Implementation won’t be easy

On Monday I mentioned that the EU summit agreement didn’t all of a sudden alter Italy’s debt level or quicken its economic growth and what today’s newspapers highlight, it also didn’t reduce the amount of European cooks in the fiscal union kitchen. Executing Friday’s framework amongst all these EU countries is the next battle that won’t be easy and will take more time. Germany’s IFO institute lowered its ’12 GDP growth forecast to just .4%, down from its old, previous estimate of 2.3%. Italy sold 5 yr debt at a yield of 18 bps above one sold last month. The euro basis swap is jumping to 147 bps, a two week high.

In Asia, after Evergrande, a Chinese residential developer, said yesterday that contract sales fell 88% m/o/m and 83% y/o/y, the Shanghai index fell for the 9th day in the past 11. Chinese yuan loans in Nov were slightly higher than expected but M2 growth fell to the slowest pace since May ’01 at 12.7%. India’s Sensex index was down also after wholesale inflation at 9.11% was slightly more than expected even though it moderated to a one yr low.

In the US, the MBA said mortgage rates fell to a new multi decade low at 4.12% but purchases dropped 8.2% to a 4 week low while refi’s jumped 9.3% to a 5 week high. II: 45.3 v 47.4 Bears 30.5 v 29.5

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