Rumors first: Yesterday, France was assured by Fitch ratings service it would keep its AAA rating for the rest of the year. Today French finance minister Francois Baroin was forced to knock down rumors that one of the other agencies has notified him that they intend to downgrade France anyway.
"False" was the word Baroin used to describe the rumors.
Meetings next: Italian Prime Minister Mario Monti met with German Chancellor Angela Merkel today. Monti is rapidly becoming the third point of a triangle as Europe's Big Two political leaders, Merkel and French President Nicolas Sarkozy realize that Italy is the key to solving the euro zone debt crisis. Monti met with Sarkozy last week and the trio will meet in Rome next week.
At a press conference afterwards, Merkel praised the reforms the technocrat Monti has brought to the Italian economy since he was appointed late last year. "This will strengthen Italy," she told a press conference.
Monti used Merkel's praise to ask that the bond markets give the reforms time to do their work. Italy is still paying more than 7 percent interest on its sovereign debts and Monti needs that rate to come down if his austerity plans have a hope of working.
Anyway, during the press conference Monti told an amusing anecdote about the Financial Transaction Tax, akaTobin Tax, Sarkozy wants to impose on banks and Merkel is intellectually ok with but politically not sure of.
Apparently Monti studied with professor Tobin at Yale and said his former prof described his tax's occasional bouts of popularity as like the Loch Ness Monster. "You see it, it disappears, then reappears."
Markets: The FTSE 100 was off slightly as the New Year rally ran out of steam. German five-year bonds sold well. The euro continued its slide against the dollar.