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Moments of truth

BBG: *MERKEL, SARKOZY REACH JOINT POSITION ON GREEK DEBT SITUATION*
At a first glace you may think: Finally they did it. But hold on and take a step back, what did they? So far nothing but agreeing on something we don t know anything about. All we can state is that this is a completely U-Turn from the beginning of the week and that they spurred hopes….hopes they tend to badly disappoint in the past. So it may be a bit too early to pop the champagne corks. To pour further cold water on it…. Given they managed to solved the Greek issue now, what do you think they will look like if it s getting really serious and a markets are turning to heavyweights as Italy or the Iberian Peninsula?
Besides the Debt Issue – btw also not solved in the US - Markets faced some fresh headwinds from eco data. In the US existing home sales fell unexpectedly to a seven-month low in June as cancellations of pending contracts surged. But more importantly, we had fresh data from China pointing to hard landing as the Flash PMI fell to 48,9 indicating contraction while the Price component reads for a pick up in prices. Nothing you seriously want to call a healthy combination. But this is not the 1st time we stress this issue, so no surprise for you, is it?
For those looking for a short term upside hedge on the EU summit result we still think it s worth looking at calendar spreads, taking advantage from the still extreme flat term structure. Beyond that, nothing new: avoid shorting downside tail risks & overwrite in rebounds