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Tuesday, January 15

15th Jan - US Close: It's Not Kosher!

We got the first “EUR is too strong” message from Europe. Remember the crisis weeks, when on an almost daily basis someone was talking the prices up (or down)? The European economy is not performing, and the numbers are very clear on that. The recovery in US will not flow to Europe if the EURUSD remains at current levels, but unless the ECB starts printing just like the othersl, the euro will remain strong – unless the crisis erupts in full mode again. So I think we’re in a Catch-22 situation: 

Either you get a serious financial crisis going on again, so that the ECB will have to print for Spain and perhaps others...

...or we get a serious recession, driving down the EUR against JPY and USD, but not before the recession reignites the financial crisis… 

It would be so much easier for the ECB to just print now, but… it’s not kosher!

Previously on MoreLiver’s:                  

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Roundups and Commentary
Markets – Between The Hedges
The Closer – alphaville / FT

Tomorrow’s Tape: CPI, Beige Book, JPMorgan Earnings WSJ
Morning Briefing (Asia): G7 Officials Sound Alarm Bells Over JPY Decline BNY Mellon
US: Stocks And Bonds Bid As AAPL Catches Down To Nasdaq – ZH

Juncker Warns EUR Exchange Rate “Dangerously High”ZH

Pictet's look at European Industrial Production StatsZH

Not everyone can be GermanyFree exchange / The Economist
Good news out of the euro zone: the euro area ran a higher than expected trade surplus in November of last year thanks to a surge in exports. The bad news? The November surplus was just under €14 billion in an economy with annual output of nearly €10 trillion.

Mario Draghi's premature canonizationFree exchange / The Economist
I find it shocking how readily we all seem to be accepting the ECB’s inaction on euro-zone economic weakness. Some perspective is in order.

The great European bank heist reversalalphaville / FT
LTRO repayment chat is speeding up the closer we get to the fateful day at the end of January when Euro-banks might actually start sending back once cheap cash to the central bank. How much will be repayed, by whom and when are the questions that need to be answered.

Greater differentiation should be the EU’s new normaleuropp / LSE
Currently an exception in the EU’s structure, normalising differentiation may give more weight to global forums, and address some of the democratic tensions now present in the EU.

Rosengren: Economy Responding to Stimulus – WSJ
Rosengren: Fed Shouldn’t Stop Buying Bonds Until Unemployment Drops Substantially – WSJ
Plosser: Policy Will Need to Be Curtailed Sooner Than Anticipated – WSJ
Kocherlakota: Monetary Policy Not Aggressive Enough – WSJ
'Monetary Policy is Currently Not Accommodative Enough' – Economist’s View

Secrets of the crisis revealedWonkblog / WP
The Federal Reserve keeps transcripts of its meetings to set monetary policy, and releases them with a five year delay. It does not announce in advance when they will be released, but if the past is a guide, any day now we will be getting full transcripts of the 2007 meetings of the Federal Open Market Committee.

After the Debt Ceiling is increased ...Calculated Risk
I'm convinced the house will fold soon on "paying the bills" (the sooner the better for everyone), but we might see a government shutdown at the end of March.

Debt ceilings and downgrades: who cares?alphaville / FT

CoreLogic: House Prices up 7.4% YoY in Nov, Largest increase since 2006 – Calculated Risk
CoreLogic: Home Prices Jump 7% in November – PragCap

Retail Sales OK, but Headwinds Coming – WSJ
Retail Sales Rose More Than Forecast in December – BB
Firmer consumer spending – Reuters
Another Positive For December's Economic Profile – The Capital Spectator
Beat Despite Electronics And Appliance Sales Drop; Empire Fed Misses Big – ZH
Increased 0.5% in December – Calculated Risk
  This was above the consensus forecast of a 0.3% increase, and suggests the initial "soft" reports for December were too pessimistic. 

The Setting Sun – Japan’s Forgotten Debt ProblemsEconoMonitor
Japan has an average debt maturity of 6 years, shorter than Spain, Italy and France. Around 60% of its debt must be refinanced in the next 5 years. This will expose Japan to the discipline of market investors at a vulnerable moment. Once the problems emerge, they will be difficult to contain.

Yield Forecast Update - ECB removes its easing biasDanske Bank (pdf)

FX Forecast Update - January: Euro gains to continue in H1 13Danske Bank (pdf)

Emerging Markets Briefer - January 2013Danske Bank (pdf)

361 Capital Weekly Research BriefingThe Reformed Broker

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