As readers will recall, TMM's survey-based ISM model wrong-footed them due to it being based upon the Philly Fed and Empire surveys which, it seems, were distorted by being a long way from Japan (who knew...?). A confirmation of a V-shaped rebound in these over the coming week should cement views of the US recovery, but as above, this is purely dependent upon the Italian situation improving. With such divergent outcomes, it's hard to have too much conviction, and TMM's guts suspect that the pain trade after the weekend is a squeeze higher in Spooz, especially given event risk being cleared. They are too scared (and scarred) to put this on just yet though...
Moving onto other things, TMM's radar has picked up increasing chatter related to the possible imposition of exchange controls in Switzerland, something last tried in the 1970s that (briefly) led to a reversal of the post-Bretton Woods CHF rally.
TMM aren't sure that this is imminent yet, but the extreme strength of the CHF is something they have been pondering for a while. But the fact that this issue is now being discussed could well make the seeming one-way moves a little more balanced. If not, the closer EURCHF gets to parity the more likely it is that the SNB LLC are forced into action give n that they are hurtling towards the point at which they will be forced to ask the politicians for a recapitalisation.
TMM don't really have much else to say, other than that the EU Stress Test results appear to already be out of date given that they do not include the scenario of a Greek restructuring, yet the Eurocrats have already moved on to discussing how to execute such a restructuring. TMM feel like they have been subjected to a more rigorous stress test this past week or so!