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Greece to fund a bail out?

  • Cyprus has suggested that Greece might like to bail out Cypriot banks with a couple of billion Euros. Greece has not responded. The worrying signal is that haircuts for bond holders and bank depositors are being discussed, which might set an uncomfortable precedent.
  • There was a move from a credit rating agency on Italy. Up or down, no one cares. Europe has a heads of government meeting later this week. Italy will use Monti as its head of government for the time being.
  • Chinese data seemed to be somewhat disappointing - inflation was higher than expected (though distorted by lunar new year) while industrial production, credit and retail sales were weaker. We believe there are some regulatory distortions to the numbers, and overall view the recovery as being intact.
  • The data calendar is quiet today. Italian GDP is just revised Q4 numbers, which will confirm the negative growth position. French industrial production is seen negative as well. Keep an eye on German trade data. Much of what Germany exports ends up in Europe.

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