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The Concert of Europe

  • Slovenia has been downgraded to sub investment grade, which might raise fears that any Slovene bailout by the Euro area would follow the template of Cyprus and include bailing in bank depositors and increasing risks (and costs) associated with other bailouts.
  • It may be uncharitable to be too pessimistic. It is always possible that the Euro area will get it right on Slovenia. Europe does get things right from time to time. The Concert of Europe (1815) being perhaps the last occasion.
  • China's manufacturing sentiment PMI slipped a little but still points to economic expansion. Japanese wages and overtime pay both slipped quite a lot, and point to the considerable problems Abenomics face if it is to ever to achieve even positive inflation in Japan, never mind 2%,.
  • The US ISM of manufacturing sentiment is forecast to signal contraction (we estimate 49.0) in the wake of softer regional surveys. This might concern investors somewhat. The Fed, however, is expected to placidly leave policy unchanged.

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