After talks about the Greek haircut broke down last week, they resumed and apparently yielded a deal. Also Spain’s auctions distanced it from the danger zone and helped the euro. Yet in Greece’s case, it’s important to remember that a 50% haircut isn’t a 50% reduction of debt, and that only the fragile banks will suffer and not the ECB. Not yet.

Here’s an update on technicals, fundamentals and what’s going on in the markets.

The lack of an immediate remedy from the EU Summit was the main reason out of many why the euro fell. This came despite some positive signs from PMIs and successful bond auctions in Spain. The IFO business climate could provide good news for Germany, but the Italian worries are due to continue, especially with the GDP report.

In Canada, Corporate Profits is due to stay -4.9% similar to the last quarter.

Fresh GDP figures have shown that the recession hasn’t arrived to Europe in Q3 although Italy is hiding its figures. The chances are much higher in Q4 as the debt crisis is spilling into the real economy with bond yields screaming in every country apart from Germany. This isn’t only the prices in secondary markets: bond auctions are reflecting the sustainability of the debt. Italy has a new government, but the powers of Mario Monti are limited. Europe is awaiting another Mario: Mario Draghi – the president of the ECB. Will we see European QE? Perhaps via the IMF.

Italian yields crossed the “bailout barrier” of 7% and this alarmed the markets. After Italy’s institutions made progress on passing new austerity measures and some serious intervention from the ECB, the winds changed and the euro managed to recover. Italy is now expected to follow Greece and appoint a non-politician as the head of state. In the meantime, the economies aren’t doing well: there are clear signs that the euro-zone is already in recession as contagion reaches the core. The idea of transferring ECB money through the IMF is gaining traction, and this sent the euro temporarily higher.

Here’s a quick update on technicals, fundamentals and what’s going on in the markets.

In the US, The Conference Board (CB) Consumer Confidence, Monthly Survey (around 5,000 homes) to rate the present and upcoming financial conditions and overall economic conditions, rise up to 46.2 points is expected from 45.4 points on September.

The potential haircut for Greece can reach 60%. Bank recapitalization is between 100 and 200 billion euros, but the big dispute is about the EFSF bailout fund, its uses and its leverage. Germany and France are working on a solution. A happy compromise might not be sufficient to settle the markets.  Here are 4 reasons why the summit will fall short.

Here’s a quick update on technicals, fundamentals and what’s going on in the markets.