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News roundup – Between The Hedges
News roundup – The Trader
Daily – Danske Bank (pdf)
-Bernanke gave no indication of further easing, rumors Merkel ready to accept larger ESM
Morning Briefing – BNY Mellon
-The ultimate cost of deflating China’s property price bubble remains unknown
-The ultimate cost of deflating China’s property price bubble remains unknown
Market Preview – Saxo Bank
Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
EURO CRISIS
Stocks declined on the testimony, but that’s as it should be: in a normal recovery, stocks are tugged higher by earnings and lower by rising bond yields. If that seems strange, it’s because recently it hasn’t been true. In a liquidity trap, interest rates mean little to stocks because they’re always assumed to be zero.
PM Dear Dairy: Good Riddance – Macro and Cheese
The guilty party is LTRO, or rather, the end of the LTRO party. After a relentless double-digit global equity advance over the past ten weeks, markets woke up and realized there's no there there.
Will the national ‘golden rule’ eclipse the EU fiscal norms? – voxeu.org
Eurozone countries have recently agreed to adopt a ‘golden rule’ for fiscal policy, forcing governments to be stricter about balancing their books. This column compares the golden rule to existing EU fiscal policies. It argues that the successful implementation of the golden rule would overturn much of the existing economic governance in the Eurozone to become the main determinant of fiscal discipline.
OTHER
The Impact of Bias: Investors, Economists & Analysts – The Big Picture
One of the more difficult things you human investors have to deal with is how your own heuristics, biases and cognitive deficits impact your views. It is how you are wired, a flaw in your wetware, and it consistently trips up your results.
Now there are a lot of people, among them European policymakers, who would actually be quite happy if the Greek default killed off the sovereign CDS market as a side effect. But I actually believe that sovereign CDS, when they work, are rather useful things. It’s just that Greece is having the effect of showing that they don’t necessarily work.
China Dumps $100+ Billion In USTs In December Per Revised TIC Data; UK Is Now Russia's Shadow Buyer – ZH
Gold Plunges Over $100; Some Blame Bernanke; What Did He Say? Nothing (However, I have 5 Different Interpretations of Nothing) – Mish’s
People can and did read into Bernanke's testimony what they wanted to hear. Others judged the market reaction, and wrote a corresponding explanation to fit…Here's the deal. If the economy tanks the Fed is likely to do another round of QE. The same holds true for another LTRO by the ECB.
The eventual unwinding of QE: why it’s ignored and what it could mean – Economic Musings
Extrapolating this thought all the way down the risk chain would apparently push buyers into the next safest asset, not the next riskiest.
OFF-TOPIC
FiveBooks Interviews: Nicholas Carr on Impact of the Information Age – The Browser
Is the Internet dividing our attention? Are we so buried in technology that we ignore one another? The technology writer discusses the history and implications of the information age, from the mechanical clock to the iPhone
How to be a Bad Manager: The Pygmalion Effect – The Psy-Fi Blog
…student’s success is directly related to a teacher’s belief in their ability. This is not simply a finding about children in the classroom, it seems to be a general truism. Good managers get more out of their people by believing in them, and letting them know it. Bad ones create bad vibes and bad results:
Unbelievable Stress of Making "Only" $200,000 After Taxes – Mish’s