corporations (Telecom Italia), the largest bank (by assets) in Italy - Intesa SanPaolo has announced – effective immediately – the resignation of its CEO and replacement with Carlo Messina. According to sources, the now former CEO had lost the confidence of shareholders (which is odd given the bank’s stock is near 2-year highs). We can’t help but wonder Ayn Rand-like at the devolution of the ruling class in Italy and what happens next (in light of the crumbling manufacturing and production data).

EUR Plunges As Markets Open

More Government Shutdown Hype

The AP comments How budget showdowns could squeeze the US economy. The story is nearly all hype. Let’s take a look.

Q. What exactly will happen within the next days and weeks?

A. The most urgent deadline is for Congress and the White House to agree to keep funding the government after the current budget year ends Monday. Otherwise, some of the government would have to shut down. The House and Senate are considering bills to fund the government past the deadline. But House Republicans want to cut off funding for President Barack Obama’s health care law as a condition of passing the spending measure. Senate Democrats and the White House have balked. Unless one side essentially blinks, a partial shutdown of the government will occur.

Mish: That is accurate so far.

Q. What about the federal borrowing cap? First of all, what is it?

A. It’s a legal limit on how much debt the government can pile up. The government accumulates debt two ways: It borrows money from investors by issuing Treasurys. And it borrows from itself, mostly from Social Security revenue.

Mish: It’s important to note there is no social security fund whatsoever. Every penny and then some has been borrowed and spent. Here comes the hype.

Q. What if Congress can’t agree to raise the cap in time?

A. It could be disastrous. No longer authorized to borrow, the government would have to pay its bills only out of the revenue it gets from taxes and fees. This would force the government to immediately slash spending by 32 percent, the Bipartisan Policy Center estimates. Most analysts think the government would delay paying each day’s bills until it had accumulated enough money to pay them all.


Goldman is closing it’s long Italy, short French 10Y trade…. For obvious reasons

Goldman: “downside risks to our view of a contained negative impact from political instability have increased”

Goldman: “resignation of the PdL ministers will clearly increase volatility in the government bond market”

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