It depends on who you listen to

Yesterday saw towel chucking on FX but equities failed to break or hold their relative range tops so Team Macro Man, thinking that upside momentum can now fade a little, has taken profit on their risk longs and is going to place stop entries to reestablish longs above yesterday's highs. One line of response we are consistently hearing on this run up of risk is that nothing has changed over the last week, the world is still a mess so we must sell all rallies. But TMM think quite a lot HAS changed over the last week

1) US does not look like it is heading for recession anymore. In fact, growth looks trend like.
2) The past few days have contradicted the survey data in Europe... it actually looks like Q3 was a quarter of growth - ie not necessarily in recession.
3) Italy in particular had vigorous IP growth in August, reducing the need for EFSF to be leveraged.
4) Merkozy agreed they need to recapitalise banks and said they will get a plan together to implement it. Acknowledging the need is a significant positive.
5) The ECB didn't need to buy many bonds last week, the private market absorbed supply from Italy.
6) The EU bank bond market has reopened... Deutsche issued 2yr paper and Bank of Ireland 3yr paper.
7) Dexia breakup burned equityholders, but not senior creditors. This was a big worry in the unsecured bond markets. Precedent set along with ECB insistence that bank bondholders do not get hit reduces the prospect of calamity.
8) Asian exports have not collapsed and have surprised to the upside in China/Korea and Taiwan. Stabilisation elsewhere (Phillipinnes isolated).
9) Policy easing in Asia. Bank Indonesia rate cut this morning along with a Chinese province easing property purchase regulations. Add to that Government agency buying Chinese bank shares on the secondary market.

So our core view remains that the background data is better than many would have us believe and that Europe is not going to implode by Christmas, though many are still strongly pushing this "recession", especially in the UK, where it is being overhyped by those with vested interests.

It is sad to say that the once mighty and trustworthy British Broadcasting Corporation is one of those and appears to be doing it's damnedest to whip up fear and financial panic amongst the population, with Radio 4 being a litany of stories focusing on social welfare cuts and public sector employees who are losing their jobs. We have expressed our ire at this before but it was whipped up again yesterday. "World at One", one of the UK's most serious news programs delved into the problem of the young unemployed and interviewed 3 recent graduates who couldn't get jobs and held them up as example of how "job creation" was a must. However the degrees these three had were in Media Communications, Broadcasting Journalism and though the final one had two business degrees he wanted to go into Market Research designing questionnaires. All were horrified that they couldn't get jobs. (click here for interviews 7min 30 onwards)

TMM didn't know whether to laugh or cry at this point. Do the BBC really think that Media Studies and Broadcasting degrees are representative of today's graduates? We'd have been much more impressed and concerned if they had unemployed graduate engineers, physicists or medics being interviewed. Or perhaps this story was coordinated with the 2000 cuts being made in their own organisation? Or perhaps, oh dear its true, the UK really is churning out a load of graduates with degrees in uselessness. The most telling comment was right at the end of the interview by one of the girls referring to a "False hope of a degree leading to a job". TMM have predicted before that the next great mis-selling scandal in the UK will be that of the student debt racked up in exchange for degrees that don't lead anywhere. All of this is most pertinent to Team Macro Man who are seeing their own offspring deciding on future further education choices and, whilst matriarchs might be insisting it's more important to be happy, this patriarch is forcefully explaining that happiness is dependent upon having a job and preferably one that they are proud of. If you doubt that then go back to the interviews above.

And finally from Guido Fawkes' great blog

A newbie MP talking to a young blonde lady. The MP says “it was nice to meet you, but I’ve got to go and show my face at the British Venture Capital Association reception”. The young lady immediately says “wow, that sounds like a very right-wing group.” The MP looks bemused, replying “I wouldn’t say that. It’s business, it’s not left-wing or right-wing. So what do you do?”The lady suddenly looks embarrassed: “I work for the BBC.” “Oh? Doing what exactly?” “I’m public affairs – it’s my job to persuade all of you lot that we’re not a bunch of raving left wingers.” “You’re not doing a very good job so far…” came the reply.

TMM still think they should set up TMM radio.