Take a moment and read the below chart. Yes, we know the GDP is measured by the new GAAP standards (not the best standard), and not presented in absolute numbers, butrather in percentage terms, but we still get a good feel of the mighty US and it’s GDP figures.

Don’t forget, Berlusconi is to hold a speech after European close today. Despite everybody in a panic mood over Italy (yes we are bearish on Italy as well), the MIB is not trading as bad as many other markets. The MIB is down some 25% from the Top….

From Reuters earlier,

View our post from two days ago. Total panic in HFT Algo heaven.

DEJA VÚ

After the great Debt Deal, we need to focus on demographics. Who is is going to pay for all the future bills?

From Stratfor; Demography is one of the hallmarks of geopolitics, as a country’s demographic profile affects everything from its ability to man an army to its likelihood of having a budget deficit. The pyramid charts show the impact of China’s “one child” policy, the end of German eugenics programs after World War II and the disastrous effects World War II and the Soviet collapse had upon Russia. In the case of the United States, the bulge in the 45-55 age range highlights the imminent retirement of the baby boomers, which will reduce the volume of government tax income while increasing the cost of programs such as Medicare and Social Security.

We presented the IV Skew chart some weeks ago. The divergence was telling us about a drop in equities was around the corner. We had the pullback, and are now entering some support levels, as the extreme reading from some weeks ago is now “complete”.

Chart, Macro story.

While everybody is writing about the World ending today, the European “risk” markets are in positive territory. Although the Markets are very nervous, this could be the first derivative of the market telling us we will find some support levels today. Below, Italy, Spain and Portugal.

and Stoxx 5 day chart

Greed and Fear at it’s best. Before you start selling in total panic, check the below DAX chart. Short gamma are puking all over the place, in a total lack of liquidity. People selling in agony, are discounting a Flash Crash. For the brave ones (and maybe stupid) , buy this dip, as we should be seeing a snap up.

One of the few Economist worth listening to.

Moody’s maintains Triple A rating;

Moody’s Investors Service has confirmed the Aaa government bond rating of the United States following the raising of the statutory debt limit on August 2. The rating outlook is now negative.

Moody’s placed the rating on review for possible downgrade on July 13 due to the small but rising probability of a default on the government’s debt obligations because of a failure to increase the debt limit. The initial increase of the debt limit by $900 billion and the commitment to raise it by a further $1.2-1.5 trillion by yearend have virtually eliminated the risk of such a default, prompting the confirmation of the rating at Aaa.

In confirming the Aaa rating, Moody’s also recognized that today’s agreement is a first step toward achieving the long-term fiscal consolidation needed to maintain the US government debt metrics within Aaa parameters over the long run. The legislation calls for $917 billion in specific spending cuts over the next decade and established a congressional committee charged with making recommendations for achieving a further $1.5 trillion in deficit reduction over the same time period. In the absence of the committee reaching an agreement, automatic spending cuts of $1.2 trillion would become effective.

While the Chinese Downgrade it a notch. Xinhua reports,

The U.S. House of Representatives on Monday approved legislation to raise the U.S. debt limit by at least 2.1 trillion U.S. dollars and cut federal spending by 2.4 trillion U.S. dollars, one day before a threatened default.

The downgrade is a result of fights between U.S. political parties over debt issues, which reflects the government’s inability to completely solve the debt problem, said Dagong Global.

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” The point is ladies and gentlemen that greed, for lack of a better word, is good. “

Gordon Gekko

Ft.com

Christophe de Margerie, chief executive of Total, the French oil group, is to be questioned in court over allegations of corruption linked to the UN oil-for-food programme in Iraq, the FT reports. A French justice official said that a decision to refer Mr de Margerie and 18 other individuals to the Paris courts had been made by Serge Tournaire http://ftalphaville.ft.com/thecut/2011/08/03/641556/total-chief-faces-grilling-over-oil-for-food/

China’s central bank governor urged Washington on Wednesday to act responsibly to deal with its debt issues, saying uncertainty in the US Treasuries market will undermine the international monetary system and hamper global growth, http://ftalphaville.ft.com/thecut/2011/08/03/641536/chinas-central-bank-chief-warns-us-on-debt/

Spanish and Italian politicians rushed to formulate a fresh response to the debt crisis engulfing the two countries as their borrowing costs hit euro-era highs, the FT reports. José Luis Rodríguez Zapatero, http://ftalphaville.ft.com/thecut/2011/08/03/641456/spain-and-italy-face-fresh-crisis/

The spectre of an imminent US default on its debt disappeared as legislation to increase America’s borrowing authority cleared its last remaining hurdle in the Senate and was signed by President Barackhttp://ftalphaville.ft.com/thecut/2011/08/03/641431/us-formally-retreats-from-brink-of-default/

The United States had its triple A rating confirmed by Moody’s and Fitch on Tuesday but threats of future downgrades remain, says Reuters. Moody’s Investors Service maintained the US Aaa rating, but assigned a negative outlook, http://ftalphaville.ft.com/thecut/2011/08/03/641436/moodys-and-fitch-affirm-us-ratings/

Syrian opposition activists are stepping up their lobbying for international sanctions against the oil industry to deprive the regime of a crucial source of revenue and cripple its ability to finance the mounting repression of popular protests. But while the activists are finding willingness for action in the US, the European Union remains reluctant to broaden its sanctions beyond specific officials and businesses that have direct links to the regime of Bashar al-Assad. http://www.ft.com/intl/cms/s/0/9e735f18-bd22-11e0-9d5d-00144feabdc0.html#axzz1TkVnqGOp

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