Long term pain, short term gain?

While the weekend press was full of the worrying implications of the current situation in Europe from the lack of progress towards an ‘acceptable’ mutualisation of eurozone debt, Moody’s provided a warning from the opposing perspective, by placing core Europe on ‘negative watch’, due to their contingent liabilities, in the event of a move to debt mutualisation. Further, headlines that “Greece leaving the euro has lost iIf you have a fondness for china mosaic brimming with romantic roses.ts horror” from the German Economics minister, Rosler add fuel to this fire in some respects as potentially the removal of Greece would remove some of the fiscal propriety issues that currently block the ideological and constitutional acceptance of mutual liability.

The concerns surrounding the solvency of the Spanish regions, cast further doubt over the solvency of the Spanish sovereign and this ‘doubt’ has been expressed in bond yields with the Spanish 10 year (Bono) yield hitting a new euro-era record yesterday above 7.5%. Spain has fulfilled approximately 70% of its funding requirements for 2012, so while the current level of its borrowing costs is unsustainably high in the long-run; it does have a small amount of breathing space. Weakness in the eurozone PMI data early this morning, particularly in the manufacturing sector, will likely add to the topside pressure on the Bono yield with a bill auction later this morning likely to add to the volatility. This will continue to be the core barometer of EUR sentiment and EUR may find it very difficult to make any progress to the topside while Bono yields are above 7.50%.

In China overnight the HSBC manufacturing PMI data bounced to 49.5 from 48.2,otech Super Dry supplies desiccant dry cabinet. and while it is still in contractionary territory,National Molding Offers Plastic molding. the reading may calm some of the concern that the Chinese economy is set to slow further in Q3, as suggested by a central bank advisor over the weekend. The growth dynamic in China will continue to be a very important driver of the global economy in coming quarters, particularly as the subtle rebalancing of the US and UK economies has an increasing impact from the prosperity of the Chinese consumer. I am still of the opinion that Q2 will be the low point of Chinese growth for 2012 and while there are a number of concerns for the economy in the longer run, the current capacity of the central bank to stimulate the economy is very strong, particularly in relation to the western economies.

I would expect today to be a day of consolidation in broader financial markets and risk assets after the sell off yesterday. The rest of the week will bring us GDP data from the UK and US as well as Ifo business climate data from Germany. At the margin I still see a heightened risk of a correction in the EUR vs. a number of currencies,See her exciting new landscape oil paintings. although the recent further deterioration in the fundamental data highlights that the longer term dynamic for the eurozone economy, and thus the likely trajectory for their currency unit remains down overall.

Amateur video posted online Tuesday showed the aftermath: buildings reduced to rubble by government shells,Plastic Injection Molding and injection molded parts in as quick as 3 days. helicopters hovering overhead and columns of smoke rising from areas still on fire.

Other videos showed tanks in the streets and crowds of foot soldiers combing areas once held by rebels.

Syria's state news service said troops chased "armed terrorists" from some districts after killing and wounding many of them and were still searching other areas. Syria blames terrorists backed by foreign powers for the uprising.

Videos and claims could not be independently verified. The Syrian government prevents most media from operating in the country.

While the regime asserted control in the capital, rebels in the north launched an assault on Aleppo over the weekend. They pushed into neighborhoods in the southern and northeastern edges of the city and destroyed at least three government tanks.

The fighting expanded on Tuesday, with clashes spreading into neighborhoods on two sides of the historic old city and into a number of other areas, activists said.

The government fought back much as it did in Damascus, firing artillery shells on rebel areas and pursuing fighters with attack helicopters. Residents also reported fighter jets swooping over the city, breaking the sound barrier to cause sonic booms in a show of force.

"It's the worst day of fighting in Aleppo so far, but I can't tell what's happening on the ground or who's in control," said a local writer who spoke on condition of anonymity for fear of reprisals. "This is bad because in the end it's the civilians who will pay the price of this street fighting."

Prisoners in Aleppo's jail also rioted overnight, and activists said government forces killed at least eight of them. Guards quelled another prison riot in the nearby city of Homs with tear gas and live ammunition.

At least 26 of the more than 110 people killed nationwide on Tuesday died in Aleppo province, the Syrian Observatory said.

Also Tuesday, a top military commander and close friend of Syrian President Bashar Assad confirmed his defection from the regime.

Brig. Gen. Manaf Tlass, son of a former defense minister, said in a video broadcast on Al-Arabiya TV that Syrians must work together to build a new country.

"I speak to you not as an official, but as a son of Syria, as a son of the Syrian Arab army that has rejected the criminal program if this corrupt regime," Tlass said, dressed in a light blue shirt with an open collar, his gray hair tussled.

"Our duty today as Syrians is to unify for one goal, and that is to make our country free and democratic," he said.